Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Let me tell you we have a new star.
Speaker 1: A star is born Elan On Mars Juthan Kennemy. He
Speaker 1: is the Thomas Edison plus plus plus of our age.
Speaker 3: Probably his whole life is from a position of insecurity.
Speaker 3: I feel for the guy.
Speaker 2: I would say ninety eight percent really appreciate what he does.
Speaker 2: But those two percent that are nasty, they are our
Speaker 2: pay in four fols, we were meant for great things
Speaker 2: in the United States of America, and Elon reminds us
Speaker 2: of that. I'm very disappointed in Elan. I've helped Elon
Speaker 2: a lot. Welcome to Elan and Bloomberg's weekly podcast about
Speaker 2: Elon Muskets, Tuesday, August fifth. I'm your host, David Papadopolis. Okay,
Speaker 2: so here's this week's show. In three large numbers to
Speaker 2: undred and forty three million dollars, thirty billion dollars, and
Speaker 2: two point two billion dollars. The first is the amount
Speaker 2: of money of Florida jury ordered Tesla to pay the
Speaker 2: victims of a crash that took place when a driver
Speaker 2: had autopilot engaged. The second is the quote introm Close
Speaker 2: quotes Stock Award that Tesla's bord handed Elon yesterday. And
Speaker 2: the third is the plunge in the estimated value, perhaps
Speaker 2: the least loved of the Musk businesses, the boring Company.
Speaker 2: So we have an eclectic cast of characters to bring
Speaker 2: you each segment, and we'll start with Elon Inks stalwarts
Speaker 2: Dana Hall and Max Chafkin. Hello to you both.
Speaker 3: Hey, David, Hey Dana, Hey guys.
Speaker 2: And we have a special guest, professor Missy Cummings, who's
Speaker 2: the director of Mason's Autonomy and Robotics Center at George
Speaker 2: Mason University and who was a expert witness in this trial,
Speaker 2: to talk about the Tesla autopilot rule link. Missy, Welcome
Speaker 2: to the show.
Speaker 1: Thank you for having me.
Speaker 2: Okay, So, Dana, before we do tap into Missy's expertise,
Speaker 2: here set the scene for us a little bit. What
Speaker 2: happened on that day back in twenty nineteen, and what
Speaker 2: exactly did the Florida jury say last week?
Speaker 4: Yeah, so this You know, there are lots of autopilot crashes,
Speaker 4: some have gotten enormous media attention, some have not. This
Speaker 4: was a crash that occurred in twenty nineteen where the
Speaker 4: driver of a Tesla. Basically, he was on hold with
Speaker 4: an airline making a phone call, dropped his phone, reached
Speaker 4: for his phone, and then managed to t bone a
Speaker 4: parked car where a young couple was stargazing, killing the
Speaker 4: woman and gravely injuring the man and the driver. You know,
Speaker 4: already kind of settled with this family, but the family
Speaker 4: sued Tesla. And surprisingly, we've had Tesla in a lot
Speaker 4: of court cases, and often they settle before the eve
Speaker 4: of trial. But this went to trial in Miami. Missy
Speaker 4: was one of the witnesses, and the jury found Tesla
Speaker 4: liable not just for damages but for punitive damages, which
Speaker 4: I think is significant because even though the driver himself,
Speaker 4: you know, testified that he had dropped his phone and
Speaker 4: was distracted, the company itself was found liable. And it
Speaker 4: was just an extraordinary case on so many measures. I mean,
Speaker 4: I was not there in Miami, but you know, Missy,
Speaker 4: like you were there, I mean, it was it was
Speaker 4: what did you think when when the verdicts came out
Speaker 4: and what did you specifically testify about?
Speaker 1: Well, there were several expert witnesses, but my specific area
Speaker 1: is AI expertise and then regulatory expertise. Since I had
Speaker 1: worked at Nitze for a year, so you know, jury trials,
Speaker 1: you just never know. I got a good sense when
Speaker 1: I was testifying because the jury was listening and you're
Speaker 1: explaining technical concepts and you can see it, you know,
Speaker 1: as a professor, I can see somebody check out fast
Speaker 1: than anyone. But they were not checked out. They were
Speaker 1: paying attention. And I think that they both understood the
Speaker 1: technical issues which led to them finding Tesla. You know,
Speaker 1: in this case, I think it was thirty three percent liable.
Speaker 1: But I also think that the jury understood the punitive
Speaker 1: damages were due to Tesla's cover up of a lot
Speaker 1: of the data. And I think they got that too.
Speaker 4: Speak a little bit about the cover up of the data,
Speaker 4: because that was a really wild thig. I know that
Speaker 4: the attorney for the Benavitaz family made like an augmented
Speaker 4: video that was based on what they were able to
Speaker 4: extract from the onboard computer. And there was a hole
Speaker 4: back and forth about did Tesla know that it have
Speaker 4: this data or they did they hide it? How significant
Speaker 4: was that?
Speaker 1: I mean, it was deleted and we knew we could
Speaker 1: see it in the files, but because we were able
Speaker 1: to recover it it was undeniable. But we knew that
Speaker 1: these augmented videos existed because I had been an expert
Speaker 1: witness in other cases where I had seen the annotated video.
Speaker 1: This is a video of any crash that they have.
Speaker 1: Your car records what's going in in the frontal camera view,
Speaker 1: but it also records everything that it sees, and so
Speaker 1: we know that this data exists. It exists for every
Speaker 1: single Tesla, every single day. And so for Tesla to
Speaker 1: try to cover this up, you know, I'm not an attorney,
Speaker 1: but I thought it bordered on criminal.
Speaker 2: So they sought to cover it up by saying what that, Oh,
Speaker 2: we don't simply don't have it.
Speaker 1: And yeah, they were trying not to give us the data.
Speaker 1: And if it hadn't been for the digital forensics person
Speaker 1: that we had on this, it would have gone unnoticed.
Speaker 1: And why that's critical is we were able to show
Speaker 1: what the car saw and what it quote unquote knew
Speaker 1: was going to happen. So you know, with several seconds
Speaker 1: to spare, the car saw the end of the road
Speaker 1: coming and decided to project drivable space into the wilderness.
Speaker 1: So it knows that the the road is coming. It
Speaker 1: has the map that knows it's coming, but still the
Speaker 1: car decided to go ahead and drive in the wilderness.
Speaker 1: So even if this other car hadn't been there, the
Speaker 1: car would have gone off the road. And indeed that
Speaker 1: the computer vision system actually saw a car there and
Speaker 1: never alerted the driver and never engaged the emergency braking system.
Speaker 2: Why isn't though Tesla's argument correct though that, and I
Speaker 2: believe by the way other juries in the past have
Speaker 2: found it to be that, hey, you know, autopilot is
Speaker 2: there just to assist you. You are still the driver
Speaker 2: and you need to be responsible for your vehicle and
Speaker 2: paying attention and not looking for your phone when it
Speaker 2: falls on the floor.
Speaker 5: Yeah, well this came up in this case as well
Speaker 5: as other ones in the past. Tesla has said that
Speaker 5: in court often and perhaps in sort of legal back
Speaker 5: and forth. But if you look at the messaging that
Speaker 5: the company has employed, and this is part of the
Speaker 5: reason why I think the jury and why many people
Speaker 5: are sympathetic to some of these drivers who have taken
Speaker 5: their eyes off the road while they're using autopilot or
Speaker 5: full self driving. You know, we've seen cases of full
Speaker 5: self driving also leading to issues, and it's because if
Speaker 5: you like, listen to what Elon Musk says. You think
Speaker 5: it's better than a human He says it all the time,
Speaker 5: and he continues to say it. Part of me thinks
Speaker 5: that this case may start to undercut that story, just
Speaker 5: because reading the details that came out here are so powerful.
Speaker 5: You have, as Missy is saying, a technological system that
Speaker 5: is inadequate, and Missy's saying it saw the road.
Speaker 2: But yeah, but in fairness is this technology this is
Speaker 2: six years old right from twenty nineteen, missy, Do you
Speaker 2: have a sense how much progress their technology is made
Speaker 2: from twenty nineteen to today?
Speaker 1: Well, you know, so full self driving is in existence
Speaker 1: today and it wasn't a product back then, and you can't.
Speaker 1: It's hard to separate out those two because the computer
Speaker 1: vision system, for example, that works for autopilot is a
Speaker 1: critical part of full self driving, and indeed, they were
Speaker 1: using a lot of the data that they were getting
Speaker 1: an autopilot mode to inform full self driving mode. What
Speaker 1: I will tell you is, as a robotics professor, have
Speaker 1: I seen a dramatic leap in capability from twenty nineteen
Speaker 1: to twenty twenty five?
Speaker 2: No?
Speaker 1: Indeed, I think that what this case showed me as
Speaker 1: an expert. Because I looked at all their testing documentation
Speaker 1: or the lack thereof, I got news for you. Self
Speaker 1: drive is not happening for them. I've seen under the covers,
Speaker 1: and they're just their procedures, processes, what they value, what
Speaker 1: they don't value in terms of testing, whther or not
Speaker 1: you can do all this shadow testing, I see still
Speaker 1: an extremely immature company that just does not know how
Speaker 1: to build a safety critical technology. They've been able to
Speaker 1: dodge responsibility up to now because the driver was the scapegoat,
Speaker 1: but when it's self driving happens, there's no scapegoat. It's
Speaker 1: all them.
Speaker 2: So Dan, we've alluded briefly here to the fact that
Speaker 2: Tesla pushes back, of course, and they have worked very
Speaker 2: hard to do so. What is their exact line, Well.
Speaker 4: Tesla argues that the driver is a fault because he
Speaker 4: was distracted, and in their statement they say today's verdict
Speaker 4: is wrong and only works to set back automotive safety
Speaker 4: and jeopardize Tesla's and the entire industry's efforts to develop
Speaker 4: and implement life saving technology. We plan to appeal given
Speaker 4: the substantial errors of law and irregularities at trial. You know,
Speaker 4: Tesla often blames the driver in these cases. But the
Speaker 4: other thing that I think is really important to point
Speaker 4: out is this was a unique case in that the
Speaker 4: victim here was not the driver or the driver of
Speaker 4: another vehicle. It was pedestrians. It was like a young
Speaker 4: couple that had pulled over to like look at the stars.
Speaker 4: They did not sign up to be part of this experiment.
Speaker 4: And that is that is like another whole aspect of this.
Speaker 4: So often in crash cases, it's what did the driver
Speaker 4: do or not do? But these people were completely innocent.
Speaker 4: They were not even in their car, and they had
Speaker 4: pulled over to the side. They were not even driving.
Speaker 4: It was a stationary object and behind some signs. They
Speaker 4: parked behind something thinking that these signs would protect them.
Speaker 1: Yeah.
Speaker 2: Wow, okay, Missy, I was struck by something you said
Speaker 2: a little bit earlier. Full self driving isn't happening for
Speaker 2: them than being Tesla now. So much of the company's
Speaker 2: nearly trillion dollar valuation is predicated on full self driving
Speaker 2: happing for them and robotaxi being a thing. So there's that.
Speaker 2: But moreover, Missy, there are already these vehicles buzzing around,
Speaker 2: these robotaxies buzzing around in Austin and perhaps soon to
Speaker 2: be in other cities. Should that worry.
Speaker 1: Us, well, I think it's first of all, really important
Speaker 1: words matter here. Full self driving is a product which
Speaker 1: is recently had its name change to supervised full self driving,
Speaker 1: really because of all these lawsuits. Right, so I'd like
Speaker 1: to distinguish between their product full self driving and actual
Speaker 1: self driving, which is still not happening for them. They
Speaker 1: have robotaxis in Austin, there's a person in the right seat,
Speaker 1: there's remote operators, and in some cases we know that
Speaker 1: there have been either leading or trailing cars that help
Speaker 1: protect the envelope around the car. There's no legitimate self
Speaker 1: driving car company that's on the road today with this
Speaker 1: amount of babysitting. Look, I'm telling you I'm a robots professor.
Speaker 1: Or they're using one sensor, one sensor stream to do everything.
Speaker 1: One thing we know in robotics that is a super
Speaker 1: bad idea in a stagey critical system, and it won't work.
Speaker 1: It just is not going to work. I don't care
Speaker 1: what they do with the software. I don't care how
Speaker 1: much Dojo is in this. I don't care you know
Speaker 1: whether or not he gets a gazillion dollar bonus from
Speaker 1: the company. It's not going to happen because technically it
Speaker 1: cannot happen for the kinds of systems and the kinds
Speaker 1: of speeds that they're operating at. So, you know, be
Speaker 1: my guest, but I'm going to put my child through
Speaker 1: college on these expert witness fees if they continue, Missy.
Speaker 2: You know, Max and I have something of a running
Speaker 2: debate slash feud on the show and off the show
Speaker 2: about human drivers versus robot d robotic drivers and what
Speaker 2: they can do. Max thinks humans are brilliant drivers.
Speaker 5: I'm not so sure about robots.
Speaker 2: Okay, I'm not so sure about that. Our lifetime's Missy,
Speaker 2: will the four of us see a world in which
Speaker 2: the robots are driving the vast, vast bulk of our vehicles?
Speaker 5: Now, David, you owe me one hundred dollars?
Speaker 2: No, I don't know.
Speaker 4: I also just want to make the point that, you know,
Speaker 4: Tesla really leans into this concept of Tesla Vision is
Speaker 4: their system. They've got cameras and this incredible brain. But
Speaker 4: I would just like to point out that humans don't
Speaker 4: just drive with their eyes and their brain. You use
Speaker 4: your ears, You listen to sound. You listen and you
Speaker 4: feel the roadway, like driving is a multisensory experience. It's
Speaker 4: not just your eyes, that's all.
Speaker 1: Waymou likes to say that they have safer drivers than
Speaker 1: human their cars are safer than humans, which is debatable.
Speaker 1: But you also have to remember that all these cars
Speaker 1: have teams of people from the Philippines watching their every move.
Speaker 1: If every single one of us had a remote operation
Speaker 1: center watching our every single move, we'd all be better drivers. Right,
Speaker 1: So I wish people would stop making that comparison because
Speaker 1: it's an Apple's to launches.
Speaker 2: All right, Missy, this was great. You will most certainly
Speaker 2: have to come back and join us again.
Speaker 1: Would love to.
Speaker 2: Max Dana more Tesla News. Elon just was handed something
Speaker 2: that we're calling an intram pay package. Max, this is
Speaker 2: a billion.
Speaker 5: This is a feel good story, I think for all
Speaker 5: of us, all of us, Yeah, who just would like
Speaker 5: to get paid more money? Elon Musk getting thirty billion
Speaker 5: dollars come on over the next two years.
Speaker 3: Having I think over the last couple of.
Speaker 5: Years, anyway, done a questionable job leading Tesla, right, Like
Speaker 5: the stock has not done super well. There's been a
Speaker 5: swirl of controversies but lawsuits, as we've discussed. But of
Speaker 5: course this award is not just about the last couple
Speaker 5: of years. It's about this other stock award. The board
Speaker 5: is attempting to sort of create a make good on
Speaker 5: their pay package from twenty eighteen that was invalidated by
Speaker 5: the Delaware court. So though although in some ways it
Speaker 5: looks like a guy.
Speaker 2: Being paid for no.
Speaker 5: Clear reason, it's actually an attempt to like recreate some
Speaker 5: part of that gigantic pay package that he has yet
Speaker 5: to receive.
Speaker 2: Yeah, so of course the ultimate valuation or value will
Speaker 2: will be determined by the performance of the stock. But
Speaker 2: give or take thirty billion dollars, so he gets this now,
Speaker 2: and what if lo and behold in that court case,
Speaker 2: they also say yeah you can in the end, all right,
Speaker 2: yeah you can have that money. Does he get both packages? No,
Speaker 2: he doesn't.
Speaker 5: The way this is written is if they somehow are
Speaker 5: able to pay the original pay package, which the valuations
Speaker 5: are all over the place because it kind of depends
Speaker 5: on the stock price. But I think when we initially
Speaker 5: talked about this it was in the fifty billion ish range.
Speaker 5: It's it's been worth I think a bit more at
Speaker 5: various times. If that package is somehow approved because of
Speaker 5: appeals or whatever, then this package would be invalidated. This
Speaker 5: is only valid if Elon Musk does not get that
Speaker 5: one and he works at Tesla for the next two years,
Speaker 5: and then the intent is to give him another giant
Speaker 5: pay package for his current work, because again this is
Speaker 5: a backwards as we're talking about work that has already
Speaker 5: been performed.
Speaker 4: Yeah, this is like an interim pay package to keep
Speaker 4: Elon focused on Tesla while the Special Committee of the
Speaker 4: board works on a new pay package to incentivize him
Speaker 4: going forward. And this is all because you know, the
Speaker 4: pay package was invalidated by the judge in Delaware, then
Speaker 4: Tesla appealed to the Delaware Supreme Court. That appeal process
Speaker 4: is taking forever.
Speaker 3: I think.
Speaker 4: Originally, you know, we all hope that maybe we would
Speaker 4: get a resolution to that sometime this year, but it's
Speaker 4: still going on. So, like they need to give him
Speaker 4: something because from the board's perspective and a lot of
Speaker 4: the retail shareholders, they're like, Elon hasn't been paid since,
Speaker 4: you know, for years. He deserves to.
Speaker 2: Get Like how is he how is he living and
Speaker 2: eating and paying rent back?
Speaker 4: The other thing you remember is that you know, on
Speaker 4: the one hand, this is about pay and like giving
Speaker 4: Elon ninety six million shares dilutes everybody else. But for Elon,
Speaker 4: it's also about control. I mean, he's been very public
Speaker 4: about the fact that he's worried about activist shareholders and
Speaker 4: he wants more control, and the more shares he gets,
Speaker 4: the more control he has.
Speaker 5: But that's kind of a hilarious concern, his concern about control,
Speaker 5: given that he effectively controls Tesla today. I mean, yeah,
Speaker 5: he only has something like twelve percent of the equity
Speaker 5: in the company, But as we've talked about a million times,
Speaker 5: he can say whatever he wants and it basically happens.
Speaker 2: Okay, Dan, we will say goodbye to you and we'll
Speaker 2: see you next week.
Speaker 3: Thank you.
Speaker 1: All.
Speaker 2: Right Now, Max and I are joined by Kyle Porter,
Speaker 2: who covers transport industrials in space for us here at Bloomberg. Kyle,
Speaker 2: Welcome to the show.
Speaker 3: Thanks for having me, guys.
Speaker 2: Now, Kyle, you had a really good piece the other
Speaker 2: day about the boring Company.
Speaker 5: Max.
Speaker 2: The boring company. You guys were just talking about all
Speaker 2: of a sudden boring everywhere, Boring everywhere.
Speaker 5: It's the forgotten Elon Musk Company to stomach scent. Although
Speaker 5: here we are talking about it. Uh, this is a
Speaker 5: second week in.
Speaker 2: A row, back to back boring. Yeah, So, Kyle, just
Speaker 2: to begin at the very beginning here for the uninitiated,
Speaker 2: remind us what the Boring Company is and does.
Speaker 3: The Boring Company is a nearly decade old effort by
Speaker 3: Musk to reinvent public transportation, in this instance by digging
Speaker 3: tunnels in which he will put his teslas underground and
Speaker 3: whisk you around without traffic.
Speaker 2: Now, Kyle, I liked your piece quite a bit. In
Speaker 2: your piece, titled Elon Musk's Boring Company is Turning into
Speaker 2: a nine hundred million dollar flop, begins with a fantastic
Speaker 2: anecdote at the beginning there that really sets the scene
Speaker 2: and tells us a lot about the state of affairs
Speaker 2: there at the company. Right now, tell us about it.
Speaker 3: Yeah, it was September thirtieth. In fact, it was completely unplanned.
Speaker 3: Everyone boring factory got told on thirty minutes notice, get
Speaker 3: out to the boudego across the road. Elon's doing an
Speaker 3: all hands. People were very excited. They hadn't really seen
Speaker 3: him on site all year. So they paraded across. Then
Speaker 3: Elon spent the next hour talking about why everyone needs
Speaker 3: to vote for Trump, how great it's going to be
Speaker 3: for SpaceX and its regulatory burden, was asking for ideas
Speaker 3: from the crowd, was asking for volunteers, for people to
Speaker 3: go to swing states, including Pennsylvania, and then he wrapped
Speaker 3: up his talk, took a few more questions, and went
Speaker 3: across the SpaceX didn't even bother visiting the factory.
Speaker 2: So how about that, Bax, You don't see the guy forever.
Speaker 2: He shows up and let's talk about everything, but what
Speaker 2: you're doing day in and day out.
Speaker 3: I mean, here's the thing.
Speaker 5: If it were a normal there would be nothing even
Speaker 5: the least bit unusual about that. I'd say. The thing
Speaker 5: that is interesting is it really cuts against the Elon
Speaker 5: Musk mythology, which is like he's in the factory, he's
Speaker 5: personally evaluating the tunnel machines or whatever. And of course
Speaker 5: it also the anecdote and the fact that he's just
Speaker 5: all he wanted to talk about was politics or whatever
Speaker 5: and space Yeah, it emphasizes this idea that like he
Speaker 5: started the Boring Company in twenty seventeen and at the
Speaker 5: time it kind of seemed like a joke and it's
Speaker 5: now Yeah, and now it feels like a joke that
Speaker 5: has sort of gotten old or something. Right. I mean,
Speaker 5: they just haven't been able to do all that much.
Speaker 5: And Kyle's story makes that point. I mean, there's really
Speaker 5: just like one actual example of a project, which is
Speaker 5: the Vegas Loop, which, for lots of reasons that we
Speaker 5: can talk about, you know, has not worked out all
Speaker 5: that well, although you know, I guess to the credit
Speaker 5: of the boring company, like it's there. You can definitely
Speaker 5: go from the Westgate Hotel to like one side of
Speaker 5: the Las Vegas Convention Center or another.
Speaker 2: Now, yeah, Kyle, there there is the Vegas thing.
Speaker 3: You said that.
Speaker 2: There's also some test tunnel they did in California. Yeah,
Speaker 2: that was the original, the original tunnel. I see. And
Speaker 2: how long or short is that one?
Speaker 3: Uh? I think they're looking less than two miles. I'd
Speaker 3: have to double tuck.
Speaker 2: Have the length, Yeah, have the length of the vaunted
Speaker 2: Vegas Tunnel. Now, in your story, you talk about how
Speaker 2: actually a lot of the work, the only work perhaps
Speaker 2: by work, I mean actual digging work they're doing, is
Speaker 2: underneath Musk's home and his businesses. In Texas. Tell us
Speaker 2: about that.
Speaker 3: Oh yeah, it's a little bit internal work. Well, there's
Speaker 3: two tunnels currently operation, one of which is the Cyber
Speaker 3: trop Tunnel, which, as it sounds, may have cyber trucks
Speaker 3: out from the Testi factory. And there's an awful lot
Speaker 3: of videos you can go and look at online at
Speaker 3: how impressive it is.
Speaker 2: Is it impressive?
Speaker 3: Well, it's impressive that you can fit a slider truck
Speaker 3: through it. I mean there is not much in terms
Speaker 3: of wiggle room when I decided that tunnel.
Speaker 2: So it's a little bit like selling one of those
Speaker 2: ships through the Panama Canal Max. You've kind of been
Speaker 2: not very very tight, all right, So you can you
Speaker 2: can roll the cyber trucks out of this tunnel. What
Speaker 2: else is there is this vaunted network of tunnels there
Speaker 2: in Texas too.
Speaker 3: You can walk underneath the road from Boring to say SpaceX,
Speaker 3: and they are currently digging a tunnel. When I was there,
Speaker 3: you could feel the ground vibrating that's going between X
Speaker 3: and SpaceX as well.
Speaker 2: So when you.
Speaker 3: Actually go to that site, there are no sidewalks, there
Speaker 3: are no stop signs, there are no pedestrianization. So rather
Speaker 3: than just adding some pain, they decided it was much
Speaker 3: cheaper and more efficient to dig under the road.
Speaker 2: Okay, now, remind us again where exactly in Texas are we.
Speaker 3: Here bass Drops. You're looking about thirty five minutes outside
Speaker 3: of Bustin.
Speaker 2: So Max said, when it was created about a decade ago,
Speaker 2: it sort of seemed like a joke, which certainly was
Speaker 2: the way I took it.
Speaker 5: I mean, so I said that, and I mean it
Speaker 5: sounds like I'm meaning glib, but it literally was a joke.
Speaker 5: I mean, Musk was like on Twitter and he was like,
Speaker 5: traffic's driving me crazy. I'm just gonna start boring tunnels,
Speaker 5: and then he made a series of boring jokes like ah,
Speaker 5: they'll be called the Boring Company, ha ha. Now and
Speaker 5: it it, it did turn into a real company that
Speaker 5: has done a bunch of sort of interesting things. I mean,
Speaker 5: the challenge has been that the same essentially, the same
Speaker 5: challenge that Musk was trying to address in the first place,
Speaker 5: which is like, it's really hard to dig tunnels. You're underground,
Speaker 5: you got to move earth, you know. And it turns
Speaker 5: out that the industry, I mean, he spent a lot
Speaker 5: of time, especially early on sort of criticizing you know,
Speaker 5: how slowly tunnel machines work, how slow tunneling is. You
Speaker 5: got all these permits and so on, and I don't know.
Speaker 5: I mean, you look at the pace, you look at
Speaker 5: the number of miles they've gone. It doesn't seem like
Speaker 5: they've really improved it.
Speaker 2: They've made it slower.
Speaker 5: Actually I don't know that that's true, but it doesn't
Speaker 5: seem like there have been huge improvements. And the other
Speaker 5: thing that's sort of interesting Kyle's story points this out
Speaker 5: as the thing that I heard as well as like
Speaker 5: this machine that they built. Essentially, and Kyle correct me
Speaker 5: if I'm getting this wrong, it's just like essentially like
Speaker 5: a knockoff of an existing tunnel boring machine, or like
Speaker 5: an improvement of an existing tunnel boring machine, which on
Speaker 5: one hand, seems like a kind of a far cry
Speaker 5: from the kind of you know, usual Musk playbook of
Speaker 5: like where you know, inventing things from first principles. The
Speaker 5: other thing is it's not very big.
Speaker 3: I mean, like to make these.
Speaker 5: Kind of like world changing tunnels that that Elon Musk
Speaker 5: has talked about, you'd want to have like big tunnels
Speaker 5: so you could have multiple cars going through and as
Speaker 5: Kyle saying, like the tunnels that they've dug so far
Speaker 5: are really narrow.
Speaker 2: A cyber truck through. I would mean Kyle was impressed,
Speaker 2: shocked to hear a cyber.
Speaker 5: Truck could go through, because I've been in those tunnels
Speaker 5: in the Vegas Loop and you could bare it feels
Speaker 5: like you can barely fit, you know, a test the
Speaker 5: model why through, Like there just isn't that much.
Speaker 2: I mean Texas is you know, everything's Texas size. In Texas,
Speaker 2: there are.
Speaker 5: Especially strain tunnels that they've put you know, a road
Speaker 5: in the middle of So.
Speaker 2: Kyle tell us about the digging machine, the boring machine, the.
Speaker 3: How do the proof Rock the prof Rock machine, Yes,
Speaker 3: that is what it's. The subsecom models have been called
Speaker 3: and they have numbers attached to them, and.
Speaker 2: We're up to number five.
Speaker 3: Now, correct five isn't testing six is in the build stage.
Speaker 3: Is the latest information that I got. But when you're
Speaker 3: looking through this, for example, proof Rock one was just
Speaker 3: a test machine. Proof Rock two is in Vegas, although
Speaker 3: there's question marks over whether it's still being used. Proof
Speaker 3: Rock three is doing tunneling in Vegas. That's the principal machine.
Speaker 3: Proof Rock four is drilling underneath in bass Drop between
Speaker 3: SpaceX and X, and then five's in testing. So when
Speaker 3: they announced that they could start right away in Nashville,
Speaker 3: I literally counted up the machines. I'm like, wow, you
Speaker 3: don't have any more proof rocks, you know, to pass around.
Speaker 2: You're out of proof rocks, Maxim So, so Nashville is why,
Speaker 2: of course Boring came up last week. They apparently have
Speaker 2: we can say, have they outright wanted concession to start
Speaker 2: digging tunnels.
Speaker 5: I think it's more like there's a plan. It's a
Speaker 5: plan than rather Okay, I think I think there's still
Speaker 5: some approvals.
Speaker 2: But Kyle, your peace sights that just like we just
Speaker 2: saw in Nashville, they've gotten green lights from other places
Speaker 2: as well in recent years, or some iteration of a
Speaker 2: green light from authorities, but it hasn't actually resulted in digging.
Speaker 3: Yeah, green light's not the best them. I'd say there's
Speaker 3: been some flashy announcements of places across the country that
Speaker 3: have somehow come to not Chicago was definitely a good
Speaker 3: case in point for that. It feels as if Boring
Speaker 3: come in and say we can build something quick, we
Speaker 3: can build it without you spending a penny and it's
Speaker 3: going to make your life so much better now, which
Speaker 3: public authority anywhere in the world is not going to
Speaker 3: say yes to that. The problem is when you start
Speaker 3: digging in, excuse the pun, to a lot of what
Speaker 3: Boring is proposing. They're terrible at paperwork, they can't meet
Speaker 3: basic bidding criteria. They don't seem in a lot of
Speaker 3: cases to have an understanding of international property law.
Speaker 2: Yeah, yeah, Kyle tinterrupt for a second. You have a
Speaker 2: great anecdote in the story about a disastrous meeting or
Speaker 2: series of meetings they held with officials to Port Authority
Speaker 2: of New York. Tell us a little bit about that.
Speaker 3: Well, they still talk about it, people who weren't there
Speaker 3: when Boring were doing this, but like, oh yeah, New
Speaker 3: York already hurts, you know. Apparently Cuomo set it up,
Speaker 3: was friendly with Musk at the time. Officials went into
Speaker 3: the room. They wanted to do this incredibly ambitious project
Speaker 3: between the city and you know, eventually connecting both the airports,
Speaker 3: and within fifteen minutes, the guys of the Porthorio We're
Speaker 3: looking at you like these guys don't have a clue,
Speaker 3: you know, couldn't tell you the basics of, you know,
Speaker 3: how we were going to make this safe from a
Speaker 3: fire perspective, how we were going to make it ADA compliance,
Speaker 3: you know, for those with disabilities, what the actual process
Speaker 3: of buying land in the city looks like. You know,
Speaker 3: So everyone just sort of nodded and smiled. I'm sure
Speaker 3: if there is no tunnel in New York.
Speaker 5: There's an interesting contrast here with SpaceX because, like Elon Musk,
Speaker 5: as he described it actually to me back in twenty seventeen,
Speaker 5: why he was thinking this made sense. He saw this
Speaker 5: as not that different from SpaceX, right. SpaceX took, you know,
Speaker 5: sort of basically existing technology, bunch of rockets that had
Speaker 5: been developed largely by the US government, and improving on them,
Speaker 5: making them more efficient, more reliable, and then in doing so,
Speaker 5: revolutionizing the practice of contracting for rocket launching. He's largely
Speaker 5: done that, and he's done that, And so the idea
Speaker 5: was why, like it would sort of make sense with boring,
Speaker 5: because you have big, heavy machinery, you have made unarguably
Speaker 5: like broken contracting process. Now, I think you could argue
Speaker 5: it was that the contracting process of something else, But
Speaker 5: in any case, you have these famous examples of cities
Speaker 5: and governments spending huge sums of money to not dig
Speaker 5: very far, and so you could kind of see where
Speaker 5: he was thinking. And I think the difference is and
Speaker 5: you see it in that Port Authority example, there was
Speaker 5: a partner, a government partner for SpaceX who was like
Speaker 5: a willing participant who was saying, yes, we want this,
Speaker 5: we want you Elon Musk, to try to figure this out,
Speaker 5: and that was NASA. NASA was paying him in the
Speaker 5: early days of the company hundreds of millions and eventually
Speaker 5: billions of dollars to develop this, and there is no
Speaker 5: equivalent partner for the boring company, right. They just sort
Speaker 5: of bounced between cities and governments and these kind of
Speaker 5: interstate authorities like the Port Authority, and no one is saying, hey,
Speaker 5: let's invest hundreds of millions of dollars to help you
Speaker 5: figure this out. And what's instead happening is Elon Musk
Speaker 5: is competing as a normal construction contractor, and it looks
Speaker 5: like competing kind of poorly, not necessarily doing a good job,
Speaker 5: and it seems to be only able to sort of
Speaker 5: get projects where he's dealing with these kind of very
Speaker 5: small projects unusual sort of private public partnerships. The Vegas
Speaker 5: one is paid for by the Las Vegas Convention Center Authority,
Speaker 5: which is a private end So anyway, so I just
Speaker 5: think there isn't this like big government partner for the
Speaker 5: Boring company. That's the thing they've lacked all along. And
Speaker 5: I think obviously Elon Musk doesn't and we've seen it
Speaker 5: from his statements over the past few years.
Speaker 3: He's not going out and looking for one of those.
Speaker 3: He doesn't seem to value that.
Speaker 5: Even though it made a huge difference in the beginning
Speaker 5: of SpaceX.
Speaker 2: Yeah, I just don't know that digging tunnels interest him,
Speaker 2: you know, captures his attention quite the way that sending
Speaker 2: big efing rockets up into space does. Kyle, I sort
Speaker 2: of buried the lead on us here. We are going
Speaker 2: to wrap up with the valuation drop, the decline, and
Speaker 2: the valuation of Boring as you have it. From one estimate,
Speaker 2: it looks like it went from somewhere over eight billion dollars, which,
Speaker 2: by the way, max for a joke, eight billion dollar
Speaker 2: jokes pretty good to now somewhere in the mid sixes
Speaker 2: at a time when most of the other you know,
Speaker 2: things at orbit around Tesla I have been soaring. Boring
Speaker 2: is sinking, I guess just a sign that this thing
Speaker 2: is just kind of sort of going nowhere.
Speaker 3: Yeah, there's no buzz around it, there's no projects around it.
Speaker 3: And you were getting on for a decade. Now when
Speaker 3: you know, they were supposed to have sixty eight miles
Speaker 3: duck in Vegas. It was supposed to be this huge,
Speaker 3: interconnected lattice and instead you've got less than four operational miles.
Speaker 3: It doesn't take a genius to look at that and go,
Speaker 3: why am I investing in this?
Speaker 2: Right? And I suppose if the man Atoptic Company weren't
Speaker 2: named Elon Musk, that six billion dollar valuation would even
Speaker 2: be a lot less.
Speaker 3: I think that's very safe to say. There's a lot
Speaker 3: of companies that tried to reinvent tunneling over the years,
Speaker 3: and none of them lasted.
Speaker 2: Okay, Kyle, well we appreciate it. Great story. By the way, everyone,
Speaker 2: you go out and read it. It's called Elon Musk's
Speaker 2: boring company is turning into a nine high and drew
Speaker 2: million dollar flop, which, by the way, gives us yet
Speaker 2: another figure to highlight on this week's pod. Thanks again, Kyle,
Speaker 2: Thank you guys. This episode was produced by Stacy Wong
Speaker 2: and edited by Anamasirakus. Blake Maples handles engineering, and Dave
Speaker 2: Purcell fact checks. Our supervising producer is Magnus Henrikson. The
Speaker 2: elon Ing theme is written and performed by take Yasuzawa
Speaker 2: and Alex Sugiira. Sage Bauman is the head of Bloomberg Podcasts.
Speaker 2: A big thanks as always to our supporters Joe Weber
Speaker 2: and Brad Stone. I'm David Papadoppolis. If you have a minute,
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Speaker 2: See you next week.