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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple card playing Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Along the watch for some Supreme Court rulings here today

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Speaker 2: we did get one. The US Supreme Court up held

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Speaker 2: a twenty seventeen tax on American owned business foreign profits.

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Speaker 2: June Grosso, Bloomberg Legal analyst that joins us here in

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Speaker 2: our studio.

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Speaker 3: Not one of the world.

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Speaker 4: Sexy ones, but not even on the most watch lists,

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Speaker 4: maybe on Bloomberg's most watch These are taxes right. Berties care,

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Speaker 4: but the average American citizen who's looking for the hot

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Speaker 4: button issues doesn't care about this. I mean, if they

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Speaker 4: had not ruled this way, it would have sent the

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Speaker 4: Internal Revenue Service into a frenzy trying to, you know,

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Speaker 4: restore taxes that were paid and also some of the

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Speaker 4: you know, the rules that they have. So this basically

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Speaker 4: was a two people who owned a minority stake in

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Speaker 4: an Indian company in India, and they said that they

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Speaker 4: shouldn't have to pay the taxes that were allocated to

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Speaker 4: them because they hadn't gotten any profits from the company.

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Speaker 4: And you know, this is the sixteenth Amendment, which I

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Speaker 4: can't read. I think law school was the last time

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Speaker 4: I ever heard about the sixteenth Amendment. And so you know,

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Speaker 4: the justice it says, this is no different than any

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Speaker 4: other tax. And the fear was that this would enable

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Speaker 4: a wealth tax, if a wealth tax ever comes. And

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Speaker 4: that was the only fear really from this case. So

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Speaker 4: it's seven to two. That tells you that there wasn't

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Speaker 4: much problem.

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Speaker 5: And what else are we waiting for?

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Speaker 4: What are those hot wepon issues over my gosh, we're

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Speaker 4: waiting Well, first of all, we're waiting for the abortion

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Speaker 4: case from Idaho about state law that basically, you know,

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Speaker 4: makes it only possible to have an abortion if the

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Speaker 4: life of the mother there's in jeopardy. We're waiting for

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Speaker 4: a gun rights case, which is based on the Second Amendment,

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Speaker 4: which is whether there's a there's a law, a federal

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Speaker 4: law that people who have domestic violence abuse charges against

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Speaker 4: them or who have this the man in this case

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Speaker 4: had a domestic violence temporary restraining order can't have a gun.

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Speaker 4: That's another one. There's there the Texas and Florida social

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Speaker 4: media cases. You know, whether or not social media companies

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Speaker 4: are allowed to look at what they have and pick

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Speaker 4: from what they have and knock things off their platform.

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Speaker 4: There's also there's a case that will make people's eyes

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Speaker 4: sort of glaze over, but it's really really important. It

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Speaker 4: involves something called Chevron defference. And this involves every agency agencies,

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Speaker 4: whether or not you're going to give deference to an

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Speaker 4: agency's interpretation of a law that's ambiguous, or whether the

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Speaker 4: court should be the one to interpret it. And so

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Speaker 4: if and the several of the Conservative justice have been

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Speaker 4: trying to get rid of Chevron deference for years and

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Speaker 4: the question is whether or not. And it's something that

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Speaker 4: conservatives have been trying to do because they don't like

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Speaker 4: agency authority isn't a.

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Speaker 5: Part because of the EPA, right, because the PLA has

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Speaker 5: like large light. I know, it goes all across it's.

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Speaker 4: The EPA, it's banking, social security, you name it. Would

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Speaker 4: anything involving an agency this would affect. And I think

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Speaker 4: the Labor Department is the department that has already started

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Speaker 4: not relying on Chevron deference in proposing rules because they're

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Speaker 4: afraid of what the Supreme Court may do here. I

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Speaker 4: have to look up, but I think it is a

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Speaker 4: labor department.

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Speaker 3: June Grosso, Bloomberg Legal Analyst.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple car Play and

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Speaker 1: Android Auto with the Bloomberg Business App. You can also

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Speaker 1: listen live on Amazon Alexa from our flagship New York station.

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: You also want to get to some of that economic

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Speaker 2: data that broke earlier Today, new home construction in the

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Speaker 2: US slumped and made to the slowest pace in four years,

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Speaker 2: as higher for longer interest rates sapped the housing industry's momentum.

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Speaker 3: From earlier this year. Drew reading, we pay.

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Speaker 2: Him to do this stuff. He's a home builder analyst

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Speaker 2: at Bloomberg Intelligence. Drew what's happening in the home building business?

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Speaker 3: Construction?

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Speaker 6: Yeah, so a pretty big myths on the headline today

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Speaker 6: on the housing starts number, not all that surprising. You

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Speaker 6: have to remember rates went up to seven and a

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Speaker 6: half percent last month and they're still hovering at around

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Speaker 6: seven percent. We also had some week data on the

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Speaker 6: home builder confidence side, you know, but these numbers are

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Speaker 6: also being impacted by you want to parse out what's

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Speaker 6: happening in this single family side versus the multifamily side,

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Speaker 6: and the way we tend to look at it is

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Speaker 6: non seasonally ad just on a year of a year basis.

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Speaker 6: So we had total starts down twenty percent, which is

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Speaker 6: a pretty big number, but single family starts were actually

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Speaker 6: up three percent and multi family is down fifty seven percent.

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Speaker 7: So that's a lot of.

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Speaker 6: The story right there. And if you look here to date,

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Speaker 6: starts are down about four percent, single families up nineteen,

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Speaker 6: multi families down forty. So that dynamic is one thing

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Speaker 6: at play. The other thing that we've talked about in

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Speaker 6: the past is the relative advantage of the big, well capitalized,

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Speaker 6: publicly traded home builders. And we just had some data

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Speaker 6: from Lenar who just reported results which lines up nicely

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Speaker 6: with what we got just got on housing starts, and

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Speaker 6: if you look at over the last six months, their

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Speaker 6: starts are up about twenty percent year every year. So

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Speaker 6: you know a couple of stories. It's the single family

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Speaker 6: side and then it's the big public builders.

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Speaker 5: Well, what do we learned from KB home on that front,

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Speaker 5: because that usually caters to sort of the entry level buyer.

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Speaker 5: Lenar are more high end.

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Speaker 6: Yeah, KB had great results pretty much across the board.

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Speaker 6: You know, their results told us that demands remained strong,

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Speaker 6: that buyers are still responding to the use of incentives.

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Speaker 6: It also tells us that incentives probably aren't going away

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Speaker 6: in the near term. You know, when we came into

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Speaker 6: the first quarter, there was an expectation that, hey, look,

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Speaker 6: rates came down to you know, six and three quarters,

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Speaker 6: maybe builders are going to be able to pull back

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Speaker 6: on their use of incentives a little bit and that

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Speaker 6: would help margins in the back half of the year.

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Speaker 6: But it looks like with rates back at seven they're

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Speaker 6: going to remain elevated, which will put a little bit

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Speaker 6: of pressure on margin. So it's it's a demand versus

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Speaker 6: margin story, and buyers are still responding to incentives.

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Speaker 2: True kind of where are we in this country in

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Speaker 2: terms of supply of housing? I know for a while

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Speaker 2: the story had been we're at a deficit, there's not

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Speaker 2: enough housing.

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Speaker 3: Is that still the case?

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Speaker 6: Yeah, that's a great question. And you know, one of

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Speaker 6: the main speaking points for the builders was there's nothing

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Speaker 6: for sale on the existing home side. People don't want

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Speaker 6: to list their homes because they don't want to trade

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Speaker 6: in their rate. We're starting to see a little bit

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Speaker 6: of a shift there. If you look across the country,

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Speaker 6: inventories are up about thirteen percent in the last month.

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Speaker 6: That being said, if you take a step back, they're

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Speaker 6: still down about thirty percent from pre pandemic levels. But

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Speaker 6: what's interesting is kind of what's happening across the US

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Speaker 6: and if you look at certain markets, you're starting to see,

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Speaker 6: you know, some warning signs and you know, some of

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Speaker 6: the ones that come to mind our Texas and Florida.

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Speaker 6: You know, in Florida you've got inventories in some cases

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Speaker 6: rising over fifty percent wow, and are actually above twenty

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Speaker 6: nineteen levels by you know, fifty to seventy five percent.

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Speaker 6: A lot of that's concentrated in some of the West

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Speaker 6: and Southwest markets. But it's something certainly to keep an

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Speaker 6: eye on because you know, as that inventory increases, the

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Speaker 6: advantage builders have had diminishes.

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Speaker 5: Huh, that's interesting. What are some of the other sort

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Speaker 5: of hot spot areas. We had a great piece out

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Speaker 5: talking about was it Tennessee? Was a Tennessee that is

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Speaker 5: attracting all the people from the west and east coast

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Speaker 5: and it's sort of pricing out all the people that

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Speaker 5: actually live there. Like, how do big waves like this

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Speaker 5: like we saw in Texas, like we did see in Florida,

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Speaker 5: how does that wind up affecting the housing market.

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Speaker 6: Yeah, there has been a lot of movement out of

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Speaker 6: some of those high cost markets, you know, from coastal

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Speaker 6: California and maybe Inland and then it's like Las Vegas

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Speaker 6: and Phoenix. But we're seeing from a demand perspective is

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Speaker 6: kind of interesting. At the national level, demand in the

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Speaker 6: new home market has been relatively strong across the board,

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Speaker 6: but we have seen markets kind of move in cycles.

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Speaker 6: So if you look at the hardest hit markets back

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Speaker 6: in you know, the second half of twenty twenty two

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Speaker 6: when rates really shot up, you had you know, California, Washington,

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Speaker 6: all the markets across the southwest. Those have actually come

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Speaker 6: back pretty strong. And it's now some of the markets

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Speaker 6: that were leading. You think about the Texas is and

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Speaker 6: the Florida's, which are the two largest markets, are now

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Speaker 6: starting to soften a little bit from both a pricing

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Speaker 6: and a sales perspective as inventories start to rise. So

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Speaker 6: you know, those markets big picture are still benefiting from

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Speaker 6: out migration into some of the lower cost markets. That's

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Speaker 6: why you've seen the Southeast and Florida do so well.

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Speaker 6: But at the same time we are starting to see

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Speaker 6: a little bit of slow down there.

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Speaker 2: You know, a friend of mine just put her house

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Speaker 2: on the market yesterday and I told her, I don't

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Speaker 2: eve think you can get to your open house on Saturday.

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Speaker 2: I think you can have like a Jillian Offers come

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Speaker 2: in and you're gonna get So we'll see.

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Speaker 3: I'll check in.

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Speaker 2: But just one of the things, you just don't see

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Speaker 2: existing inventory coming off to the market that much. When

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Speaker 2: it does, particularly in a you know, a pretty middle

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Speaker 2: of the road price range.

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Speaker 3: I got to think it's just going to be snapped.

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Speaker 5: Up, like versus six percent. Interest rate doesn't matter as

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Speaker 5: much anymore as what you're.

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Speaker 3: Saying, Yeah, yeah, yeah, I don't know. We'll have to see.

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Speaker 2: So, Drew, is there a sense that rates have to

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Speaker 2: come down for existing homes to really move well?

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Speaker 6: I think you want to see rates get into that

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Speaker 6: six and a half percent at least to see things

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Speaker 6: start to loosen up a little bit. But what's just

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Speaker 6: what's interesting, and Alex you mentioned it six verse seven.

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Speaker 6: There's not a whole heck of a lot of difference there.

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Speaker 6: And you have to remember the people coming too the

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Speaker 6: market now are coming with that higher rate mindset versus

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Speaker 6: you know what they were a couple of years ago.

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Speaker 6: So people have certainly started to adjust. And at the

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Speaker 6: same time, you know, we're still transacting at these higher

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Speaker 6: interest rate levels, So that mortgage rate lock and effect

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Speaker 6: that we've talked about previously, you know, it starts to

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Speaker 6: gradually loose in a little bit because you've had more

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Speaker 6: buyers purchasing at higher rates.

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Speaker 5: All right, really great stuff drew you the best. We

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Speaker 5: appreciate you, Adurenni. He covers home building for a Bloomberg Intelligence.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple card Playing and

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Speaker 1: Broud Auto with the Bloomberg Business App. Listen on demand

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Speaker 2: Alex Delpaul swinging' live here on our Bloomberg Interactor Brokers Studio.

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Speaker 3: I'm gonna story here. Denlt Technology shares rose Thursday.

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Speaker 2: After chiefing the second officer, Michael Dell said the company

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Speaker 2: is building a Dell AI factory for Elon Mus's startup

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Speaker 2: XAI alongside Nvidio Corp. A lot of big names. In

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Speaker 2: the first opening sentence there stick in with Woojin Hoo.

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Speaker 2: He covers all the tech stuff for Bloomberg Intelligence, Which

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Speaker 2: what's going on here with Michael Dell.

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Speaker 7: Yeah, so Michael actually posted a Twitter post on some

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Speaker 7: of his AI server racks that's going to go over

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Speaker 7: to XA, which is Elon musk AI startup. Uh. Elon

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Speaker 7: Mus actually followed up is saying, hey, yeah, this is happening,

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Speaker 7: but we're only gonna split. We're gonna split the deal

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Speaker 7: with both Dell and super Micro, and you're seeing super

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Speaker 7: Micro rise as well.

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Speaker 5: Can you just walk me through like what this all

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Speaker 5: looks like? Like when I hear that headline and they're

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Speaker 5: gonna plot provide servers for AI x tech whatever Twitter

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Speaker 5: Musk thing?

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Speaker 3: What is that?

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Speaker 6: Yeah?

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Speaker 7: So, so essentially you need specialized servers to help build

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Speaker 7: or help support large language models. If you think about

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Speaker 7: the AI build out over at Meta or at Google, uh,

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Speaker 7: you need you know, hundreds, well thousands of GPUs to

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Speaker 7: help support it. And each of these server racks are

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Speaker 7: going from roughly one hundred thousand per rack for a

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Speaker 7: traditional server rack, and what I calculate it is gonna

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Speaker 7: go to about a million dollars per rack all closer together.

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Speaker 7: So you know, you know, we've published that this one

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Speaker 7: deal could be upwards of billion dollars split two ways

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Speaker 7: between Dell and super Micro.

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Speaker 3: All right, I'm going to ask the out steal question.

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Speaker 2: As I'm looking at this photograph that was part of

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Speaker 2: the Twitter spot for mister Dell. I see a big factory, lights,

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Speaker 2: air conditioning, all that kind of stuff. I mean, how

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Speaker 2: are they going to power all this stuff? Did they

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Speaker 2: ever have to talk about that?

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Speaker 5: I love you asked this question.

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Speaker 7: Yeah, well, look, Elon Musk, I've actually seen some of

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Speaker 7: the layouts or where this AI factory may be going to,

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Speaker 7: and they've actually allocated the power for that. Now. Near term,

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Speaker 7: I think the power needs should be fulfilled. You don't

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Speaker 7: do the planning without the power. But longer term, I

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Speaker 7: do think there might be some issues in terms of

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Speaker 7: getting the land necessary, the data center land necessary to

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Speaker 7: build out these AI data centers because of the amount

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Speaker 7: of power that they're going to suck up. Some solutions

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Speaker 7: may be nuclear, small nuclear power plants or set aside

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Speaker 7: to these data centers. But there's some regulatory issues along

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Speaker 7: with that.

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Speaker 5: I thought I was reading that potentially something might be

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Speaker 5: sent to President Biden today that would make it easier

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Speaker 5: for nuclear and I wonder if that's all sort of

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Speaker 5: playing into the energy transition, but also the big data centers.

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Speaker 5: So you said it could be worth as a three billion,

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Speaker 5: So they enter into this agreement, when does like Adell

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Speaker 5: and super Micro book that revenue, Like, does that show

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Speaker 5: up on its order book?

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Speaker 7: Well, I wouldn't be surprised. That's already in the backlog numbers. Okay,

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Speaker 7: in their backlog numbers today. One of the things, the

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Speaker 7: metric that I'll share with you is that they did

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Speaker 7: one point Dell did one point five billion dollars in

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Speaker 7: AI server sales in calendar twenty twenty three. I have

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Speaker 7: them going in around seven point six billion dollars in

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Speaker 7: calendar twenty twenty four. Super Micro they're probably on pace too,

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Speaker 7: about eighteen billion dollars in calendar twenty twenty four. What

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Speaker 7: this is telling me is that not only are you

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Speaker 7: getting more AI or larger AI server deals, but you're

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Speaker 7: getting more AI server deals going forward.

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Speaker 2: So Dell, super Micro those are two ways to play.

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Speaker 2: What else in your space kind of fits into that

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Speaker 2: AI theme here?

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Speaker 7: Well, I mean, you know, my colleague Countries Obiani, he

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Speaker 7: covers the chip space Nvidia. Everyone knows Broadcom, which has

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Speaker 7: rallied over the last few days. They are a leading

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Speaker 7: AI chip player on the networking space of riskent Networks

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Speaker 7: is one of the vendors. To know that. There are

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Speaker 7: some other guys such as Cisco and Hpe, but there'll

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Speaker 7: be more enterprise focused at least for the time being,

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Speaker 7: and won't have as a sizeable impact from AI on

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Speaker 7: their numbers, at least in the near term.

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Speaker 5: So when I'm talking in panels and stuff and I

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Speaker 5: hear people like, Okay, this is definitely a bubble. It

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Speaker 5: will definitely burst. We don't know when and how and why.

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Speaker 5: We definitely want to buy puts, Like, we're definitely in

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Speaker 5: a bubble. We just don't know what that looks like.

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Speaker 5: What do you who are coming through the numbers think?

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Speaker 7: Yeah, So we publish our valuation though for super Micro today,

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Speaker 7: and I'll tell you that, you know, much of the

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Speaker 7: stock rise of the last couple of days or the

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Speaker 7: last year or so has been more earning, straighter than

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Speaker 7: anything else. And it goes back to the fact that

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Speaker 7: a lot of these AI systems have this humongous aspos boost.

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Speaker 7: I mentioned one hundred thousand dollars a rack. The latest

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Speaker 7: generation of Nvidia's servers, they're going to be about three

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Speaker 7: million dollars per rack, and that's going to support their

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Speaker 7: twenty five billion dollars in fiscal twenty twenty five expectations.

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Speaker 7: And I think that if you think about a housing boom,

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Speaker 7: we are going through an AI housing boom right now.

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Speaker 7: And this is going to last for the next couple

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Speaker 7: of years. Now, when does this housing boom bust? Still

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Speaker 7: too early to tell, because first it's going to be

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Speaker 7: the cloud. The enterprise is going to start following. I

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Speaker 7: don't know how big that enterprise opportunity is just yet.

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Speaker 2: Sense there would how much are this incremental AI spending

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Speaker 2: is in fact incremental to overall tech spending or is

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Speaker 2: it just taking it from other buckets?

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Speaker 7: Yeah, you know, you know, that's a good question. And

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Speaker 7: if we look at the companies or the sectors from

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Speaker 7: a sector basis, within hardware, we've seen some of the

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Speaker 7: traditional hardware lag in terms of spending. I do blame

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Speaker 7: some of the declines in hard traditional hardware spending to

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Speaker 7: a mix shift to AI. But the other thesis that's

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Speaker 7: going around right now in the investment circles is that, well,

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Speaker 7: it could also mean that they're going to spend less

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Speaker 7: on software as well. Right, So from from a larger

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Speaker 7: from a from from a larger perspective, there might be

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Speaker 7: spending that's being pulled away from software to build out

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Speaker 7: the infrastructure. Over time, as more software becomes AI enabled,

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Speaker 7: the investments are going to fall back to software.

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Speaker 5: So the whole I think with Nvidia like trying to

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Speaker 5: talk about software and not hardware as much.

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Speaker 3: What is that?

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Speaker 6: Oh?

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Speaker 7: Yeah, so there actually is a more. Nvidia is also

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Speaker 7: a software name, right, you actually need to build a

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Speaker 7: code to drive the GPU chips very efficiently.

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Speaker 2: Right.

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Speaker 7: And the bigger the developer user base. Right. Think about

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Speaker 7: it as a programmer for Microsoft or programmer for Oracle. Right,

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Speaker 7: You're trying to build this big developer user base so

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Speaker 7: you can have your your AI programmers to write to

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Speaker 7: the Nvidia chipset. Right. There's two benefits to this one.

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Speaker 7: The AI chip sets try to leverage the software to

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Speaker 7: optimize the energy consumption, So there is an energy benefit

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Speaker 7: to this and also two, you're trying to lock up

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Speaker 7: more developers to write to the g Nvidia GPU so

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Speaker 7: you can gain or grow your market share in the

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Speaker 7: GPU space.

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Speaker 3: All Right, we're seeing more and more ways to play AI.

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Speaker 3: I mean, there's the chips, there's the hardware of the software.

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Speaker 5: Don't know how he keeps it. I don't know how

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Speaker 5: would you keep it all straight?

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Speaker 3: I gotta be honest. Helps, thanks so much for joining us.

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Speaker 3: Wi Jinho.

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Speaker 2: He's a senior technology analyst the Bloomberg Intelligency's down in

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Speaker 2: our Princeton, New Jersey office here giving us some more

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Speaker 2: views on how various companies within the tech stack is

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Speaker 2: the tech geeks say this case Dell Computer, super micro

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Speaker 2: stocks moving today on more servers being installed for the

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Speaker 2: folks that can be running these big models.

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Speaker 5: I guess and just go and it just goes again.

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Speaker 5: And then you pair that with those that just watch

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Speaker 5: momentum bubbles and they get increasingly worried. So it's it's

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Speaker 5: really hard to square those two. At the end of

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Speaker 5: the day.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays ten am Eastern on applecar Play and Android Auto

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Speaker 2: Alex Deel, Paul Swing you live here in our Bloomberg

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Speaker 2: Interactive Broker studio or streaming live on YouTube.

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Speaker 3: So you can head over YouTube.

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Speaker 2: Dot com and search Bloomber podcast and that's what you'll find.

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Speaker 2: This all right, here's story getting a lot of readership

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Speaker 2: today by McDonald's. McDonald's US chief says the company is

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Speaker 2: ready for a fight, and in order to win, the

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Speaker 2: burger chain is pulling out one of the most potent

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Speaker 2: weapons in its arsenal, the value meal. So they're gonna

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Speaker 2: be putting some chicken and you get fries, you get

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Speaker 2: a coke, all for five bucks.

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Speaker 3: That's pretty darn solid. What does it mean for the

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Speaker 3: restaurant company? So let's chick in with Mike Halen.

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Speaker 2: Michael Halen, he covers the restaurant industry for Bloomberg Intelligence. Mike,

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Speaker 2: I guess you know the big guns here for McDonald's.

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Speaker 3: Here the value meal.

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Speaker 2: What's going on in the fast food business these days?

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Speaker 8: Yeah, listen, they have scale.

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Speaker 9: They have scale that allows them to offer prices that

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Speaker 9: some of their competitors can't match, right, And so you

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Speaker 9: know what we're seeing now is, you know, consistent traffic declines.

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Speaker 9: Same store sales have been pretty weak now for about

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Speaker 9: a year in the restaurant industry.

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Speaker 8: A lot of that is due to low income consumers.

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Speaker 8: Darden on their earnings call.

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Speaker 9: Today said, it's you know, seventy five households with seventy

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Speaker 9: five thousand or less in income, and the customers that

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Speaker 9: are really struggling our fifty thousand dollars make fifty thousand

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Speaker 9: dollars a year or less. So you know, we're still

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Speaker 9: seeing this case shaped recovery. And so you know, about

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Speaker 9: a third of McDonald's business is that low income consumer.

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Speaker 9: You know, the traffic declines can be mostly attributable to

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Speaker 9: those customers visiting less frequently. There's been a lot of

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Speaker 9: bad press about McDonald's and some of these other fast

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Speaker 9: food trains and how much they charge. You know, they

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Speaker 9: went they went viral because one of their stores, we're

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Speaker 9: charging eight teen dollars for a big back meal, right,

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Speaker 9: and they want to kind of level set people's expectations

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Speaker 9: about what they're going to pay inside the McDonald's and

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Speaker 9: kind of get people focused back on the fact that,

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Speaker 9: you know, you can still get a lot of value

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Speaker 9: on that McDonald's menu.

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Speaker 5: Do they still have a dollar man, Yeah, it's.

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Speaker 8: The one two three dollar menu.

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Speaker 9: There's not many items for a dollar, if any. I

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Speaker 9: think everything's at least a dollar in change right now.

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Speaker 8: But you know, the timing, you know, the timing makes sense.

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Speaker 9: You know, last month, casual dining chains actually outperformed quick

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Speaker 9: service team star sales for the first time since last January.

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Speaker 9: And I think a lot of that has been this

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Speaker 9: bad press about how much quick service chains are charging,

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Speaker 9: and chains like you know, Chili's have been kind of

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Speaker 9: playing into this. You know, they're saying, you know, look,

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Speaker 9: we have a ten ninety nine three for medial. You

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Speaker 9: get a lot more food, you get a better burger,

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Speaker 9: and it's cheaper than a big mac meal. So McDonald's

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Speaker 9: is trying to turn the tide again here.

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Speaker 2: You know, I'm looking at the the FA function for McDonald's.

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Speaker 2: I mean, they got gross profit margins, you know, the

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Speaker 2: kind of mid to high fifties.

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Speaker 3: That seems pretty darn good.

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Speaker 2: That seems like, if they wanted to, they really could

439
00:22:21,680 --> 00:22:25,919
Speaker 2: go into a significant kind of pricing war here. Is

440
00:22:25,960 --> 00:22:27,840
Speaker 2: that something that McDonald's thinks about or they just don't

441
00:22:27,880 --> 00:22:28,840
Speaker 2: even want to get into that game.

442
00:22:30,200 --> 00:22:35,040
Speaker 9: Well, listen, I mean, you know, McDonald's is heavily franchised,

443
00:22:35,080 --> 00:22:38,480
Speaker 9: and so they're going to have stronger gross and operating

444
00:22:38,520 --> 00:22:42,080
Speaker 9: margins than some of their competitors. You know, So what

445
00:22:42,160 --> 00:22:44,600
Speaker 9: we'll look at more as is the restaurant level margin.

446
00:22:44,680 --> 00:22:46,960
Speaker 9: And their's is good.

447
00:22:47,080 --> 00:22:47,520
Speaker 8: It's not.

448
00:22:49,119 --> 00:22:51,760
Speaker 9: Like leaps and bounds better than the competition. You know,

449
00:22:51,800 --> 00:22:55,320
Speaker 9: that's more like a shake Shack or a Chipotle. You know,

450
00:22:55,359 --> 00:22:58,600
Speaker 9: the fast casual chains tend to have that have stronger

451
00:22:58,640 --> 00:23:04,120
Speaker 9: margins and on that end, But you know McDonald's they

452
00:23:04,160 --> 00:23:07,000
Speaker 9: do do almost three million store and so they have

453
00:23:07,560 --> 00:23:12,440
Speaker 9: wider restaurant margins, wider margins for their franchisees than a Wendy's,

454
00:23:12,480 --> 00:23:14,879
Speaker 9: a Jack in the Box and Sonic and you know,

455
00:23:15,640 --> 00:23:18,359
Speaker 9: they they leaned heavily into discounting and during the Great

456
00:23:18,400 --> 00:23:22,280
Speaker 9: Recession and it enabled them to take share. They massively

457
00:23:22,359 --> 00:23:28,199
Speaker 9: out performed their smaller competitors. So yeah, they're they're they're

458
00:23:28,240 --> 00:23:30,720
Speaker 9: this is they're they're moving towards this, right, they want

459
00:23:30,720 --> 00:23:35,200
Speaker 9: to establish that that dominance uh in the industry, but they're.

460
00:23:35,040 --> 00:23:38,160
Speaker 8: They have to weigh.

461
00:23:37,000 --> 00:23:41,400
Speaker 9: The franchise e earnings with that, right, because if they

462
00:23:41,440 --> 00:23:43,960
Speaker 9: suggest a five dollars meal deal and the franchise e say,

463
00:23:43,960 --> 00:23:45,520
Speaker 9: I can't make money off this, I'm not going to

464
00:23:45,600 --> 00:23:48,720
Speaker 9: run it well, and then it's not going to happen.

465
00:23:48,920 --> 00:23:51,399
Speaker 5: Right, So does that put like Barking in like a

466
00:23:51,400 --> 00:23:53,960
Speaker 5: better spot since they have less franchisees? Am I making

467
00:23:53,960 --> 00:23:54,280
Speaker 5: that up?

468
00:23:55,600 --> 00:23:55,639
Speaker 6: No?

469
00:23:56,200 --> 00:23:58,640
Speaker 9: Burger King is also most of the quick service chains

470
00:23:58,760 --> 00:24:03,879
Speaker 9: are very heavily franchised. It's pretty easy operations, it's easy

471
00:24:03,920 --> 00:24:07,280
Speaker 9: to train new employees, and so they're they're they're typically

472
00:24:07,400 --> 00:24:08,720
Speaker 9: very heavily franchised.

473
00:24:09,920 --> 00:24:10,880
Speaker 8: Burger King's in a.

474
00:24:10,840 --> 00:24:14,440
Speaker 9: Better position this year just because they're lapping a few

475
00:24:14,520 --> 00:24:16,119
Speaker 9: years of very weak results.

476
00:24:16,880 --> 00:24:19,159
Speaker 8: So that's where I think Burger Kings advantage comes in.

477
00:24:19,200 --> 00:24:22,360
Speaker 9: It's just it's just weaker year over year comparisons, and

478
00:24:22,359 --> 00:24:26,600
Speaker 9: and management has has injected you know, billions of dollars

479
00:24:26,640 --> 00:24:31,040
Speaker 9: into that franchise system, right, and so they're renovating stores,

480
00:24:31,080 --> 00:24:35,800
Speaker 9: remodeling stores, they're marketing a lot heavier and so that

481
00:24:35,880 --> 00:24:38,520
Speaker 9: those are all benefits for Burger King. And it could

482
00:24:38,600 --> 00:24:42,679
Speaker 9: be you know, hurting McDonald's a little bit here, but

483
00:24:44,200 --> 00:24:47,719
Speaker 9: you know, McDonald's is the eight hundred pound gorilla. They

484
00:24:47,720 --> 00:24:51,760
Speaker 9: have top notch marketing program right, Like I said, at

485
00:24:51,800 --> 00:24:54,680
Speaker 9: the top they can offer prices that even Burger King

486
00:24:54,800 --> 00:24:58,040
Speaker 9: can't match. And so so that's why we're seeing kind

487
00:24:58,080 --> 00:24:59,760
Speaker 9: of what we're seeing. Right, it's a it's a week

488
00:24:59,800 --> 00:25:03,760
Speaker 9: and in our environment, and McDonald's wants so much to

489
00:25:03,840 --> 00:25:04,920
Speaker 9: keep and grow their share.

490
00:25:05,119 --> 00:25:07,760
Speaker 2: If a consumer's not going to fast food restaurants, what

491
00:25:07,880 --> 00:25:10,080
Speaker 2: is the consumer eating? Are they just staying home and

492
00:25:10,720 --> 00:25:11,400
Speaker 2: cooking at home?

493
00:25:13,040 --> 00:25:14,800
Speaker 8: I think on the low end, that's what we're seeing.

494
00:25:14,920 --> 00:25:19,240
Speaker 9: Yeah, you know, it is a case shape recovery hiring.

495
00:25:19,400 --> 00:25:21,040
Speaker 8: High income people are doing better.

496
00:25:21,880 --> 00:25:24,800
Speaker 9: You know, we're seeing stock markets, US stock markets at

497
00:25:24,840 --> 00:25:26,960
Speaker 9: all time highs, Bitcoin near an all time high.

498
00:25:26,960 --> 00:25:29,000
Speaker 8: Home prices remain elevated.

499
00:25:28,560 --> 00:25:31,480
Speaker 9: Right, and so high income consumers are still doing pretty good.

500
00:25:32,320 --> 00:25:34,840
Speaker 9: But even them are showing some even that cohort is

501
00:25:34,840 --> 00:25:38,199
Speaker 9: showing some some weakness. Uh, and they're kind of trading

502
00:25:38,280 --> 00:25:42,040
Speaker 9: down into the QSR cheaper occasions, and we're seeing low

503
00:25:42,080 --> 00:25:46,240
Speaker 9: income consumers fall out. But you know, so we're seeing

504
00:25:46,240 --> 00:25:50,560
Speaker 9: guest check averages rise, but we're where traffic is definitely down.

505
00:25:50,800 --> 00:25:53,560
Speaker 9: You know, like I mentioned, it's low income consumers are

506
00:25:53,560 --> 00:25:56,439
Speaker 9: about a third of traffic. So chains kind of have

507
00:25:56,520 --> 00:25:58,320
Speaker 9: to try to balance it, right, Like they want to

508
00:25:59,520 --> 00:26:02,040
Speaker 9: have value you for their low income consumers. They want

509
00:26:02,040 --> 00:26:04,760
Speaker 9: to offer higher priced items to kind of attract some

510
00:26:04,840 --> 00:26:07,760
Speaker 9: higher income consumers. And what we've seen is the chains

511
00:26:07,800 --> 00:26:10,080
Speaker 9: like McDonald's and Jack in the Box that have been able.

512
00:26:09,840 --> 00:26:11,640
Speaker 8: To draw in the high income consumers.

513
00:26:11,720 --> 00:26:15,760
Speaker 9: Chipotle's another one, have outperformed their peers since the start,

514
00:26:16,720 --> 00:26:17,920
Speaker 9: since the start of the pandemic.

515
00:26:18,000 --> 00:26:19,359
Speaker 5: And I should point out to just take a look

516
00:26:19,359 --> 00:26:22,320
Speaker 5: at Kroger's results, right, Like com sales rose just half

517
00:26:22,320 --> 00:26:27,080
Speaker 5: a percent last quarter, so yes, at topped analysts what

518
00:26:27,119 --> 00:26:30,119
Speaker 5: they expected, but growth has really stalled. I mean, you

519
00:26:30,160 --> 00:26:33,000
Speaker 5: had business normalizing and you got really high inflation, and

520
00:26:33,040 --> 00:26:35,439
Speaker 5: it's a cloudy picture. So even the solution of just

521
00:26:35,480 --> 00:26:39,320
Speaker 5: buying and cooking at home can be pretty rough. Hey, Michael,

522
00:26:39,320 --> 00:26:41,719
Speaker 5: thanks a lot. Michael Hale and Bloomberg Intelligence senior restaurant

523
00:26:41,720 --> 00:26:44,040
Speaker 5: and food service analysts, who I think is deep teas

524
00:26:44,040 --> 00:26:47,080
Speaker 5: here everyone back with us on Monday in studio.

525
00:26:47,280 --> 00:26:50,359
Speaker 2: In studio, he finally found his train ticket, which he

526
00:26:50,400 --> 00:26:51,360
Speaker 2: had lost for several years.

527
00:26:51,400 --> 00:26:53,200
Speaker 5: I mean, it's hard to find to be sure back

528
00:26:53,200 --> 00:26:55,680
Speaker 5: to and it's going to be about the back half

529
00:26:55,680 --> 00:26:59,080
Speaker 5: for restaurants and quick service guys. Who's winning and who's not.

530
00:26:59,280 --> 00:27:01,159
Speaker 5: How all that's going to want wind up playing out?

531
00:27:01,200 --> 00:27:06,360
Speaker 1: Ah, you're listening to the Bloomberg Intelligence Podcast. Catch us

532
00:27:06,400 --> 00:27:09,760
Speaker 1: live weekdays at ten am Eastern on applecar Play and

533
00:27:09,760 --> 00:27:12,640
Speaker 1: Android Auto with the Bloomberg Business Act. You can also

534
00:27:12,760 --> 00:27:15,960
Speaker 1: listen live on Amazon Alexa from our flagship New York

535
00:27:16,000 --> 00:27:19,679
Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty.

536
00:27:21,119 --> 00:27:21,399
Speaker 4: All right.

537
00:27:21,440 --> 00:27:24,240
Speaker 5: Joining us now is a very special guest. It's Thomas Eely,

538
00:27:24,480 --> 00:27:28,200
Speaker 5: founder and CEO of highly On Now. Hilyon is quite

539
00:27:28,240 --> 00:27:30,960
Speaker 5: interesting because I covered this company a few years ago

540
00:27:31,160 --> 00:27:35,360
Speaker 5: when it was a long haul EV trucking company. They

541
00:27:35,400 --> 00:27:38,119
Speaker 5: had a power train that they were calling the hyper

542
00:27:38,160 --> 00:27:40,440
Speaker 5: truck eRx and it was going to be an EV

543
00:27:40,600 --> 00:27:42,840
Speaker 5: trucker and it seemed like it had a lot of legs,

544
00:27:42,880 --> 00:27:45,120
Speaker 5: it had a lot of interest, and then the company

545
00:27:45,359 --> 00:27:49,520
Speaker 5: pivoted instead to become basically a power generation company. And

546
00:27:49,520 --> 00:27:52,560
Speaker 5: it's a really interesting pivot. Yes, there's some similarities, but

547
00:27:52,640 --> 00:27:56,560
Speaker 5: a really interesting pivot nonetheless, and Thomas joins us, Now,

548
00:27:57,000 --> 00:27:59,000
Speaker 5: what's happened in the last few years, tell me about

549
00:27:59,000 --> 00:28:00,280
Speaker 5: your business shift.

550
00:28:01,200 --> 00:28:03,520
Speaker 10: Well, Alex, you outlined it perfectly, so you know, the

551
00:28:03,600 --> 00:28:06,399
Speaker 10: last handful of years, there's been so much momentum behind

552
00:28:06,440 --> 00:28:09,840
Speaker 10: EV specifically in the trucking space, but the reality is,

553
00:28:09,960 --> 00:28:13,400
Speaker 10: over the last twelve eighteen months, we've seen a continued

554
00:28:13,440 --> 00:28:15,399
Speaker 10: decline to the point of many of the companies in

555
00:28:15,400 --> 00:28:19,280
Speaker 10: the space are facing bankruptcy or have already filed for bankruptcy.

556
00:28:19,320 --> 00:28:21,879
Speaker 10: They can't raise additional cash, and so we were in

557
00:28:21,920 --> 00:28:24,440
Speaker 10: a unique position where we still had a strong balance sheet.

558
00:28:24,480 --> 00:28:26,720
Speaker 10: We had about three hundred million of cash on our

559
00:28:26,760 --> 00:28:29,639
Speaker 10: balance sheets starting at the beginning of this year, and

560
00:28:29,680 --> 00:28:32,600
Speaker 10: we had a unique technology in house as well, that

561
00:28:32,800 --> 00:28:36,000
Speaker 10: is a generator basically a mini power plant that can

562
00:28:36,040 --> 00:28:40,959
Speaker 10: be deployed outside of commercial buildings, data centers, EV charging sites,

563
00:28:41,240 --> 00:28:43,320
Speaker 10: and so we saw that it was best to pivot

564
00:28:43,320 --> 00:28:45,800
Speaker 10: the company to focus on that and actually move out

565
00:28:45,880 --> 00:28:48,280
Speaker 10: of that EV semi truck space.

566
00:28:49,000 --> 00:28:52,719
Speaker 3: All right, so you have this Carno platform. Tell us

567
00:28:52,720 --> 00:28:53,120
Speaker 3: about that.

568
00:28:54,480 --> 00:28:56,760
Speaker 10: Yeah, So think of it as, you know, a power

569
00:28:56,760 --> 00:28:59,240
Speaker 10: plant that's the size of like the bed of a

570
00:28:59,280 --> 00:29:02,360
Speaker 10: pickup truck. Almost it can produce two hundred kilowats of

571
00:29:02,400 --> 00:29:05,440
Speaker 10: power and it's designed to be able to be stacked together.

572
00:29:05,560 --> 00:29:08,200
Speaker 10: So if you think of an EV charging site, you're

573
00:29:08,200 --> 00:29:10,280
Speaker 10: maybe going to need a couple of megawatts of power,

574
00:29:10,360 --> 00:29:13,800
Speaker 10: so maybe you know ten carnogenerators, or if you think

575
00:29:13,840 --> 00:29:17,000
Speaker 10: of a data center, you maybe need forty megawats of power.

576
00:29:17,560 --> 00:29:18,880
Speaker 10: But if you then go to the other end of

577
00:29:18,880 --> 00:29:23,400
Speaker 10: the extreme, you think of like a commercial like store

578
00:29:23,520 --> 00:29:25,760
Speaker 10: like a Walmart or place like that, you're in need

579
00:29:25,800 --> 00:29:28,760
Speaker 10: about that two hundred kiloots of power size. So our

580
00:29:28,800 --> 00:29:31,240
Speaker 10: thought is, as you come in and you actually make

581
00:29:31,320 --> 00:29:34,400
Speaker 10: this generator your primary power source, so you remove your

582
00:29:34,440 --> 00:29:38,160
Speaker 10: dependency from the grid, you can actually make electricity cheaper

583
00:29:38,200 --> 00:29:41,520
Speaker 10: with this gen set than most electricity costs out there.

584
00:29:41,840 --> 00:29:44,080
Speaker 10: And now you kind of have this model where you

585
00:29:44,160 --> 00:29:47,440
Speaker 10: now make power outside your building and you use the

586
00:29:47,480 --> 00:29:49,400
Speaker 10: grid as your backup power supply.

587
00:29:50,080 --> 00:29:53,720
Speaker 5: So what the two things kind of relate together is

588
00:29:53,760 --> 00:29:56,680
Speaker 5: that what was wrong with the EV trucking part. Was

589
00:29:56,720 --> 00:29:59,200
Speaker 5: it that it was too expensive to build at scale

590
00:29:59,360 --> 00:30:00,760
Speaker 5: or was the and not there.

591
00:30:02,440 --> 00:30:05,520
Speaker 10: Yeah, so five years ago fleets were saying they're going

592
00:30:05,600 --> 00:30:08,959
Speaker 10: to buy EV trucks in mass volume, and that you know,

593
00:30:09,000 --> 00:30:11,720
Speaker 10: by this time, you know, all most trucks being sold,

594
00:30:11,760 --> 00:30:14,360
Speaker 10: we're going to be evs. The reality is is EV

595
00:30:14,480 --> 00:30:17,480
Speaker 10: adoption has gone extremely slow, and fleets are saying, you know,

596
00:30:17,520 --> 00:30:20,120
Speaker 10: we're going to buy onesie tuoesie trying for a little while,

597
00:30:20,200 --> 00:30:23,120
Speaker 10: maybe we'll buy more. But what's really happened is people

598
00:30:23,160 --> 00:30:26,520
Speaker 10: are waiting until the government mandates that evs need to

599
00:30:26,520 --> 00:30:29,280
Speaker 10: be adopted, and we're seeing those dates continue to get

600
00:30:29,320 --> 00:30:32,160
Speaker 10: pushed out to the right. And in addition to what

601
00:30:32,200 --> 00:30:34,920
Speaker 10: you mentioned of the costs of EV trucks have continued

602
00:30:34,960 --> 00:30:37,360
Speaker 10: to go up as well. So we're really just seeing

603
00:30:37,400 --> 00:30:41,640
Speaker 10: this this situation where adoption isn't happening anywhere near the

604
00:30:41,720 --> 00:30:45,360
Speaker 10: rate that was initially expected, and so being in the

605
00:30:45,400 --> 00:30:48,760
Speaker 10: public markets, you know, the you know, companies needing to

606
00:30:48,840 --> 00:30:52,840
Speaker 10: raise more cash and stock prices continue to decline, we

607
00:30:52,920 --> 00:30:54,400
Speaker 10: just thought it was best to get out of that

608
00:30:54,440 --> 00:30:57,000
Speaker 10: space and focus on an area where there's actually a

609
00:30:57,040 --> 00:30:57,760
Speaker 10: lot of momentum.

610
00:30:57,880 --> 00:30:58,040
Speaker 1: Right.

611
00:30:58,080 --> 00:31:00,880
Speaker 10: You know, we talked about AI that needs a lot

612
00:31:00,880 --> 00:31:02,840
Speaker 10: of power generation, So how.

613
00:31:02,720 --> 00:31:06,120
Speaker 5: Does the so what can you take from the EV

614
00:31:06,240 --> 00:31:10,400
Speaker 5: trucking to the power world, Like how were some things transferable.

615
00:31:11,720 --> 00:31:14,920
Speaker 10: Yeah, so this generator, the Carno was actually something we

616
00:31:15,000 --> 00:31:17,920
Speaker 10: acquired out of GE and it had been a project

617
00:31:17,960 --> 00:31:20,760
Speaker 10: that we're working on with General Electric for a few

618
00:31:20,840 --> 00:31:23,040
Speaker 10: years where we were actually going to put it as

619
00:31:23,160 --> 00:31:26,400
Speaker 10: the generator inside the truck to charge the batteries while

620
00:31:26,400 --> 00:31:28,920
Speaker 10: you were driving, And so we acquired it out of

621
00:31:28,960 --> 00:31:31,360
Speaker 10: GE a couple of years ago. And we always saw

622
00:31:31,400 --> 00:31:34,000
Speaker 10: it as a solution initially for trucks, but we could

623
00:31:34,080 --> 00:31:37,320
Speaker 10: could go into the power generation space. But as you know,

624
00:31:37,360 --> 00:31:39,560
Speaker 10: we've kind of seen the market shift. We saw that

625
00:31:40,160 --> 00:31:44,200
Speaker 10: just going after power generation and stationary power first made

626
00:31:44,240 --> 00:31:46,680
Speaker 10: a lot of sense. And then you know, it's still

627
00:31:46,680 --> 00:31:49,120
Speaker 10: a technology that we see could be viable for the

628
00:31:49,760 --> 00:31:51,480
Speaker 10: EV trucking space down the road.

629
00:31:52,360 --> 00:31:55,680
Speaker 2: Talk to us about again on this new energy platform

630
00:31:55,680 --> 00:31:57,600
Speaker 2: that you have. Where are you in terms of in

631
00:31:57,640 --> 00:32:01,000
Speaker 2: your timeline of deploying these making sales, who do you

632
00:32:01,400 --> 00:32:02,800
Speaker 2: target to sell to that type of thing?

633
00:32:02,840 --> 00:32:04,160
Speaker 3: Where are unit development there?

634
00:32:05,280 --> 00:32:07,960
Speaker 10: Yeah, so we're at a point where later this year

635
00:32:08,000 --> 00:32:10,920
Speaker 10: we'll actually be getting units out into customers hands. So

636
00:32:11,760 --> 00:32:14,720
Speaker 10: you know, it's been a north of five year development

637
00:32:14,760 --> 00:32:17,600
Speaker 10: program both when it was in GE and now at

638
00:32:17,720 --> 00:32:20,560
Speaker 10: highly on and so we're right on the cusp of

639
00:32:20,640 --> 00:32:23,160
Speaker 10: just about to start getting units out there to customers.

640
00:32:23,560 --> 00:32:26,640
Speaker 10: A few key markets we're going after. One is that

641
00:32:26,800 --> 00:32:30,360
Speaker 10: EV charging space. Another is actually using waste gas. So

642
00:32:30,360 --> 00:32:32,800
Speaker 10: if you think about like oil and gas sites, they

643
00:32:32,800 --> 00:32:35,479
Speaker 10: flare a lot of gas right now, the carnogenerator can

644
00:32:35,520 --> 00:32:38,600
Speaker 10: actually be a great way to take that gas and

645
00:32:38,640 --> 00:32:42,320
Speaker 10: make electricity out of it. We're going after commercial applications

646
00:32:42,400 --> 00:32:47,360
Speaker 10: like data centers, commercial warehouses, you know, hotels, hospitals, those

647
00:32:47,360 --> 00:32:50,120
Speaker 10: type of applications. And then another one which is kind

648
00:32:50,120 --> 00:32:53,360
Speaker 10: of unique, is actually the marine space, so powering ships

649
00:32:53,360 --> 00:32:56,000
Speaker 10: and vessels off of this gen set as well. One

650
00:32:56,000 --> 00:32:57,800
Speaker 10: of the unique things with it that we haven't talked

651
00:32:57,840 --> 00:33:01,600
Speaker 10: about is it's a fuel agnostics so it can run

652
00:33:01,640 --> 00:33:05,560
Speaker 10: on futuristic fuels like hydrogen like ammonia, but can also

653
00:33:05,680 --> 00:33:09,000
Speaker 10: run today on fuels like natural gas and diesel and propane.

654
00:33:09,400 --> 00:33:11,680
Speaker 10: And so for customers, you're kind of getting this like

655
00:33:11,840 --> 00:33:12,959
Speaker 10: future proof solution.

656
00:33:13,400 --> 00:33:17,000
Speaker 5: That's interesting. So it is transferable. What is the demand like.

657
00:33:18,320 --> 00:33:22,360
Speaker 10: Yeah, so our generation demand is very strong right now.

658
00:33:22,400 --> 00:33:24,200
Speaker 10: I mean, just to share an example with you, Like

659
00:33:24,400 --> 00:33:28,040
Speaker 10: we obviously knew the EV trucking space. Well, when people

660
00:33:28,040 --> 00:33:31,800
Speaker 10: would go talk to their utilities about getting a grid interconnect,

661
00:33:31,880 --> 00:33:35,760
Speaker 10: trying to get electricity for their chargers, they're being told

662
00:33:35,800 --> 00:33:38,080
Speaker 10: it's like two to three years just to even get

663
00:33:38,120 --> 00:33:40,280
Speaker 10: access to the power, to get connected to the grid.

664
00:33:40,600 --> 00:33:43,320
Speaker 10: And then in some instances, some parts of the country,

665
00:33:43,360 --> 00:33:46,440
Speaker 10: there's being told there just isn't enough power available at all.

666
00:33:46,600 --> 00:33:50,440
Speaker 10: So we see a few things happening where you've got

667
00:33:50,440 --> 00:33:53,840
Speaker 10: ev charging, you've got AI for data centers, You've also

668
00:33:53,920 --> 00:33:57,720
Speaker 10: got industrial applications moving over to electric, so the demand

669
00:33:57,720 --> 00:34:00,240
Speaker 10: on the grid continues to increase. But we're all also

670
00:34:00,280 --> 00:34:03,080
Speaker 10: in a position where new power plants aren't being made

671
00:34:03,120 --> 00:34:06,200
Speaker 10: and infrastructure isn't being upgraded at the rate that it

672
00:34:06,240 --> 00:34:08,880
Speaker 10: needs to be. So that's where we're seeing the market

673
00:34:08,920 --> 00:34:12,280
Speaker 10: really shift to these kind of distributed power generation models

674
00:34:12,320 --> 00:34:15,359
Speaker 10: where you make your own electricity locally to power your

675
00:34:15,360 --> 00:34:18,880
Speaker 10: facility as opposed to being reliant on the grid. And

676
00:34:18,920 --> 00:34:21,680
Speaker 10: so we see a massive shift happening to that sort

677
00:34:21,680 --> 00:34:24,319
Speaker 10: of market over the next few years here, and it's

678
00:34:24,320 --> 00:34:25,960
Speaker 10: already started, which is great to see.

679
00:34:26,040 --> 00:34:27,600
Speaker 2: So I mean, I guess I mean you called out

680
00:34:27,600 --> 00:34:30,479
Speaker 2: one of the big headwinds I guess facing the EV

681
00:34:30,600 --> 00:34:32,520
Speaker 2: business today, at least here in the US, and that

682
00:34:32,600 --> 00:34:36,000
Speaker 2: is whether the US electrical grid can even support the

683
00:34:36,040 --> 00:34:40,040
Speaker 2: transition to EVS. You're down in Texas. You guys have

684
00:34:40,160 --> 00:34:42,640
Speaker 2: your own grid, but how about just a big.

685
00:34:42,480 --> 00:34:45,400
Speaker 3: Picture, Can the US grid support the transition to EVS.

686
00:34:47,239 --> 00:34:49,200
Speaker 10: I think it's going to be a tough one without

687
00:34:49,200 --> 00:34:52,880
Speaker 10: this distributed power generation model. Just this morning in Texas,

688
00:34:52,920 --> 00:34:55,400
Speaker 10: we had a power blip at this facility. I was

689
00:34:55,440 --> 00:34:58,360
Speaker 10: on a call this morning with a colleague in Michigan.

690
00:34:58,680 --> 00:35:02,640
Speaker 10: Her power was out. I mean, power is. The reliability

691
00:35:02,640 --> 00:35:05,200
Speaker 10: of the grid is a real problem right now. And

692
00:35:05,719 --> 00:35:08,560
Speaker 10: one crazy stat is if you plugged in ten semi

693
00:35:08,560 --> 00:35:12,080
Speaker 10: trucks into the grid, that would consume as much electricity

694
00:35:12,200 --> 00:35:15,799
Speaker 10: as the entire Super Bowl stadium during game time. So wow,

695
00:35:16,719 --> 00:35:19,239
Speaker 10: it's a crazy amount of power that these trucks will draw.

696
00:35:19,360 --> 00:35:21,920
Speaker 10: And I don't think the grid's able to handle it today,

697
00:35:21,920 --> 00:35:25,920
Speaker 10: at least not universally across the country. And if you

698
00:35:26,040 --> 00:35:28,440
Speaker 10: do want to support that type of demand, you need

699
00:35:28,560 --> 00:35:30,480
Speaker 10: not only the power plants, but then you need to

700
00:35:30,480 --> 00:35:32,719
Speaker 10: go build transmission lines, you need to set up the

701
00:35:32,719 --> 00:35:36,640
Speaker 10: local infrastructure. So it's kind of this ripple effect versus

702
00:35:37,160 --> 00:35:40,200
Speaker 10: you could just put this generator down and start making

703
00:35:40,200 --> 00:35:41,640
Speaker 10: your own electricity locally.

704
00:35:42,520 --> 00:35:44,439
Speaker 5: It's really interesting stuff. I wish you luck on this one.

705
00:35:44,520 --> 00:35:47,040
Speaker 5: Let's check back in and see how it's going. I

706
00:35:47,080 --> 00:35:49,279
Speaker 5: know that this is all a huge transition pretty much

707
00:35:49,440 --> 00:35:53,760
Speaker 5: for everybody and companies included Thomas Healey joining US, founder

708
00:35:53,760 --> 00:35:56,640
Speaker 5: and CEO of highly On joining us. But it is

709
00:35:56,680 --> 00:35:59,840
Speaker 5: so interesting, right because it's I just think his transition

710
00:35:59,880 --> 00:36:01,440
Speaker 5: is so interesting because.

711
00:36:01,520 --> 00:36:02,640
Speaker 4: It's too hard.

712
00:36:03,200 --> 00:36:05,560
Speaker 5: Evs are too hard if the demand's not there, how

713
00:36:05,560 --> 00:36:06,480
Speaker 5: do you stay in business?

714
00:36:06,719 --> 00:36:08,040
Speaker 3: I don't know how you do it as a public company.

715
00:36:08,080 --> 00:36:10,120
Speaker 2: I know stock's been been down and they've been drawing

716
00:36:10,160 --> 00:36:12,239
Speaker 2: down on their cash that they got from their IP.

717
00:36:12,320 --> 00:36:13,880
Speaker 2: I'm not sure if there was a spacronaut back in

718
00:36:13,920 --> 00:36:17,799
Speaker 2: the day, but that's kind of an interesting test case

719
00:36:17,840 --> 00:36:19,800
Speaker 2: to see how a company, as a public traded company

720
00:36:19,840 --> 00:36:22,719
Speaker 2: can completely pivot the business.

721
00:36:22,880 --> 00:36:24,880
Speaker 5: And I remember too like Tesla, Yes, it makes cars,

722
00:36:24,880 --> 00:36:27,280
Speaker 5: but it's also a storage play. It's also a battery

723
00:36:27,320 --> 00:36:29,520
Speaker 5: storage company, and in which case you wonder, like where

724
00:36:29,560 --> 00:36:31,960
Speaker 5: the value of EV's actually is.

725
00:36:32,280 --> 00:36:36,799
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726
00:36:37,000 --> 00:36:40,640
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727
00:36:40,760 --> 00:36:43,719
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728
00:36:43,880 --> 00:36:47,120
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729
00:36:47,200 --> 00:36:50,320
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730
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