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Speaker 1: Bloomberg Audio, Studios, podcasts, radio news.

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Speaker 2: This morning news broke that Tesla CEO Elon Musk, the

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Speaker 2: world's richest man, recently bought about one billion dollars worth

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Speaker 2: of Tesla stock, and the company's share price jumped. Tesla's

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Speaker 2: shares are getting a boost from their ceo. The stock

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Speaker 2: rose more than three and a half percent in regular trading.

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Speaker 2: The world learned about that purchase in a regulatory filing

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Speaker 2: on Monday, but Musk actually bought those shares on Friday,

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Speaker 2: September twelfth, indirectly through a revocable trust that was the

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Speaker 2: same day. Robin Denholm, the chair of Tesla's board, told

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Speaker 2: Bloomberg TV how optimistic she is about Tesla's future with

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Speaker 2: Musk in the driver's seat.

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Speaker 3: He's a generational leader. There aren't any other people out

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Speaker 3: there like Elon who can actually lead the company over

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Speaker 3: this next decade or so.

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Speaker 2: That interview came on the heels of a big announcement

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Speaker 2: earlier this month that Tesla's board wants to offer Musk

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Speaker 2: an unprecedented compensation package valued at one trillion dollars.

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Speaker 4: Well, he's already one of the world's richest people, but

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Speaker 4: Elon Musk could become the first ever trillionaire. It's all

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Speaker 4: possible under Tesla's new pay package.

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Speaker 2: But behind these headlines, these eye popping numbers are some

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Speaker 2: serious challenges Tesla's facing.

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Speaker 1: Elon Musk warning that the cuts to evs and other

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Speaker 1: clean energy credits would be incredibly destructive to the country.

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Speaker 4: When Tesla's lose power, crashes can turn into deadly races

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Speaker 4: against time. Reporting by Bloomberg News has found that regulators

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Speaker 4: have been slow to act, and complaints about Tesla's doors

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Speaker 4: have piled up.

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Speaker 1: I think this is a matter of being able to

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Speaker 1: sort of in your head, think this guy has done

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Speaker 1: it before, maybe he can do it again.

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Speaker 2: Craig Trudell oversees Bloomberg's coverage of the auto industry. These

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Speaker 2: covered Elon Musk and Tesla for years. Craig says, what's

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Speaker 2: really reassuring them and Tesla's board is having Musk out

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Speaker 2: of government with a new financial incentive to focus more

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Speaker 2: on the company.

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Speaker 1: There's a sort of concerted effort to message on the

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Speaker 1: part of this company that you know, Musk is coming back.

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Speaker 1: He's putting his head back down, he's putting politics aside.

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Speaker 1: He's left the White House, he's gonna hunker back down

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Speaker 1: and get down to business, and people are even using

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Speaker 1: really sort of over the top language like a wartime CEO.

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Speaker 2: But what's unclear is if Musk himself has gotten that

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Speaker 2: message and if that one trillion dollar pay package, provided

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Speaker 2: it's approved by shareholders, will work. I'm David Gura, and

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Speaker 2: this is the big take from Bloomberg News today. On

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Speaker 2: the show, what could have been a bad year for

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Speaker 2: Tesla isn't looking so bad to Tesla's investors and board,

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Speaker 2: who are convinced that with more of Elon Musk's attention,

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Speaker 2: the company will be back on track. Twenty twenty five

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Speaker 2: has been tumultuous for Tesla. After years of remarkable growth.

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Speaker 2: It shares plunged because of lackluster sales and increased competition,

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Speaker 2: along with concern over Elon Musk's politics. But in the

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Speaker 2: month since, Tesla's stock has been trending higher, and this

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Speaker 2: month it's all but erased those losses. Bloomberg's Craig Trudell

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Speaker 2: says it's been vibes as much as fundamentals driving the

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Speaker 2: company's share price.

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Speaker 1: This is a company that you know all of it's

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Speaker 1: here and now fundamentals are sort of flashing red, and

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Speaker 1: yet you have Musk talking up this future of humanoid robots,

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Speaker 1: and this is of course, you know, sort of running

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Speaker 1: contrary to these years of efforts on the part of

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Speaker 1: other very valuable companies with really smart engineers who have

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Speaker 1: tried to sort of make humanoid robots a thing and

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Speaker 1: really struggle doing so. The other sort of half of

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Speaker 1: the reason for optimism, I would say, would be robotaxis,

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Speaker 1: and you know, there's maybe more tangible signs of real

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Speaker 1: progress on that front for Tesla to a degree in

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Speaker 1: that they have launched this very limited service in Austin, Texas,

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Speaker 1: where they're headquartered. But it's really important to sort of

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Speaker 1: keep in mind that there are still humans in the

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Speaker 1: front row of those vehicles that are sort of keeping

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Speaker 1: an eye on things. And this was you know, far

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Speaker 1: from a sort of auspicious start for these vehicles, where

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Speaker 1: from day one when they launched this service, you had

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Speaker 1: cars driving in the wrong lane and in sort of

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Speaker 1: the wrong direction, and the National Highway Traffic Safety Administration

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Speaker 1: coming right out and telling us at Bloomberg, yeah, we're watching,

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Speaker 1: we're noticing these things, and we're in touch with the

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Speaker 1: company so you know, have they figured out robotaxis and

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Speaker 1: gotten their cars to a point where they can safely

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Speaker 1: navigate the streets without anyone behind the wheel or in

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Speaker 1: the passenger seat. Even Tesla, I think, by its actions,

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Speaker 1: can be judged to be saying no.

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Speaker 2: For so long the narrative was that Elon Musk was

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Speaker 2: distracted by the role that he was playing Trump administration

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Speaker 2: at the helm of Doge. He wasn't paying attention to this,

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Speaker 2: to this company and others that he runs. It did

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Speaker 2: seem like Tesla's board wanted to limit Elon Musk's political activity,

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Speaker 2: and then it seemed to walk that back. This is

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Speaker 2: what Robin Denholm said on Bloomberg TV.

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Speaker 3: What he does from a personal perspective in terms of

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Speaker 3: his political motivations, etc. Is up to him. I mean

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Speaker 3: clearly from our perspective as a board, we're measuring him

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Speaker 3: on results and measuring him on what he does as

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Speaker 3: a CEO of TESLAT.

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Speaker 2: What is the board's position on Elon Musk and politics.

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Speaker 1: Yeah, our colleagues Ed Ludlow and Caroline Hyde really sort

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Speaker 1: of pressed and holme on this on Friday to really

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Speaker 1: sort of get a hard and fast sense of what

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Speaker 1: do we mean by winding down as political activities, because

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Speaker 1: there was some language within the proxy to that end

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Speaker 1: that Musk had made some assurances, and we really did

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Speaker 1: not get firm answers from Denholm. I think, you know,

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Speaker 1: just reading between the lines, as though we've already gotten

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Speaker 1: to the point where they're happy. Where he's you know,

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Speaker 1: left Dough, he's left the White House, he's no longer

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Speaker 1: a special government employee, and yet there doesn't seem to

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Speaker 1: be any limits placed on you know, he's thrown out

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Speaker 1: this idea of maybe starting a political party in the US.

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Speaker 1: There's also been real substantial weighing in on UK politics,

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Speaker 1: on German politics, and there doesn't seem to be any

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Speaker 1: sort of line being drawn by the board, at least

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Speaker 1: publicly in terms of what's okay and not okay for

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Speaker 1: him going forward.

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Speaker 2: And as you look at your remit the car companies

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Speaker 2: that you cover, how different is this board, the Tesla board,

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Speaker 2: from say the board at Forward or the board at GM.

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Speaker 1: They have a really difficult job, I will give them that, right.

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Speaker 1: You know, you don't have another CEO who's pulling the

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Speaker 1: kind of stunts that he is on a day to

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Speaker 1: day and you have heard Robin Denholmes sort of speak

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Speaker 1: to this idea that she wishes that he wasn't quite

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Speaker 1: the way he is on Twitter. This is a board

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Speaker 1: that really has its hands full. And yet also on

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Speaker 1: the other side of that coin is they it is

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Speaker 1: true that this is a generational leader from the perspective

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Speaker 1: of we haven't seen somebody, you know, turn a car

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Speaker 1: company into a trillion dollar enterprise. We haven't seen a

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Speaker 1: car company even come close to that. And you know,

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Speaker 1: we can sort of debate until the cows come home

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Speaker 1: whether or not Tesla is worthy of that valuation, But

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Speaker 1: the sort of hard and fast truth is that, you know,

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Speaker 1: he is convinced enough people that it is worth that.

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Speaker 1: And even if this is more than just a car

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Speaker 1: company by any metric, you know, in terms of where

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Speaker 1: they're valued on a sort of fundamental basis, a price

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Speaker 1: earnings ratio going forward, this is a really rich stock.

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Speaker 1: And if Musk were to be sort of out of

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Speaker 1: the picture or in any way perceived as as sort

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Speaker 1: of stepping back from Tesla, we've seen over the last

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Speaker 1: few years that that can be hugely destructive to this

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Speaker 1: company's valuation.

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Speaker 2: Elon Musk's plans for Tesla go beyond cars. They include

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Speaker 2: robots and AI. But musk stream of turning Tesla into

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Speaker 2: the most valuable company in the world won't be easy.

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Speaker 2: The challenges facing Musk and Tesla after the break. When

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Speaker 2: Tesla posted its quarterly earnings back in July, a big

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Speaker 2: headline was a twelve percent drop in revenue compared to

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Speaker 2: a year earlier. On a call with investors, Tesla leadership

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Speaker 2: didn't comment much on that decline, but CEO Elon Musk

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Speaker 2: did acknowledge the next few months are likely to be rough.

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Speaker 3: I mean, does that mean like we could have a

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Speaker 3: few rough quarters. Yeah, we probably could have a few

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Speaker 3: rough quarters.

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Speaker 2: I asked Bloomberg's Craig Trudell what that admission tells us

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Speaker 2: about Musk's vision for the company and what's to come.

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Speaker 1: Yeah. I think it's going to be the case that

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Speaker 1: this quarter is going to be boosted by the fact

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Speaker 1: that in the US you have a phasing out of

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Speaker 1: electric vehicle tax credits. There's going to be a pull

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Speaker 1: ahead of people who are maybe considering buying an EV

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Speaker 1: that are going to accelerate that decision to take advantage

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Speaker 1: of the fact that they could be eligible for a

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Speaker 1: seventy five hundred dollars tax credit. The real concern is

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Speaker 1: that after those tax credits go away, that Tesla and

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Speaker 1: everyone else selling EV's is really going to have a

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Speaker 1: hard time for months to come. On top of that,

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Speaker 1: you also have a deregulation agenda on the part of

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Speaker 1: the Trump administration to take away penalties for fuel economy

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Speaker 1: standards and for emission standards that Tesla for years has

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Speaker 1: really benefited from more than twelve billion dollars worth of

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Speaker 1: regulatory credits. You have byd going from strength to strength

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Speaker 1: in terms of continuing to outsell everybody.

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Speaker 3: There.

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Speaker 1: You have Jaumi, China's version of Apple making a real

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Speaker 1: concerted effort to go into the EV space. And then

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Speaker 1: here in Europe a sort of falling apart of Tesla's

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Speaker 1: position in really major markets including Germany, France, and so

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Speaker 1: cross the globe, we're seeing real weakness in Tesla's core

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Speaker 1: car business. And I should also mention too, just to

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Speaker 1: go along with that, this is a company with an

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Speaker 1: energy business that sells storage batteries for utilities, that too

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Speaker 1: is going to be hit by the fact that the

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Speaker 1: Republicans have got it a lot of what was in IRA.

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Speaker 2: During the throws of the early days of Trump's second term,

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Speaker 2: we saw Tesla sales decline. How much of that decline

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Speaker 2: is attributable to politics, and how does he change that

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Speaker 2: part of Tesla story that sales have been dropping and

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Speaker 2: they really haven't recovered.

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Speaker 1: It's a really good question, and it's something we've struggled with.

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Speaker 1: Right there are very clear signs that Musk is at

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Speaker 1: least a major contributing factor to the challenges that this

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Speaker 1: company has had all year long, really, and some of

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Speaker 1: those signs are that early in the year the company

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Speaker 1: was kind of using this excuse that seemed to have

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Speaker 1: some merit that they were changing over their most important product,

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Speaker 1: the Model WHY, to a new design. They were making

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Speaker 1: it better in a lot of respects, upgrading the design,

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Speaker 1: and in order to sort of change over to that

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Speaker 1: new vehicle, they needed to temporarily shut down production at

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Speaker 1: factories around the world. But what we've seen is that

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Speaker 1: since the new Model Y has arrived in showrooms that

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Speaker 1: we've not seen a recovery in this company's sales. I

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Speaker 1: would say, particularly here in Europe, things have just continued

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Speaker 1: to be really weak, But in the US as well,

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Speaker 1: I think the sales numbers that we see in California

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Speaker 1: sort of liberal bastion in a place where Tesla has

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Speaker 1: dominated for so long. They have fallen from a position

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Speaker 1: of extreme strength to it's now a much more competitive

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Speaker 1: space with a lot more alternatives, Craig.

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Speaker 2: Another set of challenges have to do with the vehicles

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Speaker 2: themselves and how they're designed. And your team has done

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Speaker 2: some incredible investigations of the doors on Tesla models. For instance,

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Speaker 2: I think anybody who's bought one, or rented one or

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Speaker 2: ridden one has to figure out how to open a

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Speaker 2: car door on a test that's even more complicated on

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Speaker 2: a cyber truck. This has actually proven to be hugely

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Speaker 2: problematic when there are car accidents, and these stores are

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Speaker 2: incredibly difficult to open if the car no longer has power.

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Speaker 2: What did Bloomberg learn over the course of that investigation,

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Speaker 2: and how have federal regulators responded to that problem?

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Speaker 1: Yeah, this all started actually internally with one of our

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Speaker 1: colleagues having read about and heard about a crash involving

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Speaker 1: four college students who were in a cyber truck around

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Speaker 1: the time of Thanksgiving last year. And these students were

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Speaker 1: in a crash where only one was pulled out of

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Speaker 1: the vehicle, and the three others did not survive the

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Speaker 1: fire that followed this crash. All three of the young

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Speaker 1: people who died in this incident survived the initial crash,

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Speaker 1: but died of thermal injuries and smoke inhalation because they

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Speaker 1: were unable to get out of the vehicle. And this

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Speaker 1: really sort of big questions for us of a simple

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Speaker 1: question of why couldn't they get out? And this is

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Speaker 1: an issue that has been raised for years, going back

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Speaker 1: to the Model S, the first vehicle that Tessa built

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Speaker 1: itself from the ground up, where they designed their doors

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Speaker 1: externally to have flush door handles. I think, you know,

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Speaker 1: it was for understandable reasons of improve aerodynamics, reduce wind noise,

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Speaker 1: and also just a sort of cool factor. And yet

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Speaker 1: from the beginning there were real issues with how these

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Speaker 1: door handles worked, both from the outside and from the inside.

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Speaker 1: Where some of the pushback that we've gotten for this

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Speaker 1: piece is, well, you know they have mechanical releases to

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Speaker 1: get out of these vehicles, they're also very difficult to find.

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Speaker 1: There's also differences from model to model as to whether

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Speaker 1: or not there's mechanical releases in the back seat, which

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Speaker 1: is obviously hugely problematic if you happen to be in

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Speaker 1: the back seat in an instance where your Tesla has

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Speaker 1: lost power, and particularly if your Tesla has lost power

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Speaker 1: and it is on fire. And also I just should

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Speaker 1: point out from the outside of Tesla's you know, they

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Speaker 1: advise within their sort of rescue tip sheets for first responders,

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Speaker 1: the doors just don't work from the outside. If the

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Speaker 1: vehicle doesn't have any power, you're going to have to

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Speaker 1: bash the window and or cut the doors open to

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Speaker 1: get to people.

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Speaker 2: Musk and other Tesla executives didn't respond to Bloomberg's inquiries

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Speaker 2: about the doors or to Bloomberg's requests for comment.

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Speaker 1: And we found incidents of people complaining to the National

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Speaker 1: Highway Traffic Safety Administration about their doors not working for

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Speaker 1: them that NISA says it's aware of not only those complaints,

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Speaker 1: but also the incidents that we wrote about last week,

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Speaker 1: and they're considering whether or not a full investigation of

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Speaker 1: this issue is warranted.

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Speaker 2: It highlights this tension between Elon Musk's Tesla and regulators,

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Speaker 2: and you can hear this on quarterly calls. He often

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Speaker 2: says that the engineering is up to snuff, or they've

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Speaker 2: developed something or it's ready to go, they're just waiting

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Speaker 2: for regulatory approval. I think about this in the context

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Speaker 2: of another investigation that Bloomberg did about the self driving

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Speaker 2: system on his cars, which operate differently than other car

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Speaker 2: companies self driving apparatuses. Help me understand how that is

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Speaker 2: kind of framing elon Musk's timeline for the advancements he

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Speaker 2: says are coming. So I think of, for instance, the

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Speaker 2: robotaxis he's talked about, as you mentioned, have been in

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Speaker 2: Austin where Tesla's based, a few other cities as well.

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Speaker 2: He's very eager to expand it. How realistic is that

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Speaker 2: in light of that tension I just mentioned between what

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Speaker 2: regulators are thinking and allowing versus what Tesla says it's

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Speaker 2: able to do.

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Speaker 1: Yeah, it's interesting. NITSA has clearly demonstrated that they're paying

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Speaker 1: attention in terms of just how much they've really stood

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Speaker 1: in the way of this company. I guess there's not

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Speaker 1: necessarily huge issues in terms of the ways in which

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Speaker 1: they could be sort of perceived as holding Tesla back.

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Speaker 1: Musk has referred to them as the fun police, I

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Speaker 1: should note, And yet this is also an agency that

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Speaker 1: is not particularly well resourced, not particularly well staffed, and

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Speaker 1: that was before DOGE came in and did what it

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Speaker 1: did across the US government. And we've also just taken

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Speaker 1: an approach in the US of allowing and being more

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Speaker 1: permissive of this technology on the grounds that it has

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Speaker 1: this potential to bring down the roughly forty and traffic

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Speaker 1: fatalities that we see on US roads every year. There's

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Speaker 1: been this concern going back to the Obama administration of

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Speaker 1: we shouldn't be too prescriptive or too tough on this

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Speaker 1: technology or set hard and fast rules. We should allow

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Speaker 1: this to sort of proceed and sort of set guidelines

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Speaker 1: and come in afterward. And to the extent that issues

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Speaker 1: come up, we'll do defect investigations, will subject to these

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Speaker 1: companies to scrutiny, but we're not really going to stand

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Speaker 1: in the way. Whereas in Europe it's a very different story.

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Speaker 1: You have not seen Tesla be allowed to put what

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Speaker 1: it refers to as FSD on the roads, and even

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Speaker 1: in China there was a sort of limited ability to

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Speaker 1: sort of start to pilot that earlier this year. That

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Speaker 1: didn't last particularly long, and there's been real concerns about

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Speaker 1: Tesla and its competitors, just how sort of ready that

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Speaker 1: that technology is and the extent to which companies perhaps

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Speaker 1: have maybe oversold the capability of this technology.

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Speaker 2: Just lastly, here to recap, Tesla has issues with sales

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Speaker 2: being down, the sunsetting of these electric vehicle incentives by

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Speaker 2: the US government, problems with safety that have come to

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Speaker 2: light in the media. Given all of that, how is

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Speaker 2: it that Tesla investors retain the level of optimism we've

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Speaker 2: seen them have.

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Speaker 1: I think Musk has this uncanny ability to sort of

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Speaker 1: set agendas and command narratives, and his ability to sort

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Speaker 1: of talk about the future in this really exciting way

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Speaker 1: and put out these indications that everything's going to change.

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Speaker 1: He's going to deliver something that we've never seen before,

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Speaker 1: and we've seen him sort of make good on a

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Speaker 1: lot of those things. Right, This is a guy who

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Speaker 1: shoots rockets off into space and lands them back on

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Speaker 1: bard ships.

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Speaker 4: Right.

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Speaker 1: His ability to leverage that as don't worry about the

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Speaker 1: here and now, forget about the challenges that I'm having.

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Speaker 1: I've done it before, and I can do it again.

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Speaker 1: And it has proven to be really sort of sticky

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Speaker 1: and effective, even in spite of the damage that he

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Speaker 1: himself has been doing to his own company.

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Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.

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Speaker 2: To get more from The Big Take and unlimited access

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Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg

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Speaker 2: dot com slash podcast offer. If you'd like this episode,

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Speaker 2: you listen to podcasts. It helps people find the show.

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Speaker 2: Thanks for listening. We'll be back tomorrow.