April 23, 2024 • 16 mins
Tesla says it will accelerate the launch of more affordable models after reporting worse-than-expected profit and revenue for a third consecutive quarter. Bloomberg Radio hosts Carol Massar and Tim Stenovec speak with Ross Gerber, CEO at Geber Kawasaki Wealth Management, Bloomberg Businessweek Columnist Max Chafkin and Bloomberg Technology co-host Ed Ludlow for instant analysis and reaction.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
All right, Well, shares of Tesla are higher in the
after hours right now as investors continue to digest those
first quarter earnings numbers. Global vehicle inventory rose to twenty
eight days. It's a huge jump from the fifteen days
at the end of last quarter. Shares high right now
by just about five percent. First quarter revenue coming in
at twenty one point three billion dollars that was below
(00:29):
estimates of twenty two point three billion dollars. Also a
missed when it comes to EPs adjusted EPs, I should
say that coming in at forty five cents versus estimates
of fifty two.
Speaker 3 (00:39):
Cents, shares a teslap about five and a half percent
in the aftermarket, but also Tesla to accelerate the launch
of more affordable models at getting a red sticky by
our team here at Bloomberg. All right, so let's get
to it with us, Ross Gerber, president and CEO at
Gerber Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek
columnist Max Chafkin. Ross out there in Santa Monica, California.
Max here in our Bloomberg Interactive Brokeer studio getting ready
(01:02):
for another round of Tesla bingo.
Speaker 1 (01:03):
We'll get it do in just a moment.
Speaker 3 (01:05):
Ross investors like it. What do you make of this
report looking backwards looking forwards?
Speaker 4 (01:12):
Well, I think the good part of the report, because
this is really the only good part of the report,
is them saying that they're going to accelerate the production
of this next gen vehicle platform. And they were pretty
vague about what they're calling this or you know what
robo taxi is or is a model to coming, And
I think that'll be clarified on the conference call. So
you know, once again, we don't really watch after hours
(01:33):
trading because he really doesn't represent all the participants and so,
and we haven't seen the conference call yet, so we'll
see how this stock trades over the next several months.
But but there really isn't any other good news in
that report other than them saying they're going to accelerate
production even though they just fired all the people that
are in charge of accelerating production.
Speaker 2 (01:51):
Hey, Ross, remind everybody take a step back here, because
Carol and I were looking at the terminal a little earlier.
You've you know, you are a longtime Tesla bull until
you weren't, and you were a longtime believer and have
been a longtime believer in the company. You guys still
own a substantial number of shares over at gerber Kawasaki,
But what is your position right now in Tesla moving forward?
Speaker 4 (02:12):
So my position is that Tesla is a wonderful company
that has enormous potential with the CEO who has become
so divisive that people won't buy the cars. And that's
why saying is just going to produce more cars doesn't
address the real issue is why they're not selling cars today,
and that's the issue that needs to be addressed that
isn't being addressed. So as a shareholder, we have to
(02:33):
assess what the future earnings potential of a company is
based off what their business model is. And when we
start investing in Tesla over ten years ago, and we've
had a great run up until the purchase of Twitter,
and so we've been lowering our position because what we
feel is that Elon's behavior has hurt the brand in
such a way that consumers actually don't want to buy
(02:54):
a Tesla. It's just the best car on the road
at the best price, so people buy the car reluctantly
at this point, So I think, you know, we've got
these problems to solve, and I'm not sure if that
will be addressed on the conference call today. And that's
you know, And I don't like being called a Tesla
bear because I actually think they could turn the company
around pretty quickly if Elon changed his behavior and stopped
(03:16):
attacking everybody.
Speaker 1 (03:17):
But I just don't think that's going to happen.
Speaker 4 (03:19):
And so so I think the bigger issue that isn't
being addressed is doesn't matter how many cars Tesla makes
if nobody will buy them.
Speaker 3 (03:27):
All Right, So Max chaff can come on and you
guys do the Elon Inc.
Speaker 1 (03:30):
Podcast.
Speaker 3 (03:31):
You're constantly looking at what he says, what he does.
You're looking at his kind of his assets, his portfolio,
your initial thoughts on kind of the headlines we got.
Speaker 5 (03:39):
Yeah, just to kind of underlo Ross is saying something
like this, but like the note about the new products
is very vague. It doesn't say we're going to have
a model too, and it's going to come out on
this state, which is what investors, many investors have been
hoping for. It says it sounds like it's saying, I'm
reading it correctly, They're going to try to essentially make
the current models more affordable. Now that obviously could allow
(04:01):
them to sell more cars, but it's a slightly different
spin on things than what many people have been inspecting.
The other thing is, as Ross is saying, you know,
on a Tesla Earning's day, what Elon says, and more importantly,
how he says it is just as important as as
what's in these numbers, because he is going to hopefully
anyway clarify some of this. We also hopefully get a
(04:23):
sense of like where things stand with robotaxi, where things
stand with potential affordable cars, and investors seemed to react
to based on his optimism, you know, a couple quarters
ago when he was in this kind of dower mood,
we saw the stock go down. So it's like, do
we get an optimistic version of Elon or the kind
(04:43):
of very dour, pessimistic Elon.
Speaker 3 (04:46):
Well, I wonder if you have a question for Ross Max.
Speaker 5 (04:49):
Yeah, Ross, what is your reading on this on this product,
on this paragraph about the product?
Speaker 1 (04:55):
Well, I think you're dead right about the two things
you just said.
Speaker 4 (04:58):
Number one, they're of course vague because of the legality
of it. If they put this down and they don't
do it right, and since nobody seems to know what
Elon's going to do, and I'm sure that everybody understands
that nobody within Tesla knows what the business plan is
either because they just don't at this point.
Speaker 1 (05:14):
But I think secondly, a.
Speaker 4 (05:16):
Lot of it will be how does Elon answer these
questions from investors during the conference call?
Speaker 1 (05:21):
And what you said is right.
Speaker 4 (05:22):
If we have sort of a very positive Elon and
he's refocused and he's going to be working at Tesla
more and you know, he can play the room right,
maybe we get a little rally on the stock, but
it doesn't change the fundamentals. If he doesn't play the
room right, this becomes a bloodbath. So you know, I'm
just hoping that he understands the damage that he's done
(05:46):
and starts to mitigate this versus diving in and sort
of doubling down.
Speaker 5 (05:49):
It will be interesting to see if Twitter comes up
or sorry X comes up, you know, because there is
this question in this sense that he's spent gee Whiz
a lot of time talking about X, tweeting about X,
doing X related things. There's even a potential or they're
going to have a Grock integration inside of the Tesla's
and I think that to people who are really bought
(06:10):
into the ev story rather than the you know, Elon
Musk genius story, which those are two important constituencies here.
I think for Tesla stock, you know, they would like
to see him spend less time on his social media network.
Speaker 4 (06:23):
Yeah, well, it's not just less time, it's what he's saying,
you know, It's like it's not the time, it's that
what he's saying oftentimes is super divisive and basically racist.
So it's like, it's really hard to sell products to
people when the CEO says things that are really hurtful
to people, including me.
Speaker 1 (06:42):
For that matter.
Speaker 3 (06:43):
Now, and we've talked with you about that absolutely ross.
What could Elon say on the call, or Elon and
company say on the call that would make you more
excited about the company or once again say you know
kind of oh Elon really well.
Speaker 4 (07:01):
If I had my dream come true, he'd say I'm
coming back to work at Tesla, because he basically doesn't
work at Tesla, and he would say, I'm done tweeting
all this garbage and politics. I'm going to really focus
on advancing sustainable transportation and energy, and that we're going
to release this lower priced car and the strategy that
we all bought into three years ago, you know, and
(07:23):
the stock was at all time highs and earnings were
going up, you know, fifty hundred percent a year.
Speaker 1 (07:27):
You know, it was like it was like a different
world than today.
Speaker 4 (07:30):
And it's amazing to me he doesn't understand this difference,
that that really is his responsibility. And so as a shareholder,
I have to say it's an extremely distressing time because
the valuation of Tesla is premised off all these great
technological innovations, none of which have come to fruition yet.
So his focus is one hundred percent what needs to
(07:51):
be happening right now.
Speaker 2 (07:52):
Hey, Ross, I do want to just end with with
one last question about the cost of producing these vehicles.
It seems like Tesla is doing everything I can to
bring down the cost of producing these cars, the cost
of goods sold to Are they what numbers do you
want to see there?
Speaker 4 (08:07):
Well, they are, but their margins continue to go lower.
If you look at the report, which I've only had
a minute to look at, you know, their vehicle margins
continue to go lower. They're operating margins go lower. Their
net margins go lower, so they're able to lower the
price of the car. But what they're not able to
do is keep that going as fast as they're they're
lowering the price of the vehicles, so it's still hurting
(08:28):
them even though they're lowering the cost of the car,
and it doesn't bring in a bigger market.
Speaker 1 (08:33):
But you're not creating any demand. And this is I
have said it a hundred times. Every company in America
advertises for a reason.
Speaker 4 (08:41):
People need to know why your products are superior. And
all the Tesla people have bought in Teslas, you know,
so all these YouTubers can tweet all they want, but
everybody wanted to Tesla bought a Tesla. So you've got
to get new customers. And the new customers are being
told that charging sucks and evs are bad and this
and that and that, and Donald Trump says they're bad
and this is all they see all day. And then
(09:02):
it's like, why would they go buy a Tesla because
there's not one ad anywhere that tells you how great
the cars are?
Speaker 1 (09:07):
Because they are.
Speaker 3 (09:08):
Great, right and you still own them right real quickly?
Speaker 1 (09:11):
Yes or no, yeah I do.
Speaker 4 (09:13):
I just don't understand why they don't tell people how
great their vehicles are.
Speaker 3 (09:16):
All right, Ross Gerbert, so appreciated. We know you've got
to I think run over to our TV guys. President
CEO Gerba Kawasaki, so appreciate you joining us. Max Chafkin
is staying with us a Bloomberg BusinessWeek and we want
to roll into the conversation.
Speaker 2 (09:28):
Ed Ludlow, Yeah, he's co host of Bloomberg Technology on
Bloomberg TV. He joins us from the San Francisco Beer.
I do want to note care all the Tesla first
quarter automotive gross margin excluding regulatory credits is at sixteen
point four percent yea for the quarter.
Speaker 3 (09:40):
Stack up six point three percent in the aftermarket.
Speaker 2 (09:42):
Hey, I'd come on in here and explain why you
think the stock is moving higher given that a lot
of these numbers came in below estimates.
Speaker 6 (09:49):
Yeah. I think that the print and the numbers in
after has have nothing to do with the quarter gone.
Everyone's looked past it. Frankly, what the shareholder deck outlines
is almost line line exactly what Danna and I outlined
in the Big Take on Sunday, which is on the
affordable ev A big body of work had already been
done at the component and production process level, and Tesla
(10:12):
is moving forward with a more affordable lineup of evs
based on that technology. It was really misunderstood. It's like
the world was banking on the Honda Civic of evs
and Tesla to be the one to bring it. But
my understanding from sources that was never the case. And
if you read the shareholder deck, they spell it out
pretty clearly. They've looked at this kind of more holistically
and there will be more affordable evs coming late twenty
(10:33):
twenty five. Caution caveat Muskers often miss his own deadlines.
Speaker 4 (10:38):
You know that.
Speaker 6 (10:38):
I always say that, but it's like.
Speaker 5 (10:40):
A something for everyone.
Speaker 6 (10:41):
Yeah, you know that, And that was me protecting myself
from all the people who may go after me on
social media. But explicitly it states that they are working
on a purpose built ROBOTAXI. And so we went into
this saying, if you're a Wall Street institutional giant who
really wanted to see an affordable EV, or you're the
technology investor or the retail investor that's kind of all
(11:03):
in on the Tesla thesis around autonomy, you've got that
as well, And really I think the market adjoining in
hands to play that in after hours.
Speaker 5 (11:13):
You know, the question is like what is an affordable
EV And I think one of the things one of
the ways that Elon Musk could clarify is to is
to sort of say that, you know, he over the
weekend amid all this speculation, he tweeted a screenshot showing
the model. Why priced at twenty nine thousand dollars sounds prettyffordable.
Course that includes tax credit, which you know not everybody gets,
(11:36):
and a and like a five thousand dollars sort of
assumption of gas savings.
Speaker 4 (11:41):
So so like you could.
Speaker 5 (11:43):
Imagine a situation where he tries to argue, like, look,
we're going to cut a bunch of costs out of
this thing, and we're going to make it affordable as is,
like we don't need an additional model, which is a
really intriguing proposal. That is a huge, you know, pretty
big departure from how the car industry normally does things,
and in certain ways I get is saying maybe not
(12:04):
that surprising, right, that's kind of you know, Elon Musk
has long model this company after Apple. You know, Apple
sells a very you know, modest product line all the
products kind of look the same. They're all kind of expensive.
You know, you could sort of imagine his effort to
do this, and and you know, who knows if it's
going to work, but it definitely is outside of what
you know, a normal sort of car company, nor normal
(12:26):
car company analyst would expect to see, would want to see.
Speaker 3 (12:28):
You know, guys, I'm looking at a live blog Craik
Kanter weighing in our BNF Electric Vehicle analysts and saying,
you know where he talks about these new models and
talks about I don't know, new models ahead of our
previously communicated startup production the second half of twenty twenty five,
accelerating that launch, he he writes by including these statements
in the investor decka shows Tesla has identified that a
(12:50):
lack of new models is a problem. But are there
actually actions being taken or just a continued lack of clarity?
And I guess you know, I'm going to go back
to you Max for a second, like, right, we want
a little bit more specifics, right, And what this means?
Speaker 5 (13:04):
Yeah, again, it almost it does have the feel of
a deck that's being written for maximum optionality, and and
you know this is all happening.
Speaker 1 (13:13):
Very very quickly.
Speaker 5 (13:14):
You know, we saw we've seen Elon Musk get re engaged.
It appears in any case, you know, connected this layoff
in a way that has seemed, at least according to
you know, the reports that Bloomberg is published that Ed
has has written very hasty, and so you do wonder
like maybe they are trying to figure this out as
we speak, and and and who knows if we're definitely
(13:35):
going to get that level of clarity on the call
from Elon Musk, although given Elon Musk like he cannot
help himself but sort of say controversial things. You know,
he's got that sort of trump characteristic of being sort
of really really honest. Sometimes to a fault, he may
you know, spout something off that could send the stock
in any number of directions.
Speaker 2 (13:55):
And to that point, you know, what's like, what's what
are you looking for on the call at if you're
when you're tuning.
Speaker 6 (14:00):
In the car. So I don't want to be inconsistent,
you know, I posted in the blog before we kick
things off, clarity, but actually to be fair, I think
that Tesla has given us one single line of clarity.
So I'm just going to read it. This update may
resolve in a result in achieving less cost reductions than
previously expected. So Carol read out the section in which
(14:22):
they outline the explanation. There will be multiple affordable models,
but I think that the market, and indeed, because Elon
Musk kind of guided us there was thinking this will
be a brand new model, maybe it will be called
M two, Maybe it will specifically cost twenty five thousand
US dollars. I think in that single line of the
shareholder deck on page ten, they're saying it will be
(14:45):
less expensive than the average cost of a Y or three.
Now it will not be twenty five thousand dollars. And
so now we go to the big picture clarity. How
many of these things will you build? And what is
the strategy with that visa v ROBOTAXI because they all
occupy the same physical production space in Austin. Based on
our understanding, I also would think maybe the tone of
(15:08):
Elon Musk tim to answer your question, I thought he'd
be a bit combative and frazzled. Yeah, now I just
don't know.
Speaker 3 (15:16):
Wait wait for surprise, all right, ed, Lola, We're gonna
let you go because we know you've got a full
play to continue. But of course Bloomberg Technology co host
ed Ludlow. But we got to talk about with Max
final minute here or so Elon Bingo right.
Speaker 5 (15:33):
You know again, I've talked about this three months ago.
This is a thing that many Tesla watchers, bulls bears,
everybody in between, Elon Musk, super fans, Elon Musk's haters
tend to do, which is to kind of create a
Bingo card and look for some of his catchphrases. So
we at the Elon Ing Podcast, we've got a new
episode out right now and we have this Bingo card.
(15:55):
Just want to flag a few items. Horse that would
be one. Now, Elon Musk has said that anyone who's
driving a non autonomous card not a robotaxi, it'll be
like driving a horse compared to a car. So see
if he tries that line on us a few others
and to Grock uh uh and uh for reasonably optimistic.
(16:16):
He's often reasonably optimistic about lots of things. So so yeah,
lots of fun to be had here and we'll see
if anyone gets bingo.
Speaker 3 (16:23):
It's a fun card.
Speaker 2 (16:24):
Quefully we'll get you back in three months and also
earlier than three months. I'll be sure to check out
the Elon Inc. Podcast wherever you get your podcast. That's
Max Chafkin, a columnist for Bloomberg Business Week,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
All right, Well, shares of Tesla are higher in the
after hours right now as investors continue to digest those
first quarter earnings numbers. Global vehicle inventory rose to twenty
eight days. It's a huge jump from the fifteen days
at the end of last quarter. Shares high right now
by just about five percent. First quarter revenue coming in
at twenty one point three billion dollars that was below
(00:29):
estimates of twenty two point three billion dollars. Also a
missed when it comes to EPs adjusted EPs, I should
say that coming in at forty five cents versus estimates
of fifty two.
Speaker 3 (00:39):
Cents, shares a teslap about five and a half percent
in the aftermarket, but also Tesla to accelerate the launch
of more affordable models at getting a red sticky by
our team here at Bloomberg. All right, so let's get
to it with us, Ross Gerber, president and CEO at
Gerber Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek
columnist Max Chafkin. Ross out there in Santa Monica, California.
Max here in our Bloomberg Interactive Brokeer studio getting ready
(01:02):
for another round of Tesla bingo.
Speaker 1 (01:03):
We'll get it do in just a moment.
Speaker 3 (01:05):
Ross investors like it. What do you make of this
report looking backwards looking forwards?
Speaker 4 (01:12):
Well, I think the good part of the report, because
this is really the only good part of the report,
is them saying that they're going to accelerate the production
of this next gen vehicle platform. And they were pretty
vague about what they're calling this or you know what
robo taxi is or is a model to coming, And
I think that'll be clarified on the conference call. So
you know, once again, we don't really watch after hours
(01:33):
trading because he really doesn't represent all the participants and so,
and we haven't seen the conference call yet, so we'll
see how this stock trades over the next several months.
But but there really isn't any other good news in
that report other than them saying they're going to accelerate
production even though they just fired all the people that
are in charge of accelerating production.
Speaker 2 (01:51):
Hey, Ross, remind everybody take a step back here, because
Carol and I were looking at the terminal a little earlier.
You've you know, you are a longtime Tesla bull until
you weren't, and you were a longtime believer and have
been a longtime believer in the company. You guys still
own a substantial number of shares over at gerber Kawasaki,
But what is your position right now in Tesla moving forward?
Speaker 4 (02:12):
So my position is that Tesla is a wonderful company
that has enormous potential with the CEO who has become
so divisive that people won't buy the cars. And that's
why saying is just going to produce more cars doesn't
address the real issue is why they're not selling cars today,
and that's the issue that needs to be addressed that
isn't being addressed. So as a shareholder, we have to
(02:33):
assess what the future earnings potential of a company is
based off what their business model is. And when we
start investing in Tesla over ten years ago, and we've
had a great run up until the purchase of Twitter,
and so we've been lowering our position because what we
feel is that Elon's behavior has hurt the brand in
such a way that consumers actually don't want to buy
(02:54):
a Tesla. It's just the best car on the road
at the best price, so people buy the car reluctantly
at this point, So I think, you know, we've got
these problems to solve, and I'm not sure if that
will be addressed on the conference call today. And that's
you know, And I don't like being called a Tesla
bear because I actually think they could turn the company
around pretty quickly if Elon changed his behavior and stopped
(03:16):
attacking everybody.
Speaker 1 (03:17):
But I just don't think that's going to happen.
Speaker 4 (03:19):
And so so I think the bigger issue that isn't
being addressed is doesn't matter how many cars Tesla makes
if nobody will buy them.
Speaker 3 (03:27):
All Right, So Max chaff can come on and you
guys do the Elon Inc.
Speaker 1 (03:30):
Podcast.
Speaker 3 (03:31):
You're constantly looking at what he says, what he does.
You're looking at his kind of his assets, his portfolio,
your initial thoughts on kind of the headlines we got.
Speaker 5 (03:39):
Yeah, just to kind of underlo Ross is saying something
like this, but like the note about the new products
is very vague. It doesn't say we're going to have
a model too, and it's going to come out on
this state, which is what investors, many investors have been
hoping for. It says it sounds like it's saying, I'm
reading it correctly, They're going to try to essentially make
the current models more affordable. Now that obviously could allow
(04:01):
them to sell more cars, but it's a slightly different
spin on things than what many people have been inspecting.
The other thing is, as Ross is saying, you know,
on a Tesla Earning's day, what Elon says, and more importantly,
how he says it is just as important as as
what's in these numbers, because he is going to hopefully
anyway clarify some of this. We also hopefully get a
(04:23):
sense of like where things stand with robotaxi, where things
stand with potential affordable cars, and investors seemed to react
to based on his optimism, you know, a couple quarters
ago when he was in this kind of dower mood,
we saw the stock go down. So it's like, do
we get an optimistic version of Elon or the kind
(04:43):
of very dour, pessimistic Elon.
Speaker 3 (04:46):
Well, I wonder if you have a question for Ross Max.
Speaker 5 (04:49):
Yeah, Ross, what is your reading on this on this product,
on this paragraph about the product?
Speaker 1 (04:55):
Well, I think you're dead right about the two things
you just said.
Speaker 4 (04:58):
Number one, they're of course vague because of the legality
of it. If they put this down and they don't
do it right, and since nobody seems to know what
Elon's going to do, and I'm sure that everybody understands
that nobody within Tesla knows what the business plan is
either because they just don't at this point.
Speaker 1 (05:14):
But I think secondly, a.
Speaker 4 (05:16):
Lot of it will be how does Elon answer these
questions from investors during the conference call?
Speaker 1 (05:21):
And what you said is right.
Speaker 4 (05:22):
If we have sort of a very positive Elon and
he's refocused and he's going to be working at Tesla
more and you know, he can play the room right,
maybe we get a little rally on the stock, but
it doesn't change the fundamentals. If he doesn't play the
room right, this becomes a bloodbath. So you know, I'm
just hoping that he understands the damage that he's done
(05:46):
and starts to mitigate this versus diving in and sort
of doubling down.
Speaker 5 (05:49):
It will be interesting to see if Twitter comes up
or sorry X comes up, you know, because there is
this question in this sense that he's spent gee Whiz
a lot of time talking about X, tweeting about X,
doing X related things. There's even a potential or they're
going to have a Grock integration inside of the Tesla's
and I think that to people who are really bought
(06:10):
into the ev story rather than the you know, Elon
Musk genius story, which those are two important constituencies here.
I think for Tesla stock, you know, they would like
to see him spend less time on his social media network.
Speaker 4 (06:23):
Yeah, well, it's not just less time, it's what he's saying,
you know, It's like it's not the time, it's that
what he's saying oftentimes is super divisive and basically racist.
So it's like, it's really hard to sell products to
people when the CEO says things that are really hurtful
to people, including me.
Speaker 1 (06:42):
For that matter.
Speaker 3 (06:43):
Now, and we've talked with you about that absolutely ross.
What could Elon say on the call, or Elon and
company say on the call that would make you more
excited about the company or once again say you know
kind of oh Elon really well.
Speaker 4 (07:01):
If I had my dream come true, he'd say I'm
coming back to work at Tesla, because he basically doesn't
work at Tesla, and he would say, I'm done tweeting
all this garbage and politics. I'm going to really focus
on advancing sustainable transportation and energy, and that we're going
to release this lower priced car and the strategy that
we all bought into three years ago, you know, and
(07:23):
the stock was at all time highs and earnings were
going up, you know, fifty hundred percent a year.
Speaker 1 (07:27):
You know, it was like it was like a different
world than today.
Speaker 4 (07:30):
And it's amazing to me he doesn't understand this difference,
that that really is his responsibility. And so as a shareholder,
I have to say it's an extremely distressing time because
the valuation of Tesla is premised off all these great
technological innovations, none of which have come to fruition yet.
So his focus is one hundred percent what needs to
(07:51):
be happening right now.
Speaker 2 (07:52):
Hey, Ross, I do want to just end with with
one last question about the cost of producing these vehicles.
It seems like Tesla is doing everything I can to
bring down the cost of producing these cars, the cost
of goods sold to Are they what numbers do you
want to see there?
Speaker 4 (08:07):
Well, they are, but their margins continue to go lower.
If you look at the report, which I've only had
a minute to look at, you know, their vehicle margins
continue to go lower. They're operating margins go lower. Their
net margins go lower, so they're able to lower the
price of the car. But what they're not able to
do is keep that going as fast as they're they're
lowering the price of the vehicles, so it's still hurting
(08:28):
them even though they're lowering the cost of the car,
and it doesn't bring in a bigger market.
Speaker 1 (08:33):
But you're not creating any demand. And this is I
have said it a hundred times. Every company in America
advertises for a reason.
Speaker 4 (08:41):
People need to know why your products are superior. And
all the Tesla people have bought in Teslas, you know,
so all these YouTubers can tweet all they want, but
everybody wanted to Tesla bought a Tesla. So you've got
to get new customers. And the new customers are being
told that charging sucks and evs are bad and this
and that and that, and Donald Trump says they're bad
and this is all they see all day. And then
(09:02):
it's like, why would they go buy a Tesla because
there's not one ad anywhere that tells you how great
the cars are?
Speaker 1 (09:07):
Because they are.
Speaker 3 (09:08):
Great, right and you still own them right real quickly?
Speaker 1 (09:11):
Yes or no, yeah I do.
Speaker 4 (09:13):
I just don't understand why they don't tell people how
great their vehicles are.
Speaker 3 (09:16):
All right, Ross Gerbert, so appreciated. We know you've got
to I think run over to our TV guys. President
CEO Gerba Kawasaki, so appreciate you joining us. Max Chafkin
is staying with us a Bloomberg BusinessWeek and we want
to roll into the conversation.
Speaker 2 (09:28):
Ed Ludlow, Yeah, he's co host of Bloomberg Technology on
Bloomberg TV. He joins us from the San Francisco Beer.
I do want to note care all the Tesla first
quarter automotive gross margin excluding regulatory credits is at sixteen
point four percent yea for the quarter.
Speaker 3 (09:40):
Stack up six point three percent in the aftermarket.
Speaker 2 (09:42):
Hey, I'd come on in here and explain why you
think the stock is moving higher given that a lot
of these numbers came in below estimates.
Speaker 6 (09:49):
Yeah. I think that the print and the numbers in
after has have nothing to do with the quarter gone.
Everyone's looked past it. Frankly, what the shareholder deck outlines
is almost line line exactly what Danna and I outlined
in the Big Take on Sunday, which is on the
affordable ev A big body of work had already been
done at the component and production process level, and Tesla
(10:12):
is moving forward with a more affordable lineup of evs
based on that technology. It was really misunderstood. It's like
the world was banking on the Honda Civic of evs
and Tesla to be the one to bring it. But
my understanding from sources that was never the case. And
if you read the shareholder deck, they spell it out
pretty clearly. They've looked at this kind of more holistically
and there will be more affordable evs coming late twenty
(10:33):
twenty five. Caution caveat Muskers often miss his own deadlines.
Speaker 4 (10:38):
You know that.
Speaker 6 (10:38):
I always say that, but it's like.
Speaker 5 (10:40):
A something for everyone.
Speaker 6 (10:41):
Yeah, you know that, And that was me protecting myself
from all the people who may go after me on
social media. But explicitly it states that they are working
on a purpose built ROBOTAXI. And so we went into
this saying, if you're a Wall Street institutional giant who
really wanted to see an affordable EV, or you're the
technology investor or the retail investor that's kind of all
(11:03):
in on the Tesla thesis around autonomy, you've got that
as well, And really I think the market adjoining in
hands to play that in after hours.
Speaker 5 (11:13):
You know, the question is like what is an affordable
EV And I think one of the things one of
the ways that Elon Musk could clarify is to is
to sort of say that, you know, he over the
weekend amid all this speculation, he tweeted a screenshot showing
the model. Why priced at twenty nine thousand dollars sounds prettyffordable.
Course that includes tax credit, which you know not everybody gets,
(11:36):
and a and like a five thousand dollars sort of
assumption of gas savings.
Speaker 4 (11:41):
So so like you could.
Speaker 5 (11:43):
Imagine a situation where he tries to argue, like, look,
we're going to cut a bunch of costs out of
this thing, and we're going to make it affordable as is,
like we don't need an additional model, which is a
really intriguing proposal. That is a huge, you know, pretty
big departure from how the car industry normally does things,
and in certain ways I get is saying maybe not
(12:04):
that surprising, right, that's kind of you know, Elon Musk
has long model this company after Apple. You know, Apple
sells a very you know, modest product line all the
products kind of look the same. They're all kind of expensive.
You know, you could sort of imagine his effort to
do this, and and you know, who knows if it's
going to work, but it definitely is outside of what
you know, a normal sort of car company, nor normal
(12:26):
car company analyst would expect to see, would want to see.
Speaker 3 (12:28):
You know, guys, I'm looking at a live blog Craik
Kanter weighing in our BNF Electric Vehicle analysts and saying,
you know where he talks about these new models and
talks about I don't know, new models ahead of our
previously communicated startup production the second half of twenty twenty five,
accelerating that launch, he he writes by including these statements
in the investor decka shows Tesla has identified that a
(12:50):
lack of new models is a problem. But are there
actually actions being taken or just a continued lack of clarity?
And I guess you know, I'm going to go back
to you Max for a second, like, right, we want
a little bit more specifics, right, And what this means?
Speaker 5 (13:04):
Yeah, again, it almost it does have the feel of
a deck that's being written for maximum optionality, and and
you know this is all happening.
Speaker 1 (13:13):
Very very quickly.
Speaker 5 (13:14):
You know, we saw we've seen Elon Musk get re engaged.
It appears in any case, you know, connected this layoff
in a way that has seemed, at least according to
you know, the reports that Bloomberg is published that Ed
has has written very hasty, and so you do wonder
like maybe they are trying to figure this out as
we speak, and and and who knows if we're definitely
(13:35):
going to get that level of clarity on the call
from Elon Musk, although given Elon Musk like he cannot
help himself but sort of say controversial things. You know,
he's got that sort of trump characteristic of being sort
of really really honest. Sometimes to a fault, he may
you know, spout something off that could send the stock
in any number of directions.
Speaker 2 (13:55):
And to that point, you know, what's like, what's what
are you looking for on the call at if you're
when you're tuning.
Speaker 6 (14:00):
In the car. So I don't want to be inconsistent,
you know, I posted in the blog before we kick
things off, clarity, but actually to be fair, I think
that Tesla has given us one single line of clarity.
So I'm just going to read it. This update may
resolve in a result in achieving less cost reductions than
previously expected. So Carol read out the section in which
(14:22):
they outline the explanation. There will be multiple affordable models,
but I think that the market, and indeed, because Elon
Musk kind of guided us there was thinking this will
be a brand new model, maybe it will be called
M two, Maybe it will specifically cost twenty five thousand
US dollars. I think in that single line of the
shareholder deck on page ten, they're saying it will be
(14:45):
less expensive than the average cost of a Y or three.
Now it will not be twenty five thousand dollars. And
so now we go to the big picture clarity. How
many of these things will you build? And what is
the strategy with that visa v ROBOTAXI because they all
occupy the same physical production space in Austin. Based on
our understanding, I also would think maybe the tone of
(15:08):
Elon Musk tim to answer your question, I thought he'd
be a bit combative and frazzled. Yeah, now I just
don't know.
Speaker 3 (15:16):
Wait wait for surprise, all right, ed, Lola, We're gonna
let you go because we know you've got a full
play to continue. But of course Bloomberg Technology co host
ed Ludlow. But we got to talk about with Max
final minute here or so Elon Bingo right.
Speaker 5 (15:33):
You know again, I've talked about this three months ago.
This is a thing that many Tesla watchers, bulls bears,
everybody in between, Elon Musk, super fans, Elon Musk's haters
tend to do, which is to kind of create a
Bingo card and look for some of his catchphrases. So
we at the Elon Ing Podcast, we've got a new
episode out right now and we have this Bingo card.
(15:55):
Just want to flag a few items. Horse that would
be one. Now, Elon Musk has said that anyone who's
driving a non autonomous card not a robotaxi, it'll be
like driving a horse compared to a car. So see
if he tries that line on us a few others
and to Grock uh uh and uh for reasonably optimistic.
(16:16):
He's often reasonably optimistic about lots of things. So so yeah,
lots of fun to be had here and we'll see
if anyone gets bingo.
Speaker 3 (16:23):
It's a fun card.
Speaker 2 (16:24):
Quefully we'll get you back in three months and also
earlier than three months. I'll be sure to check out
the Elon Inc. Podcast wherever you get your podcast. That's
Max Chafkin, a columnist for Bloomberg Business Week,
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.