June 17, 2025 • 27 mins
On this week’s episode of Elon, Inc., host David and Max chat about the latest Musk-Trump drama. A detente had just emerged when we last recorded, and now it feels like it’s just a matter of time before Musk (and little X) are back in the Oval Office sparring with reporters (and playing on the floor). Will the apologies help Musk secure eased restrictions for self-driving cars and access to Star Wars 2.0 (Trump’s “golden dome” project)? And will Max and David be able to introduce MAMUWT (Musk Always Makes Up With Trump) into the lexicon alongside TACO (Trump Always Chickens Out)? What about MADRA (Musk Always Delays Robotaxi Announcements)?
Meanwhile, xAI is in talks to raise $4.3 billion (on top of the $5 billion it’s been trying to raise) since the company has already spent most of the $14 billion it previously raised. Commitments on the debt sale are due Tuesday. Bloomberg’s Carmen Arroyo joins the crew to break down what it means for the future of Musk’s company.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:07):
Let me tell you we have a new star.
Speaker 3 (00:10):
A star is born Elon mars Juthan Kennedy.
Speaker 2 (00:14):
He is the Thomas Edison plus plus plus of our age.
Speaker 3 (00:18):
Probably his whole life is from a position of insecurity.
Speaker 2 (00:21):
I feel for the guy. I would say ninety eight
percent really appreciate what he does. But those two percent
that are nasty, they are I'll pay in four folds.
We are meant for great things in the United States
of America, and Elon reminds.
Speaker 1 (00:34):
Us of that.
Speaker 2 (00:35):
I'm very disappointed in Elon.
Speaker 1 (00:37):
I've helped Elon a lot.
Speaker 4 (00:38):
A lot.
Speaker 2 (00:46):
Welcome to Elan Ink, Bloomberg's weekly podcast about Elon Musk.
It's Tuesday, June seventeenth. I'm your host, David Papadopolos. Now
we start this week's show with the latest and the
Musk Trump drama. The daytante that was just emerging when
we last recorded is taking hold, and you know, it
feels like it's just a matter of time before Musk
(01:07):
and Little X we'll be back in the Oval office,
sparring with reporters and playing on the floor. I'm sitting
here with Elon Inks stalwart Max Chaffkin, who's feeling I
suspect a little vindicated to go over the latest there, Max.
Welcome to you, sir, David.
Speaker 1 (01:24):
I told you so.
Speaker 2 (01:27):
All week. You've been prepping that line. Max will also
give us an update on the much anticipated launch of
Tessel's ROBOTAXI. Now you'll remember it was slated for last week.
We were all so excited, and then it was postponed
to this week as Musk and co. Scrambled to get
it ready. Not in auspicious beginning. And then over at XAI,
(01:47):
Musk is raising a ton of money, even more than
we had previously reported.
Speaker 1 (01:52):
But Xai is.
Speaker 2 (01:53):
Also burning through a lot of money, just reams and
reams of it in billion dollar clips in ace. Bloomberg
Credit Markets reporter Carmen Arroyo will join us later tell
us all about that. But Max, Elon and Donald are
beck so much so that my god, did I actually
hear or read an apology come out of Elon Musk's
(02:18):
mouth that was this? Did this happen?
Speaker 1 (02:21):
Elon?
Speaker 2 (02:21):
I didn't know he I didn't know he did that.
Speaker 4 (02:24):
I regret some of my posts about President at Real
Donald Trump last week.
Speaker 1 (02:29):
They went too far. He said WHOA on June eleventh,
and you're right, an unusual apology, although.
Speaker 2 (02:34):
He has I mean, I guess maybe he could say, well,
it wasn't really an apology. If you regret something or
you apologize, it's not.
Speaker 4 (02:39):
Quite a you know, full on apology. But it's pretty
darn close. And I think I said this last week,
that is what it's going to take.
Speaker 1 (02:49):
And I don't know that this roveling. Yeah, I mean.
Speaker 4 (02:53):
He accused Trump of unspeakable crimes without basis, suggested he
should be impeached. You know, he said a lot of
excuse my French, like really bad, and so he's gonna
have to do some of this to if he wants
to get back into Trump's good graces.
Speaker 2 (03:09):
And do we believe it is working. It looks like
Trump on his end continues to also move a bit
towards Musk, like, hey, maybe this is going to be okay.
Speaker 1 (03:21):
Trump's just not really saying anything.
Speaker 4 (03:24):
Beyond like they've talked, and I think last week we
went over that answer that Trump gave when he was
asked about Elon Musk. I mean, it's basically been pretty
quiet between the two of them, which honestly feels like progress.
Speaker 1 (03:35):
They're not feuding in public.
Speaker 4 (03:37):
There have also been i'd say a couple of little
things that you could interpret as sort.
Speaker 1 (03:44):
Of bullish signs for the Elon Trump relationship.
Speaker 4 (03:46):
Such as well, I believe it was last week Dune thirteenth,
Bloomberg reported on a kind of modest change that NITSA,
that's the highway regulator that we mentioned last week, is
making for rivalless car companies. Essentially, again, this is like
very much a small procedural thing.
Speaker 2 (04:05):
Yeah, helps TESLA, and I also suppose just you know, directionally,
it certainly helps. And it's probably at a moment when
that relationship appeared as rocky as it did, it certainly
looks like a good sign. So this is a really
small change it But so when I read the headline,
it was like, wow, this is big.
Speaker 4 (04:23):
Okay, So for cars that do not have pedals or
steering wheel, automakers have to seek an exemption from NITSA.
That's the highway regulator that I mentioned, the National Highway
Traffic Safety Administration. It's part of the Department of Transportation.
It's an agency that Elon Musk has tangled with over
the years.
Speaker 1 (04:40):
Nitsa said, they're going.
Speaker 4 (04:42):
To streamline this process so that the approval decisions are
made within months rather than years. So, like, I don't know,
I guess that's good, but it's not an approval. It's
just a suggestion that they will make decisions about approval
or lack of approval more quickly than they've been making
them before. It's also one that doesn't really have bearing
(05:04):
on this Robotaxi launch that we're talking about in Austin
because those cars, of course, do have pedals and steering wheels.
Speaker 2 (05:10):
They do.
Speaker 1 (05:11):
They're just normal cars.
Speaker 4 (05:13):
So I'm not one hundred percent sure that these regulations
that NITSA is talking about are even related to what
what Elon Musk is doing. Obviously, Elon Musk is doing
this launch without this NITSA approval.
Speaker 1 (05:25):
So again, I think.
Speaker 4 (05:26):
It's like a positive sign in the sense that they're
doing this in some sense in public. The Trump and
administration has to know that this will be interpreted as
a sort of olive branch to Elon Musk, and so
I think that's how.
Speaker 1 (05:39):
We should interpret it as well. Yeah, that is, but
it's a small olive branch.
Speaker 2 (05:44):
A got it, Yeah, you keep saying that I got it.
We're going to talk a little bit more about that
Robotaxi launch in a second, but before we do, I
know that you've been out there working on a little
new something you've got, because you know, given how Musk
is coming rushing back to Trump's arms, and you were
(06:04):
trying to create like a little bit of an acronym,
a little bit of thing like what do we call this?
Speaker 4 (06:09):
All right, hang on, just indulge me for a second here, David,
because as we've talked about, a couple of weeks ago,
I wrote a piece saying, don't bet on the Elon
Musk Trump breakup.
Speaker 1 (06:18):
It looked really smart for.
Speaker 2 (06:19):
Me all and then we all laughed, and then we
laughed at me and laughed in laugh.
Speaker 1 (06:24):
And now I am once again my take.
Speaker 4 (06:27):
My only regret is not sticking You're the king again,
not sticking.
Speaker 1 (06:31):
To my take.
Speaker 4 (06:32):
When Elon was hurling insults and it seemed like they
were never gonna speak again.
Speaker 2 (06:36):
That was a moment of weakness on your part.
Speaker 1 (06:39):
Yeah, definitely. But I do think there's a lesson here.
And I've been.
Speaker 4 (06:44):
Of course, following a lot of the discussion as you
have on Wall Street and among investors about how to
think about Trump's Bellaicoast language on trade. You, David, are
probably familiar with the taco acronym that has been thrown
around a lot. It stands for Trump always chickens out.
This is the idea that if Trump says I'm going
(07:04):
to put one hundred and fifty percent tariffs on China,
Wall Street traders kind of discount that because they think, hey,
he's never going to do it.
Speaker 1 (07:11):
So I think we need one for Musk and Trump,
and I propose.
Speaker 2 (07:15):
Mamma Wood, Mamma Wood, Mamma Wood.
Speaker 4 (07:19):
Yeah, Musk always makes up with Trump.
Speaker 2 (07:24):
Mamma woo, Mamma Wood.
Speaker 1 (07:25):
So that's all you need to know. I kind of
like my take off the same way that Taco has
taken off.
Speaker 2 (07:31):
I mean taco. There's a simplicity to taco, which is
fun and by the way, tacos are also delicious. Mamma Wood.
First of all, I don't even know that you're pronounce
if you're really spelling it m A M W T.
I don't know that you're pronouncing it correctly.
Speaker 1 (07:45):
Should we pronounce I think.
Speaker 2 (07:46):
It should be like that brand of shoe, those that
hiking gearts. You should be like mammoot man like w is
essentially silent. Yeah, you're right, but I say, if you're
going to go this route and go like all weird
and incomprehensible, keep on going. We need whack your wilder
more incomprehensible and longer. Maybe we go to them. Maybe
(08:06):
we have people send ideas to the mailbag.
Speaker 4 (08:08):
Yeah, listeners, let us know if you like mamut or
mamma what or however you want to pronounce it. And also, yeah,
if you've got a better acronym, maybe one that ideally
is a word, maybe one that has the correct amount
of valel.
Speaker 2 (08:19):
There's no way it's pronounced mamma wood. It's just can't
be memoot.
Speaker 1 (08:23):
Give us a shout elon ink at Bloomberg dot net.
Speaker 4 (08:25):
Tell tell us what you think the acronym should be,
and really you like how you're thinking about this Trump
Musk relationship these days.
Speaker 2 (08:32):
The acronym aside the conceit and the pronunciation of the
acronym a side the conceit is a good one. It
seems like Musk has certainly come to appreciate that. As
much as Trump has to lose in a breakup, he
elon Musk is a hell of a lot more to lose,
and so hence Musk always makes up with Trump.
Speaker 4 (08:53):
There we are, yeah, and you know I mentioned the
self driving rules. There are other signs that Trump is
sort of not done extracting punishment, or that there won't
be repercussions for Elon Musk. Reuters reported the day after
the apology that this Golden Dome project that Trump has
been talking about, this essentially a missile shield similar to
(09:15):
the Iron Dome that Israel has Trump wants to builds
in the US. Of course, gold there had been a
lot of reporting suggesting that SpaceX would be a major
player in that. Reuter's reporting on the twelfth that the
Department of Defense was looking to change the architecture of
the Golden Dome essentially in a way.
Speaker 1 (09:35):
That would cut out SpaceX.
Speaker 4 (09:36):
So they'd been imagining this sort of satellite array that's
obviously a great job for Elon Musk, and they were
looking at other solutions. And there's a suggest in the
story that the feud between Trump and Musk might open
the door for maybe opponents of this plan to suggest
their own ideas, so there might be more of a
competition for which contractors are going to get this contract
(09:58):
if it indeed happens, which, of course, they haven't appropriated
the money yet.
Speaker 2 (10:01):
And I'm sorry, say what exactly what kind of money
are we talking about here? This would be an incredibly
rich project with incredibly large I mean.
Speaker 1 (10:12):
Billions of dollars.
Speaker 4 (10:13):
Certainly, I think the overall amount of money appropriated for
this in the it's there's a there's an item in
the big beautiful bill. Off the top of my head,
I think it's twenty five billion. Well yeah, but jumps.
So it's not clear that that that will survive the
Senate thing. Reuter's mentions that defense experts think that the
overall costs of this thing will be more like one
(10:34):
hundred and seventy five billion once it's done and dusted,
So that would just be the beginning of the Golden Dome.
Speaker 2 (10:40):
But that's before Doge goes through. When Doze is done, yeah,
it's going to be down to about a couple billion dollars.
Speaker 4 (10:46):
But in any case, it's it's sort of a suggestion
that you know, there would be a competition, and that
SpaceX wouldn't necessarily have a leg up in that competition.
Speaker 2 (10:57):
Yeah, So another word to Elon if you want part
of the Golden Dome. Ma moot moot, Yeah, right, okay. Robotaxi,
we were supposed to get it max the soft launch,
as we had discussed last week. It was supposed to
come Thursday or Friday last week, and then at some
point we got our heads up now no, no, no, no,
not quite ready. What's going on.
Speaker 1 (11:17):
I feel like we need another acronym.
Speaker 4 (11:19):
That's like uh madra Musk always delays Robotaxi announcements.
Speaker 2 (11:25):
If we come up enough with enough of these things,
we'll just do the entire show and acronym. We won't
have to say other words.
Speaker 4 (11:31):
We talked last week about the prospect that there would
be a Robotaxi announcement as early as the end of
last week. That's what we had heard from people inside
of Tesla. We being Bloomberg. Musk put out of tweet
essentially saying they're aiming for the twenty second.
Speaker 1 (11:48):
Of June, which is I believe it's Sunday.
Speaker 2 (11:51):
So not only is the launch itself a soft launch,
but the date itself it was a little.
Speaker 4 (11:56):
Fuzzy squish, And then that he thought what was definitely
gonna happen was that they would celebrate his birthday, which
is the twenty years by driving by no, but by
driving a robotaxi from the factory to a customer's home.
Speaker 2 (12:09):
Now, I tell that's a good set. Well, we're there'll
be a cake. I mean, what then you get this?
Speaker 4 (12:14):
I am not holding my breath for any of this,
although I feel like the factory stunt, that's one that
feels like more plausible that they could actually pull off.
Musk has been promising these robotaxi launches for years, and
so it definitely feels like Tesla is more intent on
actually doing this, actually having something. And we've heard details
(12:38):
ten cars in Austin, we've seen some cars even driving around.
But I mean, honestly, who knows, and and so I
would not be surprised if there's something that happens, something
that could be plausibly called a robotaxi launch as soon
as Sunday. It's not going to be very big. I
don't think regular people are going to be able to
(12:59):
get in these robot teschsxs. I think it's going to
be like basically pretty minimal, but allowing Elon Musk to
claim some sort of win, and that could be again
giving some Tesla insiders or something a ride in a
quote unquote driverless car, or even just driving one of
these cars to one customer's home. So we're going to
(13:20):
see something, but the date just keeps moving and at
this point I'm not totally sure when we're going to
see it.
Speaker 2 (13:31):
Okay, Now we are joined by Ace Bloomberg, Credit Markets
reporter Carmen and Royo Carmen. Fantastic to have you on
the show.
Speaker 1 (13:40):
Thank you so much, David, So Carmon, you have.
Speaker 2 (13:42):
A great scoop out today, you and Jill Shaw on
Xai and all the money it's raising and all the
money it's spending at the same time. Tell us about it.
Speaker 3 (13:50):
Yeah, sure. So Xai is out in the market right
now trying to basically raise a little bit under a
ten billion, so nine point three billion, yes.
Speaker 2 (13:59):
So to be clear, we already knew, I believe we
had previously reported that they were seeking to raise.
Speaker 3 (14:05):
Five billion of debt. So what's new is that they're
racing also equity as part of the same fund raising process.
Speaker 2 (14:11):
Five billion debt and four point three billion in equity.
Speaker 3 (14:15):
A lot of money, a lot of money.
Speaker 2 (14:17):
And how's it going?
Speaker 3 (14:19):
I mean, the commitments on the debt are dude today,
So we'll know probably at the end of the day
how the dead process is going. But investors, so.
Speaker 2 (14:26):
Max, sorry to interpret this is I already immediately already
going back to man Mood. Right, you need to sell
a lot of debt, you need to sell a lot
of equity. You need to show investors you're in the
good graces of Donald Trump. Man Mood, I think you
missed Man Mood. Carmen man Mood.
Speaker 1 (14:43):
Must always makes up with Trump. Oh okay, how we're
going to make it happen?
Speaker 2 (14:49):
Spreads right, But you if you're going to be raising
nine point three billion, you can't be Splitsville with Donald Trump.
I wouldn't think.
Speaker 1 (14:59):
Yeah.
Speaker 2 (15:00):
But anyway, so the debt, the bids on the debt
are due today. The books are supposed to close today,
and so we should have that that should be locked
down by the end of the day.
Speaker 3 (15:07):
Yeah, the commitments should be out today.
Speaker 2 (15:09):
Yeah, okay. And then on the equity side, any sense
of how it's going.
Speaker 3 (15:14):
Apparently what they've disclosed is basically that they're working on
the four point three billion fundraise and they're closed to
being finalized.
Speaker 2 (15:21):
And this isn't just like money that Musk himself is.
Speaker 3 (15:24):
We don't know who's the what we're the source of
the funds is, but it's been put together quick from
what we know.
Speaker 2 (15:29):
So okay, so that's what they're bringing in and what
is going out.
Speaker 3 (15:35):
Yeah, so they have an incredibly expensive program, like most
AI companies do. They're just this year they expect to
invest tenvillion with capital expenditures. So basically all they're racing,
they're going to be spending. And so when you look
at some of the figures, like a little bit more
in depth, like the levered cash flow, which is basically
(15:56):
what's left once you pay everything else, they have a
negative thirteen billion. So they're really not being profitable right now.
Speaker 2 (16:04):
No, I mean wait a minute, so they are. They're
going to burn through more than a billion dollars each
and every month this year.
Speaker 3 (16:11):
Yeah, I mean built in data centers and training AM
models is expensive.
Speaker 2 (16:15):
Max.
Speaker 4 (16:16):
I mean so in some ways, like Carmen is saying,
this is not hugely surprising, because.
Speaker 2 (16:21):
This is the day of vindication for you, Max today,
because not only on the Musk Trump thing, but also
you've been hounding the tat, hounding the table about how
stupidly expensive it is to build out AI.
Speaker 4 (16:33):
I mean, the thing that jumps out of you in
the story is not so much the cost, but the
fact that there's like no revenue, I mean no revenue
coming in, right, there's some.
Speaker 3 (16:42):
Revenue coming in, like they have no they like for
this year they project like five hundred million revenue.
Speaker 2 (16:49):
Substantially five hundred million comes in, and again, how much
goes out and expenses just.
Speaker 3 (16:54):
On capex more than ten billion.
Speaker 4 (16:56):
Okay, so you know it's Look, there are a lot
of people who really believe that AI is this huge
game changer. On the other hand, this space in particular
is very capital intensive. It's also very competitive. I do wonder,
like Carmen, the story kind of hints at signs that
(17:16):
some investors are approaching this deal with skepticism, that they're
not running into this deal the way we might expect
investors to run into a normal Elon Musk deal.
Speaker 3 (17:29):
Well, the thing is, like credit investors are not used
to this type of deal like they're used to.
Speaker 2 (17:35):
Right, because there's no there's no income flow, there's no
stream of cast.
Speaker 3 (17:39):
Actually this is a startup, right, and that usually doesn't
go to the corporate credit dead markets like that usually.
Speaker 2 (17:46):
And it would either be on the equity side or
if it were on the dead side, how would it
be done?
Speaker 3 (17:50):
Could be a venture dead This is not that usual.
We don't see this. The food rasist we've seen on
data centers are mostly at the project level.
Speaker 4 (17:58):
No, is it because is he to do this because
they're actually building this like gigantic physical data center with
all these expensive GPUs that.
Speaker 3 (18:05):
Have intrinsic value. I think it's mainly like you're betting
on AI, like the and basically you're betting on Musk
and the equity race just came out this week, which
is also helping investors be more comfortable with the dead
race because they know that someone's going to be backing
it in some sense.
Speaker 2 (18:21):
But it's true, it's not super intuitive that if you're
betting on AI that you'd want to do it through
the debt side, right. I mean, if you're betting on AI,
you're hoping to hit a crazy home run, right and
come up with something that produces a return of five
hundred one thousand percent. You know, why do you want
to be clipping coupons at eleven or twelve per What
are the coupons on this debt. By the way, the
(18:42):
interest rate twelve percent.
Speaker 1 (18:43):
I believe I.
Speaker 2 (18:44):
Would think an investor gravitates that space thinking that they're
going to mind a thousand percent return, not that they're
going to clip eleven percent interest rates a year.
Speaker 3 (18:52):
Well, if you look at like the just the equity
story for Xai, like an end of twenty twenty four
was worth around fifty billion, now end of March was
eighty billion, and now they've raised more equity. So the
equity story is just like an outboard trajectory that's usually
not the same for the debt. You just expect to
get paid, so the upside is not usually that into it.
Speaker 1 (19:11):
What is that equity story based on.
Speaker 3 (19:13):
Just fund raises?
Speaker 4 (19:14):
It's just like like but I mean it's basically just
Elon decided that it's now worth twice.
Speaker 2 (19:22):
Wait a minute, no, no, no, but some sort of transaction
or two or three took place that when you extrapolated out,
it came up with fifty billion dollars whenever it was
that first one, and it spits out eighty billion, now right,
I mean, it's not Max is being very cynical and
saying it's just it's it's eighty billion dollars now because
Musk says it is, but no, presumably actual transactions happened
(19:45):
at that valuation.
Speaker 3 (19:46):
Well, well, you raise new equity, you just you basically
put a new valuation to it.
Speaker 4 (19:50):
And somebody bought it, right, Well presumably presumably. I'm curious
how the merger of x and Xai plays into this fundraising,
and like I still don't totally understand what it means
for either company, and like, how are the investors thinking
(20:12):
about the fact that they also own this sort of
struggling social network.
Speaker 3 (20:17):
So that's kind of interesting because like dead investors boughtle
out of the xtad and they were comfortable with that.
Speaker 2 (20:22):
That was how much a net was right back when
Musk bought Twitter, A chunk of that was financed with debt.
How much was it in me?
Speaker 3 (20:29):
It was twelve billion, Okay, So like basically Morgan Stanley
and the other bank sold everything earlier this year and
the debt was trading close to one hundred right to
close to par.
Speaker 2 (20:39):
So the end, but you know, it had fallen, and.
Speaker 3 (20:41):
It's fallen a little bit.
Speaker 2 (20:42):
Yeah, and it had fallen initially right after the deal
went through. It had fallen all the way down to
like in the sixties sixty some od sence on the dollar.
Then it came all the way when when Trump was
elected and Musk and Trump became buddies. He came all
the way back to around par But yeah, so x
and Xai how our investors, as Masks was asking, how
are they thinking about?
Speaker 3 (21:01):
What's kind of interesting is that if you own the
ex debt, right you have, you still have a lien
on Xai. But even if you own Xai dead, you
don't have that lean on x. They don't have that
cross collateralization.
Speaker 2 (21:11):
A lean on X. What does a lien on X
get you?
Speaker 3 (21:15):
I mean, at least you have more financials for the company,
you have a longer history.
Speaker 2 (21:19):
Max. Do you want to lean on X or x Ai?
You don't. He doesn't want to lean on either. I
will just say this, A billion dollars a month in
terms of what they're blowing through. Again, I don't know
anything about anything, but man, it seems like an awful
lot of money. And is this a window into how
much all of these AI companies are are pissing through?
Speaker 1 (21:39):
Yeah? Yeah it is.
Speaker 4 (21:41):
I mean I do think open ai is different because
open ai has a real business, Like open Ai built
this very successful consumer product that they've managed to convince
a lot of people and a lot of businesses to
pay money for. And so they are, you know, again,
their revenue projection I think should be met with some
(22:02):
skepticism as well, because like we're in the middle of
this guy very frothy period. But they're projecting Carmen, correct me,
how I'm wrong, like twelve billion, thirteen billion a year
in annual revenue, right, or I mean they're they're projecting
in the billions of annual revenue in the near term,
and I think they're already pulling in billions in revenue today.
But I do think like this is just what it costs,
(22:25):
and I think it helps us understand. You know, Must
put out that tweet a couple of weeks ago before
the fight with Trump, where he said he needs to
be super focused on his company, needs to sleep on
the floor, and he mentioned a bunch of different companies.
He mentioned Tesla of course, where the robotaxis happening. He
mentioned star Ship, which is SpaceX's you know, big rocket
(22:46):
that had just experienced launch failure, and he mentioned Xai.
Speaker 1 (22:49):
And I think in certain ways.
Speaker 4 (22:50):
There are crises going on at every single one of
those companies. Now Xai is different because there is also
this like pot of gold that really seems like it
could be there in the New York turn.
Speaker 2 (23:01):
Yeah, but why why do you say there's a crisis
going on.
Speaker 1 (23:03):
Today because it's burning twelve thirteen? You guys just.
Speaker 2 (23:07):
Told me that that's just the way these things.
Speaker 3 (23:08):
Yea, I'm not sure it's a crisis. I think it's
how the business works. Like if you look at the
other Ai companies, they're burning similar money.
Speaker 4 (23:15):
There's just no business yet he's going to need to
raise another twelve billion next year. The implication of this
story is that he's going to have to go to
the capital markets very quickly.
Speaker 2 (23:23):
Again, now, well that's a good question, waymut So, Carmen,
is there any sense in the reporting you have that
even though they're producing essentially some iteration of zero revenue
this year, that in twenty twenty six, in twenty twenty seven,
in other words, and then not so distant future, those
income streams will start to change fairly quickly. Yeah.
Speaker 3 (23:44):
Basically, their projections is that by twenty twenty seven they're
going to be profitable see that.
Speaker 2 (23:48):
Max.
Speaker 4 (23:49):
Okay, wait, I've just been thinking about how you have
this company which is an increasingly large chunk of Elon's
kind of eire, and you have Tesla, I mean, which
is entirely dependent on this ROBOTAXI story. Like, this is
a guy who's like really leveraged in one direction, which
(24:10):
is that AI playing out the way that bulls hope
and happening very very very very quickly. And anything short
of that is going to be a real problem for
Elon Musk. It's gonna be a problem for Tesla, It's
gonna be a problem for x No, that's true.
Speaker 3 (24:25):
Now, I was going to say, like something interesting on
this xaix relationship that I thought was interesting is that
basically XAI can use the x x a library to
train Groc, which is something that maybe other AI companies
don't have like that amount of like information there.
Speaker 4 (24:41):
The thing is, they were doing it already there was.
It's just like an accounting change really, But because of
course Elon Musk, you know, controlling both companies, could just
decide to give X's data to Groc, which it seemed
like he was already doing. But it does seem like
a real point of differentiation for XA and for Grock
that it can be trained on this like up to
(25:04):
the minute data. I do think if you've been using
X lately, especially over the last year, you may have
questions about just how reliable that data is. I mean,
it's it's gotten less good at sort of giving the
kind of up to the minute news that it once did.
It's also full of AI slop, including a lot of
(25:25):
Grock slop, and and you don't really want if you
know anything about what so like the point is more
like it's like making a tape of a tape. You
don't want to train an AI algorithm on AI outputs,
and because if that happens, it tends to magnifies the
problems you're like.
Speaker 1 (25:42):
Hallucinating on exactly. And so my assumption is they're trying to.
Speaker 4 (25:47):
Filter out those Grock responses and they're trying to like
find ways so that they're not training Grock.
Speaker 2 (25:53):
Is basically in a cave shouting at himself, and then he's.
Speaker 4 (25:57):
The that's the risk, to be clear, that is a
rock out of the cave. That's a risk for open
AI as well, because you're seeing, you know, open AI
and these other large language models train on the open Web.
If you've been on the open Web lately, you're noticing
there's a lot of open AI. I've been on X,
but I've been on the open Yeah, there's a lot
of AI slop, which I'm just that's a word I'm
using to describe kind of.
Speaker 2 (26:18):
So you're telling me, Shotty oi out, I shouldn't believe
what the robot tells me.
Speaker 4 (26:22):
Yeah, you gotta be careful with large language, Carmen, Alith.
Speaker 2 (26:26):
Be careful.
Speaker 3 (26:27):
Yeah, I know.
Speaker 2 (26:28):
Taking this, Carmen, keep breaking news and when you have
another really good scoop, we'll have you back on.
Speaker 3 (26:34):
Thank you, Thank you for having me Max.
Speaker 2 (26:37):
Thanks as always, Thank you. This episode was produced by
Stacey Wong and edited by Anna Masarrakas, Blake Maple's Handles Engineering,
and Dave Percelle fact checks. Our supervising producer is Magnus Hendrickson.
The e lining theme is written and performed by Taki
(26:59):
Yasuzawa and Alex Sugierra. Brendan Francis Newnham is our executive producer,
and Sage Bauman is the head of Bloomberg Podcasts. A
big thanks as always to our supporters Joe Weber and
brad Stone. I'm David Papadopolis. If you have a minute,
rate and review our show, it'll help other listeners find us.
See you next week.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:07):
Let me tell you we have a new star.
Speaker 3 (00:10):
A star is born Elon mars Juthan Kennedy.
Speaker 2 (00:14):
He is the Thomas Edison plus plus plus of our age.
Speaker 3 (00:18):
Probably his whole life is from a position of insecurity.
Speaker 2 (00:21):
I feel for the guy. I would say ninety eight
percent really appreciate what he does. But those two percent
that are nasty, they are I'll pay in four folds.
We are meant for great things in the United States
of America, and Elon reminds.
Speaker 1 (00:34):
Us of that.
Speaker 2 (00:35):
I'm very disappointed in Elon.
Speaker 1 (00:37):
I've helped Elon a lot.
Speaker 4 (00:38):
A lot.
Speaker 2 (00:46):
Welcome to Elan Ink, Bloomberg's weekly podcast about Elon Musk.
It's Tuesday, June seventeenth. I'm your host, David Papadopolos. Now
we start this week's show with the latest and the
Musk Trump drama. The daytante that was just emerging when
we last recorded is taking hold, and you know, it
feels like it's just a matter of time before Musk
(01:07):
and Little X we'll be back in the Oval office,
sparring with reporters and playing on the floor. I'm sitting
here with Elon Inks stalwart Max Chaffkin, who's feeling I
suspect a little vindicated to go over the latest there, Max.
Welcome to you, sir, David.
Speaker 1 (01:24):
I told you so.
Speaker 2 (01:27):
All week. You've been prepping that line. Max will also
give us an update on the much anticipated launch of
Tessel's ROBOTAXI. Now you'll remember it was slated for last week.
We were all so excited, and then it was postponed
to this week as Musk and co. Scrambled to get
it ready. Not in auspicious beginning. And then over at XAI,
(01:47):
Musk is raising a ton of money, even more than
we had previously reported.
Speaker 1 (01:52):
But Xai is.
Speaker 2 (01:53):
Also burning through a lot of money, just reams and
reams of it in billion dollar clips in ace. Bloomberg
Credit Markets reporter Carmen Arroyo will join us later tell
us all about that. But Max, Elon and Donald are
beck so much so that my god, did I actually
hear or read an apology come out of Elon Musk's
(02:18):
mouth that was this? Did this happen?
Speaker 1 (02:21):
Elon?
Speaker 2 (02:21):
I didn't know he I didn't know he did that.
Speaker 4 (02:24):
I regret some of my posts about President at Real
Donald Trump last week.
Speaker 1 (02:29):
They went too far. He said WHOA on June eleventh,
and you're right, an unusual apology, although.
Speaker 2 (02:34):
He has I mean, I guess maybe he could say, well,
it wasn't really an apology. If you regret something or
you apologize, it's not.
Speaker 4 (02:39):
Quite a you know, full on apology. But it's pretty
darn close. And I think I said this last week,
that is what it's going to take.
Speaker 1 (02:49):
And I don't know that this roveling. Yeah, I mean.
Speaker 4 (02:53):
He accused Trump of unspeakable crimes without basis, suggested he
should be impeached. You know, he said a lot of
excuse my French, like really bad, and so he's gonna
have to do some of this to if he wants
to get back into Trump's good graces.
Speaker 2 (03:09):
And do we believe it is working. It looks like
Trump on his end continues to also move a bit
towards Musk, like, hey, maybe this is going to be okay.
Speaker 1 (03:21):
Trump's just not really saying anything.
Speaker 4 (03:24):
Beyond like they've talked, and I think last week we
went over that answer that Trump gave when he was
asked about Elon Musk. I mean, it's basically been pretty
quiet between the two of them, which honestly feels like progress.
Speaker 1 (03:35):
They're not feuding in public.
Speaker 4 (03:37):
There have also been i'd say a couple of little
things that you could interpret as sort.
Speaker 1 (03:44):
Of bullish signs for the Elon Trump relationship.
Speaker 4 (03:46):
Such as well, I believe it was last week Dune thirteenth,
Bloomberg reported on a kind of modest change that NITSA,
that's the highway regulator that we mentioned last week, is
making for rivalless car companies. Essentially, again, this is like
very much a small procedural thing.
Speaker 2 (04:05):
Yeah, helps TESLA, and I also suppose just you know, directionally,
it certainly helps. And it's probably at a moment when
that relationship appeared as rocky as it did, it certainly
looks like a good sign. So this is a really
small change it But so when I read the headline,
it was like, wow, this is big.
Speaker 4 (04:23):
Okay, So for cars that do not have pedals or
steering wheel, automakers have to seek an exemption from NITSA.
That's the highway regulator that I mentioned, the National Highway
Traffic Safety Administration. It's part of the Department of Transportation.
It's an agency that Elon Musk has tangled with over
the years.
Speaker 1 (04:40):
Nitsa said, they're going.
Speaker 4 (04:42):
To streamline this process so that the approval decisions are
made within months rather than years. So, like, I don't know,
I guess that's good, but it's not an approval. It's
just a suggestion that they will make decisions about approval
or lack of approval more quickly than they've been making
them before. It's also one that doesn't really have bearing
(05:04):
on this Robotaxi launch that we're talking about in Austin
because those cars, of course, do have pedals and steering wheels.
Speaker 2 (05:10):
They do.
Speaker 1 (05:11):
They're just normal cars.
Speaker 4 (05:13):
So I'm not one hundred percent sure that these regulations
that NITSA is talking about are even related to what
what Elon Musk is doing. Obviously, Elon Musk is doing
this launch without this NITSA approval.
Speaker 1 (05:25):
So again, I think.
Speaker 4 (05:26):
It's like a positive sign in the sense that they're
doing this in some sense in public. The Trump and
administration has to know that this will be interpreted as
a sort of olive branch to Elon Musk, and so
I think that's how.
Speaker 1 (05:39):
We should interpret it as well. Yeah, that is, but
it's a small olive branch.
Speaker 2 (05:44):
A got it, Yeah, you keep saying that I got it.
We're going to talk a little bit more about that
Robotaxi launch in a second, but before we do, I
know that you've been out there working on a little
new something you've got, because you know, given how Musk
is coming rushing back to Trump's arms, and you were
(06:04):
trying to create like a little bit of an acronym,
a little bit of thing like what do we call this?
Speaker 4 (06:09):
All right, hang on, just indulge me for a second here, David,
because as we've talked about, a couple of weeks ago,
I wrote a piece saying, don't bet on the Elon
Musk Trump breakup.
Speaker 1 (06:18):
It looked really smart for.
Speaker 2 (06:19):
Me all and then we all laughed, and then we
laughed at me and laughed in laugh.
Speaker 1 (06:24):
And now I am once again my take.
Speaker 4 (06:27):
My only regret is not sticking You're the king again,
not sticking.
Speaker 1 (06:31):
To my take.
Speaker 4 (06:32):
When Elon was hurling insults and it seemed like they
were never gonna speak again.
Speaker 2 (06:36):
That was a moment of weakness on your part.
Speaker 1 (06:39):
Yeah, definitely. But I do think there's a lesson here.
And I've been.
Speaker 4 (06:44):
Of course, following a lot of the discussion as you
have on Wall Street and among investors about how to
think about Trump's Bellaicoast language on trade. You, David, are
probably familiar with the taco acronym that has been thrown
around a lot. It stands for Trump always chickens out.
This is the idea that if Trump says I'm going
(07:04):
to put one hundred and fifty percent tariffs on China,
Wall Street traders kind of discount that because they think, hey,
he's never going to do it.
Speaker 1 (07:11):
So I think we need one for Musk and Trump,
and I propose.
Speaker 2 (07:15):
Mamma Wood, Mamma Wood, Mamma Wood.
Speaker 4 (07:19):
Yeah, Musk always makes up with Trump.
Speaker 2 (07:24):
Mamma woo, Mamma Wood.
Speaker 1 (07:25):
So that's all you need to know. I kind of
like my take off the same way that Taco has
taken off.
Speaker 2 (07:31):
I mean taco. There's a simplicity to taco, which is
fun and by the way, tacos are also delicious. Mamma Wood.
First of all, I don't even know that you're pronounce
if you're really spelling it m A M W T.
I don't know that you're pronouncing it correctly.
Speaker 1 (07:45):
Should we pronounce I think.
Speaker 2 (07:46):
It should be like that brand of shoe, those that
hiking gearts. You should be like mammoot man like w is
essentially silent. Yeah, you're right, but I say, if you're
going to go this route and go like all weird
and incomprehensible, keep on going. We need whack your wilder
more incomprehensible and longer. Maybe we go to them. Maybe
(08:06):
we have people send ideas to the mailbag.
Speaker 4 (08:08):
Yeah, listeners, let us know if you like mamut or
mamma what or however you want to pronounce it. And also, yeah,
if you've got a better acronym, maybe one that ideally
is a word, maybe one that has the correct amount
of valel.
Speaker 2 (08:19):
There's no way it's pronounced mamma wood. It's just can't
be memoot.
Speaker 1 (08:23):
Give us a shout elon ink at Bloomberg dot net.
Speaker 4 (08:25):
Tell tell us what you think the acronym should be,
and really you like how you're thinking about this Trump
Musk relationship these days.
Speaker 2 (08:32):
The acronym aside the conceit and the pronunciation of the
acronym a side the conceit is a good one. It
seems like Musk has certainly come to appreciate that. As
much as Trump has to lose in a breakup, he
elon Musk is a hell of a lot more to lose,
and so hence Musk always makes up with Trump.
Speaker 4 (08:53):
There we are, yeah, and you know I mentioned the
self driving rules. There are other signs that Trump is
sort of not done extracting punishment, or that there won't
be repercussions for Elon Musk. Reuters reported the day after
the apology that this Golden Dome project that Trump has
been talking about, this essentially a missile shield similar to
(09:15):
the Iron Dome that Israel has Trump wants to builds
in the US. Of course, gold there had been a
lot of reporting suggesting that SpaceX would be a major
player in that. Reuter's reporting on the twelfth that the
Department of Defense was looking to change the architecture of
the Golden Dome essentially in a way.
Speaker 1 (09:35):
That would cut out SpaceX.
Speaker 4 (09:36):
So they'd been imagining this sort of satellite array that's
obviously a great job for Elon Musk, and they were
looking at other solutions. And there's a suggest in the
story that the feud between Trump and Musk might open
the door for maybe opponents of this plan to suggest
their own ideas, so there might be more of a
competition for which contractors are going to get this contract
(09:58):
if it indeed happens, which, of course, they haven't appropriated
the money yet.
Speaker 2 (10:01):
And I'm sorry, say what exactly what kind of money
are we talking about here? This would be an incredibly
rich project with incredibly large I mean.
Speaker 1 (10:12):
Billions of dollars.
Speaker 4 (10:13):
Certainly, I think the overall amount of money appropriated for
this in the it's there's a there's an item in
the big beautiful bill. Off the top of my head,
I think it's twenty five billion. Well yeah, but jumps.
So it's not clear that that that will survive the
Senate thing. Reuter's mentions that defense experts think that the
overall costs of this thing will be more like one
(10:34):
hundred and seventy five billion once it's done and dusted,
So that would just be the beginning of the Golden Dome.
Speaker 2 (10:40):
But that's before Doge goes through. When Doze is done, yeah,
it's going to be down to about a couple billion dollars.
Speaker 4 (10:46):
But in any case, it's it's sort of a suggestion
that you know, there would be a competition, and that
SpaceX wouldn't necessarily have a leg up in that competition.
Speaker 2 (10:57):
Yeah, So another word to Elon if you want part
of the Golden Dome. Ma moot moot, Yeah, right, okay. Robotaxi,
we were supposed to get it max the soft launch,
as we had discussed last week. It was supposed to
come Thursday or Friday last week, and then at some
point we got our heads up now no, no, no, no,
not quite ready. What's going on.
Speaker 1 (11:17):
I feel like we need another acronym.
Speaker 4 (11:19):
That's like uh madra Musk always delays Robotaxi announcements.
Speaker 2 (11:25):
If we come up enough with enough of these things,
we'll just do the entire show and acronym. We won't
have to say other words.
Speaker 4 (11:31):
We talked last week about the prospect that there would
be a Robotaxi announcement as early as the end of
last week. That's what we had heard from people inside
of Tesla. We being Bloomberg. Musk put out of tweet
essentially saying they're aiming for the twenty second.
Speaker 1 (11:48):
Of June, which is I believe it's Sunday.
Speaker 2 (11:51):
So not only is the launch itself a soft launch,
but the date itself it was a little.
Speaker 4 (11:56):
Fuzzy squish, And then that he thought what was definitely
gonna happen was that they would celebrate his birthday, which
is the twenty years by driving by no, but by
driving a robotaxi from the factory to a customer's home.
Speaker 2 (12:09):
Now, I tell that's a good set. Well, we're there'll
be a cake. I mean, what then you get this?
Speaker 4 (12:14):
I am not holding my breath for any of this,
although I feel like the factory stunt, that's one that
feels like more plausible that they could actually pull off.
Musk has been promising these robotaxi launches for years, and
so it definitely feels like Tesla is more intent on
actually doing this, actually having something. And we've heard details
(12:38):
ten cars in Austin, we've seen some cars even driving around.
But I mean, honestly, who knows, and and so I
would not be surprised if there's something that happens, something
that could be plausibly called a robotaxi launch as soon
as Sunday. It's not going to be very big. I
don't think regular people are going to be able to
(12:59):
get in these robot teschsxs. I think it's going to
be like basically pretty minimal, but allowing Elon Musk to
claim some sort of win, and that could be again
giving some Tesla insiders or something a ride in a
quote unquote driverless car, or even just driving one of
these cars to one customer's home. So we're going to
(13:20):
see something, but the date just keeps moving and at
this point I'm not totally sure when we're going to
see it.
Speaker 2 (13:31):
Okay, Now we are joined by Ace Bloomberg, Credit Markets
reporter Carmen and Royo Carmen. Fantastic to have you on
the show.
Speaker 1 (13:40):
Thank you so much, David, So Carmon, you have.
Speaker 2 (13:42):
A great scoop out today, you and Jill Shaw on
Xai and all the money it's raising and all the
money it's spending at the same time. Tell us about it.
Speaker 3 (13:50):
Yeah, sure. So Xai is out in the market right
now trying to basically raise a little bit under a
ten billion, so nine point three billion, yes.
Speaker 2 (13:59):
So to be clear, we already knew, I believe we
had previously reported that they were seeking to raise.
Speaker 3 (14:05):
Five billion of debt. So what's new is that they're
racing also equity as part of the same fund raising process.
Speaker 2 (14:11):
Five billion debt and four point three billion in equity.
Speaker 3 (14:15):
A lot of money, a lot of money.
Speaker 2 (14:17):
And how's it going?
Speaker 3 (14:19):
I mean, the commitments on the debt are dude today,
So we'll know probably at the end of the day
how the dead process is going. But investors, so.
Speaker 2 (14:26):
Max, sorry to interpret this is I already immediately already
going back to man Mood. Right, you need to sell
a lot of debt, you need to sell a lot
of equity. You need to show investors you're in the
good graces of Donald Trump. Man Mood, I think you
missed Man Mood. Carmen man Mood.
Speaker 1 (14:43):
Must always makes up with Trump. Oh okay, how we're
going to make it happen?
Speaker 2 (14:49):
Spreads right, But you if you're going to be raising
nine point three billion, you can't be Splitsville with Donald Trump.
I wouldn't think.
Speaker 1 (14:59):
Yeah.
Speaker 2 (15:00):
But anyway, so the debt, the bids on the debt
are due today. The books are supposed to close today,
and so we should have that that should be locked
down by the end of the day.
Speaker 3 (15:07):
Yeah, the commitments should be out today.
Speaker 2 (15:09):
Yeah, okay. And then on the equity side, any sense
of how it's going.
Speaker 3 (15:14):
Apparently what they've disclosed is basically that they're working on
the four point three billion fundraise and they're closed to
being finalized.
Speaker 2 (15:21):
And this isn't just like money that Musk himself is.
Speaker 3 (15:24):
We don't know who's the what we're the source of
the funds is, but it's been put together quick from
what we know.
Speaker 2 (15:29):
So okay, so that's what they're bringing in and what
is going out.
Speaker 3 (15:35):
Yeah, so they have an incredibly expensive program, like most
AI companies do. They're just this year they expect to
invest tenvillion with capital expenditures. So basically all they're racing,
they're going to be spending. And so when you look
at some of the figures, like a little bit more
in depth, like the levered cash flow, which is basically
(15:56):
what's left once you pay everything else, they have a
negative thirteen billion. So they're really not being profitable right now.
Speaker 2 (16:04):
No, I mean wait a minute, so they are. They're
going to burn through more than a billion dollars each
and every month this year.
Speaker 3 (16:11):
Yeah, I mean built in data centers and training AM
models is expensive.
Speaker 2 (16:15):
Max.
Speaker 4 (16:16):
I mean so in some ways, like Carmen is saying,
this is not hugely surprising, because.
Speaker 2 (16:21):
This is the day of vindication for you, Max today,
because not only on the Musk Trump thing, but also
you've been hounding the tat, hounding the table about how
stupidly expensive it is to build out AI.
Speaker 4 (16:33):
I mean, the thing that jumps out of you in
the story is not so much the cost, but the
fact that there's like no revenue, I mean no revenue
coming in, right, there's some.
Speaker 3 (16:42):
Revenue coming in, like they have no they like for
this year they project like five hundred million revenue.
Speaker 2 (16:49):
Substantially five hundred million comes in, and again, how much
goes out and expenses just.
Speaker 3 (16:54):
On capex more than ten billion.
Speaker 4 (16:56):
Okay, so you know it's Look, there are a lot
of people who really believe that AI is this huge
game changer. On the other hand, this space in particular
is very capital intensive. It's also very competitive. I do wonder,
like Carmen, the story kind of hints at signs that
(17:16):
some investors are approaching this deal with skepticism, that they're
not running into this deal the way we might expect
investors to run into a normal Elon Musk deal.
Speaker 3 (17:29):
Well, the thing is, like credit investors are not used
to this type of deal like they're used to.
Speaker 2 (17:35):
Right, because there's no there's no income flow, there's no
stream of cast.
Speaker 3 (17:39):
Actually this is a startup, right, and that usually doesn't
go to the corporate credit dead markets like that usually.
Speaker 2 (17:46):
And it would either be on the equity side or
if it were on the dead side, how would it
be done?
Speaker 3 (17:50):
Could be a venture dead This is not that usual.
We don't see this. The food rasist we've seen on
data centers are mostly at the project level.
Speaker 4 (17:58):
No, is it because is he to do this because
they're actually building this like gigantic physical data center with
all these expensive GPUs that.
Speaker 3 (18:05):
Have intrinsic value. I think it's mainly like you're betting
on AI, like the and basically you're betting on Musk
and the equity race just came out this week, which
is also helping investors be more comfortable with the dead
race because they know that someone's going to be backing
it in some sense.
Speaker 2 (18:21):
But it's true, it's not super intuitive that if you're
betting on AI that you'd want to do it through
the debt side, right. I mean, if you're betting on AI,
you're hoping to hit a crazy home run, right and
come up with something that produces a return of five
hundred one thousand percent. You know, why do you want
to be clipping coupons at eleven or twelve per What
are the coupons on this debt. By the way, the
(18:42):
interest rate twelve percent.
Speaker 1 (18:43):
I believe I.
Speaker 2 (18:44):
Would think an investor gravitates that space thinking that they're
going to mind a thousand percent return, not that they're
going to clip eleven percent interest rates a year.
Speaker 3 (18:52):
Well, if you look at like the just the equity
story for Xai, like an end of twenty twenty four
was worth around fifty billion, now end of March was
eighty billion, and now they've raised more equity. So the
equity story is just like an outboard trajectory that's usually
not the same for the debt. You just expect to
get paid, so the upside is not usually that into it.
Speaker 1 (19:11):
What is that equity story based on.
Speaker 3 (19:13):
Just fund raises?
Speaker 4 (19:14):
It's just like like but I mean it's basically just
Elon decided that it's now worth twice.
Speaker 2 (19:22):
Wait a minute, no, no, no, but some sort of transaction
or two or three took place that when you extrapolated out,
it came up with fifty billion dollars whenever it was
that first one, and it spits out eighty billion, now right,
I mean, it's not Max is being very cynical and
saying it's just it's it's eighty billion dollars now because
Musk says it is, but no, presumably actual transactions happened
(19:45):
at that valuation.
Speaker 3 (19:46):
Well, well, you raise new equity, you just you basically
put a new valuation to it.
Speaker 4 (19:50):
And somebody bought it, right, Well presumably presumably. I'm curious
how the merger of x and Xai plays into this fundraising,
and like I still don't totally understand what it means
for either company, and like, how are the investors thinking
(20:12):
about the fact that they also own this sort of
struggling social network.
Speaker 3 (20:17):
So that's kind of interesting because like dead investors boughtle
out of the xtad and they were comfortable with that.
Speaker 2 (20:22):
That was how much a net was right back when
Musk bought Twitter, A chunk of that was financed with debt.
How much was it in me?
Speaker 3 (20:29):
It was twelve billion, Okay, So like basically Morgan Stanley
and the other bank sold everything earlier this year and
the debt was trading close to one hundred right to
close to par.
Speaker 2 (20:39):
So the end, but you know, it had fallen, and.
Speaker 3 (20:41):
It's fallen a little bit.
Speaker 2 (20:42):
Yeah, and it had fallen initially right after the deal
went through. It had fallen all the way down to
like in the sixties sixty some od sence on the dollar.
Then it came all the way when when Trump was
elected and Musk and Trump became buddies. He came all
the way back to around par But yeah, so x
and Xai how our investors, as Masks was asking, how
are they thinking about?
Speaker 3 (21:01):
What's kind of interesting is that if you own the
ex debt, right you have, you still have a lien
on Xai. But even if you own Xai dead, you
don't have that lean on x. They don't have that
cross collateralization.
Speaker 2 (21:11):
A lean on X. What does a lien on X
get you?
Speaker 3 (21:15):
I mean, at least you have more financials for the company,
you have a longer history.
Speaker 2 (21:19):
Max. Do you want to lean on X or x Ai?
You don't. He doesn't want to lean on either. I
will just say this, A billion dollars a month in
terms of what they're blowing through. Again, I don't know
anything about anything, but man, it seems like an awful
lot of money. And is this a window into how
much all of these AI companies are are pissing through?
Speaker 1 (21:39):
Yeah? Yeah it is.
Speaker 4 (21:41):
I mean I do think open ai is different because
open ai has a real business, Like open Ai built
this very successful consumer product that they've managed to convince
a lot of people and a lot of businesses to
pay money for. And so they are, you know, again,
their revenue projection I think should be met with some
(22:02):
skepticism as well, because like we're in the middle of
this guy very frothy period. But they're projecting Carmen, correct me,
how I'm wrong, like twelve billion, thirteen billion a year
in annual revenue, right, or I mean they're they're projecting
in the billions of annual revenue in the near term,
and I think they're already pulling in billions in revenue today.
But I do think like this is just what it costs,
(22:25):
and I think it helps us understand. You know, Must
put out that tweet a couple of weeks ago before
the fight with Trump, where he said he needs to
be super focused on his company, needs to sleep on
the floor, and he mentioned a bunch of different companies.
He mentioned Tesla of course, where the robotaxis happening. He
mentioned star Ship, which is SpaceX's you know, big rocket
(22:46):
that had just experienced launch failure, and he mentioned Xai.
Speaker 1 (22:49):
And I think in certain ways.
Speaker 4 (22:50):
There are crises going on at every single one of
those companies. Now Xai is different because there is also
this like pot of gold that really seems like it
could be there in the New York turn.
Speaker 2 (23:01):
Yeah, but why why do you say there's a crisis
going on.
Speaker 1 (23:03):
Today because it's burning twelve thirteen? You guys just.
Speaker 2 (23:07):
Told me that that's just the way these things.
Speaker 3 (23:08):
Yea, I'm not sure it's a crisis. I think it's
how the business works. Like if you look at the
other Ai companies, they're burning similar money.
Speaker 4 (23:15):
There's just no business yet he's going to need to
raise another twelve billion next year. The implication of this
story is that he's going to have to go to
the capital markets very quickly.
Speaker 2 (23:23):
Again, now, well that's a good question, waymut So, Carmen,
is there any sense in the reporting you have that
even though they're producing essentially some iteration of zero revenue
this year, that in twenty twenty six, in twenty twenty seven,
in other words, and then not so distant future, those
income streams will start to change fairly quickly. Yeah.
Speaker 3 (23:44):
Basically, their projections is that by twenty twenty seven they're
going to be profitable see that.
Speaker 2 (23:48):
Max.
Speaker 4 (23:49):
Okay, wait, I've just been thinking about how you have
this company which is an increasingly large chunk of Elon's
kind of eire, and you have Tesla, I mean, which
is entirely dependent on this ROBOTAXI story. Like, this is
a guy who's like really leveraged in one direction, which
(24:10):
is that AI playing out the way that bulls hope
and happening very very very very quickly. And anything short
of that is going to be a real problem for
Elon Musk. It's gonna be a problem for Tesla, It's
gonna be a problem for x No, that's true.
Speaker 3 (24:25):
Now, I was going to say, like something interesting on
this xaix relationship that I thought was interesting is that
basically XAI can use the x x a library to
train Groc, which is something that maybe other AI companies
don't have like that amount of like information there.
Speaker 4 (24:41):
The thing is, they were doing it already there was.
It's just like an accounting change really, But because of
course Elon Musk, you know, controlling both companies, could just
decide to give X's data to Groc, which it seemed
like he was already doing. But it does seem like
a real point of differentiation for XA and for Grock
that it can be trained on this like up to
(25:04):
the minute data. I do think if you've been using
X lately, especially over the last year, you may have
questions about just how reliable that data is. I mean,
it's it's gotten less good at sort of giving the
kind of up to the minute news that it once did.
It's also full of AI slop, including a lot of
(25:25):
Grock slop, and and you don't really want if you
know anything about what so like the point is more
like it's like making a tape of a tape. You
don't want to train an AI algorithm on AI outputs,
and because if that happens, it tends to magnifies the
problems you're like.
Speaker 1 (25:42):
Hallucinating on exactly. And so my assumption is they're trying to.
Speaker 4 (25:47):
Filter out those Grock responses and they're trying to like
find ways so that they're not training Grock.
Speaker 2 (25:53):
Is basically in a cave shouting at himself, and then he's.
Speaker 4 (25:57):
The that's the risk, to be clear, that is a
rock out of the cave. That's a risk for open
AI as well, because you're seeing, you know, open AI
and these other large language models train on the open Web.
If you've been on the open Web lately, you're noticing
there's a lot of open AI. I've been on X,
but I've been on the open Yeah, there's a lot
of AI slop, which I'm just that's a word I'm
using to describe kind of.
Speaker 2 (26:18):
So you're telling me, Shotty oi out, I shouldn't believe
what the robot tells me.
Speaker 4 (26:22):
Yeah, you gotta be careful with large language, Carmen, Alith.
Speaker 2 (26:26):
Be careful.
Speaker 3 (26:27):
Yeah, I know.
Speaker 2 (26:28):
Taking this, Carmen, keep breaking news and when you have
another really good scoop, we'll have you back on.
Speaker 3 (26:34):
Thank you, Thank you for having me Max.
Speaker 2 (26:37):
Thanks as always, Thank you. This episode was produced by
Stacey Wong and edited by Anna Masarrakas, Blake Maple's Handles Engineering,
and Dave Percelle fact checks. Our supervising producer is Magnus Hendrickson.
The e lining theme is written and performed by Taki
(26:59):
Yasuzawa and Alex Sugierra. Brendan Francis Newnham is our executive producer,
and Sage Bauman is the head of Bloomberg Podcasts. A
big thanks as always to our supporters Joe Weber and
brad Stone. I'm David Papadopolis. If you have a minute,
rate and review our show, it'll help other listeners find us.
See you next week.
Host
David Papadopoulos
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