Bloomberg Audio, Studios, podcasts, radio news.
This morning news broke that Tesla CEO Elon Musk, the world's richest man, recently bought about one billion dollars worth of Tesla stock, and the company's share price jumped. Tesla's shares are getting a boost from their ceo. The stock rose more than three and a half percent in regular trading. The world learned about that purchase in a regulatory filing on Monday, but Musk actually bought those shares on Friday, September twelfth, indirectly through a revocable trust that was the
same day. Robin Denholm, the chair of Tesla's board, told Bloomberg TV how optimistic she is about Tesla's future with Musk in the driver's seat.
He's a generational leader. There aren't any other people out there like Elon who can actually lead the company over this next decade or so.
That interview came on the heels of a big announcement earlier this month that Tesla's board wants to offer Musk an unprecedented compensation package valued at one trillion dollars.
Well, he's already one of the world's richest people, but Elon Musk could become the first ever trillionaire. It's all possible under Tesla's new pay package.
But behind these headlines, these eye popping numbers are some serious challenges Tesla's facing.
Elon Musk warning that the cuts to evs and other clean energy credits would be incredibly destructive to the country.
When Tesla's lose power, crashes can turn into deadly races against time. Reporting by Bloomberg News has found that regulators have been slow to act, and complaints about Tesla's doors have piled up.
I think this is a matter of being able to sort of in your head, think this guy has done it before, maybe he can do it again.
Craig Trudell oversees Bloomberg's coverage of the auto industry. These covered Elon Musk and Tesla for years. Craig says, what's really reassuring them and Tesla's board is having Musk out of government with a new financial incentive to focus more on the company.
There's a sort of concerted effort to message on the part of this company that you know, Musk is coming back. He's putting his head back down, he's putting politics aside. He's left the White House, he's gonna hunker back down and get down to business, and people are even using really sort of over the top language like a wartime CEO.
But what's unclear is if Musk himself has gotten that message and if that one trillion dollar pay package, provided it's approved by shareholders, will work. I'm David Gura, and this is the big take from Bloomberg News today. On the show, what could have been a bad year for Tesla isn't looking so bad to Tesla's investors and board, who are convinced that with more of Elon Musk's attention, the company will be back on track. Twenty twenty five
has been tumultuous for Tesla. After years of remarkable growth. It shares plunged because of lackluster sales and increased competition, along with concern over Elon Musk's politics. But in the month since, Tesla's stock has been trending higher, and this month it's all but erased those losses. Bloomberg's Craig Trudell says it's been vibes as much as fundamentals driving the company's share price.
This is a company that you know all of it's here and now fundamentals are sort of flashing red, and yet you have Musk talking up this future of humanoid robots, and this is of course, you know, sort of running contrary to these years of efforts on the part of other very valuable companies with really smart engineers who have tried to sort of make humanoid robots a thing and
really struggle doing so. The other sort of half of the reason for optimism, I would say, would be robotaxis, and you know, there's maybe more tangible signs of real progress on that front for Tesla to a degree in that they have launched this very limited service in Austin, Texas, where they're headquartered. But it's really important to sort of keep in mind that there are still humans in the front row of those vehicles that are sort of keeping
an eye on things. And this was you know, far from a sort of auspicious start for these vehicles, where from day one when they launched this service, you had cars driving in the wrong lane and in sort of the wrong direction, and the National Highway Traffic Safety Administration coming right out and telling us at Bloomberg, yeah, we're watching, we're noticing these things, and we're in touch with the company so you know, have they figured out robotaxis and
gotten their cars to a point where they can safely navigate the streets without anyone behind the wheel or in the passenger seat. Even Tesla, I think, by its actions, can be judged to be saying no.
For so long the narrative was that Elon Musk was distracted by the role that he was playing Trump administration at the helm of Doge. He wasn't paying attention to this, to this company and others that he runs. It did seem like Tesla's board wanted to limit Elon Musk's political activity, and then it seemed to walk that back. This is what Robin Denholm said on Bloomberg TV.
What he does from a personal perspective in terms of his political motivations, etc. Is up to him. I mean clearly from our perspective as a board, we're measuring him on results and measuring him on what he does as a CEO of TESLAT.
What is the board's position on Elon Musk and politics.
Yeah, our colleagues Ed Ludlow and Caroline Hyde really sort of pressed and holme on this on Friday to really sort of get a hard and fast sense of what do we mean by winding down as political activities, because there was some language within the proxy to that end that Musk had made some assurances, and we really did not get firm answers from Denholm. I think, you know, just reading between the lines, as though we've already gotten
to the point where they're happy. Where he's you know, left Dough, he's left the White House, he's no longer a special government employee, and yet there doesn't seem to be any limits placed on you know, he's thrown out this idea of maybe starting a political party in the US.
There's also been real substantial weighing in on UK politics, on German politics, and there doesn't seem to be any sort of line being drawn by the board, at least publicly in terms of what's okay and not okay for him going forward.
And as you look at your remit the car companies that you cover, how different is this board, the Tesla board, from say the board at Forward or the board at GM.
They have a really difficult job, I will give them that, right. You know, you don't have another CEO who's pulling the kind of stunts that he is on a day to day and you have heard Robin Denholmes sort of speak to this idea that she wishes that he wasn't quite the way he is on Twitter. This is a board
that really has its hands full. And yet also on the other side of that coin is they it is true that this is a generational leader from the perspective of we haven't seen somebody, you know, turn a car company into a trillion dollar enterprise. We haven't seen a
car company even come close to that. And you know, we can sort of debate until the cows come home whether or not Tesla is worthy of that valuation, But the sort of hard and fast truth is that, you know, he is convinced enough people that it is worth that. And even if this is more than just a car company by any metric, you know, in terms of where they're valued on a sort of fundamental basis, a price earnings ratio going forward, this is a really rich stock.
And if Musk were to be sort of out of the picture or in any way perceived as as sort of stepping back from Tesla, we've seen over the last few years that that can be hugely destructive to this company's valuation.
Elon Musk's plans for Tesla go beyond cars. They include robots and AI. But musk stream of turning Tesla into the most valuable company in the world won't be easy. The challenges facing Musk and Tesla after the break. When Tesla posted its quarterly earnings back in July, a big headline was a twelve percent drop in revenue compared to
a year earlier. On a call with investors, Tesla leadership didn't comment much on that decline, but CEO Elon Musk did acknowledge the next few months are likely to be rough.
I mean, does that mean like we could have a few rough quarters. Yeah, we probably could have a few rough quarters.
I asked Bloomberg's Craig Trudell what that admission tells us about Musk's vision for the company and what's to come.
Yeah. I think it's going to be the case that this quarter is going to be boosted by the fact that in the US you have a phasing out of electric vehicle tax credits. There's going to be a pull ahead of people who are maybe considering buying an EV that are going to accelerate that decision to take advantage of the fact that they could be eligible for a
seventy five hundred dollars tax credit. The real concern is that after those tax credits go away, that Tesla and everyone else selling EV's is really going to have a hard time for months to come. On top of that, you also have a deregulation agenda on the part of the Trump administration to take away penalties for fuel economy standards and for emission standards that Tesla for years has really benefited from more than twelve billion dollars worth of
regulatory credits. You have byd going from strength to strength in terms of continuing to outsell everybody.
There.
You have Jaumi, China's version of Apple making a real concerted effort to go into the EV space. And then here in Europe a sort of falling apart of Tesla's position in really major markets including Germany, France, and so cross the globe, we're seeing real weakness in Tesla's core
car business. And I should also mention too, just to go along with that, this is a company with an energy business that sells storage batteries for utilities, that too is going to be hit by the fact that the Republicans have got it a lot of what was in IRA.
During the throws of the early days of Trump's second term, we saw Tesla sales decline. How much of that decline is attributable to politics, and how does he change that part of Tesla story that sales have been dropping and they really haven't recovered.
It's a really good question, and it's something we've struggled with. Right there are very clear signs that Musk is at least a major contributing factor to the challenges that this company has had all year long, really, and some of those signs are that early in the year the company was kind of using this excuse that seemed to have some merit that they were changing over their most important product,
the Model WHY, to a new design. They were making it better in a lot of respects, upgrading the design, and in order to sort of change over to that new vehicle, they needed to temporarily shut down production at factories around the world. But what we've seen is that since the new Model Y has arrived in showrooms that
we've not seen a recovery in this company's sales. I would say, particularly here in Europe, things have just continued to be really weak, But in the US as well, I think the sales numbers that we see in California sort of liberal bastion in a place where Tesla has dominated for so long. They have fallen from a position of extreme strength to it's now a much more competitive space with a lot more alternatives, Craig.
Another set of challenges have to do with the vehicles themselves and how they're designed. And your team has done some incredible investigations of the doors on Tesla models. For instance, I think anybody who's bought one, or rented one or ridden one has to figure out how to open a car door on a test that's even more complicated on
a cyber truck. This has actually proven to be hugely problematic when there are car accidents, and these stores are incredibly difficult to open if the car no longer has power. What did Bloomberg learn over the course of that investigation, and how have federal regulators responded to that problem?
Yeah, this all started actually internally with one of our colleagues having read about and heard about a crash involving four college students who were in a cyber truck around the time of Thanksgiving last year. And these students were in a crash where only one was pulled out of the vehicle, and the three others did not survive the
fire that followed this crash. All three of the young people who died in this incident survived the initial crash, but died of thermal injuries and smoke inhalation because they were unable to get out of the vehicle. And this really sort of big questions for us of a simple question of why couldn't they get out? And this is an issue that has been raised for years, going back to the Model S, the first vehicle that Tessa built itself from the ground up, where they designed their doors
externally to have flush door handles. I think, you know, it was for understandable reasons of improve aerodynamics, reduce wind noise, and also just a sort of cool factor. And yet from the beginning there were real issues with how these door handles worked, both from the outside and from the inside. Where some of the pushback that we've gotten for this piece is, well, you know they have mechanical releases to get out of these vehicles, they're also very difficult to find.
There's also differences from model to model as to whether or not there's mechanical releases in the back seat, which is obviously hugely problematic if you happen to be in the back seat in an instance where your Tesla has lost power, and particularly if your Tesla has lost power and it is on fire. And also I just should point out from the outside of Tesla's you know, they advise within their sort of rescue tip sheets for first responders,
the doors just don't work from the outside. If the vehicle doesn't have any power, you're going to have to bash the window and or cut the doors open to get to people.
Musk and other Tesla executives didn't respond to Bloomberg's inquiries about the doors or to Bloomberg's requests for comment.
And we found incidents of people complaining to the National Highway Traffic Safety Administration about their doors not working for them that NISA says it's aware of not only those complaints, but also the incidents that we wrote about last week, and they're considering whether or not a full investigation of this issue is warranted.
It highlights this tension between Elon Musk's Tesla and regulators, and you can hear this on quarterly calls. He often says that the engineering is up to snuff, or they've developed something or it's ready to go, they're just waiting for regulatory approval. I think about this in the context of another investigation that Bloomberg did about the self driving system on his cars, which operate differently than other car
companies self driving apparatuses. Help me understand how that is kind of framing elon Musk's timeline for the advancements he says are coming. So I think of, for instance, the robotaxis he's talked about, as you mentioned, have been in Austin where Tesla's based, a few other cities as well. He's very eager to expand it. How realistic is that in light of that tension I just mentioned between what regulators are thinking and allowing versus what Tesla says it's able to do.
Yeah, it's interesting. NITSA has clearly demonstrated that they're paying attention in terms of just how much they've really stood in the way of this company. I guess there's not necessarily huge issues in terms of the ways in which they could be sort of perceived as holding Tesla back. Musk has referred to them as the fun police, I should note, And yet this is also an agency that is not particularly well resourced, not particularly well staffed, and that was before DOGE came in and did what it
did across the US government. And we've also just taken an approach in the US of allowing and being more permissive of this technology on the grounds that it has this potential to bring down the roughly forty and traffic fatalities that we see on US roads every year. There's been this concern going back to the Obama administration of we shouldn't be too prescriptive or too tough on this technology or set hard and fast rules. We should allow this to sort of proceed and sort of set guidelines
and come in afterward. And to the extent that issues come up, we'll do defect investigations, will subject to these companies to scrutiny, but we're not really going to stand in the way. Whereas in Europe it's a very different story. You have not seen Tesla be allowed to put what it refers to as FSD on the roads, and even in China there was a sort of limited ability to
sort of start to pilot that earlier this year. That didn't last particularly long, and there's been real concerns about Tesla and its competitors, just how sort of ready that that technology is and the extent to which companies perhaps have maybe oversold the capability of this technology.
Just lastly, here to recap, Tesla has issues with sales being down, the sunsetting of these electric vehicle incentives by the US government, problems with safety that have come to light in the media. Given all of that, how is it that Tesla investors retain the level of optimism we've seen them have.
I think Musk has this uncanny ability to sort of set agendas and command narratives, and his ability to sort of talk about the future in this really exciting way and put out these indications that everything's going to change. He's going to deliver something that we've never seen before, and we've seen him sort of make good on a lot of those things. Right, This is a guy who shoots rockets off into space and lands them back on bard ships.
Right.
His ability to leverage that as don't worry about the here and now, forget about the challenges that I'm having. I've done it before, and I can do it again. And it has proven to be really sort of sticky and effective, even in spite of the damage that he himself has been doing to his own company.
This is the Big Take from Bloomberg News. I'm David Gura. To get more from The Big Take and unlimited access to all of Bloomberg dot com, subscribe today at Bloomberg dot com slash podcast offer. If you'd like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.