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Get to it because this is one of the other big companies reporting here after the close and what was a busy earnings aftermarket day. Bloomberg Intelligence Global autos analyst Steve Man joining us FROMBI headquarters in Princeton, New Jersey. All right, Steve, come on in on this. So Tesla shares down about three point four percent as we speak. Why is it that there's some disappointment here?
Well, if you look at their earnings, they did take a restructuring charge of about six hundred and twenty two million used to exclude that.
They did beat consensus.
But I think if you look into the numbers, the automotive gross margin continues to fall, and I think the street was expecting it to kind of stabilize given that price cuts have slowed down and battery costs have come down. So there's still some concern and it's you know, when is this gross margin gonna stop dropping?
Yeah, fourteen point six percent in the second quarter compared to sixteen point four percent in the first quarter. What do analysts want to see in terms of gross margin, like, what's a realistic percentage?
Well, they did have they did reach as high as twenty percent about a couple of years ago. It's gonna be really tough to get back to that range. They're gonna have to do a lot, you know. One of the things that you know that I think the streets talking about is the optimist humanoid robot that they're gonna bring online internally and hopefully to cut cut some of the fixed costs.
But that's gonna be a while.
I think they're gonna Tesla's gonna have to contend with, you know, the continued price war in in China, continue price decline in the US. But one of the things that they're doing that could help, that could help is expanding into markets like self. They just shipped more vehicles in the UK and the now into the Middle East.
Hopefully the increased scale, and I think that would be some of the questions we're going to have at the earnings call is are they going to be able to increase scale to drop to improve the gross margins?
So, Steve, is this a report from a Tesla that is just maturing in a more competitive market, or is this a Tesla showing signs of some strains, some struggle struggles if you will, And some questions about the output.
Well, it's definitely getting more competitive. I think the concern is that they're maturing. Auto business is maturing. GM reported earnings today and you know their automotive gross margin is fourteen percent. Tesla is around sixteen percent, So it's getting awfully close to what GM, the legacy automaker's gross margins are. So the concerns are there. The outlook, I think there's there's gonna be a lot of focus on you know, like I said earlier, are they able to build scale
in new markets? And then secondly their AI endeavors. You know, they've delayed the August eighth event on AI to a couple of months. I think a lot of investors will want to probe a little bit more to to get a glimpse of what they want to what they plan to talk about in October.
Well, let's talk a little bit about that. You're talking about an AI event. Some people refer to it as the Robotaxi event.
How do they refer to it?
I don't know how how do they refer to it internally the way you said it, Steve? How do they refer to it though? Because it's I mean, this is something Elon Musk has talked about for the better part of a decade.
Yeah, I think I think they are referring to an AI event. I think they want they do want to pivot. Uh. They know the auto industry. It's not new to to to to US, auto industry is a commoditized business.
You get the Chinese.
Uh, you know, I'm able to build cars for much cheaper.
So they know he knows that there's a lot.
Of value to be had in AI and so he does want to start pivoting the company to be an AI company, uh, less so of an auto company.
So can can But are you confident from an analyst perspective that he can realistically do that because the joke with robotaxi self driving has been next year, next year, next year, and it hasn't shown up yet.
Yeah.
Yeah, I think there's a lot lot of hurdles. One of the biggest hurdles to getting robo taxi uh to be on a across the board on the roads is really the regulations. And I know, you know, not the only Tesla, but every automaker is trying to trying to convince the government that you know, these are safe much more much safer vehicles than they are operated by humans. So uh, I think I think if you look at AI, I think what Elon must is trying to do is
uh you know, introduce AI even beyond robotaxi. Right, there's you know, at the end of the day, the company is trying to try to lower energy consumption and increase
sustainable uh energy usage. Uh So if you can imagine, for example, one thing is you know, all these vehicles have large batteries in them, and if you know, if we can get AI to actually maneuver these vehicles to say where you know, there's a deficit of power and these charge up batteries can actually uh offset some of the peaks and and and fill some of the.
The deficit power deficit.
You know, that's that's one way of achieving sustainable energy one of his goal. So you can't, I think, for us, we can't just think of its robo taxi.
You got to think of.
It as you know, you have energy store ghorich in a vehicle, in a moving vehicle. Plus the computers in these vehicles are probably more powerful than some of our PCs, So there's there's other ways of you you know, he talked about using you know, putting, you know, putting a number of these vehicles together. Yeah, to for example mind bitcoin.
Yeah.
Well, I'm looking at our live blog here and our Dana Hall, who obviously covers Tesla and Elon Musk notes something from Gene Munster of deep water asset managements as a whole story here is about what else is to come again these This is from Gene. The stock is drifting because of the run up, but there are a lot of questions about the unboxed manufacturing strategy and what that means for the Robotaxi, which means you probably won't see a Robotaxi until twenty twenty six or twenty twenty seven.
Munster a Dana Ads is referring to this line in the deck quote our purpose built Robotaxi product will continue to pursue a revolutionary unboxed manufacturing strategy. It sounds very Elon Musk, right, like we don't, I mean, like don't really quite know exactly what that means.
Right, Yeah, I you know, I think you know, in our assumptions, I don't think grobal Taxi is going to be even profitable, not until the next decade. But the one more thing I think the investor would want to know is, you know, when are they going to introduce a more affordable EV. I think that's one of the things that's plaguing the industry right now. You know, we've lowered prices a lot and and and hasn't and hasn't
really lifted sales. But I think there's still not enough choices for the consumer at the sub thirty thousand dollars range.
So who makes you know, Steve, who makes the most affordable EV out there?
Is it?
Is it Hyundai? Is it Kia?
Yeah, it's Hunda, and the Asians do Hunda in Kia, And I think I think if you look at globally, the Chinese actually makes the most.
They can't get that in the US.
Yeah, it's well, we'll have to see. I think the election is going to have He's going to have a play and that.
So it always goes back to the election.
Yeah, Ed Love though it's also noting that he says, I guess when it comes to the more affordable models remaining on track for the start of production in twenty twenty five, says those products will be built on quote the same manufacturing lines as current vehicles, but it's kind of always a wait and see good stuff, Steve. We'll
look for some of your research certainly tomorrow. Thank you for coming along and helping him make some sense of this Bloomberg Intelligence Global autos and industrial analyst Steve Mann,