Bloomberg Audio Studios, podcasts, radio news.
This is a breaking news outdated from Bloomberg instant.
Reaction and analysis from our three thousand journalists and analysts around the world. Tesla said it's moving forward with its Robotaxi and affordable vehicle plans while reporting second quarter earnings that fell short of Wall Street's estimates. Adjustin earnings forty cents per share that was just below the average analyst estimate. Revenue fell twelve percent to twenty two and a half billion dollars that was also lower than expectations and the
sharpest decline in at least a decade. Gross margin, which is a measure of profitability, was higher than anticipated. Right now, shares down about six tenths of one percent. Tesla did say many of its key isshives remain on track quote despite a sustained uncertain macroeconomic environment resulting from shifting tariffs, unclear impacts, and changes to fiscal policy and political sentiment.
Let's bring in a Bloomberg Intelligence Global Autos and Industrials research manager, Steve Mann, joining us once again from New Jersey. You gave us a great preview earlier in the afternoon. Now we have the numbers anything surprise.
You, Yeah, I think if you look at the stocks down after hours a bit, I think I think the most important thing there is they haven't given us enough visibility into the future what their outlook is going to be. I mean, the numbers they miss consensus. But if you kind of dig into a little bit more and look
under the cover, it's actually not bad. If you look at automotive gross margin excluding credits, it's actually fifteen percent better than the last quarter of twelve and a half and better than consensus estimates.
And then if you.
Look at free cash flow, the reason why it's down versus the first quarter is because they spend an extra nine hundred million on capex, which is not a bad thing given that they're launching the cheaper model in the cyber cap So if you exclude that nine hundred million of additional cap backs, their free cash flow is actually over a billion more than six hundred and sixty million in the first quarter.
So that's good.
That's good.
I mean spending cap backs, given you know what their product launches are, is not a bad thing. They're investing into the future, right, and look, they're also expanding.
Internationally, right, They have.
You know, we've seen over the quarter improvement higher sales in South Korea, they announced entry into into India and then they're launching the extended version of the Model Y in China.
So so it's a good thing.
But look, we do want to hear what Elon mus has to say in terms of not just the robotaxi, but you know, are how are they going to face ahead when the challenges we were seeing the US market which is critical, it's it's they're one of the largest market uh in in their portfolio. So we'll we'll have to hear more uh on the on the call.
How do you think Tesla's robotaxi stands up to the other autonomous vehicle solutions that are out there right now, namely Weimo.
Well, I think the market can be very big, especially in the US. So if we're not talking internationally, uh, there's.
Definitely room for multiple players. Uh.
You know, my perspective is that you know, Tesla is using an all camera system that actually is gives them a greater flexibility and greater scalability with with that system, uh, Weimo and others use a combination of radars, liedars, and camera system cameras just are just cheaper right to to to build.
And uh, you know, and and.
So it's a lot easier to scale, cheaper to scale, uh for for so.
But then again, I think the market's big enough.
I think there's going to be users that want in all camera system. I think there's going to be users that don't feel comfortable with that and want the redundancy redundancy of light oars. So you know, for example, Uber is partnering with Weimo.
So I got to go back to wait, all right, So I'm looking at the FA function on the Bloomberg and we just talked about free cash flow, and so it's one hundred and forty six million dollars versus six hundred and sixty four million in the first quarter of twenty twenty five, as our live blog says, dropping eighty
nine percent. And I know what you're saying about. It's good that they're spending for the future, right, because you said to us earlier that the best way to get to that one point fifty six million unit delivery for the year, right, that's the concessus estimate, is that they've got to launch that cheaper vehicle, right, So they've got to bring stuff out. Do we have to be worried though about that low number or they're they're going to be fine.
Well, it's u uh, I mean it's it's technical, right. It said if free cash flows overbuild, and obviously the more the better, it is down Yeah, it's you know, compared to a year ago, two years ago. But look like if you look at the model Y, if you look at the gross margin, you know, excluding credits, it is up right. That actually tells you that, uh, you know, the new vehicle is likely the model new model why is likely built? They're able to build at a lower cost.
The issue is, like I said in the preview, is they just don't have enough volume.
Yeah.
So so if if they can expand volume with the with the existing model Y, not just in the US, but in the international markets, and as well as introduced the cheaper model which is supposed to build to be built within the existing capacity, you know, there could be a lot upside right in terms of margin, in terms of free cash flow. So uh, you know, it's really execution at the moment, and that's what we want to hear from Elon Musk. You know, how where is the
second where is the cheaper model. They said, it's actually they said the production has started. Initial production has started in June, but you know it could take some time right before they launch. I have to get all the kinks out. But you know, you want to hear about India. India is a huge market, right and where are they taking India? You know, definitely Robotaxi is an important and then the cyber cap.
You know, we need a little bit more details, all right.
Details is certainly near.
Term details, near term details.
All right, great setup, Steve Man, thank you so much. We're going to look forward to reading your research in the after hours and certainly into tomorrow's trades. Demand Bloomberg Intelligence Global Autos and Industrials Research manager joining us from BI headquarters in Princeton, New Jersey.
I want to go right now and bring in Ross Gerber. He's president's CEO of Gerber Kawasaki Wealth and Investment Management. As the end of last year, had about three point four billion dollars in assets under management. Long time outspoken Tesla bull more recently expressing concerns about the company, as he did three months ago after the last quarter report earnings report. According to the Bloomberg Terminal, Gerber Kawasaki still
owns about seventy eight million dollars worth of Tesla stock. Ross. Good to have you with us this afternoon. What have you been doing to your Tesla position over the last quarter, just before we get your take on the numbers.
You know, we've been selling for years and I continue to sell. You know, we have so much stock, and we have a lot of clients that really believe in the Tesla story, and we've kept some stock obviously in our portfolios, but in my ETF, I'm out of Tesla completely out of my GK ETF. And it's mostly because the business is declining, and these earnings results continue to show that the business continues to decline and in some
kind of troubling ways. So as much as the previous guests is bullish on many of these things that Elon talks about, nobody wants to talk about the truth that nobody wants to buy Elon's products, like until that gets addressed, there's a huge elephant in the room that nobody seems
to want to point at because it's Elon. So he's the innovator behind all of the things that are great about Tesla, but he's also the sort of villain that's created so much animosity around him that nobody wants to buy his products.
We've had a great cover story by the team of Max Chafkin and Ed Ludlow in Bloomberg BusinessWeek. The new issue coming out, the August issue. It'll soon be on newstands, it's already on the Bloomberg. But you know, the whole idea ross as you know, since you understand this guy, this company so well, you never kind of count Elon out.
And so I do wonder, you know, if he does get it right, if he maybe, I don't know, We'll see what happens in terms of his involvement in politics, because it does seem like he still wants to stay according to the SpaceX filing. But I mean there is always that caveat when it comes to Elon right that he sometimes pulls it out, or he often pulls it out.
Yeah, And I think that's been true in the past. And I'm very grateful that he pulled it out five years ago when it really mattered and Tesla was almost on the verge of bankruptcy and it has become a very successful company. But it doesn't mean he's going to do it again. And this idea that you know, these kind of entrepreneur rock star people don't fall is actually is not true. In fact, it's very common to what we call the rise in fall story. That's all the
stories you see on Netflix and the documentaries. So you know, this might be a rise in fall story, and things don't rise forever per se. And I always remind people. I don't think most people even know who invented the television, but the television was invented in the United States by a company called RCA, which was like the hottest stock of the fifties. Well, how many TVs are made in the United States today? Answer is zero, So the very same thing could happen in the ev business. But that said,
Elon can fix the company. It's solely broken because of him. He can certainly fix the company if he wants to do what's necessary to improve his image, and in a year people forget and Tesla might be back. But he just doesn't seem to care about fixing his image, and he doesn't seem to be an understanding. The responsibility goes to him on why sales are down so much?
So why even have any Tesla's stock?
Right?
Now, I think the reason I hold personally still some Tesla stock is for the same hope that we all have that they are definitely focused on a future, and especially for me a climate activist, you know, it's a green future that I'm pushing and Tasla still is the leader in green transportation and energy, and I think it's an incredibly important company to succeed. Hence why I'm out here banging on elon all the time. It's not, you know, for any other reason than wanting to see Tesla succeed
because it's crucially important to climate change. But this robo taxi business is not crucially important to anybody. So you know, I think Tesla's main business is selling evs that and energy storage, and they should be focused on repairing that main business. And I think there are other future end of ours are interesting, and that's why it's a reason
to hold the stock. But it also trades at one hundred and fifty times earnings that are going down, okay, and so you know you have to weigh that too.
In the past, you've talked about how nice it is to drive a Rivian for example. Are you willing to now invest in any other EV company that you've turned on Tesla.
No, you know, I've lost a lot of money and EV businesses over the last five years that I've hoped would succeed in, including Rivian and many others, And unfortunately many of the EV operators are now having all the incentives taken away from them as well as traditional car companies along with tariffs and every everything else. It's just
really a horrible setup to be a car company. The car company we own is Ferrari actually, which has no problem selling their cars at forty percent margins that make Tesla look like chump change. So you know, truthfully, it's just a tough to be in a global auto business on a great day, let alone with Trump as president. So it's a very tough time for the businesses, and
I'm just not recommending that right now. Versus a stock like train technology that makes you know, clean energy air conditioning units where the demand for air conditioning is off the charts, and that's been a wonderful green energy investment, along with ge Vernova, from which we also own, that's been a wonderful green energy investment.
But it's not evis Hey, listen, I do want to go back to We've got the Tesla live blog going on and just tracking everything that's coming out of the earnings. Are down a hole who covers Tesla and Alon, says Page twelve of the shareholder deck shows the Tesla ecosystem, which includes optimists. We know, the robot wishing a baby stroller, you know, you know ross When it comes to Tesla and the world of Elon, there are so many different moving parts. There's you know, the shining beacon of a
SpaceX right that that's a really great business. There's all the AI stuff that's going on. There's so many different moving pieces. What else do you want to know, you know, from the Elon universe.
Well, I think the most important thing in my mind that has the biggest opportunity to help Tesla is this low cost vehicle they keep talking about. They have so much excess capacity in their factories now because they're not selling more cars that they need a new vehicle. And also for addressing other markets, whether it be India, China and Europe, you need a small vehicle that's inexpensive to compete against the other EV players and regular traditional car companies.
And they need to do this now and the sooner they do this the better, and that's the most important thing I know. We like to talk about the day a robot is pushing my care around in a stroller. That day is long in the tooth from coming. Nor does anybody in the world would trust some big robot made by Elon Musk.
Russ Gerber always appreciate you finding time for us.