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On Today's Bloomberg Intelligence Show, We're going to dig inside the big business stories impacting Wall Street and global markets. Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide, And today we'll look at what to expect in the media streaming space in twenty twenty five. Plus we'll discuss why Toyota's recent success may be getting in the way of its
evy future. But first we turn to US bank earnings. The four giant lenders that reported full year results Wednesday notch their second most profitable year ever in twenty twenty four. They include JP Morgan, City, Goldman Sachs, and Wells Fargo. The results were driven by interest rate moves, investment banking fees,
and trading revenue. For more, guest host Matt Miller and Nora Melinda spoke with Alison Williams Bloomberg Intelligence, senior analysts for global banks and asset managers, and they started by asking Allison about City Group's outlook for twenty twenty five.
Well, I think they sort of notched down their return on tangible equity target in the near term, but I think it's realistic. You know, it's interesting, even Goldman Sachs, who had like a blowout quarter, really strong numbers. It's tough to see them. You know, they say they have a path to reach their target. But I think what all these banks did was after twenty twenty one, which was a blowout year, you saw a lot of people raise their targets, but at these very bullish targets. And
JP Morgan has met their targets. But for everybody else, you know, it's tough and even with the markets as strong as.
They are, so.
But targets were pretty high, right, yeah, I mean Shannali keeps telling me that JP Morgan missed on equities trading, but equities trading rose.
Right I think because I think because they restated their numbers, and so if you look at the restatement, what happened was they shifted a little bit from equities to thick and so I think that's why it appears that they missed on the equities line but really beat on FICK and explained to her fixed income.
Okay, what's acronym?
Thank you?
Yeah, it's an acronym that also doesn't do well in Germany.
Yeah, I'm not sure what it would be, although Deutsche Bank only does fick with oneesay because.
They're not that good man.
So who's the front runner here and who are the laggards?
So you know, JP Morgan really continues to post the leading returns of the group. As I said, there, you know, exceeding their target in the near term. We expect they'll meet their target again next year. But I would say that for I say you that all the banks really had a good quarter. And it's not just the quarter, it's the guidance and so net interest income coming in better than expected.
You know, WELLS.
Fargo and JP Morgan in particular raising their guidance for a net interest income for next year. With the City Group, as we pointed out, you know, they had the buyback is about fourteen percent of their market cap, So that's pretty significant. I mean, keep in mind the valuation at City and so that's why I think investors are even more excited about that.
Well, you know what, that brings up an interesting question. We have the inauguration and will be a different regulatory regime. Not just throwing out the Basil three endgame, but I wonder if these banks are going to be able to do more buybacks, Are they going to be able to pay more in dividend? Are they gonna be able to return more cash?
To show that is that is definitely the thesis.
If you will.
And so a lot of the run up that we saw in the banks was due to this lighter regulatory environment. A big part of that, to your point, is the capital rules. So Basil three endgame as we call it.
Sounds like a movie.
Yes, right, so it will eventually happen.
I mean.
For the banks, it's probably a good thing actually, if it happens under the current administration, because the current administration, as we know, is very US focused, and a lot of the issues that the banks had with the capital rules was that it was very punitive versus some other jurisdictions. So it felt like it put them at a disadvantage. Especially it's something like prime brokerage, and that's not a
business that regulators are necessary. You know, regulators generally they're looking to protect the smaller banks and do things, and you know they're not as concerned with trading and prime brokerage. But to the extent that this at this administration, you know, we would see the lighter rules come through.
It could be good to get them solidified.
The other thing M and A less antitrust should be good for M and A. It's actually a little bit of a.
How many banks are there in the US and the United States of America.
How many banks do we have?
Well, it's not it's not five thousand.
It's not necessarily even the bank insolidation. It's the fees that they'll make advising other people.
Right. Okay, So you're saying advising M and A for other industries. Okay, I thought you were talking about in banks, because you know, in some countries they have like.
Four or five, but just a couple that you can count on your hand.
And this country, we have we have a lot, a lot.
I mean, I'm not far off with five thousand.
Right, yes, so you're not far off. But I mean the size of these g SIPs as we call them, which globally systemically important banks. I mean, the big really have gotten bigger. They have consolidated share, and they've gotten bigger globally.
I don't know if Nora remembers, but there was a time when we were concerned about banks being too big to fail. Okay, I mean you were probably in middle school at the time, but now they're even bigger. I don't know that I shouldn't assume that your age is. But you know, twenty ten now is fifteen years ago, so into two thousand and eight, right, seventeen years ago.
What grade were you in seventeen years ago?
I don't think I'm allowed to ask, Actually forget that. In any case, these g sibs are g sibbier than ever.
Right.
I'm also so I keep an eye on real estate stocks, so I'm covering office rates, and one thing that I'm always looking at is return to office. So we did have JP Morgan saying that they're pushing people back into the office. What has been the general mandate and what has been the conversation for the banking industry in general?
In general?
You know those that are front office, if you will, that are out there. You know, we have this banking fee recovery. Banks are competing with each other, so a lot of those senior people happen in office or traveling again, right, so a lot of for investment bankers, a lot of it is not necessarily sitting in your office, but being
out there and visiting clients. So we definitely saw that return to travel and JP Morgan, even though the five days a week is getting a lot of headlines, you know, the senior people at JP.
Morgan have already been back.
You know, people that I talked to at the company were back, you know, May of twenty twenty. They were back in their office five days a week. So yeah, so definitely there is the return to office.
Office.
Commercial real estate, as you know, was a big concern, but we're we're definitely seeing some stabilization there all right.
Thanks to Alison Williams, Bloomberg Intelligence Senior Analyst, global banks and asset managers. We move next to the streaming business. We heard recently that Walt Disney, Fox, and Warner Brothers Discovery scrapped plans to create a joint sports streaming service called Venue Sports, and the company said they instead want
to focus on their existing online offerings instead. For more host Paul Sweeney and Normal Linda were joined by Gethera Monkannathan Bloomberg intelligence analyst on US Media, and they first asked Etha what Venue was to be and why the parties decided not to go through with it.
So Venue was really this skinny sports service that that was having content from Disney, Fox, and Warner Brothers. It was supposed to launch last year. But Fubo, which is another player in the space, they're a digital PayTV service provider, they actually had filed a lawsuit against Venues saying that it kind of blocks competition, and so you know, because of that, there was an injunction which had blocked the
launch of Venue. Now, in a somewhat of a surprising move, Disney actually merged Hulu Live Tv, which is its own digital PATV service, with Fubo, and as part of that deal, Fubo actually agreed to drop litigation, which potentially, i mean theoretically, on paper, it kind of cleared the way for the launch of venues.
So this move, or this announcement rather is somewhat.
Of a head scratcher because we really thought that they had, you know, kind of put everything in place to actually
go ahead with the launch of venue. But you know, Direct TV and Dish had also come up with their own concerns, and they had said that, you know, antitrust concerns regarding Venue were actually still very much in place, which kind of suggests to us that maybe Disney, Fox and Warner Brothers said that it's really not worth all of this, you know, legal and time resources being spent on Venue, so let's just crap the whole thing.
We're in also expecting this.
Nobody was really expecting this.
I mean, first of all, nobody was really expecting that whole fuboat Disney move, but really that kind of seemed like this perfect setup for actually a go ahead on Venue. So this obviously, this is the kind of our second big shock this week, but it really kind of goes to prove to us, you know, despite everybody kind of wanting to make this transition into you know, streaming pauls. You very well know there are so many legal and logistical complications associated with it.
I mean we've seen that time and time again.
You know, there was this short form video service called Queebi, which basically was kind of dead or arrival. We had CNN Plus again never really took off the ground. So so many of these services, Yes, theoretically they're good, but practically it becomes almost impossible to implement.
Can you update us on what disney strategy is for ESPN in the streaming world?
Yeah, Now, I think all eyes now that this whole venue thing is off, I think all eyes are on ESPN. So the big move that happens this year, it happens in fall of twenty twenty five, when Disney is preparing to launch what they call the flagship ESPN product, which is all of the ESPN content, all of the Marquee Sports content actually going direct to consumer. Now, the big news that we're still kind of waiting for Paul is
what the price point is going to be. So we knew that Venue Sports was priced at about forty three dollars a month, but that included, you know, obviously content from Fox Waterer Brothers and Disney just kind of looking, you know, crunching some numbers. We think that this new Disney ESPN service could be priced anywhere from about twenty
two to twenty five dollars a month. So then the question is, you know, how many people are going to subscribe to the service and will it potentially help Disney to offset all of the losses that they're seeing on the linear TV side. We think over time it will, but it's still a little bit of a weight and wash because we really need that price point.
So how big could this really be if they were to launch this ESPN product.
We think it can be really really big.
So remember right now we have about seventy million PayTV households, but there are totally one hundred and thirty million TV households, so that means sixty million households are actually not even subscribing to a PATV service. So we think that, you know, the ESPN product potentially can capture a lot of both the PATV household on as well as the ones that we call cord never's or you know, cord cutters who
have just completely left the TV ecosystem. So the way that we're kind of modeling it out is we think that this service gets about, you know, ten twelve million subscribers by the end of next year, potentially reaches almost thirty forty million subscribers over the next few years. But again no, a lot of that is going to depend on exactly where they price the product and also what
content would they offer. Do they go out and license more content from let's say some of their peers like you know Fox or Warden Brothers.
Thanks to gethr Maranganathan, Bloomerg Intelligence analyst on US Media. Coming up, We're going to break down why the investment company black Rock attracted record client cash last year. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on some of the two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence through Bigo. I'm a terminal, I'm Alex Steel, and this is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Easter on Apple CarPlay and the Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We moved next to earnings results from the investment company black Rock. This week, we heard the black Rock attracted an annual record of six hundred and forty one billion dollars in client cash. The number show the firm's global reach as it integrates multi billion dollar acquisitions and reshapes
its leadership. For more, guest host John Tucker and Normal Linda spoke to Neil Sipes, Bloomberg Intelligence financials analyst, and they asked him how much assets under management Blackrock had now.
The number now is eleven point six trillion. Wow, that's chilling with the tee, right the t And what's really interesting is you know that number, you know, blows people's minds away, especially if they're not following the name closely. You think about the rule of seventy two, how many years it takes to double. Their assets have grown ten percent a year over the past seven years, So that how we've sort of gotten here. Twenty seventeen we were
at six trillion. Now we're at eleven point six trillion, so, you know, effectively doubling a lot of that of course's markets, but with black Rock, what we know is sort of premium organic growth that's net inflows of client assets. That's been their strong suit.
Neil, As we look at earnings, what were your biggest takeaways for this company?
Yeah, I think the biggest takeaway was that at eleven point six trillion dollars, the question of can you still grow at that scale is sort of answered here and we've seen that, you know, the two hundred billion in long term flows in client assets, that's eight percent long term organic growth. That's one of their best quarters in a handful of years, and it's at the point where
they've been the biggest they've ever been. So they're proving that, you know, the bigger they get, the growth is still there. And a lot of that speaks to sort of the breadth of that franchise where we know they have the massive eye shares franchise, the legacy sort of active mutual fund franchise, and now that push into private markets.
As a client of Blackrock, how much money am I making with my stuff?
Yeah?
Well, I guess it's going to depend what sort of products you're investing in, but a lot of what they've sort of typically done or legacy when you think of Blackrock as a lot of those beta type products, the simple I shares ETFs that are going to track an index or an index mutual fund that you might find in your four oh one K or in your retirement plans.
So that's going to vary buy product. But what I think is a bigger story in asset management as well is the fees that are associated with those types of products. So we know that Blackrock is huge in that sort of passive realm. That's where fees are lowest, but we know that's where investor demand is, so that's where those assets are growing quickest. On the other side, in the asset management industry, we call it the Barbell strategy.
Passive.
On one side, that's low fee, high growth. On the other side, you have the higher fee, high growth, and that's private market.
I guess what I'm asking is what is the secret sauce that attracts so many clients to them? Is it the low fee aspect of this?
Yeah, I think it's a combination of both both performance
and sort of competition on price. Right, Blackrock has the scale to be competitive on price, so they can effectively either undercut competitors or at least justify you know, the fees with performance where necessary, and you have Blackrock, that's pretty much embedded with all financial services, all at financial institutions across the world, wealth advisors down to the self directed brokers, you know, defined contribution providers, all of that
sort of makes their products permeate pretty much everyone's portfolios, from retail all the way up to institutional.
So Neil Blackrock also mentioned the announced that we were going to be having a shake up and management. So one of its most senior executives, Mark Weedman, will be exiting this spring.
And why would shake things up are going so well, right, don't shake anything.
He was also seen as a potential successor for Larry Fink, the CEO.
So what are.
Conversations like, what are you hearing in terms of how people think about who could potentially replace the CEO? And if there's any sort of you know, instability there.
Yeah, I don't necessarily view these headlines as as a you know, indication of instability. I think we know that Blackrock has a pretty strong bench. You are, you know, at times going to see higher profile people depart certain firms. You know, Larry's been at the Helm for you know, over thirty years at this point, since co founding Blackrock, So that's always sort of been a question that's sort
of in the back of investors' minds. It doesn't sound like it's you know, on the verge of being announced or anything changing, but you know, ultimately that's one person out that may have been a sort of potential heir to the CEO. But we view the bench as pretty solid and don't see that as a negative.
Right, So what do you do for an encore? Larry finks this is just the beginning, I think.
He said, or seventy two years old.
Yeah, right, And some may even call the past twelve months the encore where he strung together three pretty sizable transactions in private markets, Global Infrastructure Partners, Prequeen, the private market's data provider, and then just recently HPS that has significantly shaken up the firm in terms of how those fees are going to be generated, where the growth is ultimately going to come from. So that's perhaps sort of the latest in the legacy of Larry Fink, and ultimately
where that goes is going to be the question. But it feels like more of the same, more on the passive etf side of the business as well as now into private markets.
Our thanks to Neil Sipes, Bloomberg Intelligence financials analyst, we move next to the renewable energy space. There's been growing concern that changes under a new Trump administration could undercut US policies that have spurred renewable energy, but according to Bloomberg Intelligence, greater private equity involvement and much of the S and P five hundred seeking emission cuts could offer
support for more. Co host Paul Sweenie and I were joined by Margo Wenzel, Bloomberg Intelligence Senior ESG research associate. We first asked Margaret to talk about the renewable space and if it's right for some m and A and consolidation.
It's a really small market. I will say it's only about two percent of total deals currently, but it's growing pretty quickly. It's grown around sixty five percent if we compare twenty twenty to twenty twenty four versus the prior decade, and if we look at the overall market zooming out a little bit that has grown around thirty percent. So there's definitely some focus there for this particular part of the market and.
Does it slow down under President like Trump and administration.
I think there's certainly risk for that the changing administration definitely presents some challenges. We saw President Trump talk about how there will be no wind bild out under his off show wind offshore wind YEP, which it presents a challenge. But I think we do see some longer term key drivers that could continue to propel the momentum of this market,
especially things like companies have set decarbonization goals. Ninety eight percent of the S and P five hundred have set emissions reduction targets, a lot of those ending term in twenty thirty they've cited M and A is a key strategy for that. And then secondly something that everyone is talking about AI data center build out. We are going
to need so much energy for that. IA is saying demand's going to increase four percent just this year compared to last year, with renewables meeting like seventy five percent of that. So I think those long term drivers are important to know.
So generally speaking, in the renewable space, where is the growth here?
It's interesting because renewable energy costs have actually dropped quite a lot. We look at SOUL, Solar costs has come down over eighty percent since twenty ten, wind over forty percent I think it's important to note what Alex mentioned about it's offshore wind. Offshore wind has faced a lot of challenges recently with regards to supply chain issues and
rising costs. It's interesting because last year three of the biggest deals that we saw in the renewable energy M and A space were actually electric utilities selling off stakes and their offshore wind and private equity buying that. And that was so that they could generate some cash flow to pay off those costs.
It's interesting, where do you think in renewables we'll see the most action, because renewables is a huge bucket. Like we might wind, you got renewable natural gas. I mean, is nuclear now included in renewables with natural gas included in renewables? I think it depends on who you ask, right, right, clean coal, that's a thing, right.
I think from a cost standpoint, solar has been adopted pretty widely. We're seeing a lot of companies acquiring solar assets, so I think solar is a place to watch. And as you mentioned, nuclear energy has been a huge focus recently. There's still opportunity for costs to come down there, but definitely a focus.
So where are we in terms of you think kind of just the evolution to deploying renewable energy, where are we VISA v the goals as the US and as US different from other parts of the world.
Yeah, I think the IRA has definitely improved adoption in the US. We're probably seeing a little bit more adoption in Europe just from a policy standpoint. But yeah, I guess it'll be interesting to see what happens.
Yeah, it feels like the two areas. Definitely, EVIS is going to be a risk and the Department of Loan programs right and that, but that would go to fund many different things, Like it wouldn't just be like super weird green Techi's things, It was like real projects. Also, those threats impact M and A or as you pointed out, are these like longer term, multi year dis.
I think they could impact renewable energy emity in the short term. I mean the IRA is it's a broad piece act.
Yeah.
Sorry, but is there rich that President Trump could unwind the Inflation Reduction Act?
Yeah, I mean it's such a broad piece of legislation. There are so many policies involved. He's been pretty vocal about rolling back certain parts of it, like the ev tax credits, for example, but it's pretty unclear exactly how that would work, and it would take a lot of time to really unwind policies within the and.
Some of it you can't do unless you have Congress too, So there is right, So there is that as well. Last question, Paul didn't ask it, so I will is ESG still a thing?
Yes, but there's a butt. I can look at our face and see there's a butt.
I think ESG is still a thing. At the end of the day. I think esg's broad it's it's good investing. We have a ESG team here within BI and the research we do and we'll continue to do, is going to be around. Are their investment risks and opportunities associated with ESG themes. So I think it's here to stay, but we are weathering some challenges associated with the changing administration.
Our thanks to Margot Wenzel, Bloomberg Intelligence and your ESG research associate. Coming up on the program, a look at how the world's number one auto maker has kept its focus on hybrids and gas guzzlers for better and worse. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on some two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence
through Bigo on the terminal. I'm Alex Steel, and this is Bloomberg.
You were listening to the Bloomberg Intelligence podcast. Catch the program live weekdays at ten am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven.
We take a look next at the media streaming space. Co host Paul Sweenie and I were recently joined by Mark Douglas, President and CEO of Mountain, and he joined to discuss what he expects in the media streaming landscape this year. We began the conversation with live sports and ask Mark how that will migrate into streaming moving forward.
Well, I think you're seeing a few things happening at the same time what you just mentioned, which is Netflix getting into sports. Also ESPN is coming like fully to streaming. So I think the advertisers really like they still are addicted to kind of like big audiences watching at the same time, so they can create big moments and so these networks they want to commodate that, but they're going to start accommodating that on streaming in twenty and twenty five.
It's already happening.
But now you hear from Disney, you hear from Netflix, they're really going all in on it. I think ESPN on streaming, really going full in on streaming is a big deal.
Will the ad revenue for that live streaming of sports follow I.
Think it will. I think the.
Netflix in particular is a big advantage because so many people go to Netflix as their first source, so they can turn something that might not have been that big into a big moment. They did that with the Tyson Jake Paul fight. I think they're gonna do that with WWE on Monday, where people who normally wouldn't watch WWE are going to turn on the TV and that's what they see and they're gonna, you know, click and watch, and so they able to kind of amplify these sports events.
But Disney, with ABC and all their other and especially ESPN, also has ability to deliver a big audience.
I think they'll do the same.
You were really early on on the Netflix story, Mark, Are you still as bullish about them, because one could argue it's a whole new competitive landscape here these days.
Yeah, I think where you go first, you know, in some sense, the modern day TV guy is a really, really big and as long as Netflix owns that spot, I think there's data to show that well more than fifty percent of people when they turn on the TV, the first app because now you like start an app rather than change the channel, the first app they go to is Netflix. As long as you own that spot, you will own, you know, kind of be the leader in streaming. But it requires a big investment in content.
People go there first because that's the first place they think there's.
Going to be new content.
So Netflix is going to have to keep beating that machine. And they're doing it now, and they're doing it profitably, so you know, all of that combined I think keeps them in the lead until they they until they make a strategic error essentially, and maybe you know, get cheap about how much you're willing to spend on content people abandon them.
Mark.
When it comes to the next step, then are we going to see bundles? Like you said, it's Netflix is like basically raced to lose at the end of the day.
Yeah, I mean bundles in the form of acquisitions.
I think.
So there's some loose bundles now that don't involve acquisitions. But I mean what's happening in twenty twenty five is every network is all in on streaming. I mean I talk to executives at all these networks. W this is pretty regularly all that I mean, linear doesn't even come out of their mouth anymore.
That's a legacy business.
You know, the viewers are still there, so they still have to migrate them, but they only want to talk about streaming and the you know, the big winners I've said this many times are the ones where I can name them and you can.
Tell me why you go there and watch them.
And so those winners are going to started consolidating the buy content and it's already under way, and that that that's kind of what's going to have that bundles in the form of let's just start buying content and buying these brands which are going to disappear like old you know, car companies that that you never hear about anymore.
Something you know, similar to that.
Are the economics Are they as good in streaming?
Mark?
Do we know that. I mean, it seems like they're pretty good for Netflix.
They're good for Netflix, and I think starting to get good for Disney. And you know, it's when do you reach a critical mass of subscribers that is more than your cost of acquisition for the consumers and the costs of the content. And Netflix is clearly at that point. I think Disney is. If not, I think I think Disney Plus is now profitable. I hope they don't underinvest in content to maintain that profitability, and so and a
few others are going to follow it. I think the business is going to become very, very profitable, and it's going to go back to being a growth business. That's been the story of Linear is it grows at one percent a year, and streaming has obviously grown a lot faster. So hopefully the whole industry is going to grow a lot faster.
If everyone's talking about streaming, are the ad pricing that a streamer can get as good as Linear? And then if not, when does that ship turn?
Yeah, it is as good.
The ad load is not quite as high, and so consumers are probably happy about that. They see fewer ads, but the ad load will probably catch up and so the pricing is about the same, meaning how much money can you make per consumer is about the same. One thing also just switching back ear so, you know, kind
of the previous topic. The interesting thing about Netflix is they're profitable while they're bringing one out of every two subscribers is paying the lowest possible price with ads supported, and they're not selling many ads right, They're still relatively small in the ad game, and so it bodes well
for how profitable this company is going to become. I think it's five pot ninety nine price point is the cheapest price point to join Netflix, and they remain profitable, not actually expanding profits at that price point, and the media dollars are going to show up and make this company incredibly profitable. So that's back to the question about you know, is the industry going to grow?
Is the profitability going to be there?
Yeah, it's going to be there pretty big, and the particularly pretty large for Netflix.
Is there a sense mark how many streamers can be economically supported in this marketplace?
I wouldn't call it unlimited demand for TV advertising, but there's a lot of demand. The pricing has been coming down a bit because of the competition. You had you know, like Netflix started to really come on board, Disney plus Amazon Prime. Now every subscriber receives ads. There's not even a way to opt out, and so all of that new inventory is definitely bringing prices down, triggering a little
bit of a price war. But I think that'll shake out when you combine that with the acquisition spree that's probably gonna happen over the next few years. I think pricing will temporarily dip then start to go back up. And the main thing is you have a lot of new advertisers comeing in market, a lot smaller, younger, mid sized companies, smaller companies and bringing new revenue that will will drive up revenue for the whole industry.
Mark are we ever going to see the streamers get really into news talking about live? I know that some of them have their own streaming news part, right like CBS Now, et cetera.
How do you think that part evolves.
I think probably not, And the reason is is because no one really, I think fully understood in their recent years that like social media is a big competitor in news, so they get the kind of news that people are getting literally right now listening to you, I think that's going to remain relatively independent. I don't see like Netflix and Disney getting into that and so and I've never, honestly never hear from any of these companies about news.
They only want to talk about sports and entertainment.
Thanks to Mark Douglas, President and CEO of Mountain, this week we focus on a Bloomberg Big Take story titled Toyota's recent success is getting in the way of its future. You can find it on Bloomberg dot Com and on the Terminal, and the story looks at how the world's number one automaker has came. It's focused on hybrids and gas guzzlers for better and worse For more. Guest hosts Matt Miller and normal Inda spoke with Chester Dawson, Bloomberg Senior editor tode Is.
You know they're kicking it and taking names right. I mean, they're the world's largest automaker, full stop. They're highly profitable, and they've got you know, business growing and markets right around the world. But they too haven't quite figured out eves and you know, it's it's it's keeping them up at night because they realized that, you know, by looking
over their shoulder. The Tesla's and about three dozen Chinese ev makers that nobody in this country's ever heard of, are are quickly creeping up with products that cost a lot less and have just as much, if not better, you know, cockpit technology, and are flooding into work at markets, you know, in places like Africa and Southeast Asia and the Middle East, among others. And and they've got to
figure out what to do about it. So yeah, the scene that that that you describe it, you know, they have it's actually a specially reverse engineering company that that has these facilities. And you know, the fact that they put one in Japan, you know, uh is is I think telling you know, they realize that the world's largest dottomaker and Japan's largest automaker by the way, you know, it was kind of interested in and peeling apart the onion and finding out how it is that Tesla and
the Chinese can make these things so darn cheaply. By the way, I'll just mention that there's also a facility right here in suburban Detroit. It's in a former milk processing facility, so not a not a junior high school gymnasium, but but they do the same thing for the Detroit three to show them.
So they take they take a by d seagull apart there and say, like, how did they do this so well for so little?
Exactly? They take it, they literally strip it part by part, piece by piece. They X ray, you know, each piece to determine, you know, what it's made of, how much it weigh. You know, some of the interior things that can't be seen, but I saw, for example, they had a cyber truck in there and they had the battery pack and they ripped off the top of it and you could literally see all those prismatic cylinder batteries stacked up, you know, like so many bowling pins, which I'd never
seen before. I mean, it's kind of cool, but it's also very frightening to these executives at companies who are trying to figure out, you know, because I mean the other thing about this is and this we get into this in the story. You know, Toyda knows how to make an internal combustion engine vehicle or even a hybrid very very well. They are in many ways the world's leading experts on it, and.
People says from Toyota right their their production their production methods are have been world famous since the since the eighties exactly.
Yeah, and we get into that too, the kind of somewhat mystical may the Force be with you, Toyta Production System and Kaizen and just in Time and lean manufacturing, all that stuff, you know, comes straight out of Toda City. But it's not. It just turns out it's not so relevant in the world of you know, modular manufacturing vehicles that have many fewer parts and you know, a lot
different technology. So trying to you know, Toda's trying to put a square peg into a round hole and it's not alone, right, I mean, and we chronicled how other automakers, you know, Volkswagen, Ford, General Motors, they're all struggling to figure this out. But in some ways TPS Tota Production System actually seems to kind of get in Toto's own way because they're so imbued with this there. It's almost
this reverential philosophy that permeates everything in Toyota. You know, how do you kind of think outside the box when everyone in the company is trying to think a certain way to kind of hone and shape and incrementally improve things. You know, that doesn't help when you're looking at a revolutionary change, how.
Important is it that Toyota catches up in the EV transition? If you're thinking from a US perspective, maybe there isn't as much demand for EV's, but more globally, how important is it that they catch up?
Well, Laura, that's a good question. You know, it isn't super relevant in this market right here and now, except for one thing. They've invested thirteen billion dollars in a giant lithium ion battery factory in a rural part of North Carolina. So if they're not going to be selling evs, they got to figure out what to do with that sunk investment, all right.
Thanks to Chester Dawson, Bloomberg Senior Editor.
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