BNEF's Morsy on Tesla: Investors Want Numbers vs. Vision(Audio)

a loss of sixty cents. Stocks halted a two days slide as a rebounding crude oil lifted energy producers West Texas Intermediate back about forty one dollars of barrel that offset declines in defensive industries. Gold snapped its longest rally in six weeks. Gold down six tenths of one percent, down thirteen fifty nine, SMP five hundred Index up six to sixty three, a gain of three tents of one

percent down. Industrial is up forty one to eighteen thousand, three hundred fifty five, a gain of two tenths of one percent, and has stack up by four tenths of one percent. I'm Charlie Pellett. That's a Bloomberg Business flash. You're listening to Stock with Kathleen Bloomberg Radio at Boston Live at Smith and Lesky Restaurant here in the Boston Seaport district. During our attention to Tesla now, as Charlie Pellett just reported Tessa saying it's on track for five

hundred thousand vehicles this year. If you're on your Bloomberg and you're watching Top Live, you can see some very interesting comments from a lot of our team at Bloomberg News covering this. Jamie Butters, you know, det Bureau saying that Tesla forecast cards per week by the end of Q three and by the end of the year in an average of twenty five weeks. That would be decent

number if it can be delivered. It seems to be echoing the sentiment of our next guest, Aleen Morrisey, advanced transport analysts at Bloomberg New Energy Finance, we call it BNF. He joined us in Bloomberg World Headquarters in New York City this afternoon. Slen, welcome, thanks for having me. So let's start with the kind of painting, painting with a broad brush what we've seen in the headlines on the

earnings report. So far. Yeah, so listen, they missed the earnings, but they did keep their guidance on the fifty thou vehicles to be delivered this year. Remember that they had missed both their targets for quarter one and quarter two. They came in at fourteen thousand or a little bit above in quarter two against the guidance of seventeen thousands, so they're really gonna have to wrap up in the

second half of the year. To targets are the opening of their retail locations tied directly to their ability to get these production numbers to where they want them to be. Well, I think there's generally there's been a little bit of a slowdown in the electric vehicle market, broadly in the United States as energy prices have been lower, even though vehicle sales are higher. But they've also had trouble um

selling their vehicles and key markets like China. To give you an indication of what I'm talking about, Yeah, test corners about twenty percent of battery electric vehicle sales globally, but about in the US, And I think what may be happening is that they're plateauing in their addressable market in the US and having trouble catching up in in

other markets well data whole autos report. A reporter for the Bluebrig News team notes in this top live feed from the from the Tesla shareholder letter that says, we are also accelerating store opening, some planned at a new retail location every four days on average during the remainder of Q three and through Q four. Does this maybe address their need to sell better in markets like China?

This is I mean, it's important obviously to have retail locations for their vehicles, and they're dealing also with conflicts with American UH, with American dealerships because the test to sell directly to customers, I think more importantly, at the

price points of the vehicle. I mean they've come down market with the two flagship models, the Model X and the Model S. They've come down about nine thousand dollars on the starting price of the Model X starting at four thousand dollars at about sixty seven thousand dollars on the Model U S sixtk our pack about four thousand dollars lower, or four thousand dollars lower than the previous one.

But these are still vehicles that are super expensive. I mean we're talking about the medium price of a car in the US is thirties thousand dollars. That they just need to get those price points down. And the only way they're really going to start telling more cars is with the rollout of the Model three in twenty seventeen and eighteen. How's their frecash flow doing? Uh? So, you know, they're about negative half a billion quarter at the moment.

I haven't. I really haven't seen the latest numbers for this quarter, but I think the expectation is that that's going to keep stay negative for the time being. And this rate is actually the other which is the justification they need to bring to the analysts for the acquisition of Solar City, another kind of free cash flow negative business that they want to add to the test, to

the test of brand. You know something, You're quoted recently um saying that elons master plan reads more like a wish list than anything remotely execute able in the medium term, as you note the company's last two billion dollar or in his last year of operation. Yeah, and I think you know the on the call that we're gonna here in an hour, I'm sure that there will be questions

about the execution of this master plant. You know, he's talking about building semi trucks for all electric semi trucks, you know, class vehicles, think of like the big Walmart trucks that you see on the highways driving in the American Midwest. He's talking about building buses, he's talking about having sharing car sharing. You saw the news of d D absorbing the Uber business in China. These are super competitive,

cutthroat businesses. And again with free cash flow negative businesses as it is, I think it's going to be uh, you know, a tall order to convince, uh, convinced investors that they should even more money into the business when it's losing uh cash flow at the moment. So just quickly. The Giga factory near Reno, Nevada, it opened, I believe last week. Any inference as to how that's going and whether that's going to suck even more money out of testless operations, so you know, it's a it's a five

billion dollar factory. It's uh. The equity investments are from Hannasonic or Filift in my own battery supplier and tested themselves, as well as some subsidies from the state of Nevada. Uh, it's not complete yet. Actually far from its complete. They think they will be producing battery cells out of that location by the end of the year, but the thirty five gigawatt our capacity that the factory will be producing

won't be for another two two and a half years. Uh. And that's and you're right, it's critical because uh it will help lower the cost of production of the Model three and hopefully make it make a Model three uh profit of at least on a you know, an operating basis. So how long do you think investors are going to be uh on on lest side be patient with him.

I can't answer that question, but I will say, you know, it's it's the camps are broadly divided between those who buy his vision and those who are more interested in the financials than expect returns on their investment. UH. So far, you know, and uh in the last few years the

kind of visionary month winning over investors. But frankly, I think since you know, these issues of autopilot, of casualty, than regulatory uh federal investigations, the issue of UM of of other issues kind of affecting the business um and the master plan itself, you know, basically asking for free or blank check I think more questions are going to be asked, and that balance may tip now in favor of investors really want hard numbers from We've got to

leave it there, So leave Morse Advanced Transport Analysts, Bloomberg New Energy Finance. This is Bloomberg coming up. Bloomberg Law. Brought you by land Over Manhattan, where New York goes for luxury convenely located at fifty fourth and eleventh Avenue and online at land over Manhattan dot com. Landover Manhattan, Is that your service? The