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Let me tell you we have a new star.
A star is born Elan On Mars Juthan Kennemy. He is the Thomas Edison plus plus plus of our age.
Probably his whole life is from a position of insecurity. I feel for the guy.
I would say ninety eight percent really appreciate what he does. But those two percent that are nasty, they are our pay in four fols, we were meant for great things in the United States of America, and Elon reminds us of that. I'm very disappointed in Elan. I've helped Elon a lot. Welcome to Elan and Bloomberg's weekly podcast about Elon Muskets, Tuesday, August fifth. I'm your host, David Papadopolis. Okay,
so here's this week's show. In three large numbers to undred and forty three million dollars, thirty billion dollars, and two point two billion dollars. The first is the amount of money of Florida jury ordered Tesla to pay the victims of a crash that took place when a driver had autopilot engaged. The second is the quote introm Close
quotes Stock Award that Tesla's bord handed Elon yesterday. And the third is the plunge in the estimated value, perhaps the least loved of the Musk businesses, the boring Company. So we have an eclectic cast of characters to bring you each segment, and we'll start with Elon Inks stalwarts Dana Hall and Max Chafkin. Hello to you both.
Hey, David, Hey Dana, Hey guys.
And we have a special guest, professor Missy Cummings, who's the director of Mason's Autonomy and Robotics Center at George Mason University and who was a expert witness in this trial, to talk about the Tesla autopilot rule link. Missy, Welcome to the show.
Thank you for having me.
Okay, So, Dana, before we do tap into Missy's expertise, here set the scene for us a little bit. What happened on that day back in twenty nineteen, and what exactly did the Florida jury say last week?
Yeah, so this You know, there are lots of autopilot crashes, some have gotten enormous media attention, some have not. This was a crash that occurred in twenty nineteen where the driver of a Tesla. Basically, he was on hold with an airline making a phone call, dropped his phone, reached for his phone, and then managed to t bone a parked car where a young couple was stargazing, killing the
woman and gravely injuring the man and the driver. You know, already kind of settled with this family, but the family sued Tesla. And surprisingly, we've had Tesla in a lot of court cases, and often they settle before the eve
of trial. But this went to trial in Miami. Missy was one of the witnesses, and the jury found Tesla liable not just for damages but for punitive damages, which I think is significant because even though the driver himself, you know, testified that he had dropped his phone and was distracted, the company itself was found liable. And it
was just an extraordinary case on so many measures. I mean, I was not there in Miami, but you know, Missy, like you were there, I mean, it was it was what did you think when when the verdicts came out and what did you specifically testify about?
Well, there were several expert witnesses, but my specific area is AI expertise and then regulatory expertise. Since I had worked at Nitze for a year, so you know, jury trials, you just never know. I got a good sense when I was testifying because the jury was listening and you're explaining technical concepts and you can see it, you know, as a professor, I can see somebody check out fast than anyone. But they were not checked out. They were
paying attention. And I think that they both understood the technical issues which led to them finding Tesla. You know, in this case, I think it was thirty three percent liable. But I also think that the jury understood the punitive damages were due to Tesla's cover up of a lot of the data. And I think they got that too.
Speak a little bit about the cover up of the data, because that was a really wild thig. I know that the attorney for the Benavitaz family made like an augmented video that was based on what they were able to extract from the onboard computer. And there was a hole back and forth about did Tesla know that it have this data or they did they hide it? How significant was that?
I mean, it was deleted and we knew we could see it in the files, but because we were able to recover it it was undeniable. But we knew that these augmented videos existed because I had been an expert witness in other cases where I had seen the annotated video. This is a video of any crash that they have. Your car records what's going in in the frontal camera view, but it also records everything that it sees, and so we know that this data exists. It exists for every
single Tesla, every single day. And so for Tesla to try to cover this up, you know, I'm not an attorney, but I thought it bordered on criminal.
So they sought to cover it up by saying what that, Oh, we don't simply don't have it.
And yeah, they were trying not to give us the data. And if it hadn't been for the digital forensics person that we had on this, it would have gone unnoticed. And why that's critical is we were able to show what the car saw and what it quote unquote knew was going to happen. So you know, with several seconds to spare, the car saw the end of the road coming and decided to project drivable space into the wilderness.
So it knows that the the road is coming. It has the map that knows it's coming, but still the car decided to go ahead and drive in the wilderness. So even if this other car hadn't been there, the car would have gone off the road. And indeed that the computer vision system actually saw a car there and never alerted the driver and never engaged the emergency braking system.
Why isn't though Tesla's argument correct though that, and I believe by the way other juries in the past have found it to be that, hey, you know, autopilot is there just to assist you. You are still the driver and you need to be responsible for your vehicle and paying attention and not looking for your phone when it falls on the floor.
Yeah, well this came up in this case as well as other ones in the past. Tesla has said that in court often and perhaps in sort of legal back and forth. But if you look at the messaging that the company has employed, and this is part of the reason why I think the jury and why many people are sympathetic to some of these drivers who have taken their eyes off the road while they're using autopilot or
full self driving. You know, we've seen cases of full self driving also leading to issues, and it's because if you like, listen to what Elon Musk says. You think it's better than a human He says it all the time, and he continues to say it. Part of me thinks that this case may start to undercut that story, just because reading the details that came out here are so powerful. You have, as Missy is saying, a technological system that is inadequate, and Missy's saying it saw the road.
But yeah, but in fairness is this technology this is six years old right from twenty nineteen, missy, Do you have a sense how much progress their technology is made from twenty nineteen to today?
Well, you know, so full self driving is in existence today and it wasn't a product back then, and you can't. It's hard to separate out those two because the computer vision system, for example, that works for autopilot is a critical part of full self driving, and indeed, they were using a lot of the data that they were getting
an autopilot mode to inform full self driving mode. What I will tell you is, as a robotics professor, have I seen a dramatic leap in capability from twenty nineteen to twenty twenty five?
No?
Indeed, I think that what this case showed me as an expert. Because I looked at all their testing documentation or the lack thereof, I got news for you. Self drive is not happening for them. I've seen under the covers, and they're just their procedures, processes, what they value, what they don't value in terms of testing, whther or not you can do all this shadow testing, I see still an extremely immature company that just does not know how
to build a safety critical technology. They've been able to dodge responsibility up to now because the driver was the scapegoat, but when it's self driving happens, there's no scapegoat. It's all them.
So Dan, we've alluded briefly here to the fact that Tesla pushes back, of course, and they have worked very hard to do so. What is their exact line, Well.
Tesla argues that the driver is a fault because he was distracted, and in their statement they say today's verdict is wrong and only works to set back automotive safety and jeopardize Tesla's and the entire industry's efforts to develop and implement life saving technology. We plan to appeal given the substantial errors of law and irregularities at trial. You know,
Tesla often blames the driver in these cases. But the other thing that I think is really important to point out is this was a unique case in that the victim here was not the driver or the driver of another vehicle. It was pedestrians. It was like a young couple that had pulled over to like look at the stars. They did not sign up to be part of this experiment. And that is that is like another whole aspect of this. So often in crash cases, it's what did the driver
do or not do? But these people were completely innocent. They were not even in their car, and they had pulled over to the side. They were not even driving. It was a stationary object and behind some signs. They parked behind something thinking that these signs would protect them.
Yeah.
Wow, okay, Missy, I was struck by something you said a little bit earlier. Full self driving isn't happening for them than being Tesla now. So much of the company's nearly trillion dollar valuation is predicated on full self driving happing for them and robotaxi being a thing. So there's that. But moreover, Missy, there are already these vehicles buzzing around, these robotaxies buzzing around in Austin and perhaps soon to be in other cities. Should that worry.
Us, well, I think it's first of all, really important words matter here. Full self driving is a product which is recently had its name change to supervised full self driving, really because of all these lawsuits. Right, so I'd like to distinguish between their product full self driving and actual
self driving, which is still not happening for them. They have robotaxis in Austin, there's a person in the right seat, there's remote operators, and in some cases we know that there have been either leading or trailing cars that help protect the envelope around the car. There's no legitimate self driving car company that's on the road today with this amount of babysitting. Look, I'm telling you I'm a robots professor. Or they're using one sensor, one sensor stream to do everything.
One thing we know in robotics that is a super bad idea in a stagey critical system, and it won't work. It just is not going to work. I don't care what they do with the software. I don't care how much Dojo is in this. I don't care you know whether or not he gets a gazillion dollar bonus from the company. It's not going to happen because technically it cannot happen for the kinds of systems and the kinds
of speeds that they're operating at. So, you know, be my guest, but I'm going to put my child through college on these expert witness fees if they continue, Missy.
You know, Max and I have something of a running debate slash feud on the show and off the show about human drivers versus robot d robotic drivers and what they can do. Max thinks humans are brilliant drivers.
I'm not so sure about robots.
Okay, I'm not so sure about that. Our lifetime's Missy, will the four of us see a world in which the robots are driving the vast, vast bulk of our vehicles?
Now, David, you owe me one hundred dollars?
No, I don't know.
I also just want to make the point that, you know, Tesla really leans into this concept of Tesla Vision is their system. They've got cameras and this incredible brain. But I would just like to point out that humans don't just drive with their eyes and their brain. You use your ears, You listen to sound. You listen and you feel the roadway, like driving is a multisensory experience. It's not just your eyes, that's all.
Waymou likes to say that they have safer drivers than human their cars are safer than humans, which is debatable. But you also have to remember that all these cars have teams of people from the Philippines watching their every move. If every single one of us had a remote operation center watching our every single move, we'd all be better drivers. Right, So I wish people would stop making that comparison because it's an Apple's to launches.
All right, Missy, this was great. You will most certainly have to come back and join us again.
Would love to.
Max Dana more Tesla News. Elon just was handed something that we're calling an intram pay package. Max, this is a billion.
This is a feel good story, I think for all of us, all of us, Yeah, who just would like to get paid more money? Elon Musk getting thirty billion dollars come on over the next two years.
Having I think over the last couple of.
Years, anyway, done a questionable job leading Tesla, right, Like the stock has not done super well. There's been a swirl of controversies but lawsuits, as we've discussed. But of course this award is not just about the last couple of years. It's about this other stock award. The board is attempting to sort of create a make good on their pay package from twenty eighteen that was invalidated by the Delaware court. So though although in some ways it looks like a guy.
Being paid for no.
Clear reason, it's actually an attempt to like recreate some part of that gigantic pay package that he has yet to receive.
Yeah, so of course the ultimate valuation or value will will be determined by the performance of the stock. But give or take thirty billion dollars, so he gets this now, and what if lo and behold in that court case, they also say yeah you can in the end, all right, yeah you can have that money. Does he get both packages? No, he doesn't.
The way this is written is if they somehow are able to pay the original pay package, which the valuations are all over the place because it kind of depends on the stock price. But I think when we initially talked about this it was in the fifty billion ish range. It's it's been worth I think a bit more at various times. If that package is somehow approved because of
appeals or whatever, then this package would be invalidated. This is only valid if Elon Musk does not get that one and he works at Tesla for the next two years, and then the intent is to give him another giant pay package for his current work, because again this is a backwards as we're talking about work that has already been performed.
Yeah, this is like an interim pay package to keep Elon focused on Tesla while the Special Committee of the board works on a new pay package to incentivize him going forward. And this is all because you know, the pay package was invalidated by the judge in Delaware, then Tesla appealed to the Delaware Supreme Court. That appeal process is taking forever.
I think.
Originally, you know, we all hope that maybe we would get a resolution to that sometime this year, but it's still going on. So, like they need to give him something because from the board's perspective and a lot of the retail shareholders, they're like, Elon hasn't been paid since, you know, for years. He deserves to.
Get Like how is he how is he living and eating and paying rent back?
The other thing you remember is that you know, on the one hand, this is about pay and like giving Elon ninety six million shares dilutes everybody else. But for Elon, it's also about control. I mean, he's been very public about the fact that he's worried about activist shareholders and he wants more control, and the more shares he gets, the more control he has.
But that's kind of a hilarious concern, his concern about control, given that he effectively controls Tesla today. I mean, yeah, he only has something like twelve percent of the equity in the company, But as we've talked about a million times, he can say whatever he wants and it basically happens.
Okay, Dan, we will say goodbye to you and we'll see you next week.
Thank you.
All.
Right Now, Max and I are joined by Kyle Porter, who covers transport industrials in space for us here at Bloomberg. Kyle, Welcome to the show.
Thanks for having me, guys.
Now, Kyle, you had a really good piece the other day about the boring Company.
Max.
The boring company. You guys were just talking about all of a sudden boring everywhere, Boring everywhere.
It's the forgotten Elon Musk Company to stomach scent. Although here we are talking about it. Uh, this is a second week in.
A row, back to back boring. Yeah, So, Kyle, just to begin at the very beginning here for the uninitiated, remind us what the Boring Company is and does.
The Boring Company is a nearly decade old effort by Musk to reinvent public transportation, in this instance by digging tunnels in which he will put his teslas underground and whisk you around without traffic.
Now, Kyle, I liked your piece quite a bit. In your piece, titled Elon Musk's Boring Company is Turning into a nine hundred million dollar flop, begins with a fantastic anecdote at the beginning there that really sets the scene and tells us a lot about the state of affairs there at the company. Right now, tell us about it.
Yeah, it was September thirtieth. In fact, it was completely unplanned. Everyone boring factory got told on thirty minutes notice, get out to the boudego across the road. Elon's doing an all hands. People were very excited. They hadn't really seen
him on site all year. So they paraded across. Then Elon spent the next hour talking about why everyone needs to vote for Trump, how great it's going to be for SpaceX and its regulatory burden, was asking for ideas from the crowd, was asking for volunteers, for people to go to swing states, including Pennsylvania, and then he wrapped up his talk, took a few more questions, and went across the SpaceX didn't even bother visiting the factory.
So how about that, Bax, You don't see the guy forever. He shows up and let's talk about everything, but what you're doing day in and day out.
I mean, here's the thing.
If it were a normal there would be nothing even the least bit unusual about that. I'd say. The thing that is interesting is it really cuts against the Elon Musk mythology, which is like he's in the factory, he's
personally evaluating the tunnel machines or whatever. And of course it also the anecdote and the fact that he's just all he wanted to talk about was politics or whatever and space Yeah, it emphasizes this idea that like he started the Boring Company in twenty seventeen and at the time it kind of seemed like a joke and it's now Yeah, and now it feels like a joke that has sort of gotten old or something. Right. I mean, they just haven't been able to do all that much.
And Kyle's story makes that point. I mean, there's really just like one actual example of a project, which is the Vegas Loop, which, for lots of reasons that we can talk about, you know, has not worked out all that well, although you know, I guess to the credit of the boring company, like it's there. You can definitely go from the Westgate Hotel to like one side of the Las Vegas Convention Center or another.
Now, yeah, Kyle, there there is the Vegas thing.
You said that.
There's also some test tunnel they did in California. Yeah, that was the original, the original tunnel. I see. And how long or short is that one?
Uh? I think they're looking less than two miles. I'd have to double tuck.
Have the length, Yeah, have the length of the vaunted Vegas Tunnel. Now, in your story, you talk about how actually a lot of the work, the only work perhaps by work, I mean actual digging work they're doing, is underneath Musk's home and his businesses. In Texas. Tell us about that.
Oh yeah, it's a little bit internal work. Well, there's two tunnels currently operation, one of which is the Cyber trop Tunnel, which, as it sounds, may have cyber trucks out from the Testi factory. And there's an awful lot of videos you can go and look at online at how impressive it is.
Is it impressive?
Well, it's impressive that you can fit a slider truck through it. I mean there is not much in terms of wiggle room when I decided that tunnel.
So it's a little bit like selling one of those ships through the Panama Canal Max. You've kind of been not very very tight, all right, So you can you can roll the cyber trucks out of this tunnel. What else is there is this vaunted network of tunnels there in Texas too.
You can walk underneath the road from Boring to say SpaceX, and they are currently digging a tunnel. When I was there, you could feel the ground vibrating that's going between X and SpaceX as well.
So when you.
Actually go to that site, there are no sidewalks, there are no stop signs, there are no pedestrianization. So rather than just adding some pain, they decided it was much cheaper and more efficient to dig under the road.
Okay, now, remind us again where exactly in Texas are we.
Here bass Drops. You're looking about thirty five minutes outside of Bustin.
So Max said, when it was created about a decade ago, it sort of seemed like a joke, which certainly was the way I took it.
I mean, so I said that, and I mean it sounds like I'm meaning glib, but it literally was a joke. I mean, Musk was like on Twitter and he was like, traffic's driving me crazy. I'm just gonna start boring tunnels, and then he made a series of boring jokes like ah, they'll be called the Boring Company, ha ha. Now and it it, it did turn into a real company that
has done a bunch of sort of interesting things. I mean, the challenge has been that the same essentially, the same challenge that Musk was trying to address in the first place, which is like, it's really hard to dig tunnels. You're underground, you got to move earth, you know. And it turns out that the industry, I mean, he spent a lot of time, especially early on sort of criticizing you know,
how slowly tunnel machines work, how slow tunneling is. You got all these permits and so on, and I don't know. I mean, you look at the pace, you look at the number of miles they've gone. It doesn't seem like they've really improved it.
They've made it slower.
Actually I don't know that that's true, but it doesn't seem like there have been huge improvements. And the other thing that's sort of interesting Kyle's story points this out as the thing that I heard as well as like
this machine that they built. Essentially, and Kyle correct me if I'm getting this wrong, it's just like essentially like a knockoff of an existing tunnel boring machine, or like an improvement of an existing tunnel boring machine, which on one hand, seems like a kind of a far cry from the kind of you know, usual Musk playbook of like where you know, inventing things from first principles. The other thing is it's not very big.
I mean, like to make these.
Kind of like world changing tunnels that that Elon Musk has talked about, you'd want to have like big tunnels so you could have multiple cars going through and as Kyle saying, like the tunnels that they've dug so far are really narrow.
A cyber truck through. I would mean Kyle was impressed, shocked to hear a cyber.
Truck could go through, because I've been in those tunnels in the Vegas Loop and you could bare it feels like you can barely fit, you know, a test the model why through, Like there just isn't that much.
I mean Texas is you know, everything's Texas size. In Texas, there are.
Especially strain tunnels that they've put you know, a road in the middle of So.
Kyle tell us about the digging machine, the boring machine, the.
How do the proof Rock the prof Rock machine, Yes, that is what it's. The subsecom models have been called and they have numbers attached to them, and.
We're up to number five.
Now, correct five isn't testing six is in the build stage. Is the latest information that I got. But when you're looking through this, for example, proof Rock one was just a test machine. Proof Rock two is in Vegas, although there's question marks over whether it's still being used. Proof Rock three is doing tunneling in Vegas. That's the principal machine. Proof Rock four is drilling underneath in bass Drop between
SpaceX and X, and then five's in testing. So when they announced that they could start right away in Nashville, I literally counted up the machines. I'm like, wow, you don't have any more proof rocks, you know, to pass around.
You're out of proof rocks, Maxim So, so Nashville is why, of course Boring came up last week. They apparently have we can say, have they outright wanted concession to start digging tunnels.
I think it's more like there's a plan. It's a plan than rather Okay, I think I think there's still some approvals.
But Kyle, your peace sights that just like we just saw in Nashville, they've gotten green lights from other places as well in recent years, or some iteration of a green light from authorities, but it hasn't actually resulted in digging.
Yeah, green light's not the best them. I'd say there's been some flashy announcements of places across the country that have somehow come to not Chicago was definitely a good case in point for that. It feels as if Boring come in and say we can build something quick, we can build it without you spending a penny and it's going to make your life so much better now, which public authority anywhere in the world is not going to
say yes to that. The problem is when you start digging in, excuse the pun, to a lot of what Boring is proposing. They're terrible at paperwork, they can't meet basic bidding criteria. They don't seem in a lot of cases to have an understanding of international property law.
Yeah, yeah, Kyle tinterrupt for a second. You have a great anecdote in the story about a disastrous meeting or series of meetings they held with officials to Port Authority of New York. Tell us a little bit about that.
Well, they still talk about it, people who weren't there when Boring were doing this, but like, oh yeah, New York already hurts, you know. Apparently Cuomo set it up, was friendly with Musk at the time. Officials went into
the room. They wanted to do this incredibly ambitious project between the city and you know, eventually connecting both the airports, and within fifteen minutes, the guys of the Porthorio We're looking at you like these guys don't have a clue, you know, couldn't tell you the basics of, you know, how we were going to make this safe from a fire perspective, how we were going to make it ADA compliance, you know, for those with disabilities, what the actual process
of buying land in the city looks like. You know, So everyone just sort of nodded and smiled. I'm sure if there is no tunnel in New York.
There's an interesting contrast here with SpaceX because, like Elon Musk, as he described it actually to me back in twenty seventeen, why he was thinking this made sense. He saw this as not that different from SpaceX, right. SpaceX took, you know, sort of basically existing technology, bunch of rockets that had been developed largely by the US government, and improving on them, making them more efficient, more reliable, and then in doing so,
revolutionizing the practice of contracting for rocket launching. He's largely done that, and he's done that, And so the idea was why, like it would sort of make sense with boring, because you have big, heavy machinery, you have made unarguably
like broken contracting process. Now, I think you could argue it was that the contracting process of something else, But in any case, you have these famous examples of cities and governments spending huge sums of money to not dig very far, and so you could kind of see where
he was thinking. And I think the difference is and you see it in that Port Authority example, there was a partner, a government partner for SpaceX who was like a willing participant who was saying, yes, we want this, we want you Elon Musk, to try to figure this out, and that was NASA. NASA was paying him in the early days of the company hundreds of millions and eventually billions of dollars to develop this, and there is no
equivalent partner for the boring company, right. They just sort of bounced between cities and governments and these kind of interstate authorities like the Port Authority, and no one is saying, hey, let's invest hundreds of millions of dollars to help you
figure this out. And what's instead happening is Elon Musk is competing as a normal construction contractor, and it looks like competing kind of poorly, not necessarily doing a good job, and it seems to be only able to sort of get projects where he's dealing with these kind of very
small projects unusual sort of private public partnerships. The Vegas one is paid for by the Las Vegas Convention Center Authority, which is a private end So anyway, so I just think there isn't this like big government partner for the Boring company. That's the thing they've lacked all along. And I think obviously Elon Musk doesn't and we've seen it from his statements over the past few years.
He's not going out and looking for one of those. He doesn't seem to value that.
Even though it made a huge difference in the beginning of SpaceX.
Yeah, I just don't know that digging tunnels interest him, you know, captures his attention quite the way that sending big efing rockets up into space does. Kyle, I sort of buried the lead on us here. We are going to wrap up with the valuation drop, the decline, and
the valuation of Boring as you have it. From one estimate, it looks like it went from somewhere over eight billion dollars, which, by the way, max for a joke, eight billion dollar jokes pretty good to now somewhere in the mid sixes at a time when most of the other you know, things at orbit around Tesla I have been soaring. Boring is sinking, I guess just a sign that this thing is just kind of sort of going nowhere.
Yeah, there's no buzz around it, there's no projects around it. And you were getting on for a decade. Now when you know, they were supposed to have sixty eight miles duck in Vegas. It was supposed to be this huge, interconnected lattice and instead you've got less than four operational miles. It doesn't take a genius to look at that and go, why am I investing in this?
Right? And I suppose if the man Atoptic Company weren't named Elon Musk, that six billion dollar valuation would even be a lot less.
I think that's very safe to say. There's a lot of companies that tried to reinvent tunneling over the years, and none of them lasted.
Okay, Kyle, well we appreciate it. Great story. By the way, everyone, you go out and read it. It's called Elon Musk's boring company is turning into a nine high and drew million dollar flop, which, by the way, gives us yet another figure to highlight on this week's pod. Thanks again, Kyle, Thank you guys. This episode was produced by Stacy Wong and edited by Anamasirakus. Blake Maples handles engineering, and Dave
Purcell fact checks. Our supervising producer is Magnus Henrikson. The elon Ing theme is written and performed by take Yasuzawa and Alex Sugiira. Sage Bauman is the head of Bloomberg Podcasts. A big thanks as always to our supporters Joe Weber and Brad Stone. I'm David Papadoppolis. If you have a minute, rate and review our show, it'll help other listeners find us. See you next week.