Hey everybody, welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads, the shape. SpaceX. Tesla X. The Boring Company and Neuralink. I'm your host, Will. Walden Elon Musk has issued a warning to Bill Gates and has threatened the Microsoft Co founder with severe financial consequences if he continues betting against Tesla. Now, Musk foresees a dramatic transformation for Tesla, envisioning the carmaker becoming a colossal entity
valued at $30 trillion. This forecast hinges on Tesla's successful shift from primarily selling electric vehicles to managing a profitable fleet of robo taxis and humanoid robots.
Musk's ominous message to Gates was shared on social media, where he stated once Tesla fully solves autonomy and has Optimus in volume production, anyone still holding a short position will be obliterated, even Gates. The animosity between the two billionaires became public in 2022 when text messages revealed Musk's refusal to support Gates's charitable efforts. Due to Gates's significant short position against Tesla now, Musk expressed his disapproval in a message saying.
Sorry, but I cannot take your philanthropy on climate change seriously when you have a massive short position against Tesla, the company doing the most to solve climate change. By then, Gates had already begun regretting his pessimistic stance on Tesla, though it's uncertain if he still maintains that position despite Musk's strong warning. It's a bold claim considering Tesla's recent struggles.
The company's vehicle sales have declined by 6.6% in the first half of the year, and the highly anticipated Cybertruck has not met expectations. Now, Tesla has abandoned its ambitious target of increasing volumes from 1.8 million EVs last year to 20 million by 2030. Nonetheless, Musk remains undeterred by adversity. He has previously outlasted other notable Tesla shorts like David Einhorn and Jim Chanos, known for profiting from the collapses of Lehman Brothers and
Enron, respectively. Since April, Musk has been working to stabilize Tesla's stock, beginning with hints of a new Cyber Cab robotaxi model, suggesting he might finally achieve full autonomy. Additionally, Musk announced that 2025 could see a resurgence in EV sales with the introduction of new low cost models, potentially marking a
turn around for the stock. Concerns that Musk might resign from Tesla over the loss of his 2018 compensation deal, valued at $70 billion at the current stock price, were largely dispelled when Vanguard and other significant investors expressed their support for him last month. On Tuesday, Tesla reported it had avoided a steeper decline in Q2 vehicle sales by selling off excess inventory.
By reducing EV production to its lowest level since Q 3/20/22, Tesla redirected surplus battery cells to its stationary energy storage business, more than doubling its Q1 volume to an unprecedented 9.4 GW hours deployed. This move has added $100 billion to Tesla's market capitalization over the past two days, currently trading at 70 times
next year's earnings. Tesla's valuation is high even for a growth stock, especially one expected to see declines in revenue and earnings in 2024. However, investors confident in Musk's vision for robot butlers might view the current market cap of $740 billion as a minor issue. Musk envisions widespread adoption of robots, aiming for one in every business and home, ultimately reaching a production rate of 1 billion droids per year.
Musk plans to sell these Optimus robots at $20,000 each, despite production costs being only $10,000, ensuring a 50% profit margin per unit. This would result in annual profits of $1 trillion, translating to a market cap of $25 trillion. With a standard earnings multiple of 25, adding $5 trillion for the future Robo taxi fleet, Musk believes this presents a substantial value for current investors. Critics argue that Musk's projections are overly optimistic.
For instance, the market demand for such robots might not parallel the demand for smartphones, which are significantly cheaper cars. A more comparable product C annual sales of about 100 million units. Due to their higher price points, Chanos and others contend that Musk's estimates imply a market cap approaching 1/3 of the world's total annual economic output, a highly
improbable scenario. Musk's previous prediction of reaching 20 million EV sales by 20-30, which would surpass the combined output of the two largest carmakers globally, was based on replacing 1% of the two billion cars currently on the road each year. This ambitious target was quietly dropped well before the 20-30 deadline, highlighting the need for Musk to produce more realistic projections moving
forward. In the meantime, Tesla's shares surged by 10% on Tuesday, following better than expected Q2 delivery numbers. The company delivered 404 three sound 956 vehicles and produced 410,831 in Q2 2024, surpassing analysts expectations of 439,000 deliveries. Despite a 4.8% year over year decline in deliveries, This represented a 14.8% increase from Q1.
Tesla groups its deliveries into two categories, Model 3 and Model Y vehicles and all other vehicles, but does not report numbers for specific models or regions. Earlier this year, Tesla reported an 8.5% drop in Q1 deliveries, marking the 1st annual decline since 2020. This was followed by a 13% year over year revenue decrease for the quarter, mainly due to lower average selling prices.
Now, the decline was partly due to temporary factory shutdowns in response to an alleged arson attack at Tesla's German factory and shipping delays from Red Sea conflicts. Additionally, Tesla's aging vehicle line up and increasing competition, particularly from Chinese EV makers, have impacted sales. A recent survey attributed part of Tesla's brand erosion to CEO Musk's public behavior and
political statements. To boost sales, Tesla has offered various incentives and discounts throughout the year. In China, Tesla is offering zero interest loans to encourage purchases of the Model 3 and Model Y by the end of July. Tesla generated approximately $21.00 and $75 billion from China in 2023, accounting for 22.5% of its total sales.
However, Wells Fargo analyst Colin Langan advised selling Tesla shares, citing declining delivery growth driven by lower demand and diminished return on price cuts. Now, Wells Fargo anticipates a decrease in Tesla's automotive gross margins, excluding environmental credits, due to more price cuts and lower volumes.
Investors are now focusing on Tesla's Q2 earnings report later this month and a marketing event in August, where the company plans to unveil its design for a dedicated robotaxi or cyber cab. While Tesla continues to explore new technologies and markets, it faces stiff competition, especially in battery production. LG Energy Solution aims to commercialize a new dry coating technology by 2028, which could significantly reduce production costs.
This innovation could position LG as a strong competitor to Chinese battery manufacturers and potentially challenge Tesla's market position. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never miss an episode.
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