Tesla's Success Comes From Musk's Vision: Former Tesla Executive

Bloomberg

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00:00So, Karim, you know, just on that point, is there an Elon Musk sort of premium or discount in this stock at the moment?

00:08And if so, to the tune of how much?

00:12I don't think we can talk about discounting.

00:15I think if you look at the history of Tesla, it's very clear that everything, all the great things that have happened at Tesla,

00:21the innovation, the incredible products, the success that the company had over the past decade,

00:26it all comes down from Elon's product vision, his very powerful vision, his strategy, and his leadership,

00:34and his ability to bring great talent into the company.

00:38I don't think these things have disappeared.

00:40There's a lot of headwinds, as you mentioned, that the company has to deal with,

00:44essentially because of the increased competition, this incredible competition going on.

00:49That's what Tesla has to deal with.

00:51They have to go back to the roots of what has made them successful,

00:53which is creating amazing products and services that customers love.

00:58So, I think it's going to be interesting to see if they're able to go back to this, what has made them successful.

01:04Just on that point, though, you know, everything you say may be true about how this is all down to Elon Musk and so on,

01:10but if you look at Apple, for example, you know, we had Steve Jobs,

01:13but then Tim Cook came, took over, and the stock has never fared better.

01:18Couldn't that also happen at Tesla?

01:20I think the decision and the assessment in terms of what needs to be done from a leadership standpoint,

01:28this all belongs to the Tesla board and the Tesla shareholders.

01:34It's up to them based on the information they have from the inside to determine what the best course is for the company.

01:41What we know for sure is that when you look at creating amazing product and creating amazing services and solutions,

01:49there's no better person that we know of than Elon at this time.

01:54Is the car still the amazing product, though?

01:56They haven't really refreshed the lineup in a while, and all talk of this lower-priced EV has been just that all talk.

02:03We haven't really seen any concrete plans on when they're going to release any of that.

02:06Yeah, and this, you're making an excellent point.

02:10This is really the key issue for me when I look at Tesla's future.

02:15The vehicle lineup is becoming old.

02:19Competition has caught up.

02:21On many aspects, Tesla is now behind,

02:24and it's going to take a lot of effort and a lot of time and resources and energy for them

02:28to catch up on all these amazing competitions that we're seeing from the U.S.,

02:33from the European, and from Asian competitors in China, Korea, etc.

02:37So that's going to be something we're going to need to watch.

02:40Is the company able to go back to this innovative roots

02:46and launch new products to replace the ones that, frankly, are becoming quite old right now

02:53and are falling behind this amazing competition that they're dealing with?

02:58Yeah, you talk about how success for a company that is increasingly a mature business

03:02as opposed to a growth business really depends on operational excellence and product innovation.

03:07Is that still Elon Musk's forte?

03:11I think this is something that is in the DNA of the company and its leader.

03:15I don't think it's something they lose.

03:17The question is, do you still have the focus and the ability to drive all your attention and your energy to them?

03:26One of the challenges that Tesla is dealing with right now

03:29is the fact that they've become a mature car manufacturer.

03:32They have to deal with the same issues as all other car manufacturers are dealing with,

03:38competition, prices, new markets, etc., having to innovate.

03:42And at the same time, Tesla has embarked on this new journey of creating a new business model

03:48and essentially a new company with the robotaxi service.

03:53So doing the two things at the same time is actually one of the big challenges

03:57because it consumes your attention and your resources.

04:03Karim, how do you see Tesla increasing profit margins over the next several years?

04:09Can it do that if it takes down the unit cost per production basis?

04:15I think that's going to be really hot for them.

04:18They first have to catch up on the product lineup, as we said,

04:22launching new products that customers are going to love,

04:26innovating on the technology side, innovating on the manufacturing side.

04:31This takes up a lot of resources and capital.

04:34And they have to do that in a context where the sales are declining,

04:40the profit margins are declining because of the price war that they're not able to offset.

04:46So that puts a lot of pressure on the margin.

04:48I think we're going to see in the next few quarters declining profit

04:52and really challenges for the company to generate enough profit

04:59to be able to fund this R&D and this innovation on both from the core business and the robotaxi business.

05:05And then the 15% of revenues that are not from cars and that are not from vehicles, right,

05:10it's from the energy business.

05:11What do you see Tesla doing with that in the next coming quarters and years?

05:15I think one of the things that made Tesla successful was this vertical and horizontal integration,

05:22thinking of the EV business, not just as making successful great electric vehicles,

05:30but thinking much broadly in terms of the charging infrastructure, the energy business,

05:36and thinking of all this in a very consolidated way.

05:40So it has to continue being a core and essential to the vision and the strategy for the company.

05:52The question, again, is an issue of focus and resources,

05:56being able to develop, invest, innovate in the energy business

06:01when you have all the other challenges with the core automotive business

06:04and the robotaxi business at the same time.

06:06It's really this conflict of resources and attention that makes it really hard for the company.

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