Tesla Profits Expected to Drop 25% in Third Quarter

Bloomberg

Watch Tesla Profits Expected to Drop 25% in Third Quarter - Bloomberg on Dailymotion

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00:00Let's stick with the earnings. Tesla's report today after the closing bell. Bloomberg's

00:03Trudel joins us now for more. Craig, welcome to the program, sir. What a 24 ask for the

00:08likes of General Motors. Do you think Tesla can repeat the act?

00:12Yeah, I mean, it's going to be a tough ask because on one hand, this is a company that

00:16is coming off a really solid quarter of EV sales. They're the most that they've had in

00:22a quarter ever. And yet the sort of go forward outlook, I think, is going to be the real rub.

00:27And, you know, we've heard that from Elon Musk himself three months ago when he talked

00:32about this notion that once we see EV tax credits go away in the U.S., that Tesla could be in

00:39for, in his words, a few rough quarters. And I think that's, you know, sort of something

00:43that's reinforced by what we heard from GM yesterday and in the lead up to their earnings, that

00:49this is a case of just a sort of widely held view that EV uptake is going to slow pretty

00:57dramatically in the U.S. without these incentives. And that leaves, you know, companies like

01:01Tesla that only have that to offer in a bind for quarters to come.

01:07Craig, do you think there's the potential for more positive framing of the same story with

01:10this in mind? GM are pulling back. Others are pulling back. They're more of a purer play

01:15on that story. Doesn't that give them the space to succeed, space they otherwise wouldn't have

01:20had? I think you can try that. I guess the concern is that, yeah, maybe you have more of the pie.

01:28And yet that pie is going to shrink so much in the U.S., at least. And it's already the case that,

01:36you know, to Tesla's credit, that they are so dominant in this segment of the market. So even as we're

01:43seeing, you know, the likes of GM and Ford saying, look, we expect this to really shrink, it's not as

01:49though they're completely doing away with their their electric vehicle models that they have on

01:54offer. They're just sort of counting on demand for those models, you know, dropping along with demand

02:00for, you know, the Teslas that are on the market. And so, you know, we can I would not be surprised if we heard

02:07some of that spin. And I would sort of also anticipate that Musk will lean into, you know,

02:13sort of bright, brighter, shinier objects like humanoid robots and driverless cars. But but those

02:20are our products also that Tesla has yet to really commercialize in any fashion. Watch this space.

02:26Craig, thank you, sir. Craig Trudeau of Bloomberg out of London. Let's stick with Tesla.

02:30George Janaricus of Canaccord Genuity remaining bullish, writing with momentum in near-term estimates,

02:35potential for new EVs, a continued expansion of the robot taxi and the possibility of transformative

02:41developments in humanoid robotics. We reiterate our buy. George joins us now for more. George,

02:46welcome to the show. It's good to see you again. So let's talk about the quarter behind us. We're

02:50looking for that boom juiced by the expiry of tax credits. We had a lot of people come on the

02:54program talking about how they'd been back in EV before the interview even started, George. So I

02:59imagine we're going to see a lot of that. George, the question for you is, what does the rest of the

03:02year look like? What does early 26 look like? And how rough could this be?

03:07I think you guys sort of nailed it in your previous discussion in the near term and maybe even the

03:12medium term. The issue is, can they continue the momentum? If you recall, the first two quarters of

03:17the year were pretty bad for Tesla. And there was a rush in Q3 to buy EVs in the US. But it wasn't only

03:24the US. I mean, they released some new vehicles in China that did incredibly well. So the question for

03:28people is, well, we see a sequential decline in Q4 and it's normally an up-sequential quarter. And what

03:34happens in 2026? The real question here is, what does the bridge look like? In other words, when can

03:41robo-taxi, when can human and rooibots kick in such that they can continue the momentum and earnings for

03:47years to come?

03:48What would you hear, George, that would make you think that maybe Tesla has to be valued as a car

03:53company and not necessarily as a company tied to self-driving and a host of other technologies?

04:01That's a great question. And that's been a question for, I don't know, 15 years. You know,

04:06Tesla should be valued like a car company. Therefore, its earning multiple should be really low. And we

04:11should look at comps like Toyota and GM. But I was a tech analyst for over 15 years before I started

04:19covering Tesla. And really, this reminds me of companies like Alphabet, like Amazon, like Netflix.

04:26And that was the same debate. Shouldn't they be valued like advertising companies or media companies?

04:31And when you have companies that singularly disrupt end markets like Tesla does, it's really hard to

04:37apply the same valuation metrics to new companies. And so it's a debate that will continue going forward.

04:44But we look at Tesla as driving new innovations, driving new markets. And they're actually what

04:50they've done in the last 15, 20 years is they created new markets. I mean, they've created

04:55essentially the EV market. They helped create the energy storage market. They're helping to create

05:00the robo taxi market. And they're helping to create the humanoid robotics market. So it's a

05:05different paradigm that you in the lens through which you have to look at Tesla.

05:08I want to look at two aspects of that. On one hand, you've got the full self-driving.

05:11And on the other hand, you have the idea of humanoid robots with the full self-driving vehicles.

05:17I'm just wondering how much Elon Musk was set back based on the frayed relationship that he has

05:22with President Trump. There was this theory that he would be in the front seat, not only technologically,

05:27but also in being able to roll out the robo taxi programs because of a sort of positive spin coming

05:34from the White House. Can you still lean on that? Is that still such a push that will help them get this

05:39through? Those relationships are way above my pay grade. But I think it is essential for the

05:46United States to push forward on autonomy, AI, and the list of things that we need to do to compete

05:52more effectively against China. So in the medium to long term, despite the volatility in those

05:57relationships, I expect that the administration will push forward and help ease the path for us to

06:03be a leader in those markets and compete more effectively against China. So Tesla is one of the leaders

06:09in autonomy, and I continue to expect this deployment to accelerate over time.

06:13George, do you expect they'll get squeezed out of a place like China? How difficult is it to compete

06:17there? It's a conversation we had with the GM CFO just yesterday. We've often called it the most

06:22competitive industry anywhere on the planet. It's got to be the Chinese EV market right now, George.

06:26Can they stick with it?

06:28That's another really great question. I mean, Chinese EVs are remarkable, and they're the global leader

06:35in the space. And what Tesla has done really effectively is they've produced vehicles at a

06:41very low cost relative. They've done that on their own without really, over time, government support.

06:47And they have a feature set that's incredibly effective, and they've shown they're able to

06:52compete in China against these incredible companies in that country. So I continue to expect that they'll

06:57trade well in China, and that regardless of what happens politically, that to the extent they have a

07:03place to compete there, they'll retain market share. And they've shown that time and time again.

07:08People have counted them out in China numerous times, and they've just introduced new models with

07:12new feature sets that have effectively allowed them to maintain this share that they have for several years.

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