Musk Wins Pay Deal, Now Come Major Milestones

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Watch Musk Wins Pay Deal, Now Come Major Milestones - Bloomberg on Dailymotion

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00:00Look, 75% is a lot, but there also comes some significant milestones.

00:04And also then talk of 50% growth in car production by the end of 2026.

00:10Can he make that, Gene?

00:12No, the simple answer is that probably not.

00:15But that's what Elon did a masterclasses, is ultimately is throwing a ball out there

00:21that is difficult to achieve, but he has the wherewith to do that.

00:26And so that ball he talked about, the production piece, this 50%, he puts that target out there.

00:33But then he adds these kind of qualifiers that say that, yes, we can do it,

00:37but we can only move as fast as the slowest part of the production chain,

00:42that pipeline to get them to build the whole capacity, to get them to build capacity.

00:48And separately, when he thinks about optimists and what the potential is there,

00:51I mean, this is something that he outlined as kind of a five-year, ten-year plan,

00:57but it is ultimately something that, you know, getting the 10 million robots here,

01:02I just want to put that into perspective, 10 million a year, they're doing 2 million cars a year.

01:08And they really got moving in earnest on the car production in 2019.

01:13And so it's taken them six years to get to 2 million.

01:15These are huge targets.

01:16And Caroline, at the most basic level, he put big targets out there.

01:20That's what he does.

01:21And that's the mandate that investors gave him with this vote of this pay package,

01:26is they want these big targets out there.

01:28And he's delivering on that, whether it's the production or the commentary about optimists.

01:33Investors excited.

01:34Your dog's excited, Gene.

01:35I'm interested about what, therefore, he has to do to keep up with the momentum now.

01:41Because, look, let's just ask you a basic question.

01:44Many were worried about a 25% ownership for Elon because of the control,

01:49not so much the $1 trillion pay package.

01:51It's more about that he's going to be controlling the robot army.

01:54Is that something you want to see that generally society wants to see?

01:57Well, that's what he wants, control.

02:01And the answer is no one wants an army of robots to be controlled by one person.

02:06But most, 75% plus of Tesla investors want a company that's building that

02:12to be controlled by one person or controlled by Elon.

02:16And I think that that makes sense.

02:19Elon's been very clear that if he wants to build this army,

02:22if he wants to build this AI vision company, he doesn't want to be pushed out.

02:26He also left open the option for him to get pushed out, in his words,

02:31if I go insane.

02:32And so I think that's an important distinction, too.

02:35He has control, but that doesn't mean that he's going to be at Tesla forever.

02:39I think going back to basics is really critical here, Gene.

02:43So there's the mechanics of what happened.

02:45The vote passed, the package was approved, and then Elon Musk spoke afterwards.

02:50And he actually gave some information that relates directly to the milestones the company has set.

02:55So in the middle there, we're saying the board is tasking him over 10 years to deliver 20 million vehicles, right?

03:03He told us in his remarks that 2026 would see 50% annualized growth.

03:10That was something material, was it not?

03:13He said 50% annualized growth, but then he put the caveat if the supply chain can provide the components

03:20to get them to increase the capacity by that much.

03:23It's a similar caveat that happens when he says we're going to have autonomy,

03:28full FSD approved in one to two months.

03:30That was his comments yesterday, pending regulatory approval.

03:33And so I'm a shareholder of Tesla.

03:37I think that this company is grossly undervalued.

03:39That may sound like it's out of touch with reality, that comment, but I think it's grossly undervalued.

03:43But I also am realistic about what goes on here.

03:46There's these targets they could put out there, but then there's these caveats that are out of his control

03:52that will be put on any sort of some of these really big targets.

03:57You noted, as many have done, Musk's comments on silicon.

04:03And it was a throwaway comment that the idea that Tesla might do its own fab.

04:08Are you taking that seriously?

04:09So I'm not taking it seriously.

04:14I think that Elon wants to make a point, and the point is I think he's frustrated about what he is paying for silicon.

04:20If you look at all of his enterprises, SpaceX, XAI, Tesla, Neuralink, all those combined,

04:27the biggest line item on those outside of people is around silicon.

04:31I mean, he spends a ton of money on that.

04:34What he talked about here was having similar performance as Blackwell, NVIDIA's Blackwell GPU,

04:39at a 10% of the cost.

04:41Do you think that that's doable?

04:43And I just want to kind of put that to the test, is that kind of performance,

04:48that kind of cost performance is something that is, I think, unrealistic, at least for the next few years.

04:54It's the same reason why NVIDIA has been so bullish on their business,

04:59is that these customers would love to find an alternative, whether it's through custom silicon or through AMD, for example.

05:06But the reality is that NVIDIA still is the best bang for the buck when it comes to silicon,

05:13and that's a very expensive buck in this case.

05:15So I think that I generally don't think Tesla is going to or should do their own fab.

05:22I think $20 billion can be spent in much better places.

05:26He kind of threw the lifeline out there.

05:28Maybe we work through Intel.

05:29It's been a challenging road for Intel on the fab side.

05:33And building a fab, advanced fab, is really tough.

05:37These advanced nodes are very tough, and Intel's never shown they were competent in that.

05:41Gene, broaden that out, therefore, because the whole market has a lot of anxiety on its shoulders right now

05:47around the build-out of generative AI infrastructure.

05:50Now, in particular, we saw Sam Altman trying to navigate what had become a bit of an explosion

05:57that the CFO had set off on Wednesday by saying maybe they'd look to some sort of government

06:01to support for their infrastructure spend.

06:04Sam Altman came out and said, look, the only way we'd want government support

06:06is perhaps if we became a fabricator of chips.

06:09But what do you make about the weight that is currently on this market,

06:12about vindicating $1.4 trillion spending by a company that's making

06:16maybe $12 billion, call it maybe even $20 billion a year in terms of revenue?

06:21So there is a switch that flipped since the end of October.

06:27I think it was like the 28th of October is when Jensen came out and said that

06:32NVIDIA is going to essentially beat the expectations by 15% plus over the next five quarters.

06:38He put out this $500 billion in Blackwell revenue.

06:42And that was a really big point.

06:45And then we had the hyperscalers.

06:46And then this conversation started to shift.

06:49There was a change in terms of how the AI investor is thinking about this.

06:53And this shift is this sense of like, wow, maybe this is just getting to be too much.

06:58We saw what happened with Metastock.

07:00And then on top of that, Sarah Fry and the Sam Altman and the Wall Street Journal event,

07:06all that kind of, I think you put all this together and there is all of a sudden this vortex of what's really going on here,

07:15whether it's the government piece, whether it's the expectations that NVIDIA has about how much they're going to sell over the next few quarters,

07:22whether it's Meta saying how much they're going to spend in Amazon.

07:25It just feels like investors are now at a point where they're uncomfortable,

07:30that they don't believe that this ultimately is going to be prosperity around this investment.

07:37And so I think that's the shift we've seen.

07:39That's why I think we've seen sell-off in these companies.

07:41The fundamentals are rock solid.

07:44Opening AI doesn't need government support.

07:46There's no question.

07:47But there's a psychology piece to this trade, and I think it's just gotten softened by some of these conversations,

07:53just too many moving parts now for our investors.

07:56That will settle down once they start to see the December quarter results

08:00and understand that, in fact, we are still early in this AI build-out.

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