00:00Investor Michael Burry making another big call against the market.
00:03The big short investor calling Tesla shares ridiculously overvalued.
00:07Tom Narayan covers Tesla and other automakers for RBC and joins us now.
00:12Tom, great to see you. Thank you for being with us.
00:14We can start with Tesla, but I would love to talk about how representative it is of the larger auto space
00:20and how difficult it is to get a handle on exactly the supply-demand dynamics
00:25at a time of post-pandemic transition and post-tariff realization.
00:31Yeah, and I think what you're noticing more and more is the strength underlying the U.S. economy,
00:37especially at the top end and maybe at the middle, is manifesting itself with auto sales,
00:43which have actually been stronger than what a lot of people expected.
00:47We did our own work to actually show that there's about a 6 to 7 million vehicle deficit
00:53of cars that were never purchased because of the pandemic.
00:58And, you know, in the U.S., in a lot of states, you have to have a car.
01:04It's as simple as that.
01:05How do you get to work?
01:07And if you can afford the car, you will buy it.
01:10And so, you know, at the beginning of the year, I think folks were looking at something
01:14like a 15 million vehicle SAR for 2025.
01:18It's looking like it's probably going to be a 16-2, 16-3 million number.
01:23So, yes, sure, things are slowing down a little bit.
01:26There's been some pricing to offset some tariffs lately with some OEMs.
01:32But if you take a step back, there is some real strength of the economy.
01:38Unemployment is very low.
01:39We'll probably have another rate cut, right, later this year, probably more next year.
01:43And then tariff resolution in 2026, especially with the USMCA.
01:48So given that backdrop, we're actually pretty constructive on U.S. autos.
01:53So this goes to who's going to win, right?
01:55Is it the U.S. auto manufacturers?
01:57Is it the electric vehicle manufacturers?
01:59Or is it, as we have seen of late, a real shift back to hybrid and, frankly, trucks and
02:05away from the Elon Musk's Teslas of the world?
02:09Yeah, I mean, let's just look at cars specifically or autos specifically.
02:13I would agree with that.
02:14It's ICE cars in the U.S.
02:17Definitely, perhaps there's some room for E-rev or hybrid.
02:21Certainly, EVs is not the place to be right now in the U.S.
02:25I do think there's room for that maybe later in the decade.
02:29But right now, the strength is at the heart of the U.S. auto industry.
02:33Pickups, large SUVs, ICEs, think GM, most notably, maybe Ford as well, some Stellantis.
02:41So we think that's really where you'll see most of the benefit near term, not as much with
02:47the EV space in the U.S.
02:49EV space has certainly been under pressure.
02:51At the same time, though, Tom, you have an outperform on Tesla.
02:54Why do you continue to like this company?
02:57Yeah, it's certainly not really because of autos.
03:00It has more to do with the AI features, right?
03:04So RoboTaxi, you guys well know my thoughts on RoboTaxi.
03:08And then now the humanoid market.
03:11And yes, look, it's very early to tell where Tesla is going to be in that.
03:15So I look at Tesla the same way on humanoids as I do on RoboTaxi, which is I look at the
03:22top down.
03:23I think it's a huge market opportunity, both humanoids and RoboTaxi.
03:27And I'm assuming actually very small penetration levels for Tesla on humanoids, only 5% of that
03:34market.
03:34It's a big opportunity, this humanoid market.
03:38I don't think the investor base has caught up with reality.
03:42Certainly folks like me are new to the game.
03:45When you talk to the experts in robotics, as we have recently, you realize why there's
03:51such a big market opportunity.
03:53And, you know, that tends to move this stock, right?
03:56It's a narrative stock.
03:58As long as we don't have negative data points, and this is like a 10, 15 year horizon, what
04:04is the negative catalyst here to kind of put some shade on the stock?
04:10So right now we're looking at that perspective and we like the stock.
04:14So what do you make of Michael Burry's call then when he says Tesla is ridiculously overvalued?
04:20Would you just tell him that you're looking at the future and what's going on with not
04:24just RoboTaxi, but potentially what happens with humanoids?
04:29Yeah, I mean, like, we don't know is the answer, right?
04:32I mean, we don't know who's going to win.
04:35What do we know about humanoids?
04:38We know there's going to be a lot of them.
04:39We know that's probably going to be decades from now.
04:42We know the form factor will probably be humanoid.
04:46And we know Tesla is one of the leaders.
04:48So, you know, from that basis, I do think there's enough inertia that should support the stock.
04:54Maybe in 10 years or five years, we look back and maybe I was wrong, you know.
05:00But I just think it's too early to tell, right?
05:03I mean, I think the data that Michael Burry had during the housing crisis was real data, right?
05:10I don't think we have actual real-life data to show that humanoids won't happen or Tesla won't be a big piece of that or the RoboTaxi side either, right?
05:21So I'm following what the data that we have presenting before us today is, and I like the odds that Tesla has to capture it.
05:30But ultimately, none of us really know the answer.
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