How Wall Street Sees Elon and the Autopilot Superbowl "Ad"

Published Feb 13, 2024, 9:36 PM

Following a Superbowl attack ad, this week’s episode sees the crew discussing the challenges (and opportunities posed by) Autopilot and Full Self-Driving. 

Then they welcome Barry Ritholtz, host of the podcast Masters in Business and the founder of Ritholtz Wealth Management, to the studio for a wide-ranging conversation about Musk’s prowess as a manager and as a marketer.

Bloomberg Audio Studios, podcasts, radio news.

Well, Elon Musk gives now the richest person on the planet.

More than half the satellites in space are owned and controlled by one man.

Well, he's a legitimate super genius.

I mean legitimate.

He says he's always voted for Democrats, but this year it will be different.

He'll vote Republican.

There is a reason the US government is so reliant on him.

Alon Musk is a scam artist and he's done nothing.

Anything he does, he's fascinating people. Welcome to Elan, Inc. Where we discuss Elon Musk's vast corporate empire, his latest gambits and antics, and how to make sense of it all. I'm your host, David Papadopolis. This week we have an exciting guest, Barry Ridtholts, host of the Masters in Business podcast and founder of Ritholt's Wealth Management. Barry is joining us to talk about Elon's leadership of his companies over the years and his relationship with Wall Street. But first we'll do a deep dive on Tesla's full self driving Mode FSD. After a controversial Super Bowl ad that targeted Tesla and a Washington Post article on a fatal accident will unpack the state of the technology. To do this, I'm sitting here in the studio with Max Chafkin, senior reporter at Bloomberg Business Week. Max, you brave the snowstorm in are here, Welcome.

Good to be here.

And Dana Hall, Bloomberg's Ace Tesla reporter he Loo Dana, Hello, Hello, Hey, So listen. So super Bowl ads about cars are usually I don't know, they're like American flags and God bless America and pickup trucks and farmers. But then all of a sudden during the Super Bowl, millions of people her something like this.

Tesla dances away from liability in autopilot crashes by pointing to a note very deep in the owner's manual that says autopilot is only safe on freeways. So the FEDS demanded autopilot be restricted to freeways. Shockingly, Tesla refused.

And it ends with these words, boycott Tesla to keep your kids safe. Dan not subtle here. Who are these Dawn people behind the project and what do we make of them?

And the ad?

So the Dawn Project is kind of the campaign of a guy named Dan O'Dowd who is a longtime software executive who has this kind of one man, quixotic campaign about Tesla and autopilot. He thinks it's unsafe. He thinks that regulators are not doing enough, and for years he has been kind of after autopilot. He's run ads in the New York Times. Last year they did small Super Bowl ads where they were kind of pressuring regulators. This year they did ads that are really kind of pressuring consumers to boycott a company. But the term super Bowl ad is a little overstated. I mean, this was not a national buy. These were very targeted ads and very weird small markets. Dover, Delaware, Traverse City, Michigan, Santa Barbara, California, parts of DC. So like a lot of people didn't actually see these ads.

No, and I didn't myself. Traverse City, Michigan. Why Trevor Where I couldn't pick out Trevor's city Michigan on a map.

Why is in northern Michigan.

It's on the lake. It's where a lot of auto industry executives have second homes.

I believe Pete Boodhages, the Transportation Secretary, may may have a home there. At least that's what the CNN story about this ad said, we should say super Bowl ads are of course often used to sell products, they're also sometimes used to garner media attention. You know, if you were watching, you might have seen the ads for Jesus, the ads for Scientology, and of course the ads for this Tesla thing. And I think in all those cases, right, this is part of a media operation. So part of the idea is to just sort of call attention to the point that this guy, Dano Daoud has been making and he's got a dog in this fight. He makes competing software.

Green Hills Software. I mean they make software for a variety of clients. Some of them are automotive. I mean, they don't make something that's like a direct competitor to Tesla Autopilot per se. But I think what's weird about this guy is, like, listen, like NITSA is investigating autopilot scores of like plaintiffs attorneys are suing Tesla over autopilot. Like there is like a regulatory and a legal process at play here, and like he's just seems very frustrated that it is not going fast enough, and so he's done all these things, Like you know, got these like mannequins to look like kids and tried to like recreate crashes. And it's like this, it's an interesting one man campaign, but it's like he's pressuring NITZA to do more. Well, I mean, NITSA has like this whole defect investigation underway, so I don't know what else the regulatory reagencies could be doing.

So NITSA being the National Highway Transportation Safety Administration, that is a mouthful. They are investigating Tesla and autopilot. Give us a brief refresher course, Dana. Autopilot does what exactly and how widely used is it by Tesla owners?

So the term autopilot is confusing to people because it's name, it's legacy really comes from aviation and the idea that like airline pilots use autopilot when they fly planes. Tesla has kind of adopted this word to the tertiary world of like roadways and freeways and stop signs and school buses and fire trucks and roundabouts. And it is a driver assistance feature that comes standard on all Tesla cars. And you know, it is not capable of driving itself, but it helps you like keep lanes and if you're tired and fatigue. You know, a lot of Tesla owners actually square by it. I've used autopilot myself several times when I've rented a Tesla. It's actually like a pretty great system.

There is a full self driving which is a separate sort of product under construction right.

Separate software called FSD beta for Full self Driving Beta, which promises that one day it will be self driving, but right now it's not. And just the whole name calling something FSD when the driver still really has to be in control is like a whole kind of marketing advertising issue that a lot of people have problems with. And what happened with Tesla is that very early on a lot of folks that were driving Tesla cars when autopilot was engaged, we're smashing into fire trucks. Well, it was like, what is going on here? Is there something about autopilot where they're not where the car is not seeing or inferring or reacting to emergency vehicle lights, or is confused by these stopped vehicles. And so NITSA opened this investigation into all these accidents, and you know, like NITSA does a very thorough job. They take years, and you know, these investigations are sort of ongoing, and in the meantime you can sort of see that the agency has kind of pushed the company to improve its safety culture. They've dinged them for all kinds of things like the font size of their alerts. They've asked them to kind of bug drivers a little bit more.

So.

This, this Dawn Project is like a separate track where you've got regulators doing their things, You've got all these lawsuits and then and then the Dawn Project is just trying to continually get across this message in their mind, which is that you know, Tesla's are just completely unsafe and consumers should boycott them completely.

I mean, Dan O'Dowd is self interested, and he's kind of self aggrandizing. And we're talking about a Super Bowl commercial that showed in like three you know, Washington, d C.

And like three time Michigan.

Yeah, I mean like really like giving this guy a lot of airtime and maybe undeservedly, except that there are real problems here. And you know, Dan is talking about auto pilot and full self driving. Both those names are bad, right. They both imply something that the car that you would think the car does, but that it doesn't actually do. And for years Tesla drivers have sort of been told in various ways, buy Elon Musk and buy Tesla supporters and buy people on Twitter and so on, that you can you essentially can can stop paying attention to the road. And that is not what it says in the Tesla manual. That is not the official position. But like when when you have a CEO going around saying, hey, next year, you're gonna this is gonna drive itself from you know, Los Angeles to New York with no interventions, and you know, distributing videos on the Internet in which you know, it looks like the car is doing everything. That creates a very misleading perception. And there are real problems with not just Tesla's autonomous vehicle technology, but all like these problems that Odoubt has been pointing to school, you know, emergency vehicles, kids, cyclists and so on. These are across the board problems that no one has solved, including Elon Musk.

Just today, actually the Washington Post came out with the story saying that there was a first apparently fatality from somebody. I guess my question for the two of you is this, I get these issues in these concerns, and I wonder if autopilot, as a result, we're saying is not safe or let me express it differently, is it less safe and worse than human drivers?

Who?

Human drivers are pretty awful, right, and we're getting consistently worse.

So, first of all, I've totally pushed back. Human drivers are not pretty awful. Humans are very good at driving, you know, most people will drive their entire lifetimes, you know, without being involved in a in a you know, serious crash. The thing is that autopilot is very similar to technology that is in other cars, and as Dana says, it's super useful. So like if you have a sort of high end GM car, you might have something like Super Crews, Honda, Toyota, all these car companies have made amazing advances in terms of driver assistance. So lane keeping breaking for you if you fail to hit the brake fast. I have a Honda. My Odyssey has a version of this. You use it, and I use it.

It's really good.

But the thing is it doesn't replace the human. It augments the human. And the criticism that's being made by Odoubt and also many others is that Tesla has not communicated that well and has in fact, at times seemed to deliberately kind of blur the distinction between self driving and some kind of driver assistance.

So I just want to make one note about the Washington Post story, which is an issue that has come up in a lot of these autopilot stories that are in the media, and that is that the drivers in that vehicle were drunk, and so it's very difficult to separate out what was autopilot and what was human error, Like you should not be. But this also gets back to the point of how autopilot and fst beta lures people into thinking that the car can do something that it cannot. But there is no lawyer in their right mind who's going to take a case for people that were three times over the legal limit. And so it's just this tricky thing where you know, a lot of these accidents are happening because the drivers think that the car is capable of doing more than it really can. This is what regulators are being pressured to act on. And then the data is it safer or not is all over the place. Because autopilot is really supposed to be used on highways, some people don't use it on highways. Tesla cherry picks how they use their data. Good data is hard to come by. There's a wide variety of perspectives about whether it is safer or not. We don't hear about the times that autopilot actually saved people. And you know, like YouTube and Twitter is also full of all of these Tesla owners that are like, oh my god, like I had no idea that this truck was about to cut me off. An autopilot saved my life. I mean, so I just want to you know, I'm not trying to like the autopilot defender here, but I think it is important to notice that we hear about the crashes, we hear about the fatalities, we don't really hear about all the times that people swear that, like, without autopilot, they would be dead in a dish.

So you're trying to Dano doubt is trying to target policy makers and testing at.

This point, he's trying to target consumers because the ads that ran this weekend are boycott Tesla to keep your kids safe. Tesla must be held accountable. So he's actually going directly for the consumers because you know, the regulators are doing their process, and I think that he's now trying to target like the American auto buyer.

It's a media thing, it's not. I mean, yes, the ads are framed about consumers, but the idea is to like make some noise and to get to get media to cover cover this. And I think you know, he areed in Washington as well, so like clearly there is a there is a thought to policy makers, right, But again I think it's it's about trying to to The reason you buy a Super Bowl ad is not because it's like an efficient way to reach people. It's because it's a great way to make some noise, especially a Super Bowl ad like this.

I just also want to point out that, you know, one of the the ads use the NTSB seal and the NTSB was really upset about that.

And the NTSB being yes.

The NTSP the National Transportation Safety Board, they put out a statement saying that they did not authorize the use of the seal in their ad. They had nothing to do with this ad. They didn't. So it's like, you know, you just have to like Dan O'Dowd, he's got a campaign. And to Maxi's point, like free media is the name of the game with these things.

Now joining us is Barry Ritholts, host of Bloomberg's Masters in Business podcast, where he has interviewed I don't know, Berry, how many hundreds, over five hundred, over five hundred business leaders and thinkers.

Okay, Barry, my first.

Question for you is where does Elon rank in the Barry Ridtholts pantheon of Masters in Business?

So you got to give him mad props for the things he's done so special, so well he he basically could have let PayPal become a disaster. Somehow that became a big win for him. The original concept of Tesla was let's take some lotuses and jam the underside filled with laptop batteries. Talk about a pipe dream. He joined the company was he didn't create Tesla, but he joined the company and basically put them on the right footing. And then I think SpaceX. So when you look at what he's accomplished across his career, it's fantastic. He's almost single handedly forced the automotive industry into electrifying and reducing their carbon footprint. He has reinvigorated the space race and made it more affordable to put payloads into orbit and both in and out of the car industry, and I generally got a sense during the early ramp up of Tesla, or maybe was the later ramp up of Tesla post twenty thirteen, fourteen fifteen, you know when the model s really started to take off. Jeff Bezos is the guy that I think was the warning to the automobile industry, Hey, don't let Elon do to you what Bezos did to retailers everywhere that if you just are going to sit back and let a modern software driven digital platform steal your lunch, you're in trouble. And I think whatever you say positive or negative about Elon Musk, I think he forced the automobile industry into adapting what I think is a superior technology. And I say that it pains me to say that as a petrol head into adopting electric I don't know, a decade earlier than they would have.

Otherwise I would argue he's an amazing marketer, Like an amazing like.

In terms of jobs level market.

Yes, in terms of just like formulate a pitch and like bring people along.

And and it also shows selling a story.

Selling a story, and it shows you a little bit of the difficulty there because like the story has had to change. It's changed a couple of times, right like and and now and and and the story when you're selling you know, what amounts to like a you know, a Corolla but with an electric battery, which is what they're trying to sell. Now, like that is maybe a different I don't know, that's that's a different story. And I think that is creating continual tests for Tesla, and they're only going to increase, you know, if if the company continues to grow.

So Barry, he.

Did indeed achieve these things, and he got these companies to where he got them, and so investors obviously sank a lot of money into his companies and made a lot of money. I mean, and I think he made many many investors very rich people.

But where do.

The investors you speak with, you know, where do they land on on must Now? Given his evolution as a public persona as a celebrity, as a leader, when you when you talk to clients at Ridtholt's Wealth Management, what kind of chatter do you hear about?

So we're a plain, vanilla, boring allocator and we're putting people in big bold index funds, and we have some other things we do direct indexing, and a behavioral based tactical portfolio. But primarily, if you buy a domestic US fund, you're going to have some exposure to Tesla. So it comes up less from the investment standpoint and more from hey, does it make any sense? And so when people come up to me and when I get the question, what's going on with Tesla? Does it make sense that they're more valuable than the next ten comomobile companies combine? And the short answer is no, that doesn't make any sense at all. But if you can tell me when the market is going to say, oh, we got this wrong, let's sell off Tesla by these other ones, that's when you have to worry about it. Now, this has been going on for years. This isn't a secret. Everybody knows it, and the market seems to more or less be comfortable with it.

Which is to mattress point about his ability to sell a story and to sell to investors that beyond just a car company and an ev car company, it's also a technology company selling autopilot.

Elon has always been selling the future, like a vision of the future that evolves and changes as each milestone is reached. You know, they go to the next one. I mean, you know, in the early days of SpaceX, nobody thought that they would ever land this rocket on a drone ship in the ocean, and now they've done it multiple, chundreds of times, multiple times, and you know, he's not going to stop until he creates his Mars colony. And there is a throng of people who are sort of entranced by that. And there are a lot of Wall Street investors who, you know, there's like an Elon premium with his companies, which is why all of his startups, from neurally Link to the Boring Company to xID Ai are able to raise capital because people want to be in Musk Circle and he's made people a lot of money and they they you know, he's like a financial engineer as much as a real one.

Here's a question for you, Barry.

So he is obviously, with this public persona made a lot of friends and a lot of fans. He's got a lot of fans, He's also made a lot of enemies. Your sense of just how much Elon is hurting Tesla's sales right now?

So that's a fascinating question because a number of things have happened over the past couple of years that really it's hard to tell if they put a dent into sales. So all the problems with full self driving automatic driving, it's two years away for like, I don't know, forever, eight ten years now, so it's hard to judge. And yet at the same time, we had some substantial price cuts over the past few years in Tesla's which I was kind of surprised because I'm familiar with basic economics. I was surprised that this is a brilliant move to capture market share and put the other companies back on their heels. Okay, maybe, but I'm concerned about profits, not market share.

The only thing that I thought that maybe could be akin to is Saudi Arabia saying, and you know, you know what, I'm just gonna flood the market with cheap oil and I'm going to drive out all the other higher, higher cost producers. If one can make an argument for it, that would sort of be like maybe what it was like as sort of a power move. But we do know that, you know, right Dan, as he's cut prices, their growth is slowing markedly correct.

Yeah, but the whole EV industry growth is slowing. It's like, you know, like EV sales are still growing, they're just not like the fifty percent year of a year growth that the market thought was gonna happen.

All that once achodetic because Barry has taken my highlighter and he's drawn something for us.

What have you drawn here? I've got a visual aid.

This is just simply the technology adoption cycle, which starts with the early adopters. So yeah, that group, and then eventually you move into the broad you know, the next level. You know, you go from innovators to early adopters to at a certain point you hit a peak. And so you have two things happening simultaneously in the EV car market. First, people are starting to understand the advantages and disadvantages of an electric vehicle. And again, as a petrol head, it's hard to argue it's a more reliable platform. So that's the broad picture. The legacy internal combustion engine has almost a century of infrastructure built out that you're not going to catch up to in a dozen years. It's going to take you ten, twenty thirty years to get there. And over that transitional period, the hybrid is is filling the gap.

Let me ask you this though, back on Elon the entrepreneur and the salesman, perhaps as good as a technologist and an engineering mind as he is. What are the great salespeople of our time?

Right?

Maybe no doubt Steve Jobs the second, Like everybody, how often you hit people described as the next Steve Jobs And it's always a pale imitation.

My theory in that is Steve Jobs died in what two thousand and eleven, That was when Tesla was ramping up the models, and so I think the media had quite a lot of a role. The tech press in particular had quite a lot of a big role to play in this because Steve Jobs died and everyone was like, who's the new Steve Jobs.

But that ability to create that reality distortion field where people suspend disbelief and get pulled into a universe that doesn't exist. And it's say, to be fair to Elon, it's a hopeful vision of the future where pollution is a thing of the past, and climate change has been managed and even if we have over population, well everybody just head over to my country home on Mars and this plenty of room for all. I mean, he has created a narrative that is hopeful, and that's not the worst.

Thing, the Steve Jobs thing. I think that was something that Elon did himself. I mean he has that he has explicitly modeled himself on Steve Jobs, like he I mean you look look at look at.

Yeah, yeah.

Like the way he presents himself as a CEO, the way he conceptualizes the role of a manager, the way he.

Goes, the way he tweets, the.

Rollout of the new vehicles, he does the choice of Walter isa Look at the covers of those books, right, I mean it's like he dial he ordered up his own, you know, Isaacson treatment. And I think that has been an effective approach. People were entranced by Steve Jobs, and to some extent, Tesla has managed to create an Apple like following and has been able to convince investors that the economics for cars are the same as the economics for smartphone.

So who's the Tim Cook in the Elon Musk story. We know Gwen is the Tim Cook of SpaceX. Who is the Tim Cook of Tesla?

Does said person exist?

So that's always been the interesting dynamic at Tesla whenever anyone has kind of risen up to be the sort of de facto number two they've they've always been axed, or they've disappeared suddenly. We saw that most recently with Zach Kerkorn, the very highly regarded CFO. He left in August. No one exactly knows why.

So that reminds me a little bit of Jack Welsh, who was running General Electric for twenty years and there was a just series of CEOs coming up under him, or potential CEOs, and they knew Jack had a death grip on GE and all these guys. The S and P five hundred is littered with CEOs who were potential Jack Welsh replacements. There's a whole longer story about what a terrible job Welch did, but there are some parallels there in that it becomes hard to retain talent at the highest level if they don't see a path to work their way up the ladder, if not succeed the CEO. You know, we saw that a little bit with Jamie Diamond at JP Morgan Chase, and we definitely saw it with Jack Welsh at GE. The question is, at a certain point Elon is going to have to focus on whatever the next thing is, and he needs someone to run Tesla when he's too busy. I have no idea who that person might be.

Well, and it's really hard for someone from the outside to succeed at Tesla because the culture is so unique that the various people that they've hired from other industries or from other companies have never lasted long. I mean, the top the four named executives now at the top of the roster, there are all long time Tesla executives who've been there forever.

No one else can be as hardcore as I musk, and that that's true.

I mean, this is definitely true.

So, Barry, last question for you, your final thought on Elon and the difference between physics and humans.

Sure, so his greatest successes have come I don't want to say, conquering the rules of physics, but working within the laws of physics to bend our expectations as to what's possible. Very quick, long range software driven cars, the ability to launch cheap, renewable, reusable rockets into space and land them where He's kind of, you know, seems to have lost the thread. No pun intended was at Twitter. By the way, we don't know the impact on Tesla sales from him being such a kind of wa could do on Twitter because we don't have the control group. You know, we can't run an experiment. But I know personally and all right, I live in the New York area, which tends to vote Democratic, but that tends to be his tesla potential base. You have California, you have Austin, Texas. You have you know, the liberal coasts, the big city. You have the cash to write, they have the income. They they're concerned about the environment, and they're willing to put up with some of the inconveniences of an electric car if they think they're they're doing good for the world, like I'm That is eventually a series of Harvard Business School case studies how to alienate your core customer and how long can you get away with that? My last thought is he needs a couple of no men. He needs some people around him to say, Elon, that's a really dumb idea. Elon forty four billion dollars, that doesn't make any sense. Elon, focus on rockets and cars. Leave this social media crap to other people. And he doesn't have anybody. Not only does any of people willing to stand up to him and tell him that's a terrible idea. That inner circle really seems to be a bunch of cheerleaders urging him on. You know, you know, Chuck Chuck Chuck at a frat house, every worst instinct he has, and they're encouraging.

And chug he does.

I guess, Dana, last word with you, I suppose the only person who pushes back some or that we know about on a regular basis, is indeed Gwen shot well at SpaceX Or is that mischaracterizing her role?

No, I think that's fair. I mean Max and I had a long, lengthy interview with Gwen and she will like she you know, if you think about it as like a dysfunctional family, he's the scary dad and she's the mom who constantly runs interference with employees but also with like NASA and the Air Force. And you know, she told a great story about how Musk was ready to cancel Falcon Heavy and she ran and she was getting text messages from others like you got to come in here, and she ran into the meeting and was like, no, no, Elon, you can't do that. Like the Air Force has reserved this rocket, like Falcon Heavy is going ahead, and he's like, oh, yeah, you're right, and so he will change his mind if he's presented with the right data. But I think there's very few people who have the kind of emotional intelligence to go head to head with him and understand the way he thinks and can manage him.

Thanks for listening to Elon H and thanks to our panel, Max Barry and Dana.

Thank you, Thank you great to be here.

This episode was produced by Stacy Wong. Naomi Shaven and Rayhan Harmanci are our senior editors.

The idea for this.

Very show also came from Rayhan. Blake Maples handles engineering, and we get special editing assistants from Jeff Grocott. Our supervising producer is Magnus Hendrickson Huge Thanks to Angel We See You and Joel Weber. The elin ing theme is written and performed by Taka Yasuzawa and Alex Sugiyira. Sage Bauman is the head of Bloomberg Podcast and our executive producer. I am David Papadopoulos. If you have a minute, rate and review our show, it'll help other listeners find us.

See you next week.

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