Elon, Inc.Tuesday was a big day in the world of Tesla, which reported its second-quarter sales numbers. After a disastrous start to 2024, and despite year-over-year sales being down, the numbers weren’t that bad. David, Dana and Max talk it out with Bloomberg senior editor for autos Craig Trudell. Plus we have a lot of SpaceX and X news.
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Well, Jlon Muski is 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 the elan Ink, Bloomberg's weekly podcast about Elon Musk. It's July second. I'm your host, David Papadopolis. Today is a big day for Tesla. The company reported its quarterly sales numbers. Than they are not too bad. We'll dig into Tesla's potentially changing fortunes after a terrible start of the year. First, though, we'll do a lightning round of odds and ends, starting with some low Earth orbit news, where SpaceX has scored a NASA contract to blast a space station into the ocean, just as the company's valuation soared above two hundred billion dollars. And in Washington, the Supreme court rendered some opinions that could have an impact on X in a very consequential election year. And to wrap up, we'll examine somewhat seriously Elon's bid to turn X into Pinterest. So for our roundup, we have Ace Elon Musk, reporter Dana Hull, Allow Dana Hey, and Max Chapkin, BusinessWeek senior writer in Max. Good Day, David, Max, Now, I noticed that last week while you're on there were an awful lot of F bombs. I want you to keep it clean. This week I got some listener mail.
Did you really No?
Okay, So Dan, we're going to start with you in our news roundup. SpaceX gets to create something called the Space Station deorbit Vehicle. What the heck is that?
Yeah, So the International Space Station, which has been like this home away from home for astronauts, is going to be retired. It is expected to be retired in twenty thirty and NASA needs help getting this station like out of space. And so SpaceX won this contract, which is worth up to eight hundred and forty three million dollars to sort of deorbit the space station.
And so my.
Understanding is that SpaceX is going to create some kind of vehicle that's going to help guide the space station back through the Earth's atmosphere, at which point it will blow up and then like fall into the ocean.
So Max, how cool is this? Not only do you get to blow this thing up, you get had to blow.
Up objectively probably the coolest government contract you could possibly win.
But I will say this is like a weird It's kind of weird.
Like SpaceX's whole deal is like they are a commercial provider. They just sell these launches, and this is obviously a custom project. You know, this is kind of like an old school What it feels like is like an old school defense contract, the kind of thing that SpaceX would have criticized maybe in the past. On the other hand, objectively cool contract, I don't see how you turn it down create stuff.
I mean, then press release from NASA. I got a kick out of NASAU selects International Space Station US de orbit vehicle. Now here's the thing, though, Dan, about this deorbit vehicle. My sense is that SpaceX Elon and the crew they get to create it, and they have a large budget now to do so, but they do they actually get to do the blowing up themselves, So they have to turn this baby over to the end up NASAU crew to handle that part of it.
I understanding is that SpaceX develops the de orbit spacecraft and then turns.
That over to NASA.
That's kind of a down and.
SpaceX are like long term partners. I mean, NASA was key to like SpaceX even becoming company. And so I mean, I don't know the contract could be modified going forward.
Maybe it will how much in the it's a robot.
I just say, I'm just saying this. You know, one of the in addition, in addition to being a great industrialist, Elon apparently is quite the gamer. You could see him just like gaming out on this thing, controlling it as it's gonna blow this thing up.
I mean reading stories about this, you know they're going to drop it in some part, some part of the ocean that's like Asteros, not a lot of I guess marine life or whatever, but this is like the area of the ocean where they.
Dump old spaceships.
So it'll it's the whole thing is fascinating, and you know, hopefully by the time they do this, we'll have you know, a station on the Moon or something.
One would hope. Okay, Max, in other SpaceX news its valuation is up, up and up.
Yeah.
So SpaceX, as we've said on this podcast many times, is a privately held company. It's a little bit unusual because it's been around for a long time, and you have employees and investors who've been who've held stock in the company for many years, if not more than a decade, and private companies essentially like this will make tender offers. Well, they'll essentially offer to buy shares of longtime shareholders using external capital. The reporting suggests that the valuation is two hundred and ten billion dollars, substantially up from before. I will just say, you know, these tender offers, these valuations are not public markets valuations. Anytime we're talking about private market valuations. It's not like the definitive value of this thing. It's just sort of like what the company is telling investors that it thinks it is worth.
Well. But if it is the latest transaction that's happening, so at sub level, that does set a price. I mean, I guess the fact that SpaceX is willing to pay that price for the shares indicates that it thinks it's worth that much. I mean, but yeah, as you were saying it's climbed quite a bit. I think towards the end of last year was at one hundred and eighty billion, and then two hundred billion, and now two hundred and ten. It is a very very, very very large private company. Remember, the vast bulk of Elon's companies are privately held companies, ie, not companies that trade in public stock markets, Tesla being the loan exception. But it is SpaceX that is by far the most valuable, and at this point I would say on the cuspmax of being the most valuable private company in the world right now, the only larger one is Byte after bite after Byte Dance, right, owner of TikTok. But if SpaceX's valuations up up and up, Byte Dances valuation is going in the exact opposite direction, right But Dan, I got to say on that does SpaceX and Star do they stay private or go public? Given how worked up Elon is getting about the Delaware court as it relates to Tesla and all the hassles of having to be a publicly traded company, man, I got to think that these companies stay private.
Yeah, I don't think Elon likes being a public company. CEO I mean it opens you up to just far more scrutiny. You've got to deal with earnings every quarter. I mean I think he you know, he tried to take Tesla private back in twenty eighteen and then had to back out of that when when it was clear that that was going to be way harder to do.
That he realized.
And the whole thing with the funding secured at four twenty and the saudis so. But yeah, I mean, why go The only the reason to go public, it's it's really a fundraising event. Like you go public because you need to raise money. If SpaceX can continue to raise money from private investors and venture capitalists and private equity and get these lucrative government contracts, like, I don't think he would want to go. But yeah, I mean Gwen shotwell All, the president of SpaceX, you know, at an investor conference a couple of years ago, said that she could see spinning Starlink out at some point when Starlink had positive revenue. I don't think they're there yet. But if you're elon, like, what upside is there to going public?
There's a serial case for going public is that you know, his his like ability to raise capital from the public markets is much greater.
Because you get to tap into all that.
I mean, we just saw like the retail investors of Tesla gave him just just you know, wrote him a fifty billion dollar check after declining. Like you know, you can like Elon Musk as as persuasive as he is with you know, major private.
Market investor retail crowd.
It's the retail crowd that really, you know, will will go for this.
That's fair. Here's my prediction. He neither IPO's SpaceX or starlink, but does an IPO spin off of his de orbit vehicle unit. Okay, well, we'll see how this first one does, uh in a few years when they try to blow this thing up up. Okay. In other news, down in Washington, Max, the Supreme Court had a couple of big rulings on social media that could affect Elon Musk's X. Tell us all about.
Them, all right, So the top line here is that the status quo for social media stays the same. But just going a little bit deeper on that, you had a case about a week ago where a couple of states had sued the Biden administration over essentially accusations that came up during the Twitter Files. This was the idea that the government was, you know, improperly influencing social media companies. Supreme Court said, now, this is a bit of a rebuke to the for people who really thought the Twitter files were a big game changer. Essentially said that there was no reason to think that this had actually happened in any kind of sustained way. There was a second sort of set two cases that the Supreme Court kicked back to lower courts earlier this week, and these were over laws in Texas and Florida that we would essentially prevent social media companies from doing the kind of moderation that they do previous that they do currently. So it was saying, like, you know, you're not allowed to like throw somebody off a platform. You have to give people like an absolute right to free speech on social media.
That's kind of Elon Musk's position.
The Court effectively is saying that for now, social media companies have free speech rights as well, which means that they can sort of do whatever they want with their platforms. So that's the stat This is a status quo stays the same. Now, does this affect Elon Muskin anyway?
Probably not. I mean, like.
His his sort of maximalist view of the First Amendment could be seen as being rebuffed. But for now, you know, X will just continue operating as as it's operated.
Actually, And as a result, the effect on the twenty twenty four campaign and use of social media in the twenty twenty four campaign and disinformation campaigns, any impact there?
No? Well, like I said, status Quo is going to say the same.
I mean, I think that there are that probably like public pressure on social media companies matters, because these companies have constituencies that include like investors and users and so on, and if and if a social media in the same way that you can kind of like work the refs like in a game and sort of push them towards making decisions that are close to.
What you like. I gotcha. So we are now joined by Bloomberg's Global autos Are Craig Trudel to talk about tesla second quarter sales. Craig, welcome, Thanks for having me. Okay, so, Dana, we will start with you though here tell us what exactly were the numbers and how should we interpret them?
Yeah, so, Tesla delivered four hundred and forty three thousand nine hundred and fifty six vehicles in the second quarter. Those are global figures. It was still a five percent year of year decline, but the numbers that were released this morning were better than what analysts were expecting, and you're seeing the shares move higher as a result.
This is a matter of a few thousand vehicles more than analysts we're expecting. I think, you know, the consensus that we had was about a five point eight percent decline, So all of one percentage point has meant you know, a roughly ten percent move just this morning, which is really remarkable but also kind of par for the course with this this stock. You guys have had Esha Day on here before to kind of talk about Tesla as a stock and how much that's a big aspect of the story for this company. When this name gets momentum, it really moves in dramatic ways, and we've seen that, you know, just in the last few weeks. You know, even as everybody was anticipating these numbers weren't going to be that great, there's been so much emphasis and focus on the future, in no small part thanks to Elon and his comments at the annual meeting recently.
Yeah, so on the stock. We spent a fair amount of time in the first half of the year talking about its cratering it had at its nadir back in April, it was down almost fifty percent. It was quite the plunge. It has roared back since, as you guys are alluding to, It's gained more than fifty percent since then, and really isn't down much year to date at all. Now, So, Craig, how do I square that rebound with these sales numbers that just came out again? I get that the sales numbers weren't quite as bad as expected, but they were still down.
I suppose. I mean, I guess this has always been, you know, a story stocked to some degree, right, I mean, it's always been the case that, you know, if you talk with a sort of more traditional automotive analyst, that they've generally, you know, and very consistently said that this valuation, you know, doesn't make a sense in their universe. But as long as you're looking at this as a tech company and putting that serious amounts of value on businesses that don't exist in in the case of robotaxis or optimist robots, you can sort of put whatever number you like on this and Elon you may call you something other than boneheaded.
The other thing I was just going to point out about the release today is that they flagged their energy storage numbers. You know, so Tesla has two divisions, automotive and energy storage. Energy storage is when they sell these big batteries known as megapas to utilities like pgene and the power wall to consumers, and like, the energy division has always played this big back seat to automotive in terms of revenue, but now with the automotive sales obviously no longer showing robust growth, they're like really flagging energy is like this big growth thing. So it was just funny to see in a quarterly release that's all about vehicle deliveries that they flag how awesome the energy sales are going. And I think you're going to see Elon talk a lot more about energy on the earnings call later this month.
Yeah, it's a little bit of the active diversion and confuscation. That is the second time recent week, Stana, that you brought interview storage up. I feel an entire segment or episode coming up on that topic soon. Max, though, how did you take the number?
I just like Craig is saying, We've been talking for months about what I think, in retrospect was a really kind of audacious move by Elon Musk. We have a car company that is priced like a growth stock that has stopped growing, and we've been talking for a long time about how that's a pretty big problem.
We're a growth stock and you're not growing. That's problem.
And what we've seen is Elon Musk, over the course of several months, essentially reframe the story. And now it's been reframed. It's no longer a car company. He's said that a million times, despite the fact that as we see from these delivery numbers, they sure saw a lot of cars, seems to be the bulk of their revenue. But nonetheless, you know, what the investors are clearly focused on, and we've seen this now in the stock reaction today, in the payvote, you know, over the last several months, is is this autonomy story. And what's interesting here is getting lost. So they sold almost all of these sales are Model three, Model Y that's the kind of lower end car. Tesla also sells, of course models Model X and a Sign.
They basically sell almost none.
Of those and remember we talked about at this at the end of last year, like wow, you know the cyber truck, this, this could really, you know, change the game for Tesla. You know, pickup trucks are are the best selling category.
You don't even break it out separately, it's under it.
It looks like a very very small number twenty thousand total other models. So I mean you're talking about, you know, number of cyber trucks that you know, would be insignificant to like a Toyota, Ford or whatever. So it's just pretty staggering first of all that that the company has gone in this direction, and then also that investors are are up for it, they like it.
Yeah, so, Craig, I actually I've been thinking about this for a while now. At this point on the model S IS and X IS, and you know, these are older models that are selling at this point negligible amounts. As Max is saying, it's all about the why, It's all about the three. The cyber truck is just ramping up. If it even goes anywhere, why not put a bullet in the s in the ax. Aren't they just a distraction? No?
I think they do still sell for for fairly significant amounts of money, and so perhaps you can kind of make the argument that you know, continuing to amortize, you know, the investment in those vehicles makes some sense. But as as we do look ahead to you know, where this company is going, and you know, sort of pay close attention to the fact that you know, Musk is very much you know, focused on autonomy and on robotaxis to the extent that he is able to actually stand up that business and does want to sort of, you know, put more emphasis on that going forward. Would it make sense to potentially, you know, switch up the existing factory capacity that you have to make those vehicles over you know, ones that now are quite long in the tooth that Musk has said, we probably shouldn't keep making them anymore and are really just sort of doing so for posterity reasons.
On the fleet point in general, and this has come up a fair amount in the past, but I suppose it's going to keep coming up, not just the S and the X, but the totality of the fleet, with the exception of the cyber truck, Dana. As I drive around the streets of the Tri State area, Man, these teslas they do it? Should they just look old and tired. I mean you drive around, you bump into you know, you see Rivians in the wild and some of the new Fords, and the key is in the VW's It just seems like these are just yesterday's cars.
I think the calculation that Elon Musk made is that look like they were the first company to really bring electric cars into the mainstream full stop. But now electric cars are quite common and here in California, same thing. I mean, I see Rivians, I see a lot of Hyundaies, and like being an electric car maker is no longer enough to set you apart from the pack. What sets you apart from the pack is that you are electric and fully autonomous, and that is what Elon is going for. And Craig and I have had long debates back and forth about whether this is like real or vaporware, and like, at what point does Tesla actually get you know, level five regulatory approval. I mean, that's all very still very high in the sky. But Musk believes in his heart that they are on the cusp of full autonomy and he just wants to be like he wants to be valued as a tech company. He sees Nvidia and all these other players getting these crazy valuations, and he wants Tesla to be thought of in that vein, and so he is all about like Tesla doesn't really just make cars, they are making autonomous.
So then your point is he's not up for playing this game that the traditional car makers play, which is, hey, we're going to refresh our fleet every shing.
I think that Elon is just bored of making cars. It's like very capital intensive and like he's always been about.
And he's board making cars, but he wants them to pay him some odd billion dollars when car making is your main job.
Right, But he's been at this for a very long time. It is capital intensive, it is grueling, you're fighting for market share. He's got byd coming out like after him, Like he's just like he like just constantly refreshing models and constantly coming out with new models is just it's boring for him.
I mean you could see it Nickel Dimes stuff.
It wants to be, you know, he wants to be like cutting edge, mister future, and that's.
Our time as you as you've often said, I do think, you know.
For Elon Musk and for the people who sort of buy this it's the the comparison is a tech company, not not a car company, you know. And I think all along the reason they are not refreshing the Model three or whatever, and the reason this is happening is because Musk has long seen like the model as Apple, Right, the iPhone form factor is has been essentially unchanged for almost the entire time that the iPhone has you know, existed. Every other company's you know, iPhone like device looks exactly like it.
Right.
The differentiator is the software and that's what Musk sees.
Right, and those he would argue, those are where the refreshes come.
Yeah, but I.
Think there are real questions about whether that is how consumers feel. And even when we're talking about atimomy, Dana is saying, like, you know, talking about oh, well, you know, maybe they'll get the level five approval or whatever. I you know, obviously, like, there are so many questions there, and I think it's going to take way longer.
Than Elon Musk assumes.
But then the on the other side, there's a question of do consumers care like is like it is the assumption that this is a game changer going to be true for a regular person who drives a regular car. And we don't know answer that question yet, but we have seen some signs and like one of which is it doesn't seem like there have been that successful in selling full self driving or whatever you want to call it, this aid ass system to customers. Customers, they've drive the price like, it doesn't look like how much does it cost?
Well, it was what two.
Hundred dollars a month. Now they're down to one hundred dollars a month. They're sort of getting it away.
It is not thought to be very high.
Right, And I think that and when you talk to like normal people, you know, and every time I'm sure Dan and Craig do this as well, but like you know, you're in an uber you ask them about full self driving, you know, it's pretty rare. When I ask the question that someone is like, yeah, it's the best. Most people are like I don't use it, or yeah it's okay. And I just don't think they've managed to convince regular normal drivers that this thing is worth paying for yet.
Craig on the Robotaxi, you guys have referred to it. It's coming soon, right, the big reveal. They're gonna they're gonna put bring it out on stage. They're gonna bring something out on stage, you know, covered in a blanket or you know, and then they're gonna Elon's gonna, you know, with great pomp and circumstance, you know, pull the blanket away. We're gonna see something when it exactly is that coming?
Yeah, I'd like a BINGO card for that event. You know, is he wearing the Texas hat.
Working on the beginning?
Oh, Craig, we are doing it.
Yeah.
So that's August eighth. And to Max's point, I do think the fact that this company has been taking people's money for years now and deferring revenue that it that it collects related to full self driving. And actually, when you when you sort of look closely at their quarterly filings and compare the deferred revenue that they're actually recognizing versus what they thought they would recognize, you know, the prior year, those numbers have have never matched up. They've always overestimated how much revenue they're going to generate from or or recognize from that sort of you know, piggybank that they've you know, kind of set aside in acknowledgment of the fact that Full self driving is not actually self driving. So you know, this is a company that, for years, if you're sort of a close partser of regulatory filings, has acknowledged the fact that they've over sold this stuff. And not only do we not know to what extent consumers are ready to take this on, I think we have some real questions about just how ready regulators are because if you look at what the National Highway Traffic Safety Administration has to say about Tesla's lower level systems autopilot I'm referring to here, they have real concerns about the safety gap between you know, how the company is marketing this and how they're deploying it versus what it's actually capable of.
Robotaxi. Of course, the level of angst among regulators and scrutiny's going to be that much greater. I will just say, though, Max, that between you got to say here that between robotaxi talk and all by doing whatever he was that he had to do, stabilizing sales to some extent, slashing payrolls by the way, during in recent months he's cut payrolls almost twenty percent. Okay, you take all those things together, and he's done it again. He has turned the tied on a stock that seemed to be in free fall.
Yeah, I totally agree.
Listen, there there are some real questions about whether this strategy is real. And I mean you're talking about like our robotos tax is going to happen. I think some elon probably thinks that's a problem for the Trump administration to solve. I think it's going to be a problem for like the Eric Trump administration or the Donald Junior Trump ad like this is a this is a decades long regulation problem, not not something that's going.
To happen soon, but and and so.
But in the near term.
Yeah, he's done it. He really has.
I mean, he he completely managed to change the narrative to turn what should be a real problem for a company that makes cars, which is that it's not selling them as much as it wants to, into like almost an asset.
It's you know, sorry, we're not a car company anymore. We're software.
Don't worry about that. But he has Craig push sales volume at any price, cutting prices repeatedly that presumably has come and will continue to calm at the cost of margin. I mean, is that is that something that's we're going to see playing out in coming quarters.
Yeah, Dana mentioned the energy storage deployments, and it is a very dramatic increase, but I think we've also watched very closely how that has actually translated in terms of revenue, and we've not really seen evidence that that is really moving the needle. I think the fundamentals of this company's business are sort of continuing to deteriorate and sort of you know, matching, you know, maybe what the stock was doing months ago. And it's been fascinating to see the shares you know, really sort of come roaring back just these last few weeks.
I just looked at the Bloomberg terminal and shares are only down like seven point six percent for the year now. I mean, that is a big difference from where we.
Were basically flat. I mean, it's true, Dana that the market overall is up like fifteen percent or so, So seven percent down is still seven percent down at a time when everything else is up. But you're absolutely right. I mean, to have gone from almost fifty percent down to down just seven percent year to date is quite a thing.
I just want to make one more point, which we've pounded on quite a bit on this show and elsewhere, which is that, like you know, Elon is fundamentally just this like master Marketer, master of the narrative. It's like the Man behind the Curtain, Wizard of Oz kind of stuff where he really does like drop these clues. It's almost like a QAnon drop and the fans go bananas. So the other thing that happened this week was he started following Travis Kalanik, which everyone saw as this clue that like the Robotaxi is gonna partner with Uber or like that, you know, and he's called it the cyber Cab. And so like just when he does stuff like that, like the fans go go ballistic and they are all in on like this future vision. And it is like a cult in a lot of ways in terms of the way that the stock moves and the way that you know, everyone rallies around the leader. And there have been these real pivot points where you're like, oh my god, is he going to be able to pull this out? Is he going to be able to pull the rabbit out of the hat, And like he does it over and over again to the point where like we're all very cynical about it, but obviously investors are not. And that's like, that's the disconnect that I think some of us feel. It's like, Wow, they're really going for this yet again. But we've seen this play over and over again.
Craig, great to have you on. Don't be a stranger. Come back soon.
Thanks for having me.
Okay, to wrap this up. Now, we're gonna do a segment that I'm gonna be honest, I know absolutely nothing about Max. Tell us all about it. Something about Elon trying to make X a kinder, gentler place.
Yeah, we've talked about this in past episodes. Elon. You may think of him as a trolling, you know.
Poster who loves to just stir the pot, but he has a softer side, and that softer side wants to see content that isn't divisive, that doesn't you know, rile people up.
That's just beautiful.
Such a and and so yesterday there this is i'd say one of my favorite all time Elon Musks posts. He he posted a tweet by an account called l Lookbook. It's basically like a a bunch of pictures essentially beautiful interiors, and it looks like something out of Brides magazine it's like an all white interior with a bed kind of in the in the background, and an arch and some plants. It's just a gorgeous It looks like your ideal Airbnb in Newport or something. And Elon wrote, would be lovely to see more accounts on x simply posting beautiful content. Okay, and I say, Elon here here, let's all come back.
But I'm seeing he wants.
To become Pinterest or something.
Well, I feel like I'm seeing a direction of travel because just the previous week, right he said, when I told everyone to go all the you know, advertisers to go f themselves, I didn't mean go f yourself. And now like again he's just right just continuing on that line, and man, can we just post beautiful.
And a dyne non You know, it's weird because like the jk Rowling one was sort of felt like a specific comment about jk Rowling where he was saying, hey, what was that?
Remind me?
Yeah, he had he.
Had suggested that, you know, essentially I'm paraphrasing, probably badly, but essentially that she had been posting all this controversial stuff. Wouldn't it better if she was just posting stuff about wizards or Harry Potter or something here.
Yeah, like Danna says.
It's like, well, it wouldn't it be great if we just had some nice interiors on this on this site instead of all this divisive content. And I thought, Okay, maybe, you know, maybe this maybe is turning overleaf. But you really don't have to go too too far before he's you know, down in the timeline, before he's back in the mix politically, So just.
Back in the in the in the in the scrum and just and just fighting and scrap it. So, Dana, though, you see that post and it says, pinteresting, Well.
It's a summer bedroom. I mean I see flowers, I see white sheets, white walls. The person who posted is Eva loves Design and yeah, look it's like a Pinterest board like my favorite interior for my summer cottage or something like that.
So now, Max, is that the totality though? The kinder gentler X from elanor were there other things that put you in that direction? That was it?
That's the totality.
That's the totality, Max, Dana, thanks for joining.
Always a pleasure, great to be here.
This episode was produced by Stacy Woan 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, Antonia Muffarech and Arafat Jalasho Perry. Our supervising producer is Magnus Hendrickson. The elin ing theme is written and performed by Taka Yasuzawa and Alex sugi Era. Brendan Francis Newnham is our executive producer, and Sage Bauman is the head of Bloomberg Podcasts. A big thanks as always to our supporter Joel Weber. I'm Dave bit Papadopolis. If you have a minute, rate and review our show, it'll help other listeners find us. See you next week.
