Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads, the
shape. SpaceX.
Tesla X. The Boring Company and
Neuralink. I'm your host, Will.
Walden Elon Musk has issued a warning to Bill Gates and has
threatened the Microsoft Co founder with severe financial
consequences if he continues betting against Tesla.
Now, Musk foresees a dramatic transformation for Tesla,
envisioning the carmaker becoming a colossal entity
valued at $30 trillion. This forecast hinges on Tesla's
successful shift from primarily selling electric vehicles to
managing a profitable fleet of robo taxis and humanoid robots.
Musk's ominous message to Gates was shared on social media,
where he stated once Tesla fully solves autonomy and has Optimus
in volume production, anyone still holding a short position
will be obliterated, even Gates. The animosity between the two
billionaires became public in 2022 when text messages revealed
Musk's refusal to support Gates's charitable efforts.
Due to Gates's significant short position against Tesla now, Musk
expressed his disapproval in a message saying.
Sorry, but I cannot take your philanthropy on climate change
seriously when you have a massive short position against
Tesla, the company doing the most to solve climate change.
By then, Gates had already begun regretting his pessimistic
stance on Tesla, though it's uncertain if he still maintains
that position despite Musk's strong warning.
It's a bold claim considering Tesla's recent struggles.
The company's vehicle sales have declined by 6.6% in the first
half of the year, and the highly anticipated Cybertruck has not
met expectations. Now, Tesla has abandoned its
ambitious target of increasing volumes from 1.8 million EVs
last year to 20 million by 2030. Nonetheless, Musk remains
undeterred by adversity. He has previously outlasted
other notable Tesla shorts like David Einhorn and Jim Chanos,
known for profiting from the collapses of Lehman Brothers and
Enron, respectively. Since April, Musk has been
working to stabilize Tesla's stock, beginning with hints of a
new Cyber Cab robotaxi model, suggesting he might finally
achieve full autonomy. Additionally, Musk announced
that 2025 could see a resurgence in EV sales with the
introduction of new low cost models, potentially marking a
turn around for the stock. Concerns that Musk might resign
from Tesla over the loss of his 2018 compensation deal, valued
at $70 billion at the current stock price, were largely
dispelled when Vanguard and other significant investors
expressed their support for him last month.
On Tuesday, Tesla reported it had avoided a steeper decline in
Q2 vehicle sales by selling off excess inventory.
By reducing EV production to its lowest level since Q 3/20/22,
Tesla redirected surplus battery cells to its stationary energy
storage business, more than doubling its Q1 volume to an
unprecedented 9.4 GW hours deployed.
This move has added $100 billion to Tesla's market capitalization
over the past two days, currently trading at 70 times
next year's earnings. Tesla's valuation is high even
for a growth stock, especially one expected to see declines in
revenue and earnings in 2024. However, investors confident in
Musk's vision for robot butlers might view the current market
cap of $740 billion as a minor issue.
Musk envisions widespread adoption of robots, aiming for
one in every business and home, ultimately reaching a production
rate of 1 billion droids per year.
Musk plans to sell these Optimus robots at $20,000 each, despite
production costs being only $10,000, ensuring a 50% profit
margin per unit. This would result in annual
profits of $1 trillion, translating to a market cap of
$25 trillion. With a standard earnings
multiple of 25, adding $5 trillion for the future Robo
taxi fleet, Musk believes this presents a substantial value for
current investors. Critics argue that Musk's
projections are overly optimistic.
For instance, the market demand for such robots might not
parallel the demand for smartphones, which are
significantly cheaper cars. A more comparable product C
annual sales of about 100 million units.
Due to their higher price points, Chanos and others
contend that Musk's estimates imply a market cap approaching
1/3 of the world's total annual economic output, a highly
improbable scenario. Musk's previous prediction of
reaching 20 million EV sales by 20-30, which would surpass the
combined output of the two largest carmakers globally, was
based on replacing 1% of the two billion cars currently on the
road each year. This ambitious target was
quietly dropped well before the 20-30 deadline, highlighting the
need for Musk to produce more realistic projections moving
forward. In the meantime, Tesla's shares
surged by 10% on Tuesday, following better than expected
Q2 delivery numbers. The company delivered 404 three
sound 956 vehicles and produced 410,831 in Q2 2024, surpassing
analysts expectations of 439,000 deliveries.
Despite a 4.8% year over year decline in deliveries, This
represented a 14.8% increase from Q1.
Tesla groups its deliveries into two categories, Model 3 and
Model Y vehicles and all other vehicles, but does not report
numbers for specific models or regions.
Earlier this year, Tesla reported an 8.5% drop in Q1
deliveries, marking the 1st annual decline since 2020.
This was followed by a 13% year over year revenue decrease for
the quarter, mainly due to lower average selling prices.
Now, the decline was partly due to temporary factory shutdowns
in response to an alleged arson attack at Tesla's German factory
and shipping delays from Red Sea conflicts.
Additionally, Tesla's aging vehicle line up and increasing
competition, particularly from Chinese EV makers, have impacted
sales. A recent survey attributed part
of Tesla's brand erosion to CEO Musk's public behavior and
political statements. To boost sales, Tesla has
offered various incentives and discounts throughout the year.
In China, Tesla is offering zero interest loans to encourage
purchases of the Model 3 and Model Y by the end of July.
Tesla generated approximately $21.00 and $75 billion from
China in 2023, accounting for 22.5% of its total sales.
However, Wells Fargo analyst Colin Langan advised selling
Tesla shares, citing declining delivery growth driven by lower
demand and diminished return on price cuts.
Now, Wells Fargo anticipates a decrease in Tesla's automotive
gross margins, excluding environmental credits, due to
more price cuts and lower volumes.
Investors are now focusing on Tesla's Q2 earnings report later
this month and a marketing event in August, where the company
plans to unveil its design for a dedicated robotaxi or cyber cab.
While Tesla continues to explore new technologies and markets, it
faces stiff competition, especially in battery
production. LG Energy Solution aims to
commercialize a new dry coating technology by 2028, which could
significantly reduce production costs.
This innovation could position LG as a strong competitor to
Chinese battery manufacturers and potentially challenge
Tesla's market position. Hey, thank you so much for
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