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This July, Tesla sold fewer than
1000 cars in the UK. 

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That's not an error. 
The company that wants to find 

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00:00:08,560 --> 00:00:12,560
the electric vehicle revolution 
saw it's British sales collapse 

4
00:00:12,560 --> 00:00:17,800
by nearly 60%, while it's 
Chinese rival BYD surged ahead, 

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00:00:18,000 --> 00:00:22,360
quadrupling it's sales and 
outselling Tesla 3 to one in the

6
00:00:22,360 --> 00:00:25,280
UK. 
In the same week that this news 

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00:00:25,280 --> 00:00:30,320
broke, Tesla's board awarded 
Elon Musk a $29 billion pay 

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00:00:30,320 --> 00:00:33,280
package. 
Let's think about that for just 

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00:00:33,280 --> 00:00:36,280
one moment. 
Sales down, pay up. 

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00:00:36,520 --> 00:00:41,280
What kind of company does this? 
This isn't just a story of 1 bad

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month or one big payday. 
It's a look inside Tesla's 

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warped reality, where the usual 
rules don't apply fundamental 

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00:00:49,840 --> 00:00:54,280
spend and executive pay floats 
ever upward, regardless of 

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00:00:54,280 --> 00:00:57,520
results. 
Defenders will argue that Musk's

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latest award is partly 
retroactive, compensating him 

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00:01:01,680 --> 00:01:05,720
for a previous $56 billion 
package struck down by the 

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00:01:05,720 --> 00:01:09,000
Delaware court. 
But the timing and the scale of 

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00:01:09,000 --> 00:01:12,880
this new pay grant raise 
questions about how Tesla's 

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00:01:12,880 --> 00:01:16,960
board defines success. 
As competitors gain ground, 

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00:01:17,120 --> 00:01:21,800
lawsuits pile up and executives 
flee, Tesla's stock remains 

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00:01:21,800 --> 00:01:25,640
surprisingly stable. 
That stability might suggest 

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00:01:25,640 --> 00:01:28,600
investor confidence, or at least
indifference. 

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But if you look beneath the 
surface, there are growing signs

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of dissatisfaction, shareholder 
lawsuits, governance critiques, 

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00:01:36,600 --> 00:01:39,080
and growing scrutiny from 
regulators. 

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Let's examine the contradictions
at the heart of Tesla's current 

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moment, the Cybertruck debacle, 
the boardroom drama, the robo 

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taxi fantasy, and the growing 
tension between Musk's ambitions

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00:01:52,720 --> 00:01:56,880
and Tesla's realities. 
We'll look at how Elon Musk's 

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sprawling empire, now including 
a separate AI company that some 

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00:02:01,400 --> 00:02:05,480
are accusing of siphoning talent
and resources away from Tesla, 

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00:02:05,760 --> 00:02:08,240
raises serious governance 
questions. 

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00:02:08,440 --> 00:02:11,600
And we'll ask whether Tesla 
should still be considered a 

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growth company or if it's just a
cult stock with a fading product

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00:02:15,840 --> 00:02:19,840
line up and ACEO who's always on
to the next hot thing. 

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First, we should look at the 
numbers. 

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00:02:22,960 --> 00:02:27,040
Tesla's sales are falling almost
everywhere, and not just 

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slightly. 
In the UK, July registrations 

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00:02:30,080 --> 00:02:35,320
dropped 60% year over year. 
In Germany they fell 55%, in 

40
00:02:35,320 --> 00:02:40,400
Sweden a staggering 86%, and in 
Australia they've reported the 

41
00:02:40,400 --> 00:02:44,480
biggest sales decline of any 
mainstream brand in the country.

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00:02:44,800 --> 00:02:49,200
Across Europe, Tesla has posted 
5 consecutive months of decline,

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00:02:49,440 --> 00:02:53,880
and global sales for the full 
year of 2024 were also down. 

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00:02:54,240 --> 00:02:58,920
BYD, meanwhile, is surging. 
It's now the world's top EV 

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00:02:59,040 --> 00:03:03,040
seller, having overtaken Tesla 
in both the unit sales and 

46
00:03:03,040 --> 00:03:05,960
revenue. 
It's dominance is no longer 

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00:03:05,960 --> 00:03:10,760
confined to just China or 
Europe, it's global, and BYD has

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00:03:10,760 --> 00:03:14,360
achieved this despite being 
effectively barred from the US 

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market for 100%. 
Tariffs imposed by both the 

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00:03:18,200 --> 00:03:21,840
Trump and Biden administrations 
make selling competitively 

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00:03:21,840 --> 00:03:26,920
priced cars nearly impossible. 
In China, Tesla sold just under 

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00:03:26,920 --> 00:03:32,560
70,000 vehicles in July, down 
8.4% year over year and 

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00:03:32,560 --> 00:03:35,360
continuing a nine month downward
trend. 

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00:03:35,680 --> 00:03:39,920
The Model Y, once Tesla's crown 
jewel, which they confusingly 

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00:03:39,920 --> 00:03:45,000
claim is an SUV for tax purposes
when it's clearly a compact car,

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00:03:45,240 --> 00:03:48,160
is losing ground to local 
competitors. 

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00:03:48,400 --> 00:03:51,920
Even a refreshed version hasn't 
reversed the slide. 

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00:03:52,240 --> 00:03:56,080
In the United States, Tesla 
sales may be worse than they 

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00:03:56,080 --> 00:04:01,080
initially appear, while Cox 
Automotive estimated an 8.6% 

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00:04:01,080 --> 00:04:04,080
decline in the first quarter. 
More accurate registration 

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00:04:04,160 --> 00:04:07,840
ministration based analysis done
by Fred Lampert at Electric 

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00:04:08,040 --> 00:04:13,200
suggests that the real drop is 
closer to 15% in California, 

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00:04:13,280 --> 00:04:16,800
which accounts for nearly 40% of
Tesla's U.S. sales. 

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00:04:17,040 --> 00:04:22,040
Second quarter deliveries fell 
21% year over year, marking the 

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00:04:22,040 --> 00:04:24,360
seventh straight quarter of 
decline. 

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00:04:24,960 --> 00:04:28,880
This means that sales in 
California were declining well 

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00:04:28,880 --> 00:04:31,720
before Elon Musk got involved in
politics. 

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00:04:32,200 --> 00:04:35,520
To top it off, Tesla is now 
facing a lawsuit from the 

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00:04:35,520 --> 00:04:39,520
California Department of Motor 
Vehicles over false advertising 

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00:04:39,520 --> 00:04:43,520
of its Autopilot and Full Self 
Driving features, potentially 

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00:04:43,520 --> 00:04:46,840
threatening its ability to sell 
cars in the state. 

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00:04:47,320 --> 00:04:52,440
Globally, Tesla reported almost 
340,000 deliveries in the first 

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00:04:52,440 --> 00:04:56,880
quarter, but inventory levels 
are rising and demand appears to

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00:04:56,880 --> 00:05:00,440
be softening. 
Despite a recent facelift, Tesla

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00:05:00,440 --> 00:05:04,320
has no backlog for its new new 
Model Y, and analysts are 

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00:05:04,320 --> 00:05:08,280
questioning whether Tesla can 
grow its sales at all this year 

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00:05:08,280 --> 00:05:11,280
or next. 
The cyber truck, which was once 

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00:05:11,280 --> 00:05:15,240
typed as Tesla's boldest 
innovation, has quickly become 

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its weakest link. 
Sales plunged over 50% year on 

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00:05:19,320 --> 00:05:22,440
year in the second quarter and 
the truck has been plagued by 

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00:05:22,440 --> 00:05:26,520
recalls, breakdowns and 
ridicule, with even loyal fans 

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00:05:26,520 --> 00:05:30,680
questioning its viability. 
Earlier this week, Tesla's board

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00:05:30,680 --> 00:05:35,000
awarded Elon Musk 96,000,000 
shares, which are worth around 

84
00:05:35,000 --> 00:05:39,720
$29 billion, a package which the
company framed as being a 

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00:05:39,720 --> 00:05:44,360
forward-looking incentive to 
retain and refocus Musk, who has

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00:05:44,360 --> 00:05:47,760
threatened to leave the company 
unless he's given more control 

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00:05:47,760 --> 00:05:50,160
over it. 
This package makes him the 

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00:05:50,160 --> 00:05:54,920
highest paid CEO in history. 
To put his pay in context, the 

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00:05:54,920 --> 00:05:58,880
second highest CEO pay package 
in history was awarded to 

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00:05:58,880 --> 00:06:02,560
Stephen Schwarzman, the Co 
founder of Blackstone, who 

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00:06:02,560 --> 00:06:08,280
received $1.39 billion in total 
compensation in 2008. 

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00:06:08,600 --> 00:06:13,320
This payout was largely due to 
Blackstone's IPO that year and 

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00:06:13,320 --> 00:06:16,880
Schwarzman's equity stake. 
It happened during a year of 

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00:06:16,880 --> 00:06:20,400
strong performance despite the 
broader market turmoil. 

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00:06:20,880 --> 00:06:25,720
Musk's $30 billion pay package 
is not only more than 20 times 

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00:06:25,720 --> 00:06:29,560
larger than Schwartzman's, but 
it comes at a time when Tesla's 

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00:06:29,560 --> 00:06:32,600
fundamentals are weakening, not 
improving. 

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00:06:33,240 --> 00:06:37,480
Quartz put together a slideshow 
of the 11 other highest CEO 

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00:06:37,480 --> 00:06:41,920
payouts in history after Elon 
Musks, and only two of these pay

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00:06:41,920 --> 00:06:44,720
packages came to more than a 
billion dollars. 

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00:06:44,960 --> 00:06:47,920
Amusingly, a number of the 
companies with the highest paid 

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CEO's in history were either 
unprofitable or barely 

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profitable. 
Musk Taipei stands in stark 

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00:06:55,400 --> 00:06:58,000
contrast to other iconic 
founders. 

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00:06:58,200 --> 00:07:01,680
Figures like Bill Gates, Warren 
Buffett, Jeff Bezos and Mark 

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00:07:01,680 --> 00:07:06,080
Zuckerberg have historically 
taken modest salaries or none at

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00:07:06,080 --> 00:07:08,840
all and relied on their 
ownership stakes in the 

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businesses that they founded for
ongoing motivation. 

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00:07:12,680 --> 00:07:17,000
Buffett famously paid himself 
$100,000 per year, while 

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Zuckerberg has taken a $1.00 a 
year salary since 2013. 

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This compensation model reflects
A broader norm among founders, 

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who are typically motivated by 
equity rather than paychecks. 

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00:07:31,120 --> 00:07:34,920
Venture capitalists often view 
modest salaries as being a 

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signal of a founders confidence 
in their business and commitment

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00:07:39,040 --> 00:07:43,200
to long term growth. 
In contrast to this, Elon Musk, 

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00:07:43,200 --> 00:07:46,760
despite being Tesla's largest 
shareholder, has repeatedly 

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00:07:46,760 --> 00:07:51,080
demanded additional equity based
compensation, even threatening 

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00:07:51,080 --> 00:07:54,120
to leave the company if not 
granted more control. 

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00:07:54,560 --> 00:07:59,200
His $29 billion pay package 
stands out not just for its 

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00:07:59,200 --> 00:08:02,680
size, but for its departure from
founder norms. 

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00:08:03,560 --> 00:08:07,480
Tesla's board have described 
this package as being a critical

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00:08:07,480 --> 00:08:10,680
first step to energize and focus
Musk. 

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00:08:10,920 --> 00:08:14,040
Now, I'm not sure what the 
following steps will be, but the

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award increases Musk's stake in 
Tesla from under 13% to about 

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00:08:19,440 --> 00:08:23,280
16% of the company. 
And the only requirement it puts

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00:08:23,280 --> 00:08:27,080
on him is that he has to stay in
a senior leadership role at 

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00:08:27,080 --> 00:08:31,160
Tesla for two more years. 
There's no requirement that he 

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00:08:31,160 --> 00:08:33,400
devote any more time to the 
company. 

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00:08:33,559 --> 00:08:37,679
He just can't quit. 
Musk's overturned 2018 

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00:08:37,679 --> 00:08:41,679
compensation package had 
entitled him to 20% of the 

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00:08:41,679 --> 00:08:46,520
company, and he has said that he
needs to own at least 25% if 

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he's going to advance Tesla's 
artificial intelligence and 

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00:08:49,800 --> 00:08:53,440
robotics capabilities. 
And those are the most important

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00:08:53,440 --> 00:08:58,640
buzzwords of 2025. 
He says the 25% would be enough 

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00:08:58,640 --> 00:09:03,040
control to prevent an activist 
investor from ousting him like 

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00:09:03,040 --> 00:09:06,240
he did to to the management of 
Twitter a few years ago. 

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00:09:06,680 --> 00:09:10,680
Despite his claim that he's not 
interested in wealth and only 

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00:09:10,680 --> 00:09:14,720
wants control of Tesla, which 
will allow him to save humanity.

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00:09:14,920 --> 00:09:18,720
In recent years, Musk has sold 
billions of dollars worth of 

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00:09:18,720 --> 00:09:22,600
Tesla stock. 
He managed to sell 7 1/2 billion

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00:09:22,600 --> 00:09:26,200
dollars worth of Tesla shares 
near it's all time high in late 

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00:09:26,200 --> 00:09:30,680
2022, right before a sales 
report that sent the price of 

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00:09:30,680 --> 00:09:34,600
the stock plunging. 
His new pay package is being 

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00:09:34,600 --> 00:09:39,520
pitched to Tesla investors as a 
contingency plan if the $56 

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00:09:39,520 --> 00:09:43,600
billion award from 2018, which 
was struck down by a Delaware 

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00:09:43,600 --> 00:09:46,560
court for being excessive and 
poorly disclosed. 

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00:09:46,840 --> 00:09:50,400
He's reinstated. 
Upon appeal, he'll forgo the new

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00:09:50,400 --> 00:09:53,200
shares. 
But if the court rejects Tesla's

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00:09:53,200 --> 00:09:56,520
appeal, Musk will still walk 
away with the largest pay 

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00:09:56,520 --> 00:10:01,360
package in corporate history. 
As a critical first step, it's 

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00:10:01,360 --> 00:10:05,440
worth noting that Elon Musk's 
overturned $56 billion 

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00:10:05,440 --> 00:10:09,480
compensation package is worth 
more than Tesla's entire 

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00:10:09,480 --> 00:10:12,680
accumulated net income since 
inception. 

154
00:10:13,080 --> 00:10:18,160
As of early 2025, Tesla had 
earned approximately $38.6 

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00:10:18,160 --> 00:10:22,880
billion in total net profit 
since going public, meaning that

156
00:10:22,880 --> 00:10:28,200
Musk's $58 billion pay package 
would have represented about 1.6

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00:10:28,200 --> 00:10:30,600
times the company's lifetime 
earnings. 

158
00:10:31,240 --> 00:10:36,280
The more modest $29 billion pay 
package is less than 80% of 

159
00:10:36,280 --> 00:10:39,960
Tesla's total net profits since 
going public, meaning that 

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00:10:39,960 --> 00:10:42,920
something is left over for the 
other shareholders. 

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00:10:43,640 --> 00:10:47,480
The logic behind Musk's award is
unconventional. 

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00:10:47,720 --> 00:10:51,880
As The Economist puts it, under 
the Elon Musk theory of pay, the

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00:10:51,880 --> 00:10:55,640
worst Tesla performs, the more 
it's boss ought to earn. 

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00:10:56,240 --> 00:11:01,320
Musk's control over Tesla is 
seen as essential not because of

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00:11:01,320 --> 00:11:04,680
operational success, he did 
after all, designed a 

166
00:11:04,680 --> 00:11:08,120
Cybertruck, but because of the 
Pixie dust he brings. 

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00:11:08,400 --> 00:11:13,600
Promises of robotaxi's humanoid 
robots and an AI powered future.

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00:11:13,840 --> 00:11:17,320
With Tesla's fundamentals 
weakening its valuation 

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00:11:17,320 --> 00:11:20,360
increasingly depends on Musk's 
futurism. 

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00:11:20,520 --> 00:11:24,600
In this topsy turvy incentive 
structure, declining performance

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00:11:24,600 --> 00:11:27,360
seems to justify greater 
rewards. 

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00:11:27,960 --> 00:11:31,680
Tesla's board, reduced to a two 
person special committee, 

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00:11:31,840 --> 00:11:35,320
approved the pay deal amid 
falling sales, rising 

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00:11:35,320 --> 00:11:39,560
competition and reputational 
damage from Musk's political 

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00:11:39,560 --> 00:11:44,400
entanglements and awkward waves.
Shareholders have largely gone 

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00:11:44,400 --> 00:11:48,080
along with this, even voting to 
reincorporate the company in 

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00:11:48,080 --> 00:11:51,640
Texas, where investor lawsuits 
are harder to pursue. 

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00:11:52,320 --> 00:11:55,920
Analysts and economists are 
divided on whether Musk's pay 

179
00:11:56,120 --> 00:12:00,040
reflects a competitive market 
for rare talent or a case of 

180
00:12:00,040 --> 00:12:02,840
rent extraction enabled by a 
weak board. 

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00:12:03,160 --> 00:12:07,120
One thing is clear, however. 
Musk doesn't need to walk across

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00:12:07,120 --> 00:12:09,920
the street to a competitor to 
negotiate a raise. 

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00:12:10,080 --> 00:12:15,320
He just needs to switch his 
focus from Tesla to SpaceX, XAI 

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00:12:15,320 --> 00:12:19,600
or Twitter, which he calls X, or
that brain implant company that 

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00:12:19,600 --> 00:12:22,880
kills monkeys and a variety of 
other animals. 

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00:12:23,320 --> 00:12:27,880
With Tesla's NVIDIA chips having
been diverted to XAI, the 

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00:12:27,880 --> 00:12:31,400
boundaries between his companies
are blurring fast. 

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00:12:31,960 --> 00:12:35,600
Tesla's decision to 
reincorporate in Texas away from

189
00:12:35,600 --> 00:12:39,200
Delaware's more shareholder 
friendly courts underscores the 

190
00:12:39,200 --> 00:12:43,240
board's willingness to reshape 
legal frameworks to accommodate 

191
00:12:43,360 --> 00:12:45,640
Elon Musk's compensation 
demands. 

192
00:12:45,960 --> 00:12:49,920
As Matt Levine pointed out 
earlier this week, this move was

193
00:12:49,920 --> 00:12:53,360
not just symbolic. 
It was strategic, designed to 

194
00:12:53,360 --> 00:12:57,640
avoid the Delaware courts that 
invalidated Musk's 2018 pay 

195
00:12:57,640 --> 00:13:00,960
package due to conflicts of 
interest on the board and 

196
00:13:00,960 --> 00:13:03,280
inadequate shareholder 
disclosures. 

197
00:13:04,040 --> 00:13:07,760
Levine points out that the 
funniest part of Tesla's filing 

198
00:13:07,960 --> 00:13:10,800
is their section on accounting 
consequences. 

199
00:13:11,080 --> 00:13:14,320
And let's be serious, it's rare 
to ever describe something 

200
00:13:14,320 --> 00:13:17,720
labeled accounting consequences 
as being funny. 

201
00:13:17,960 --> 00:13:21,680
But according to Tesla, they 
don't have to recognize any 

202
00:13:21,680 --> 00:13:25,800
compensation expense when they 
issue Elon Musk the largest pay 

203
00:13:25,800 --> 00:13:30,000
package in history because 
there's a performance condition 

204
00:13:30,000 --> 00:13:33,960
attached to receiving the award 
and they're claiming that there 

205
00:13:34,040 --> 00:13:37,960
there is essentially no chance 
of Musk ever getting the shares.

206
00:13:38,120 --> 00:13:41,520
Thus they can value the 
compensation package at 0. 

207
00:13:42,160 --> 00:13:46,040
This is a bit of a weird claim 
as the new options are meant to 

208
00:13:46,040 --> 00:13:50,520
replace the 2018 options and 
there are no operational or 

209
00:13:50,520 --> 00:13:53,680
financial targets tied to the 
payout whatsoever. 

210
00:13:53,920 --> 00:13:57,560
The stock price doesn't have to 
rise, no extra cars have to be 

211
00:13:57,560 --> 00:14:01,120
sold, they don't have to get 
their robo taxis working or 

212
00:14:01,120 --> 00:14:03,960
achieve AGI. 
The only thing that Musk 

213
00:14:04,160 --> 00:14:08,680
actually has to do to get the 
award is to serve continuously 

214
00:14:08,680 --> 00:14:12,520
in a senior leadership role at 
Tesla during the two year 

215
00:14:12,520 --> 00:14:16,160
vesting term. 
There are no requirements other 

216
00:14:16,160 --> 00:14:19,120
than that he can't quit. 
He doesn't have to devote any 

217
00:14:19,120 --> 00:14:21,320
fixed portion of his time to the
company. 

218
00:14:21,520 --> 00:14:25,160
In fact, his presence can be 
entirely symbolic. 

219
00:14:25,280 --> 00:14:27,720
He just can't announce that he's
leaving. 

220
00:14:28,600 --> 00:14:31,680
So do they really think that 
there's no chance that he'll 

221
00:14:31,680 --> 00:14:35,880
stick around for two more years?
Well, Levine points out that the

222
00:14:35,880 --> 00:14:39,000
other condition tied to the 
award is that it'll be 

223
00:14:39,000 --> 00:14:42,480
immediately forfeited and 
returned to the company if, 

224
00:14:42,720 --> 00:14:45,960
prior to vesting, there's a 
final judgement order or 

225
00:14:45,960 --> 00:14:50,040
decision of the Delaware court 
with respect to Tornado versus 

226
00:14:50,040 --> 00:14:54,960
Elon Musk, that results in Musk 
being able to exercise in full 

227
00:14:55,120 --> 00:14:58,200
the performance based stock 
option award he was granted in 

228
00:14:58,200 --> 00:15:02,160
January 2018. 
So they either think that 

229
00:15:02,160 --> 00:15:05,520
there's no chance that the 
Delaware judgment is not going 

230
00:15:05,520 --> 00:15:09,400
to be overturned upon appeal, or
they think that there's no 

231
00:15:09,400 --> 00:15:12,520
chance that Musk stays on for 
two more years. 

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00:15:13,360 --> 00:15:16,520
This accounting treatment of the
world's largest corporate pay 

233
00:15:16,520 --> 00:15:20,840
package in history has drawn 
sharp criticism from corporate 

234
00:15:20,840 --> 00:15:25,080
governance specialists and 
accounting experts, who argue 

235
00:15:25,240 --> 00:15:28,880
that the company's assertion 
lacks independent accounting 

236
00:15:28,880 --> 00:15:32,480
validation and may be misleading
to shareholders. 

237
00:15:32,840 --> 00:15:36,680
A Columbia Business School paper
from last year estimated that 

238
00:15:36,680 --> 00:15:40,960
reinstating the original award 
or issuing a similar one should 

239
00:15:40,960 --> 00:15:45,840
trigger an accounting charge of 
20, 25 to $51 billion. 

240
00:15:46,240 --> 00:15:50,600
These critiques suggest the 
Tesla's board may be downplaying

241
00:15:50,600 --> 00:15:54,720
the financial impact of Musk's 
compensation, which raises 

242
00:15:54,720 --> 00:15:57,880
deeper concerns about the 
company's transparency and 

243
00:15:57,880 --> 00:16:01,840
governance. 
The behavior of Tesla's board is

244
00:16:01,840 --> 00:16:05,840
emblematic of a broader crisis 
in corporate governance, which 

245
00:16:05,840 --> 00:16:10,080
The Economist recently described
as the fecklessness of American 

246
00:16:10,080 --> 00:16:13,080
boards. 
They argue that directors are 

247
00:16:13,080 --> 00:16:17,440
often either too beholden to 
imperial CE OS like Elon Musk, 

248
00:16:17,680 --> 00:16:20,440
or too disengaged to challenge 
them. 

249
00:16:21,160 --> 00:16:25,680
In the article, they say that 
Intel and Tesla represent two 

250
00:16:25,680 --> 00:16:28,960
ways in which boards fail in 
their duty to represent 

251
00:16:28,960 --> 00:16:31,880
investors and hold management to
account. 

252
00:16:32,240 --> 00:16:35,880
At companies like Tesla, 
directors find themselves at the

253
00:16:35,880 --> 00:16:39,680
mercy of a domineering figure 
and have a powerful incentive to

254
00:16:39,680 --> 00:16:43,800
humor that person's whims, even 
if it might mean ignoring their 

255
00:16:43,800 --> 00:16:46,480
fiduciary obligations to 
shareholders. 

256
00:16:47,040 --> 00:16:50,800
Equally, they say that at firms 
like Intel, thoroughly 

257
00:16:50,800 --> 00:16:55,480
independent directors may lack 
enough of an incentive to care. 

258
00:16:55,960 --> 00:16:59,560
Either way, the result looks 
like feckless passivity. 

259
00:17:00,280 --> 00:17:04,079
Tesla's internal turbulence is 
not limited to its boardroom 

260
00:17:04,079 --> 00:17:07,160
decisions. 
It's increasingly reflected in 

261
00:17:07,160 --> 00:17:10,760
the exodus of top talent and 
insider stock sales. 

262
00:17:11,040 --> 00:17:14,880
According to Mint, over the last
year at least 15 senior 

263
00:17:14,880 --> 00:17:17,920
executives across Musk's 
companies have resigned, 

264
00:17:18,119 --> 00:17:21,640
including Tesla's head of 
battery architecture, the 

265
00:17:21,640 --> 00:17:26,079
director of HR, and the leader 
of its humanoid robot program. 

266
00:17:26,640 --> 00:17:30,640
These departures suggest more 
than routine turnover, they 

267
00:17:30,640 --> 00:17:34,320
point to a growing unease with 
Musk's leadership and the 

268
00:17:34,320 --> 00:17:36,400
strategic direction of the 
company. 

269
00:17:36,680 --> 00:17:41,040
Meanwhile, Tesla board members 
have been quietly cashing out. 

270
00:17:41,520 --> 00:17:47,000
Robin Denholm, the board chair, 
has sold over $117 million worth

271
00:17:47,000 --> 00:17:51,680
of shares this year alone, while
other insiders including Musk's 

272
00:17:51,680 --> 00:17:55,600
brother Kimball and long time 
ally James Murdoch have 

273
00:17:55,640 --> 00:17:58,040
offloaded 10 10s of 1,000,000 
more. 

274
00:17:58,280 --> 00:18:02,080
Though some of these sales were 
pre arranged, their timing amid 

275
00:18:02,080 --> 00:18:06,040
falling sales lawsuits and 
reputational damage sends a 

276
00:18:06,040 --> 00:18:10,040
clear signal that those closest 
to Tesla's leadership are 

277
00:18:10,040 --> 00:18:13,120
hedging their bets. 
As University of Florida 

278
00:18:13,120 --> 00:18:17,000
professor Jay Ritter put it, 
whenever insiders, including 

279
00:18:17,000 --> 00:18:20,840
directors, are selling shares, 
it's not a positive signal. 

280
00:18:21,320 --> 00:18:25,480
Musk's simultaneous leadership 
of multiple ventures, including 

281
00:18:25,480 --> 00:18:31,160
Tesla, SpaceX, Neuralink, X 
Corp, and now X AI, raises 

282
00:18:31,160 --> 00:18:34,760
serious questions about divided 
attention and resource 

283
00:18:34,760 --> 00:18:37,840
allocation. 
Well, Tesla has long marketed 

284
00:18:37,840 --> 00:18:42,760
itself as an AI company. 
Musk's decision to launch XAI as

285
00:18:42,760 --> 00:18:47,280
a separate venture, reportedly 
diverting hard to acquire NVIDIA

286
00:18:47,280 --> 00:18:52,120
chips and talent from Tesla, 
suggests a conflict of interest.

287
00:18:52,800 --> 00:18:56,520
Investors who have been claiming
for some time that Tesla is an 

288
00:18:56,560 --> 00:19:01,280
AI company are left wondering 
whether Tesla's AI ambitions are

289
00:19:01,280 --> 00:19:04,560
being sidelined in favor of 
Musk's newer ventures. 

290
00:19:05,160 --> 00:19:08,280
By going along without setting 
any boundaries or being 

291
00:19:08,280 --> 00:19:12,560
transparent, the board shows 
that it's not really in charge. 

292
00:19:13,040 --> 00:19:16,840
Tesla is facing a long list of 
headwinds that threaten its 

293
00:19:16,840 --> 00:19:20,280
profitability, reputation, and 
long term growth. 

294
00:19:20,680 --> 00:19:24,280
Donald Trump's cancellation of 
EV and renewable energy 

295
00:19:24,280 --> 00:19:28,560
incentives has stripped Tesla of
billions in regulatory credit 

296
00:19:28,560 --> 00:19:31,440
revenue. 
He has also added hundreds of 

297
00:19:31,440 --> 00:19:35,280
millions of dollars in tariff 
related costs to the company. 

298
00:19:35,800 --> 00:19:40,120
Elon Musk warned of rough 
quarters ahead earlier this year

299
00:19:40,320 --> 00:19:43,560
as the company struggled to 
deliver vehicles before 

300
00:19:43,560 --> 00:19:48,760
incentives expired, and it faces
uncertainty over future demand. 

301
00:19:49,640 --> 00:19:54,400
Tesla's aging model line up and 
decision to abandon a lower cost

302
00:19:54,400 --> 00:19:59,000
model too in favor of robo 
taxis, which in no way appear to

303
00:19:59,000 --> 00:20:02,440
be functional and humanoid 
robots for which there's 

304
00:20:02,440 --> 00:20:06,280
questionable demand, have left 
it extremely vulnerable to 

305
00:20:06,280 --> 00:20:09,720
competition from both 
traditional automakers and 

306
00:20:09,720 --> 00:20:14,680
aggressive Chinese entrants. 
As the Economist note, Tesla has

307
00:20:14,680 --> 00:20:19,000
become a reluctant car maker, 
relying heavily on just two 

308
00:20:19,000 --> 00:20:22,640
models while rivals offer 
broader portfolios. 

309
00:20:23,040 --> 00:20:26,880
Musk's political entanglements 
and erratic leadership have 

310
00:20:26,880 --> 00:20:31,560
further alienated customers, 
with protests, vandalism and 

311
00:20:31,560 --> 00:20:36,160
even anti Musk bumper stickers 
becoming symbols of discontent. 

312
00:20:36,680 --> 00:20:41,200
The company's valuation, once 
buoyed by Musk's Pixie dust, now

313
00:20:41,200 --> 00:20:44,400
looks increasingly detached from
fundamentals. 

314
00:20:45,080 --> 00:20:48,840
How many quarters of slowing 
growth are needed for investors 

315
00:20:48,840 --> 00:20:51,880
to notice that it's not really a
growth stock? 

316
00:20:52,760 --> 00:20:55,840
Tesla's troubles are not 
occurring in a vacuum. 

317
00:20:56,160 --> 00:20:59,680
Around the world, governments 
are reassessing the cost and 

318
00:20:59,680 --> 00:21:04,680
pace of their green transitions.
In Britain, soaring energy bills

319
00:21:04,760 --> 00:21:08,400
have shattered the One Solid Net
0 consensus. 

320
00:21:08,800 --> 00:21:13,560
While gas prices remain a major 
driver, the cost of upgrading 

321
00:21:13,560 --> 00:21:17,520
the electricity grid, new 
pylons, wires and balancing 

322
00:21:17,520 --> 00:21:21,280
mechanisms to accommodate 
renewables are increasingly 

323
00:21:21,280 --> 00:21:23,960
showing up in household 
electricity bills. 

324
00:21:24,640 --> 00:21:28,800
According to The Economist, 
these network and subsidy costs 

325
00:21:28,920 --> 00:21:33,080
have contributed nearly 2/3 as 
much to the rise in real 

326
00:21:33,080 --> 00:21:38,240
electricity prices as wholesale 
energy costs have since 2019. 

327
00:21:38,760 --> 00:21:42,840
Across Europe, even centrist 
leaders are beginning to echo 

328
00:21:42,840 --> 00:21:47,240
hard right Net 0 skepticism, 
questioning whether climate 

329
00:21:47,240 --> 00:21:49,520
action is worth the economic 
pain. 

330
00:21:50,240 --> 00:21:53,920
For Tesla, this shift is deeply 
consequential. 

331
00:21:54,120 --> 00:21:57,320
The company has long benefited 
from generous subsidies, 

332
00:21:57,520 --> 00:22:01,000
regulatory credits, and the 
political environment that 

333
00:22:01,000 --> 00:22:04,920
incentivized electrification. 
But as the Financial Times 

334
00:22:04,920 --> 00:22:09,520
reports, Donald Trump's rollback
of EV incentives and emissions 

335
00:22:09,520 --> 00:22:13,640
penalties has already slashed 
Tesla's revenue and added 

336
00:22:13,640 --> 00:22:16,640
hundreds of millions in tariff 
related costs. 

337
00:22:17,280 --> 00:22:21,520
If the global mood continues to 
sour on green investment, Tesla 

338
00:22:21,520 --> 00:22:24,920
may find itself not only 
battling competitors and 

339
00:22:24,920 --> 00:22:29,640
internal dysfunction, but also a
shrinking policy tailwind that 

340
00:22:29,640 --> 00:22:34,360
wouldn't help justify its lofty 
valuation, according to the LA 

341
00:22:34,360 --> 00:22:36,920
Times. 
At the heart of Tesla's current 

342
00:22:36,920 --> 00:22:40,800
legal and reputational 
challenges lies a simple but 

343
00:22:40,800 --> 00:22:44,680
consequential question. 
Can Elon Musk be trusted? 

344
00:22:45,200 --> 00:22:49,120
His tendency to exaggerate, 
whether about autopilot, full 

345
00:22:49,120 --> 00:22:53,680
self driving or the timeline for
robo taxis, has drawn increasing

346
00:22:53,680 --> 00:22:57,240
scrutiny from regulators, courts
and consumers. 

347
00:22:57,560 --> 00:23:00,920
Some of his more ridiculous 
ideas, like the Hyperloop, have 

348
00:23:00,920 --> 00:23:05,400
been quietly abandoned. 
Simultaneously, in California, 

349
00:23:05,640 --> 00:23:09,160
the state's Department of Motor 
Vehicles is arguing that Tesla 

350
00:23:09,160 --> 00:23:13,240
misled consumers by branding its
features as Autopilot and Full 

351
00:23:13,240 --> 00:23:16,240
Self Driving, despite their 
limitations. 

352
00:23:16,760 --> 00:23:21,120
Musk has been warned by federal 
regulators to stop making public

353
00:23:21,120 --> 00:23:24,920
statements that overstate the 
capabilities of these systems, 

354
00:23:25,080 --> 00:23:29,960
yet he continues to do so. 
With Tesla's safety reputation 

355
00:23:29,960 --> 00:23:34,360
under fire and punitive damage 
is looming, the issue of Musk's 

356
00:23:34,360 --> 00:23:37,600
credibility is no longer just a 
matter of style. 

357
00:23:37,760 --> 00:23:40,760
It's a material risk to the 
company's future. 

358
00:23:41,480 --> 00:23:45,640
Tesla's robo taxi ambitions have
long been a pillar of Elon 

359
00:23:45,640 --> 00:23:49,400
Musk's growth narrative, but 
they now sit at the center of a 

360
00:23:49,400 --> 00:23:52,840
deepening crisis of governance 
and investor trust. 

361
00:23:53,720 --> 00:23:57,880
Elon Musk first introduced the 
idea that Tesla vehicles could 

362
00:23:57,880 --> 00:24:02,480
operate as autonomous robo taxis
when not in use by their owners 

363
00:24:02,480 --> 00:24:06,080
in 2016. 
On what he dubbed Autonomy Day 

364
00:24:06,080 --> 00:24:11,120
in 2019, he claimed that Tesla 
would have 1,000,000 robo taxis 

365
00:24:11,120 --> 00:24:16,040
on the road next year enabled 
through an Over the Air update. 

366
00:24:16,480 --> 00:24:20,480
His 2019 claim that his cars 
would soon be able to earn more 

367
00:24:20,480 --> 00:24:24,000
for their owners than they cost 
in a year, and that they would 

368
00:24:24,000 --> 00:24:28,000
be appreciating assets is what 
first set the stock price on 

369
00:24:28,000 --> 00:24:31,440
fire. 
The claim that full autonomous 

370
00:24:31,440 --> 00:24:35,640
driving was coming next year was
repeated annually, helping to 

371
00:24:35,640 --> 00:24:39,560
sustain Tesla's tech stock like 
valuation, despite the 

372
00:24:39,560 --> 00:24:42,480
technology never working as 
described. 

373
00:24:42,800 --> 00:24:48,200
Central to the robotaxi story 
was a 2016 promotional video set

374
00:24:48,200 --> 00:24:51,880
to the Rolling Stone song 
painted black, which purported 

375
00:24:51,880 --> 00:24:56,080
to show a Tesla driving itself. 
The video claimed that the 

376
00:24:56,080 --> 00:24:59,800
person sitting in the driver's 
seat was only there for legal 

377
00:24:59,800 --> 00:25:03,600
reasons, that he wasn't doing 
anything, and that the car was 

378
00:25:03,600 --> 00:25:06,840
driving itself. 
It turns out that he might have 

379
00:25:06,840 --> 00:25:10,800
been acting as a crash test 
dummy, as former employees have 

380
00:25:10,800 --> 00:25:14,880
since testified that the video 
was faked, the route was pre 

381
00:25:14,880 --> 00:25:19,320
mapped, drivers intervened 
repeatedly, and the car crashed 

382
00:25:19,320 --> 00:25:22,400
off camera. 
Tesla is now facing a 

383
00:25:22,400 --> 00:25:26,920
shareholder lawsuit alleging 
securities fraud, accusing MASK 

384
00:25:26,960 --> 00:25:31,280
and the company of concealing 
testing data and overstating the

385
00:25:31,280 --> 00:25:33,560
safety of its autonomous 
technology. 

386
00:25:33,960 --> 00:25:38,440
The suit follows a failed public
robo taxi test in Austin, where 

387
00:25:38,440 --> 00:25:42,520
vehicles were seen speeding, 
braking erratically and dropping

388
00:25:42,520 --> 00:25:48,400
passengers in unsafe locations. 
This event wiped $68 billion off

389
00:25:48,400 --> 00:25:51,480
Tesla's market cap in just two 
days. 

390
00:25:52,320 --> 00:25:55,800
Regulators appear to be 
circling, courts are weighing 

391
00:25:55,800 --> 00:25:59,880
liability, and the gap between 
Musk's promises and Tesla's 

392
00:25:59,880 --> 00:26:03,280
capabilities is no longer just a
technical issue. 

393
00:26:03,480 --> 00:26:07,400
It's a legal and financial 
reckoning For a board already 

394
00:26:07,400 --> 00:26:10,720
criticized for its passivity and
entanglements. 

395
00:26:10,920 --> 00:26:15,280
The robotaxi saga is a case 
study in the cost of unchanged 

396
00:26:15,360 --> 00:26:19,240
tech leadership and the erosion 
of shareholder confidence. 

397
00:26:19,640 --> 00:26:24,040
Tesla's pivot towards robo taxis
is not just a technological 

398
00:26:24,040 --> 00:26:26,720
gamble, it's a strategic 
lifeline. 

399
00:26:26,920 --> 00:26:30,880
With their sales declining and 
their car line up aging, Elon 

400
00:26:30,880 --> 00:26:34,480
Musk has staked the company's 
future on autonomous ride 

401
00:26:34,480 --> 00:26:37,320
hailing. 
He once again is promising that 

402
00:26:37,320 --> 00:26:41,240
thousands of cyber cabs devoid 
of steering wheels or pedals 

403
00:26:41,400 --> 00:26:44,200
will be on US roads by next 
year. 

404
00:26:44,720 --> 00:26:48,800
The problem is that Tesla's Full
Self Driving system remains a 

405
00:26:48,800 --> 00:26:53,040
Level 2 technology requiring 
constant driver oversight. 

406
00:26:53,240 --> 00:26:57,160
It has fallen far behind rivals 
like Waymo and Zoox, which 

407
00:26:57,160 --> 00:27:02,200
operate Level 4 vehicles. 
Safety concerns are mounting. 

408
00:27:02,480 --> 00:27:07,880
Tesla was recently ordered to 
pay $243,000,000 in damages over

409
00:27:07,880 --> 00:27:11,640
a fatal crash involving 
Autopilot, and federal data 

410
00:27:11,640 --> 00:27:16,120
contradicts Musk's public claims
that no self driving Tesla has 

411
00:27:16,120 --> 00:27:18,920
ever crashed. 
Trials in Austin and San 

412
00:27:18,920 --> 00:27:23,440
Francisco have faced regulatory 
hurdles and Tesla has yet to 

413
00:27:23,440 --> 00:27:26,720
apply for permits for a fully 
autonomous service. 

414
00:27:27,480 --> 00:27:32,000
Unlike competitors who have 
invested in costly sensor suites

415
00:27:32,120 --> 00:27:36,400
and purpose built vehicles, 
Tesla relies solely on cameras 

416
00:27:36,600 --> 00:27:41,080
and plans to Crowdsource it's 
fleet by an Airbnb style model 

417
00:27:41,200 --> 00:27:45,040
from Tesla owners who presumably
are happy to have their car 

418
00:27:45,240 --> 00:27:48,880
return after a busy night out 
smelling like a phone booth. 

419
00:27:49,440 --> 00:27:53,240
Uber, who have flirted with the 
idea of robo taxis for years, is

420
00:27:53,240 --> 00:27:57,360
hedging its bets by partnering 
with multiple autonomous vehicle

421
00:27:57,360 --> 00:28:00,320
firms including Waymo and We 
Ride. 

422
00:28:00,640 --> 00:28:04,120
Tesla, on the other hand, is 
planning on going it alone. 

423
00:28:04,520 --> 00:28:08,080
As The Economist note, the 
regulatory landscape for 

424
00:28:08,080 --> 00:28:11,720
autonomous vehicles is 
fragmented, public trust is 

425
00:28:11,720 --> 00:28:15,240
fragile, and profitability 
remains elusive. 

426
00:28:15,600 --> 00:28:19,120
Unless Tesla can quickly prove 
its technology is safe, 

427
00:28:19,440 --> 00:28:23,720
scalable, and commercially 
viable, it's robo taxi dream may

428
00:28:23,720 --> 00:28:28,680
remain just that, a dream. 
Despite declining sales, legal 

429
00:28:28,680 --> 00:28:32,680
setbacks, and governance 
concerns, Tesla stock has shown 

430
00:28:32,680 --> 00:28:35,800
surprising resilience. 
While it's underperformed the 

431
00:28:35,800 --> 00:28:39,320
stock market year to date, it 
remains one of the better 

432
00:28:39,320 --> 00:28:43,080
performing Magnificent 7 stocks 
on a one year basis. 

433
00:28:43,640 --> 00:28:46,680
As Robert Armstrong noted in a 
recent column about the 

434
00:28:46,680 --> 00:28:50,880
Magnificent 7, the market's 
message has been quite simple. 

435
00:28:51,120 --> 00:28:53,400
Gross sales and the stock goes 
up. 

436
00:28:53,760 --> 00:28:56,960
Tesla's problem, he points out, 
is that it hasn't. 

437
00:28:57,560 --> 00:29:00,840
Revenue growth has stalled, 
deliveries are down, and it's 

438
00:29:00,840 --> 00:29:04,520
core lineup is aging. 
Yet the stock continues to trade

439
00:29:04,720 --> 00:29:10,200
a tech like multiples over 95 
times estimated 2025 earnings 

440
00:29:10,440 --> 00:29:14,920
because investors remain fixated
on Elon Musk's promises of 

441
00:29:14,920 --> 00:29:20,520
future growth, particularly 
around robo taxis, robo robots, 

442
00:29:20,720 --> 00:29:24,200
and AI. 
These narratives have helped 

443
00:29:24,200 --> 00:29:28,560
sustain Tesla's valuation even 
as its fundamentals weaken. 

444
00:29:28,880 --> 00:29:32,680
The company's promotional 
tactics, including the painted 

445
00:29:32,680 --> 00:29:36,960
black video that misrepresented 
full Self driving capabilities, 

446
00:29:37,080 --> 00:29:40,280
have blurred the line between 
innovation and hype. 

447
00:29:40,600 --> 00:29:44,440
With lawsuits alleging 
securities fraud and regulators 

448
00:29:44,440 --> 00:29:48,200
scrutinizing safety claims, the 
question is no longer just 

449
00:29:48,200 --> 00:29:51,840
whether Tesla can grow, but 
whether it can be trusted at 

450
00:29:51,840 --> 00:29:54,640
all. 
For now, the market seems 

451
00:29:54,640 --> 00:29:58,480
willing to suspend disbelief. 
But as Armstrong's analysis 

452
00:29:58,480 --> 00:30:03,200
suggests, without real sales 
growth, even the most compelling

453
00:30:03,200 --> 00:30:05,680
story eventually loses its 
power. 

454
00:30:06,120 --> 00:30:10,280
Tesla's story is no longer just 
about the technology products 

455
00:30:10,280 --> 00:30:12,760
that it insists are coming next 
year. 

456
00:30:13,000 --> 00:30:16,560
It's about governance, trust and
the durability of belief. 

457
00:30:17,120 --> 00:30:21,160
Sales are declining, lawsuits 
are mounting and the robo taxi 

458
00:30:21,160 --> 00:30:25,920
dream remains elusive. 
Teslas valuation doesn't respond

459
00:30:25,920 --> 00:30:31,000
to earnings or delivery numbers.
It responds to Musk spell over a

460
00:30:31,000 --> 00:30:35,800
group of passionate investors. 
That spell has been reinforced 

461
00:30:35,840 --> 00:30:40,480
by years of government support, 
from Obama era loans to Trump 

462
00:30:40,480 --> 00:30:45,160
era tax credits, and it now 
faces real tests as political 

463
00:30:45,160 --> 00:30:49,320
alliances fray and regulatory 
scrutiny intensifies. 

464
00:30:49,800 --> 00:30:53,920
The shareholder lawsuits and the
recent verdict in Florida all 

465
00:30:53,920 --> 00:30:57,560
point to a widening gap between 
promise and reality. 

466
00:30:58,000 --> 00:31:02,000
Tesla may still be considered a 
growth company by some, but the 

467
00:31:02,000 --> 00:31:05,120
growth now lies in narrative, 
not numbers. 

468
00:31:05,320 --> 00:31:09,120
Whether that narrative can 
survive further erosion of trust

469
00:31:09,240 --> 00:31:13,640
among regulators, investors, and
the public is the question that 

470
00:31:13,640 --> 00:31:16,000
will define Tesla's next 
chapter. 

471
00:31:16,600 --> 00:31:19,240
Thanks again for tuning into 
this week's podcast. 

472
00:31:19,400 --> 00:31:23,400
The podcast is entirely funded 
by donations from viewers like 

473
00:31:23,400 --> 00:31:26,800
you on Patreon, and there's no 
minimum donation. 

474
00:31:27,000 --> 00:31:29,960
If you'd like to support the 
podcast, there's a link in the 

475
00:31:29,960 --> 00:31:32,360
show notes. 
Have a great week and talk to 

476
00:31:32,360 --> 00:31:33,680
you again soon. 
Bye.