No Mercy / No Malice: Tesla WTF

As read by George Hahn. https://www.profgalloway.com/tesla-wtf/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:19Speaker 02

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• 1:49Scott Galloway?

  I'm Scott Galloway, and this is No Mercy, No Malice. Tesla's RoboTaxi event was a head fake to justify a ridiculous valuation. It didn't work. Tesla, what the fuck? As read by George Haan.

• 2:11George Hahn?

  The most impressive and unimpressive product displays of 2024 occurred last week, from companies headed by the same person. The largest booster rocket ever assembled was called back to terra by gravity. Then, as it approached the Earth's surface, engines ignited that navigated the projectile into a metal cradle. SpaceX's 20-story booster rocket catch was nothing short of remarkable. But four days before, analysts were summoned to a product launch that, essentially, didn't happen. I know a woman who was engaged to a celebrity chef who, after 300 guests had assembled

• 2:55George Hahn?

  at a Caribbean resort, was a no-show, no-joke at their wedding. Tesla's Cybercab was a no-show at its premiere. Specifically, there were no details that gave any analyst or onlooker much insight into the product or any idea when the rubber will meet the road. Why was the Cybercab a no-show? In the past two years, CEOs have added trillions to their business's valuations with two letters: A.I. Over the last decade, Tesla has sustained its position as the world's most valuable car company with a one-word claim: autonomous.

• 3:36George Hahn?

  Tesla's WeRobot event was a head fake that didn't fool the market, which promptly trimmed $60 billion from the company's market cap. At its peak in 2019, WeWork was valued at $47 billion. Four years later, the coworking company was worth $44 million. In between those two valuations, investors rejected Adam Newman's narrative that the business was a tech company and came to see WeWork for what it was: a poorly-run real estate play. Tesla is a great company with positive cash flows.

• 4:18George Hahn?

  However, like Adam Newman, Musk keeps spewing adjectives and embellishments that have worn thin.

• 4:27George Hahn?

  In April, Tesla's operating profit dropped 50%. This should have sent the stock down, but Musk pulled off another midair catch. On the earnings call, he said, quote, "We should be thought of as an AI robotics company. If you value Tesla as just an auto company, it's just the wrong framework," unquote. Then he added, quote, "If somebody doesn't believe that Tesla is going to solve autonomy, I think they should not be an investor in the company," unquote. The stock rose 14%. Spoiler alert: Tesla is a car company.

• 5:09George Hahn?

  Automotive is Tesla's core business, accounting for 94% of last year's revenue. There is a dangerous belief in the US that if you repeat a lie long enough, it will become less of a lie. The election wasn't stolen, and Tesla is not a software slash energy slash AI slash autonomous firm, but a great car company that is wildly overvalued. Note: not financial advice. I consistently get it wrong on Tesla. I used to own a Tesla Falcon Model X. It's a great car from a great brand. Early adopters signaled to the world that they cared about the environment and were

• 5:52George Hahn?

  rich, which is a feature that commands margin, being more desirable to potential mates or less undesirable. At the moment, however, hybrids appear to be the bridge to a future thought to be electric. Internal combustion autos still account for 81% of new car sales in the US, and hybrids are selling five times faster than EVs in 2024.

• 6:20George Hahn?

  Range anxiety and charging concerns are limiting EV sales. One consumer survey found that 80% of those considering an EV for their next car believe the current charging availability is insufficient, while 70% of current EV owners say they're dissatisfied with the current infrastructure. That's bad news for the EV brand, but potentially good news for Tesla as its charging infrastructure is excellent. However, Musk's plan to make Tesla charging the industry standard and open its charging stations to all EVs have not materialized. Another significant factor is price,

• 7:02George Hahn?

  as hybrids in the US on average cost $14,884 less than EVs. As EVs attempt to expand beyond early adopters to the mass market, price becomes more important as the middle of the pyramid is much more price-conscious. For the first time since the pandemic, Tesla saw its sales drop 13% in the first quarter and 9% in the second. Sales rebounded 9% in the third quarter, but the news across the EV sector suggests the category is slowing. Ford is scaling back its EV rollout.

• 7:44George Hahn?

  General Motors is delaying its electric truck and reducing investments in EV battery mining. Volvo is walking back its 2030 all-electric target. The EV revolution isn't over, but Toyota CEO Akio Toyoda was right about its pace. Toyota bet on hybrids, and this year, that paid off with a 66% jump in US hybrid sales.

• 8:15George Hahn?

  In China, though, EVs will account for 45% of new car sales this year. A growing EV pie is good news for a pure-play EV company. But BYD, the number-one Chinese EV manufacturer, offers cars at considerably lower prices than Tesla. The BYD Seagull sells for $9,700, and the Yuan Plus costs $16,600. A Tesla Model 3 starts at $34,000, and the Model Y costs $37,000.

• 8:55George Hahn?

  China also has 200 domestic EV manufacturers fighting for the EV iron throne. The CCP has made clear that it intends to win the EV future via competition. The main attraction at Tesla's We Robot event was supposed to be the Cybercab, a two-seat, fully-autonomous vehicle that's long been central to justifying Tesla's gravity-defying valuation. Unlike the Cybertruck, which looks like John Delorean dropped acid with Homer Simpson and designed a life-size version of the vehicle from the '80s arcade game Moon Patrol—Google it— the Cybercab actually looks cool.

• 9:38George Hahn?

  Supposedly, it'll enter production by 2026, or, as Musk jokes, "before 2027." The Cybercab will sell for under $30,000, but Musk didn't offer any details as "financials are a buzzkill." Also, we have no idea whether the self-driving technology will meet regulatory safety standards. Recently, there was news that the main U.S. auto safety regulator said it was investigating Tesla's self-driving system, Latin for "this tech is not ready for prime time." But don't worry. For the past decade, Musk has been predicting that autonomous driving is just around the corner.

• 10:23George Hahn?

  Meanwhile, back on Earth, Tesla has only achieved Level 2 autonomy. A driver is still required. The Waymo self-driving taxi, which looks like a science fair project, has Level 4 autonomy, no driver needed, and is already providing 100,000 paid rides per week in Austin, Los Angeles, Phoenix, and San Francisco. Unlike Tesla, which is trying to go vertical, Waymo wants to be the OS for autonomous driving. The company is working with multiple auto manufacturers, including Fiat Chrysler, Hyundai, and Volvo. My prediction?

• 11:06George Hahn?

  Waymo's tech, coupled with several brands at different price points, will bring autonomous to the masses, not Tesla. In LA last week, I experienced my first Waymo ride. It drives just how I'm hoping my 17-year-old drives: overly cautious. However, when we encountered an accident with flares, cones, and a cop with a luminant baton redirecting traffic into the wrong side of the road to pass the damaged vehicle, Waymo was intimidated. But it figured it out, which I found remarkable. The millions of unexpected data points collected, digested, and then acted on is staggering.

• 11:51George Hahn?

  Musk believes the cybercab is going to usher in a "glorious" future. Maybe his claim that entrepreneurs will manage a cybercab fleet like a shepherd tends their flock will become a reality. Maybe a future where cybercabs are constantly on the move will enable city planners to turn parking lots into parks. If that day comes, maybe Kathy Woods, who believes Tesla will create $8 trillion in enterprise value by 2029 as a robo-taxi business, will look like Warren Buffett. But at the moment, she appears to be the Tesla of hedge fund managers: over-promising and under-delivering with inane hyperbole.

• 12:38George Hahn?

  My pivot co-host Kara Swisher called the Tesla robo- van a "toaster on wheels." But Kara also drives a Kia Sorento, which puts an asterisk next to any view she might have on cars. My take: Despite Musk insisting that they will build it, the robo- van is a concept car that has almost no chance of ever being street legal. And Tesla knows this. But autonomous was a no-show at the wedding, and the bride, Musk, needed something to get everyone to look away from the embarrassing situation in front of them.

• 13:17George Hahn?

  Peter Drucker advised business leaders to focus on your opportunities, not your problems. And Musk is doing this. SpaceX is ascending. Tesla is falling to earth. This was obvious at the event, as Musk seemed unrehearsed, confused, and stumbled over his words. By the way, the most impressive person in tech you've likely never heard of is Gwynn Shotwell, COO of SpaceX. Musk pitched the Optimus robot as a personal R2-D2 or C3PO that can be a teacher, babysitter, dog walker, gardener, or companion. Quote, "Whatever you can think of, it will do."

• 14:02George Hahn?

  Well, I can think of it actually being a robot that has autonomous capabilities. At the event, Optimus robots served as bartenders and chatted with the crowd, which sounds amazing until you realize that they were controlled by human operators. Supposedly, the robots will cost somewhere between $20,000 and $30,000, human operator not included. That's $12,000 less than a new Tesla Model 3. But a Tesla is a product that solves a real problem, offering personal transportation without burning fossil fuel. Even if Optimus could do half the things Musk claims it can, who's gonna buy one?

• 14:46George Hahn?

  Tesla can't answer that question, but neither can Boston Dynamics. Their Atlas robot requires human oversight, just like Optimus. But after more than a decade of R&D and support from the Defense Department's DARPA program, Boston Dynamics still doesn't have a commercial strategy for Atlas, though it has produced some great YouTube videos. This entire category defines the concept of a technology in search of a use case. However, while it may never be able to watch your kids, Optimus did provide a purposeful distraction from the introduction of a product that is not ready and, once ready, will be

• 15:29George Hahn?

  inferior to products already in the market. Entrepreneur is a synonym for salesperson, and salesperson is the pedestrian term for storyteller. Pro tip: No startup makes sense. We entrepreneurs are all imposters who must deploy a fiction, a story, that captures the imagination and attracts capital to pull the future forward and turn rhyme into reason. No business I have started at the moment of inception made any sense until it did or didn't. The only way to predict the future is to make it.

• 16:13George Hahn?

  This is not the same as lying. There's a real distinction between an entrepreneur and a liar. Entrepreneurs believe their story will come true as they are laser-focused on making it true. A liar, well, they know they're misleading people with false data, usually for money, i.e. fraud. This is where Tesla turns gray. Here's what I see. In 2015, Tesla was two years away from a 1,000-kilometer range. A decade later, it's closer to 600 kilometers. In 2016, coast-to-coast autonomous driving was two years away.

• 16:55George Hahn?

  In 2019, Tesla said it would have 1 million self-driving cars that wouldn't require any human oversight on the road by mid-2020. Also in 2019, robo-taxis were one year away, until last week, when we were told robo-taxis were two years away.

• 17:17George Hahn?

  I believe this is the year the market looks at Tesla and sees what I see: A great car company that is a car company.

• 17:29Scott Galloway?

  Life is so rich.

• 17:44Speaker 02

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