Latest / Elon Musk Podcast / Gavin Newsom calls Musk "One of the great disappointments"

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Gavin Newsom calls Musk "One of the great disappointments" · Elon Musk Podcast

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  California Governor Gavin Newsom recently called Tesla CEO Elon
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  Musk one of the greatest disappointments of our time,
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  directly accusing him of handing the global electric vehicle
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  market over to China. Wow.
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  I mean, that is a really stark condemnation to just throw out
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  there publicly. But when you actually look at
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  the public friction going on, it represents this much larger
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  collision between state regulatory power and industrial
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  strategy. Right, and it's not just cars.
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  Exactly. It touches everything like
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  talking space launches, artificial intelligence and just
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  the core physical infrastructure of cities.
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  So when a leading industrialist and the regulatory apparatus of
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  the largest state go to war, what happens to the future of
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  domestic manufacturing and innovation?
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  To really get a handle on that, we have to look closely at the
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  automotive data right now. China's BYD recently overtook
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  Tesla as the world's top seller of battery electric vehicles.
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  Oh, wow. Yeah, they hit 2.6 million units
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  globally compared to Tesla's 1.63 million.
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  Wait, backup? Hasn't Tesla always dominated
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  the EV market? How did a Chinese company
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  suddenly take the crown? Well, it really comes down to
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  this really sharp strategic divergent between the two
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  companies. OK, BYD is basically flooding
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  the market with highly affordable models.
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  They have this car called the Seagull.
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  Right, I've heard of that. Yeah, and it's aimed squarely at
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  buyers who just want a budget friendly electric car for a
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  daily commute. They keep costs low through
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  extreme vertical integration, so they control their battery
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  manufacturing top to bottom. And Tesla is doing something
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  else entirely. Exactly.
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  Musk is actually sunsetting the production of the flagship Model
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  S and Model X. Wait, really?
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  Yeah, he's intentionally pivoting Tesla's focus toward
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  humanoid robots, specifically the Optimist bot and full
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  autonomous driving Which. You know, completely, explains
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  Newsom's reaction. How so?
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  Well, Newsom sees this pivot away from traditional cars as a
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  total unforced geopolitical error, right?
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  He genuinely views it as a national security threat, and
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  that's heavily exacerbated by the Federal Administration's
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  anti EV subsidy policies. Yeah, because when those federal
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  subsidies get cut or restricted, it creates extreme volatility.
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  You see a massive surge in buying right before the cutoff
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  date and then a really steep drop in sales immediately after.
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  That makes sense. So an unpredictable environment
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  like that makes high margin products like Advanced Robotics
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  look incredibly appealing to a company trying to manage risk.
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  Tesla is stepping back from making traditional cars, so
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  foreign competitors are stepping up.
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  That is the practical reality on the highway, yeah, but the
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  friction between these regulatory bodies and these
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  companies extends way beyond cars.
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  Right, because we also have the aerospace side of things.
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  The California Coastal Commission unanimously voted to
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  block SpaceX from expanding its Salkin 9 rocket launches at
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  Vandenberg Space Force Base. Wow.
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  Yeah, they wanted to go from 50 launches a year to 95.
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  Hold on, aren't these rockets being used by the military?
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  They are, yeah. SpaceX launches roughly half of
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  all national security space launch payloads for defense and
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  intelligence agencies. So how can a state Commission
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  block that? Well, the Commission argues that
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  SpaceX is operating as a private commercial business because they
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  are expanding their Starlink network.
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  So they're saying that subjects them to state coastal
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  development permits. They cited severe environmental
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  concerns over Sonic booms and the impact on marine life.
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  That just creates a huge legal mess.
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  It really does. And so now we have these
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  lawsuits to look at. SpaceX and the conservative
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  group Judicial Watch are suing the Commission.
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  They're claiming the regulatory block is just naked political
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  discrimination based on Musk's support for Donald Trump, right?
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  And the Commission's stated position is that their actions
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  are strictly about Environmental Protection.
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  Well, the consequence of that legal battle directly limits the
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  military's immediate ability to expand its launch cadence.
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  Yeah, totally. Because now they can't scale up
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  without navigating these incredibly complex, multilayered
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  state environmental reviews. That's huge bottleneck.
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  It is, and that profound tension between state oversight and
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  rapid tech expansion brings us to a completely different front.
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  Artificial intelligence. A federal court recently denied
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  XA is request to block a California AI transparency law.
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  OK, so think of this like forcing a famous chef to publish
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  the exact sourcing of every single ingredient in their
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  secret recipe. Yeah, that's a good way to look
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  at. It I mean, how can a tech
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  company protect its intellectual property if they have to reveal
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  exactly how their models are built?
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  Well, the court actually looked at the mechanics of that exact
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  argument, and the judge completely rejected the trade
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  secret defense. Really.
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  Why? Because XAI failed to prove
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  their training data sets were uniquely distinct from their
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  competitors. Got it.
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  They just couldn't show that their data was fundamentally
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  different and what everyone else is scraping off the Internet.
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  So what happens now? The consequence is that this
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  ruling forces developers to publicly disclose summaries of
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  their training data. Like whether they use
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  copyrighted material or personal data.
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  Exactly. It opens up tech companies to
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  intense public and regulatory scrutiny regarding the safety
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  and bias of their AI models. It completely shifts the burden
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  of proof onto the developers. Wow.
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  So in response to all these regulatory hurdles, Musk is
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  physically relocating his corporate empire.
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  He's moving the headquarters of X and SpaceX to Texas and just
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  pouring billions into new infrastructure projects.
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  Like the Terrafab project, which is this massive chip factory
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  joint venture between Tesla and SpaceX designed to produce
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  specialized processors for AI and robotics.
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  And that takes a lot of resources it.
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  Requires thousands of acres and just unprecedented power
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  consumption. And at the same time, Musk's
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  Boring Company is funding feasibility studies for
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  underground transit loops in places like Dallas, Baltimore
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  and New Orleans. Wait, New Orleans?
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  Yeah, building a subterranean transit tunnel in a city with a
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  famously high water table and soft soil that tests the
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  absolute limits of engineering. It definitely pushes the
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  boundaries. Residents there are highly
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  skeptical. I mean their question why
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  resources are going toward a sci-fi tunnel when basic surface
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  level water infrastructure is heavily struggling.
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  Which makes total sense, but this migration changes the
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  physical center of gravity for tech development.
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  They are heavily prioritizing deregulated environments for
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  hardware scaling right? To build bigger, they had to
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  find a place with fewer rules. Which brings up a really
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  fascinating contradiction. Yeah, it does.
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  Tesla is currently advancing a plan to build 100 gigawatts of
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  United States solar manufacturing capacity by 2028.
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  Let me get this straight. We are worried about foreign
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  dominance in electric vehicles, but we are buying the actual
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  factory equipment from overseas to build American solar panels.
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  Yeah, yeah. That is the mechanical reality
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  of the supply chain right now. Tesla is in active talks to
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  purchase billions of dollars worth of screen printing
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  production lines from Chinese firms.
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  Like Suzu Maxwell technology. Exactly because you need those
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  specific, highly specialized machines to apply conductive
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  paste to silicon wafers. Wow.
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  And Chinese manufacturing firms have effectively cornered the
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  global market on engineering that specific hardware.
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  So this completely limits the concept of true domestic
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  independence. And while the final solar panels
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  will be assembled in the US, the foundational technology relies
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  entirely on export approvals from the Chinese Commerce
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  Ministry. It completely scrambles the
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  narrative of a clean split between domestic and foreign
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  manufacturing capabilities. We're building our energy
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  infrastructure using their tools.
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  And the struggle over who actually controls critical
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  energy infrastructure isn't just happening between private
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  corporations and state regulators.
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  Right, because California's regulatory fights extend
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  directly to the federal government.
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  California Attorney General Rob Bonta recently filed a federal
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  lawsuit against the Trump administration to block a
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  Department of Energy order. Yeah, the federal government
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  utilized the Defense Production Act to order the restart of the
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  Sable offshore oil pipelines on the Central Coast.
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  Wait, can the federal government just override state
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  environmental laws and local court orders like.
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  That well, that's exactly what creates this major
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  constitutional clash over state sovereignty versus Federal
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  Emergency powers, because you have two totally opposing
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  arguments. The state is arguing that they
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  are strictly defending the coastline and enforcing A
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  consent decree following a previous oil spill.
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  Right. And the federal and corporate
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  argument is that prioritizing national energy production is a
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  security matter. Exactly.
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  So if the federal order holds, it's severely limits
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  California's ability to protect its state parks and coastlines
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  from fossil fuel infrastructure. And if California wins?
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  It strictly restricts the federal governments authority to
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  dictate domestic energy supply during an emergency.
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  The escalating conflict between strict state regulatory
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  frameworks at the rapid expansion of industrial
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  technology is fundamentally rewriting where and how
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  innovation happens. It really is, and it leaves you
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  with an open question. Will strict local regulations
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  ultimately protect the public, or will they accidentally force
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  the future of transportation and artificial intelligence out of
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  the country entirely? If.
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