Latest / Bloomberg Intelligence / BNEF's Morsy on Tesla: Investors Want Numbers vs. Vision(Audio)

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BNEF's Morsy on Tesla: Investors Want Numbers vs. Vision(Audio) · Bloomberg Intelligence

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  Speaker 1: Global business news twenty four hours a day at Bloomberg
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  Speaker 1: This is a Bloomberg Business Flag blom Bloomberg World Handquarters.
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  Speaker 1: I'm Charlie Pellett. Tesla Motors says it's on track for
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  Speaker 1: fifty thousand deliveries in the second half, shares of about
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  Speaker 1: one and a half percent. It did report a second
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  Speaker 1: quarter adjusted loss of a dollar six versus estimates for
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  Speaker 1: a loss of sixty cents. Stocks halted a two days
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  Speaker 1: slide as a rebounding crude oil lifted energy producers West
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  Speaker 1: Texas Intermediate back about forty one dollars of barrel that
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  Speaker 1: offset declines in defensive industries. Gold snapped its longest rally
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  Speaker 1: in six weeks. Gold down six tenths of one percent,
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  Speaker 1: down thirteen fifty nine, SMP five hundred Index up six
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  Speaker 1: to sixty three, a gain of three tents of one
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  Speaker 1: percent down. Industrial is up forty one to eighteen thousand,
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  Speaker 1: three hundred fifty five, a gain of two tenths of
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  Speaker 1: one percent, and has stack up by four tenths of
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  Speaker 1: one percent. I'm Charlie Pellett. That's a Bloomberg Business flash.
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  Speaker 1: You're listening to Stock with Kathleen Bloomberg Radio at Boston
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  Speaker 1: Live at Smith and Lesky Restaurant here in the Boston
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  Speaker 1: Seaport district. During our attention to Tesla now, as Charlie
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  Speaker 1: Pellett just reported Tessa saying it's on track for five
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  Speaker 1: hundred thousand vehicles this year. If you're on your Bloomberg
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  Speaker 1: and you're watching Top Live, you can see some very
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  Speaker 1: interesting comments from a lot of our team at Bloomberg
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  Speaker 1: News covering this. Jamie Butters, you know, det Bureau saying
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  Speaker 1: that Tesla forecast cards per week by the end of
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  Speaker 1: Q three and by the end of the year in
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  Speaker 1: an average of twenty five weeks. That would be decent
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  Speaker 1: number if it can be delivered. It seems to be
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  Speaker 1: echoing the sentiment of our next guest, Aleen Morrisey, advanced
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  Speaker 1: transport analysts at Bloomberg New Energy Finance, we call it BNF.
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  Speaker 1: He joined us in Bloomberg World Headquarters in New York
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  Speaker 1: City this afternoon. Slen, welcome, thanks for having me. So
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  Speaker 1: let's start with the kind of painting, painting with a
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  Speaker 1: broad brush what we've seen in the headlines on the
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  Speaker 1: earnings report. So far. Yeah, so listen, they missed the earnings,
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  Speaker 1: but they did keep their guidance on the fifty thou
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  Speaker 1: vehicles to be delivered this year. Remember that they had
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  Speaker 1: missed both their targets for quarter one and quarter two.
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  Speaker 1: They came in at fourteen thousand or a little bit
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  Speaker 1: above in quarter two against the guidance of seventeen thousands,
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  Speaker 1: so they're really gonna have to wrap up in the
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  Speaker 1: second half of the year. To targets are the opening
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  Speaker 1: of their retail locations tied directly to their ability to
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  Speaker 1: get these production numbers to where they want them to be. Well,
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  Speaker 1: I think there's generally there's been a little bit of
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  Speaker 1: a slowdown in the electric vehicle market, broadly in the
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  Speaker 1: United States as energy prices have been lower, even though
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  Speaker 1: vehicle sales are higher. But they've also had trouble um
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  Speaker 1: selling their vehicles and key markets like China. To give
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  Speaker 1: you an indication of what I'm talking about, Yeah, test
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  Speaker 1: corners about twenty percent of battery electric vehicle sales globally,
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  Speaker 1: but about in the US, And I think what may
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  Speaker 1: be happening is that they're plateauing in their addressable market
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  Speaker 1: in the US and having trouble catching up in in
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  Speaker 1: other markets well data whole autos report. A reporter for
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  Speaker 1: the Bluebrig News team notes in this top live feed
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  Speaker 1: from the from the Tesla shareholder letter that says, we
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  Speaker 1: are also accelerating store opening, some planned at a new
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  Speaker 1: retail location every four days on average during the remainder
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  Speaker 1: of Q three and through Q four. Does this maybe
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  Speaker 1: address their need to sell better in markets like China?
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  Speaker 1: This is I mean, it's important obviously to have retail
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  Speaker 1: locations for their vehicles, and they're dealing also with conflicts
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  Speaker 1: with American UH, with American dealerships because the test to
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  Speaker 1: sell directly to customers, I think more importantly, at the
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  Speaker 1: price points of the vehicle. I mean they've come down
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  Speaker 1: market with the two flagship models, the Model X and
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  Speaker 1: the Model S. They've come down about nine thousand dollars
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  Speaker 1: on the starting price of the Model X starting at
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  Speaker 1: four thousand dollars at about sixty seven thousand dollars on
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  Speaker 1: the Model U S sixtk our pack about four thousand
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  Speaker 1: dollars lower, or four thousand dollars lower than the previous one.
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  Speaker 1: But these are still vehicles that are super expensive. I
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  Speaker 1: mean we're talking about the medium price of a car
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  Speaker 1: in the US is thirties thousand dollars. That they just
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  Speaker 1: need to get those price points down. And the only
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  Speaker 1: way they're really going to start telling more cars is
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  Speaker 1: with the rollout of the Model three in twenty seventeen
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  Speaker 1: and eighteen. How's their frecash flow doing? Uh? So, you know,
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  Speaker 1: they're about negative half a billion quarter at the moment.
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  Speaker 1: I haven't. I really haven't seen the latest numbers for
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  Speaker 1: this quarter, but I think the expectation is that that's
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  Speaker 1: going to keep stay negative for the time being. And
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  Speaker 1: this rate is actually the other which is the justification
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  Speaker 1: they need to bring to the analysts for the acquisition
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  Speaker 1: of Solar City, another kind of free cash flow negative
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  Speaker 1: business that they want to add to the test, to
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  Speaker 1: the test of brand. You know something, You're quoted recently
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  Speaker 1: um saying that elons master plan reads more like a
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  Speaker 1: wish list than anything remotely execute able in the medium term,
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  Speaker 1: as you note the company's last two billion dollar or
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  Speaker 1: in his last year of operation. Yeah, and I think
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  Speaker 1: you know the on the call that we're gonna here
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  Speaker 1: in an hour, I'm sure that there will be questions
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  Speaker 1: about the execution of this master plant. You know, he's
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  Speaker 1: talking about building semi trucks for all electric semi trucks,
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  Speaker 1: you know, class vehicles, think of like the big Walmart
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  Speaker 1: trucks that you see on the highways driving in the
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  Speaker 1: American Midwest. He's talking about building buses, he's talking about
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  Speaker 1: having sharing car sharing. You saw the news of d
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  Speaker 1: D absorbing the Uber business in China. These are super competitive,
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  Speaker 1: cutthroat businesses. And again with free cash flow negative businesses
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  Speaker 1: as it is, I think it's going to be uh,
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  Speaker 1: you know, a tall order to convince, uh, convinced investors
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  Speaker 1: that they should even more money into the business when
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  Speaker 1: it's losing uh cash flow at the moment. So just quickly.
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  Speaker 1: The Giga factory near Reno, Nevada, it opened, I believe
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  Speaker 1: last week. Any inference as to how that's going and
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  Speaker 1: whether that's going to suck even more money out of
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  Speaker 1: testless operations, so you know, it's a it's a five
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  Speaker 1: billion dollar factory. It's uh. The equity investments are from
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  Speaker 1: Hannasonic or Filift in my own battery supplier and tested themselves,
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  Speaker 1: as well as some subsidies from the state of Nevada. Uh,
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  Speaker 1: it's not complete yet. Actually far from its complete. They
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  Speaker 1: think they will be producing battery cells out of that
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  Speaker 1: location by the end of the year, but the thirty
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  Speaker 1: five gigawatt our capacity that the factory will be producing
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  Speaker 1: won't be for another two two and a half years. Uh.
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  Speaker 1: And that's and you're right, it's critical because uh it
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  Speaker 1: will help lower the cost of production of the Model
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  Speaker 1: three and hopefully make it make a Model three uh
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  Speaker 1: profit of at least on a you know, an operating basis.
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  Speaker 1: So how long do you think investors are going to
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  Speaker 1: be uh on on lest side be patient with him.
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  Speaker 1: I can't answer that question, but I will say, you know,
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  Speaker 1: it's it's the camps are broadly divided between those who
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  Speaker 1: buy his vision and those who are more interested in
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  Speaker 1: the financials than expect returns on their investment. UH. So far,
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  Speaker 1: you know, and uh in the last few years the
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  Speaker 1: kind of visionary month winning over investors. But frankly, I
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  Speaker 1: think since you know, these issues of autopilot, of casualty,
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  Speaker 1: than regulatory uh federal investigations, the issue of UM of
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  Speaker 1: of other issues kind of affecting the business um and
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  Speaker 1: the master plan itself, you know, basically asking for free
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  Speaker 1: or blank check I think more questions are going to
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  Speaker 1: be asked, and that balance may tip now in favor
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  Speaker 1: of investors really want hard numbers from We've got to
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  Speaker 1: leave it there, So leave Morse Advanced Transport Analysts, Bloomberg
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  Speaker 1: New Energy Finance. This is Bloomberg coming up. Bloomberg Law.
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