Elon Musk defended the dip in EV growth yesterday after
reporting lower than expected earnings.
Take a listen. As people have seen,
the EV adoption rate globally is under pressure and and
a lot of other water manufacturers are pulling back on
E VS and pursuing plug in hybrids instead.
We believe this is not the right strategy and electric
vehicles will ultimately dominate the market.
Elon also announcing that Tesla would be starting production of
new affordable E VS by early
2025. A lot of investors cheering that news.
Joining us right now is John McNeil.
He is DVX venture CEO and a former Tesla president.
Good morning to you. Good morning.
So tell us how we're supposed to think about this,
because I think a lot of investors were both looking
at
both the sales piece, which is the decline in what's
happening to EVs.
The bulls are saying this is great news that the
lower priced vehicle may be coming.
Unclear what the timeline really looks like because robo taxis
are also apparently part of this.
And then there's a CapEx piece of this,
which is how much money they're actually going to spend
to do this.
It seems like they're pulling back a little bit on
some of their sort of big plans to sort of
completely remake these factories and are sort of taking a
middle path in terms of using some of the facilities
they already have.
Is that a a decent summary of I think that's
happened on that call.
I think that's a decent summary.
I think you had kind of two contrasts yesterday.
You had the GM earnings before the market.
You had the Tesla earnings after the market.
GM did it a triple beat
and they are getting through their production issues and now
ramping E VS,
which I think creates demand challenges for Tesla because there's
so many now EV alternatives coming to market.
And so I think they are having to answer the
pressure to have lower cost E VS
at the same time, they're trying to move the story
to autonomy and,
and the longer term autonomous vehicles.
For the investor though, today,
who's thinking about Tesla? Do you have to think about?
And I think he's made the case you have to
think about it as an autonomous vehicle company long term
to, to, to capture the valuations of where even Tesla
sits in terms of the the stock price today.
Yeah, I think there's a little bit of,
hey, look over here when the core business is weak,
let's let's recast a different story.
And I think there's a little bit of that going
on for sure,
because their core business is weak.
And they were, they, they were straightforward about that.
But I think, yeah, to support a
evaluation, you've got to believe in this recast
into a time. OK, So straight up,
do you believe it? Well,
I think there are already two companies that are doing
driverless,
driverless cars. And so there's there's a race where two
are already out there,
right? And Tesla, if they can get there would be
the 3rd.
And I do believe that cars need to be autonomous
10 years from now. You probably won't buy a car
if it's not
because that's 10 years from now.
But the question is, given that they're already vehicles,
that, I mean, they have a totally different kind of
rig,
LIDAR, radar, lots of other kind of sensors.
It's a very expensive product,
something of Cruise and the like.
And Waymo, do you think that that Tesla can do
it and do it with the tech
stack that's already on the vehicle,
which is to say that Elon has said repeatedly he
wants to be able to do this whole thing with
cameras and processing power.
Yeah, I think that's the big question.
Like we've been waiting since 2015 for the
for the finish line to arrive and the finish line
keeps moving out and out now.
And people that work on this problem say,
hey, we're 95% done, but the last 5%
is like as big as the
1st 95%. And so where that finish line is when
we finally get there,
whether it's Tesla or others,
I don't think anybody knows.
But we're closer than we've been.
And in terms of these more affordable vehicles,
yeah. Do you think those will compete well against
what you're seeing at a GM and what you're seeing
out of these other car makers?
I think you need lower.
You've got to open the market and the,
and the broad market is at the lower price.
And so in a couple of months you can buy
a Chevy Equinox after the tax incentive.
It's like
$27,500 for a 300 plus mile range car.
That's a small SUV and there are a number of
those vehicles coming out.
And I think that's going to be formidable competition.
It's going to give the consumer a lot.
Should we be more concerned though about the competition or
more concerned about the idea even that EV,
the EV adoption is not staying at pace,
right? I mean, that's the even
the sort of bigger overhang of the whole situation.
Are people going to go to hybrids?
Are they going to stick with combustion engines?
What's really happening here? I think like we all knew
the first quarter was coming and what happened in the
first quarter was most of the manufacturers lost the tax
incentive credit that is now back.
So I think we're going to see very different numbers
coming out of
the rest of the year because it was a slow
first quarter,
because consumers are smart. They know if they wait a
few weeks or a few months,
they're going to get, they're going.
If they wait, they'll get it.
Or is it just that this market doesn't work without
government incentives?
I think if they it's a little bit of both,
like you've got to, you've got to make E VS
affordable.
And so the government's helping while the car manufacturers bring
their prices down and their cost down
and those cost downs are happening.
So I think when you have like a Chevy Bolt
and that's priced in the 20s,
you've got a very viable car with without tax incentives.
Even more viable with the hybrid situation is a real
one too.
I mean, we just had a car manufacturer,
I mean car sales person group,
Group One, who heads all these car companies.
Consumers really want hybrids too when they're walking in there.
Yeah, there's a difference between hybrids and plug in hybrids.
Hybrids tend to be more expensive than gas.
So it doesn't answer that cost issue or price issue,
but plug in hybrids, you can get the range that
most people drive every day with a plug in hybrid.
And so I think you're going to see people leaning
into plug in hybrids.
And that's where GM, what do you think of the
sort of political divide around EVs?
You talk to some leaders of,
of, of vehicle makers today and they say,
look, in red states, buying an EV
is not a palatable product.
That, that, that this has been so politicized that there's
a view that if it's like having a bumper sticker
on the back of your car,
if you're driving an EV
for, for, for a certain type of person,
that's a, that's a bad sign.
And for a certain kind of person,
that's a good sign. Maybe it splits across political parties.
And in some ways, do you,
do you believe that is actually happening?
I live in a purple state,
but on the red side of the purple state
and I've been driving a Chevy Silverado EV.
I it's got 460 miles of range.
I pull up in the grocery store,
the hardware store parking lot.
I get a lot of questions like what is that
thing?
I is it full size?
How far, how, how much range do you get?
Can I look at it?
And so I don't get that vibe from the farmers
and ranchers that that are that are you don't you
don't believe you don't believe this sort of they they're
not saying, Hey, I'm not interested in this because my
political views they're they're genuinely interested in the the Biden
and Energy Information Administration
is estimating what US cars percentage by 2050 will be
electric.
Do you know what their estimate was?
So they've that estimate's been moving around a lot between
50%
and now down 12%. And we're already at we're already
at about 8%.
So I think it's a layup to go from 8:00
to 12:00 between now and 2030.
No, this is 2050. Oh,
yeah, that's that. I don't,
I think that's from the Biden admission.
Yeah, I'm not sure that's not from a red state.
The person that's, yeah, I think the car manufacturers have
very different views of that market.
Yeah. They they've had to have revised
and cost them some money revised and how big that
EV market will be.