Tesla ends week nearly 4% higher. What's driving the EV stock?

00:00 Speaker A

Tesla stock, meanwhile, ending the week on a high note after last week’s drop following earnings here with the latest on the EV maker. Let’s get to Yahoo finds his very own Pras Subramanian. Pras, good to see you. So, great story you got out today with with the stock. So down last week, bounced this week. Couple big themes front and center. Ryan, what’s your take on it? One would be spending, the 25 billion CapEx. How do you frame that? How much of a worry is that for folks?

00:30 Pras Subramanian

So that was a worry last week we had earnings come out. earnings are, you know, somewhat positively received, but it was that massive, you know, 25 billion and above CapEx figure. was, you know, prior to that was 20. So they’re saying there’s going to be more. Uh kind of uh spooked some investors there last week and the stock got hit. Uh but this week, you know, a little bit of rebound here, up nearly 4% for the week. Uh nothing really major here, but a couple of things happening in the world of Tesla that may, you know, uh kind of move the stock a little bit.

01:00 Speaker A

Well, on the positive on your story, you also mentioned the semi high volume production. How big a deal is that?

01:06 Pras Subramanian

You know, it’s taking years for them to get to this point, right? We we heard about this thing in 2017 and, you know, Musk had promised 2019, 2020 production, didn’t happen. You know, it’s a pretty, pretty giant engineering challenge, right? To make this vehicle that can pull hundreds of thousands of pounds, still have range, right? So, they’ve put a lot of time tweaking it, getting out, taking out weight, uh improving the batteries and things like that. And so now they’ve gone a car of or sorry, a truck that can do that. And costs run 260 for the standard range, around 290 for the extended range, which is more than most semi’s cost. But this thing will supposedly, you know, over the course of time, you’re not paying for

01:49 Pras Subramanian

diesel gas is like 6, $7 a gallon now, right? That’s not a thing anymore. So the question is, can they ramp up production? Can you build up the charging network? That sort of thing.

01:56 Speaker A

All right, you had a nugget in your story that I thought was interesting too. You highlighted how uh Tesla recognized around roughly 500 million in sales from SpaceX and XAI. What what’s going on there?

02:08 Pras Subramanian

Yeah, so, so this is an amended uh filing that Bloomberg first spotted. But basically it turns out 500 million of the sales of Tesla last year came from Musk’s own companies, right? So uh a big chunk of that was XAI and they think that that’s that’s because of the battery storage and things like that they were buying from Tesla for their data centers. uh for XAI data centers. and then the other other 140 million or thereabouts from SpaceX. Uh, and Bloomberg found out that $100 million worth of that was cyber trucks, right? So, in Q4, 20% of the cyber trucks were bought by SpaceX. You know, so people kind of look at that and say, hey, um isn’t this sort of self-dealing where Musk’s company is buying from another company?

02:40 Speaker A

Well, that’s what I was going to ask you, like, when you look at that, do you say, okay, that’s a that’s a sign of strength or that’s just Musk companies doing business with each other?

02:46 Pras Subramanian

I see, I see two sides of it, right? So, if I’m if I’m Elon Musk, I own all three companies, I’m going to say, hey, purchasing manager, you buy the trucks from my company. I own that company. That’s it’s all part of the deal, right? Then you could say, well, we could have gotten a better deal from Ford. We could have gotten a better deal from GM with a competitive bidding process. Well, but why should there be? I own all both companies. Well, SpaceX investors or or Tesla investors might say, or whoever X investors might say, well, we want you to get the best deal for us. It’s you’re you’re beholden to us, not not you. So, I see all sides to it, but you know, uh it’s just interesting that the the sheer amount of money, 500 million dollars

03:19 Pras Subramanian

as a, you know, purchasing from another another company to for your own company, it’s seems like a lot of money.

03:25 Speaker A

One I here here’s a here’s a line of argument I’ve heard so I want you to take on. SpaceX goes public, right? What, could it be that that becomes, when that happens, we’re all kind of waiting for it here. That becomes like the new fun, exciting way to invest in all things Musk, the Musk world, the Musk universe, perhaps maybe even to the detriment of Tesla? What do you think?

03:49 Pras Subramanian

Whoo, that’s tough. That’s tough. I I think that if you want to think about the exciting parts of the Musk Musk enterprises, the Musk Muskonomy as people have called it. You got to say that SpaceX is it, right? Rocket launches, Starlink, uh date data centers in space, moon base, things like that, uh working on the next Artemis mission. That’s that’s the thing that SpaceX is working on. So that’s the most exciting part, but I still think Tesla still a lot going on there, right? Optimus robots, we’ll see, robotaxis, Cybertruck production just started, the Tesla semi just started. We have um their own chip foundry. There’s a lot going on there in the world of Tesla. I think that, you know, I think still would be appealing to the people that are going to be interested in that stock.