The Tesla Crash is Only Beginning

Paris Marx: Ed, welcome back to Tech Won’t Save Us!

Edward Niedermeyer: Thanks for having me again.

PM: Absolutely. We had a fantastic conversation around Tesla last time you were on, which was probably about a year ago now — maybe a little bit less than that. Obviously, a lot has happened between now and then, whether it’s with Tesla itself or with Elon Musk, specifically. He never misses an opportunity to be in the headlines and to have people talking about him. There’s so much I want to get to this is going to be a jam-packed conversation. We’ll see if we can get to all of the things I want to touch on!

I want to start here, because around the end of last year, and even into the beginning of this year, Tesla’s share price was a big story. It was on a precipitous decline through 2022 and lost about 70% of its value, I believe, that year. It’s come up a bit this year after some things that Elon Musk has been saying about the company and where he sees it going, try to juice that investor interest again. What do you make of that story and the roller coaster ride that Tesla stock has been on over the past year or so?

EN: When it comes to Tesla stock — this was the piece of this all that I had no idea coming in. I never really thought about the fact that my reporting about car companies was something that was as important to Wall Street traders and stuff as it is. As soon as I stumbled into the Tesla story, I was immediately accused of being a short-seller and I just realized: Oh, wow, there’s this whole world around this. One of the hardest things for me, as I was accepting that, was like: Okay, the stock price is going to proceed from the facts of what’s happening with this company, whether that’s the financing. Obviously, it’s not always going to be about the economic performance right now, but some expectations and things like that.

Over the years, what’s become really, really clear is that Tesla’s stock has a mind of its own. One of the reasons that this cult around the company, the stock and around Elon Musk, is so necessary is because there has to be this process of translating these movements in the stock into some kind of narrative that makes sense for people. That’s how the logic works, and this is why it really has reached a point where talking to people who are interested in it from a stock market perspective, I just almost don’t do it anymore, because we’re just coming at it from opposite ends. One of the things that we’ve seen again and again, is bad news will come out and the stock will go up.

We’ve seen things around gamma squeezes and things like that, which was a very arcane market thing. There was just recently some reporting, where I don’t have the numbers in front of me, but basically Tesla options — so not just buying and selling the stuff — but buying options on Tesla stock. It’s one of the biggest options markets out there next to the S&P, which is a very broad indicator of where the economy as a whole is going. With Tesla has become like a horse race or a scorpion fight or something. It’s just something to gamble on, and as something to gamble on, it’s become more important. It’s become disassociated from any of the fundamentals, and it just is its own thing, which has to be, again, translated back into some sense that humans can talk about and build a consensus around.

Right now, what we’ve seen over the last year or so — in the real world of Tesla’s fundamentals — all kinds of problems building. Clearly, their demand is slowing. They’ve had some some strong growth, but clearly, either margins or volume is going to start to slow down. Also, there’s a lot of issues around autopilot for self-driving, which I know we’re going to talk about and all these things. But really, to me, where I see the correlation happening — just trying to make sense of that stock price in relation to these other things — is that a lot of it seems to be caught up into this broader investor psychology. Now, the fluctuations tend to really track like these wavering, emotional roller coaster that the market and traders are going on about, like what is this post-quantitative easing era going to actually look like? Are we going to get a soft landing? Is inflation going to get under control?

In a lot of ways, the easiest way to think about Tesla’s stock price movements is that it’s almost like a macro-indicator — an index, almost, of the relationship between the broader economy and the political system and everything else, and tech as this idea. That’s been huge. It’s a very relevant topic to the things that you discuss, because this has been such an important relationship for not just American economy, but culturally, politically, all these other things. Tesla is basically an indicator for that. If you think of it as a social media poll or something where people are voting it up and voting it down, that way, it makes way more sense than trying to go back to the fundamentals, and create causal or rational links between what’s actually happening with the company, or what the stock is doing.

PM: I remember during 2021-ish, people would say: It seems like Tesla is more of a meme-stock, because that was something that was going on at the time. But it feels like there’s this push and pull, especially when we look at Tesla, when we look at what’s happened with the share price over the past year or so, between what is Tesla? Is it a tech company that is judged based on its potential future prospects? Or is it a regular company that is a regular auto company that is based on its actual fundamentals, that is based on its current performance and what it’s actually doing?

It seemed like as the share price was declining so much, it was like the market was judging it more as a regular company, rather than some tech company that was going to have this explosive growth and transform transportation. Basically saying: This is just another car company that’s now making electric cars rather than the traditional cars that companies have been making for a long time with internal combustion engines, but it’s just selling a car at the end of the day. It seems like that’s always the push and pull, the question of what is actually going on?

EN: I think our relationship with tech, as an idea is in itself not just a rational thing. Some of it is, because companies have come out of the tech sector — like Google or Apple — that have these economics that just blow everything we’ve seen out of the water in terms of profitability and margins from software and things like that. Clearly tech, and the software business in particular, has created new economic rules that are obviously very appealing to capitalists. There’s massive margins. You build a good piece of software, and you can scale it endlessly. As soon as you paid off your development cost, it’s basically all profit — this has been a transformative thing.

We’ve had a psychotic break, almost, from that truth is this idea that logic, by virtue of being part of the Silicon Valley ecosystem, can be applied to other things, like making cars. In some ways, I’ve really developed, in covering this story, a real appreciation for what they call the ‘animal spirits’ of the market. I think that that’s more and more what this relationship with tech is, from a capital market perspective. I think of it like when you’re going through a midlife crisis, and all of a sudden young people become very appealing. It’s kind of a trope — it’s because it’s their vitality, their beauty, and their potential. That’s what it is, we see that people have this potential that for us is no longer. I should preface this, I turned 40 a month ago.

PM: Thinking a lot about age?

EN: Maybe I am projecting a little here, but there’s something to this. What’s going on right now with Tesla stock, in particular, is that we’re battling with this. After 10 years of being infatuated with Tesla, the markets are having to come to terms with the fact that the story is constantly changing. Very little of what was promised, and what got people super excited — you go back and you show the things that Musk was promising, and people just forget about it. It’s that allure, and that animal draw of wanting to believe in this future of infinite possibilities.

PM: He also just always has the new thing in the window, so that you don’t think about the thing he hasn’t delivered because there’s always something else for you to focus on and to distract you.

EN: Exactly, and at the same time, you have traditional car companies, which are obviously very imperfect in a lot of ways, but they know how to make and build cars in economically, sustainable and viable manner — well, sustainable obviously gets into a whole lot — but just by the rules of capitalism, or capital markets. What they don’t offer is the potential for explosive growth. That’s what’s the heart of this psychological battle that we’re going through here, and it ties very deeply into questions about what we’re doing on a monetary policy and a macroeconomic level of do we keep pumping easy money into the economy, so that we can hold on to these dreams and these beliefs that we throw money at stuff that there’s going to be new breakthroughs like the iPhone or Google, or like things like that open up brand new economic vistas?

I think with Tesla in the car manufacturing space you have to, at some point, get realistic about the fact that you can’t just endlessly bet on potential. At some point, you have to look and say: You know what? Maybe these older folks may not have this unlimited potential in their futures, but they’ve learned a lot over the years. They’ve learned how to integrate with society; they’ve learned what a real relationship is, in some ways, and that’s been a difficult process, but they’ve gone through it over a hundred years. I think the real challenge that the markets are facing — and again, it’s tied to this broader macroeconomic thing — is how do we sort this out? Because I think we want to have both, to some extent, but clearly, we’ve way over-indexed on — let’s call it — the young, promise of youthful revitalization.

PM: I think that’s a really good point, though, because it also makes me think about the prospect of self-driving and what that really meant. In June of 2022, Elon Musk said that without self-driving, if they can’t make self-driving work, that Tesla is worth “basically zero.” That also made me think, especially, as you’re talking about the more traditional automakers, in this moment, in the 2010s, the latter half of the 2010s, when there was a lot of excitement around self-driving technology. There were a lot of narratives surrounding: It’s right around the corner; it’s going to completely change how we get around. So that a lot of the traditional automakers also plowed into this space, put a lot of money into self-driving to try to catch some of that excitement, to try to catch some of that investor interest, so they could try to emulate Tesla and what it was achieving to a certain degree, achieving in the degree of share price and things like that, not actual technological advancement, necessarily.

I wonder how you see that is playing into it, especially in this moment now, where it feels like we’ve already had a reckoning to a certain degree on self-driving technology and what the realistic implementations of it are going to be. Especially, now where we see autopilot, because it is the system that Elon Musk has still been pushing as going to have transformative effects that most of the other companies have left behind and have moderated their language a bit more. But autopilot and full self-driving — which are the features that are available on Tesla — have been getting more regulatory scrutiny, more scrutiny from the SEC, the Department of Justice, everybody, virtually. What do you make of this transformation and this change?

EN: Tapping into the way of thinking about it that we were just discussing, there was this upwelling of youthful energy and optimism about this technology from Silicon Valley. Clearly, with the automakers, it was a carrot and a stick for them. The carrot was: We can get a piece of this; we can also now reinvent ourselves and be seen as youthful. It’s like plastic surgery or whatever, rejuvenation. And the stick was: If we don’t, the capital markets will leave us for the young, hot thing. So they felt forced to go along with it. I think it’s a testament to how powerful these forces are. Only now in the last year, or so, have the automakers stopped and said: Wait a second, does this technology actually really fit our business model? And it doesn’t.

If you do driving automation technology the right way, and we’ve discussed this a bit, you automate tasks and cars are general purpose devices. There was always this tension there that didn’t really quite fit. Again, if you go out — I don’t want to get into the politics of plastic surgery — but it doesn’t make you younger. It can make you appear younger and make you feel younger, but it does not turn back the hands of time. Realities continue to be realities. I think we’ve seen where Elon is right now — in his perception especially in capital markets, to some extent the political world — is so important is because behind the scenes, and this hasn’t been reported a lot, the driving automation technology space has been shaken.

2022 has been a quietly devastating period for these companies and big names. Basically everyone has done layoffs of some kind or another. We’ve seen companies like Argo go under. Believe me, 2023 will hold a lot more of that in the future. Investors have gone from being infatuated with the infinite promise. This is the market thing of switching on a dime from greed to fear. It’s so fascinating to watch that happen when there’s billions, literally billions of dollars, and people’s entire life work at stake. Because one minute, investors will say: Yes, we see the infinite future potential of this. The next minute, they’re like: Well, we need a business model in six months guys, or else we’re cutting, we’re pulling the plug.

PM: Especially when interest rates start to rise and access to cheap money goes away.

EN: It’s amazing how a couple of macroeconomic factors change, and all of a sudden, the way people think about their psychology shifts in fascinating, fundamental ways, and that’s happened. That’s what makes it all the more interesting that Elon, who was just on a quarterly earnings call. He’s not backing off on any of this stuff, he’s still saying: The Tesla that you bought in 2016 — well, he’s fudging the 2016 part — but basically, he’s still saying: If you buy Tesla today, it’s going to drive itself. What people don’t necessarily understand, because again I don’t think the public has seen behind the curtain as much as I have in the driving automation tech space, is that the contrast between the people who are legitimately, seriously, trying to deploy this technology, and have always had a more realistic relationship with Tesla, they’re struggling to fundamentally change. Elon is not eve trying to change at all.

That’s for the same reason that Tesla has always taken more risks with its approach here. Which is that all of these companies — whether it’s the car companies, or the big tech companies like Google, or Apple or any of the others — they have businesses to protect. They have to think seriously about the risks that they incur, and that’s fundamentally different than Tesla, because the stock promotion aspect of Tesla has always been much more important than the business. The business itself has never been so big that it can’t be at risk. So guess what? It always is precarious and net-risk anyway, because the profit margins aren’t that good.

Tesla is emerging as this new tech company where, because they don’t have that undeniably solid economic machine the way Google, Amazon and Apple have, they’ve ended up getting stuck in this startup mode. Where everything is always at risk and every risk is always justifiable. The future upside is always unlimited, and the actual operations never really mattered. They’ve just managed to take that mode, which is the standard way that millions of startups operate, but bring it into the public markets and reach a size that is totally unprecedented. Now that they’re there, what comes next and how we off-ramp from this situation is it’s not clear at all.

PM: Part of the reason for that is also because of this aura that was created around Musk, so that everything he touched was golden and had to explode in valuation and interest and all these sorts of things. To back up your point as to what you were saying, last year we saw Argo AI fold, which was funded by Ford and Volkswagen. We also saw Apple further push back its timeline on its car that it’s been working on for years. It’s interesting in, I don’t know if you’ve read Tripp Mickle’s book, “After Steve,” but he mentions in that book that Steve Jobs dies, and Tim Cook takes over, they’re looking for what the next big thing is going to be.

Tim Cook doesn’t really have much insight into this, or isn’t really hands on with it in the way that Steve Jobs used, to be with the different products. So one team is like: Wearables is what we should be doing, Apple watch, things like this. Another team is like: What if we went into cars and self-driving cars? Because this is the moment when hype is really at its max with that. He was like: Let’s just go for it; let’s try to do both. So this car project has just been limping along for almost a decade,

EN: Actually, Apple is a fascinating counterfactual to Tesla, because they’re one of the only players that — as far as we can tell from the bits that we put together — that the goal has been similar to Tesla, which is a car that you buy and you own. Again, when I first started hearing about Apple Car stuff, years back, I was contributing to Bloomberg View at the time, Bloomberg Opinion. I wrote a piece that was like: There’s no way they’re going do a car; it’s going be a service; it’s going be like the Apple-tier of Uber. Basically, it was at the time, how that made sense. But no, it became increasingly clear they were going to make and sell or have someone make and sell a car to you.

Again, this is the exact contrast that I was talking about. Apple has — especially since Steve Jobs passed — has had to worry about his credibility, so part of them not talking about this stuff is the traditional Apple secrecy. I think that is absolutely part of it, but no one’s going to be like: Oh, I’m not gonna buy a MacBook, because I’m going to wait for the car. They don’t have those traditional Osborne Effect issues to worry about. A lot of it has been: We just want to get the product right and get it out there. That’s what a business does, and they’re a business where they’re not going to the capital markets and hyping them up to get the capital to pay for it.

They’re just choosing, arguably, to waste their money on it, which they’re more than welcome to do. They’re hiring, they’re employing smart people to do interesting work — more power to them. But it distinguishes that approach, which I think is the serious approach, from what Tesla is doing. Which is, again, to me, Tesla is fundamentally a stock promotion business, that operates as much of a business as it absolutely has to. Again, some of this is unfair — they’ve done some great things, we talked in our last episode about it. But I think at this point, you can see in how these different companies are approaching things, with Tesla, fundamentally, what matters is the stock promotion, and everything about the business can be put at risk, because it’s not as important as the unlimited future upside.

PM: It does feel like if Apple didn’t have, basically, unlimited money, any other company would have canceled that project long ago. But with Apple, it doesn’t matter. Who knows what they’re spending on it, some tens or hundreds of millions of dollars a year. That doesn’t matter compared to all the other money that they make, and all the money that they have in the bank. That they were able to bring back to the US, thanks to Trump’s tax cuts, a few years ago. Talking about autopilot, to wrap up this conversation about self-driving, I wonder what you make of the increased scrutiny that autopilot and full self-drive have come under more recently?

We have California saying that they can’t use the term full self-drive in marketing anymore because it’s seen as misleading, because the cars can’t actually fully drive themselves, which I don’t think is very controversial to say. I think Tesla would even admit that. We also have a number of court cases that are coming up in recent months based on crashes that happened with Tesla, using autopilot a number of years ago, they are finally making their way through the court systems. Then we also have, Tesla admitted in a recent filing to shareholders, that the Department of Justice is looking into autopilot and full self-driving.

Of course, there was the story recently, that you will be very familiar with, about a video that was released in 2016, I believe. It claimed to show autopilot working, but that we now know — or that we’ve known for a while if we read your book — that was completely staged and totally fake. That’s one of the things that has helped to blow up Tesla share price and to make it look like it’s something more than a car company. What do you think about where all this is going?

EN: I think the autopilot and full self-driving part of Tesla was a relatively small piece of the book, “Ludicrous: The Unvarnished Story of Tesla Motors” that I wrote. But it has become fundamental, and central, and one of the most important parts of this. The reason we’re in this place with autopilot, full-self driving, is that it’s very difficult for people to actually understand what’s happened, and I say this because it’s been difficult for myself, it’s taken years for myself to, really, pull back all the layers and really actually understand what was going on. Then, it’s another challenge to how do I explain this to like people? It’s very difficult, I’m still trying to figure that out.

But essentially what happened was Tesla took technologies that had existed — Adaptive Cruise Control had been around since the 90s, and Lane Keeping Assist had been in limited forms available, not quite as long, but had been around. So what it did was put those together and created this new class. And what crystallized this, I was just talking for the podcast I do, Autonocast, with Kelly Funkhouser from Consumer Reports. We were talking about how Consumer Reports, which is this traditional mediator between the auto-industry and the public, and it has this independence and credibility. It has to work with automakers to certain extent, but it really takes its independence, and credibility, important. What they’ve had to do was to accept that Tesla stepped into this Wild West. It wasn’t necessarily that they completely invented a new technology — which I think is what people think they did — but it’s that they took these technologies, and created a market segment. They created a type of product out of these existing technologies that became very popular.

The problem is that it became popular under false pretenses — there were two core forms of appeal. One is your car is driving itself, which it isn’t. Again, we’re starting to see, or one of the factors we’re starting to see, is Mercedes is coming in and they’re saying: We’re going to offer level three, which is called conditional autonomy in consumer vehicles. Which means essentially, that when the system is active, and they’re being very forward with messaging, which I think is helping explain what Tesla hasn’t been doing. Which is that when this system is active — which will only be in certain weather on certain freeways, basically, that is pre-mapped — Mercedes is legally responsible for the system’s actions. Again, this technology is difficult to understand, but that distinction is easy. A car is self-driving, or a system is self driving when it takes responsibility.

I remember, as a kid, I used to go camping with my dad out in Central Oregon, and he would let me drive, at age like 12 or 11, out in the middle of nowhere. We get to a little town, we’d stop and pull over, he get in the driver’s seat, and he’d drive us into town. I knew how to drive with the automatic transmission and stuff. I couldn’t get a job driving. Uber didn’t exist. I couldn’t get a driver’s license, so I wasn’t really driving. It gets weird there, but that’s essentially what’s happening. So they sold a simulacrum of self-driving, and then they sold the illusion of safety as the other piece and they’ve been lying. This is another piece where, again, I wrote an article in The Daily Beast in 2016, saying that these statistical claims to safety are bullshit. We’re finally getting serious researchers writing things in journals and stuff and getting a more credible foundation that hopefully regulators can use.

PM: That, of course, hasn’t stopped Elon Musk from continuing to claim that it’s safer than human drivers and all this stuff.

EN: I think how we reach a reckoning with that is going to be really difficult because thus far, he either can’t, or won’t back down from anything. Which we’re talking about in this broader context of things, he’s increasingly stands out. Now, what Consumer Reports has had to do is to say: Okay, so now we’re going to start ranking and reviewing this category that they’ve created, but we have to make this point that these systems can improve safety, but they can also not improve safety. It depends on how you design and architect them basically. People are still at this weird point where we’re consumers and stuff, especially the the more pro-Tesla Autopilot people, they look at these rankings, they’re like: The rankings are determined by how good your driver monitoring system is, whether or not it doesn’t let you use it in certain areas. These things seem like reductions in capability, and therefore the systems are worse.

The ongoing communications challenge that we still haven’t fully solved. Huge credit to CR and IHS and the work that they’re doing around in helping people understand how these systems are designed and deployed, and even how they’re communicated about literally affect whether or not they have the possibility of enhancing safety, or whether they ultimately are just there to enable inattention and in fact, create totally novel safety risks. We are making progress on this, and it started in 2020, with Liza talking about ‘autono-washing.’ Consumer Reports and IHS is developing a set of principles around the designs of these systems, where they can boil down complex design issues into basic principles of how a system is more collaborative and keeps the driver engaged, rather than one that fools the driver into thinking that it’s automated, which then makes them disengage.

We’re making progress, but it’s slow. It’s all having to be done by these NGO, civil-society type of groups, and government has been AWOL. Now we’re starting to get to a point where I think the government is, clearly, facing more pressure to move forward on it. I’ve been hearing some promising things out of NTSA, and they’re gonna have to do something, but more and more. This was really reinforced in the last 10-K that Tesla filed because they were doing more disclosure around the DOJ piece of this. As I’ve been thinking through, it makes more sense. Really, if you look at what Tesla’s done from the beginning — yes, they created a new product category, but they’ve done it under selling fraudulent goods, essentially. The system was what it wa, but the benefits of the system were fraudulent. It was not self driving, and it was not safer. In fact, telling the people that it was safer made it less safe.

So, to me, and especially now, we have the head of autopilot software saying he doesn’t know what an operational design domain is, which is one of the most fundamental pieces of this technology. I think the picture that’s more and more clear is that the autopilot full self-driving piece of this has been fundamentally a criminal enterprise from day one. We don’t even have a regulatory system around this stuff, we have a framework, which is this SAE level system. They’ve been breaking it by telling people: The car is self-driving, but telling regulators: Oh, no, it’s level two driver assistance. So more and more, instead of revamping the entire regulatory system — which is an idea that I’ve worked with different industry groups to think about and explore, and it’s not easy. I think more and more, it makes sense, to me, this is a criminal enterprise, and we can’t build a regulatory system, if we’re even ever going to build a regulatory system, which is a question.

There are people who want it, who do see it as a positive, healthy thing for the industry, but I think you can’t build it around this level of deception and disingenuousness and bad faith. Tesla’s approach to this has to be treated as criminal, so that regulators don’t have to necessarily build a system that assumes, or anticipates, that what Tesla’s been doing is normal. Hopefully, once you prosecute that stuff criminally people know: Okay, there’s a line there, and we’re gonna go and play within the regulatory system, otherwise. We potentially face a perp walk.

PM: Totally. Just to be clear about what you’re saying, the regulators are looking at it right now. One approach is to try to regulate the system and develop some set of regulations around it. Then the other side of things, the Department of Justice is also looking into autopilot and full self-driving. When you talk about it being criminal, that’s what you’re suggesting that the Department of Justice route is the better way to approach it, because what they’ve done here is a significant problem and not something that should be normalized.

EN: I want to clarify too, there’s been a number of reasons why regulators haven’t moved more aggressively on this. One of them is just an entire culture around regulation and new technology, in particular, in this country, we need to grow some backbone around that on a broad level. It’s difficult to measure, but this is very challenging technology, to regulate, especially when you get into the complex interactions of human behavioral psychology and technology, very, very tough stuff. I think one of the main factors that is understandable — I think I’m being generous to the regulators here on what’s held them back— is there’s a very real fear that if you act, that you create these precedents. That what might be an appropriate course of action in one event, may not, given how who knows how this technology was going to actually evolve, may create all kinds of weird problems.

We’ve already seen in California, they just left out trucks for some reason, and now that’s creating a whole political battle. Totally unanticipated that trucks were going to end up being one of the early use cases. It shows how hard regulation is in this space. I’ve got license plates here from Nevada for autonomous vehicles, because they thought in 2013, that they were going to need these things, which they haven’t. Anyway, so I think some of it on the regulatory side, instead of just responding to bad actors, you have to build up in a systematic way of like: What do we actually want? What do we want to encourage, what we want to discourage? When you get outliers, like Tesla, you have to say: No, you’ve crossed these lines, and you engage with this technology in bad faith.

To me, it ties into the fact that they’re stock promotion and not a real company. Real businesses understand that they have something to protect, and that regulating every other competitor is — increasingly, less and less — but traditionally, it has been a cost of doing business that people and companies accept. Hopefully, if some good comes out of this, I hope this broader shake up in the driving automation space, hopefully, one of the things that leads towards, is an understanding that: What we may not want regulation, but ultimately, there’s a reason that all kinds of companies and industries have have accepted it. Even though it is a pain on a day to day basis, sometimes.

PM: When we talk about other companies developing this, as you say, there’s still the question about how us as humans interact with these technologies and the effects that they have on us. It’s known in many different sectors that there is the automation displacement, or distractions, that come with it, where people just lose the ability to properly pay attention to what’s going on around them when technology takes over certain tasks. They feel that they can rely on it. Then that, especially when we start talking about it as a regulatory question, that’s where these things come in as to: If automakers are putting out level three systems to what impact is this having? How should they be properly regulated so that we ensure that they’re not causing safety issues in a way that an autopilot or something like that is?

EN: Well, I think the why is important — what are these systems doing? Like, why are companies developing this system? Again, with Tesla, that’s the key to understanding what autopilot and full self-driving have been. You mentioned the stock price, Q2 of 2013 was exactly when Elon started talking about autopilot. That was the very first time the stock started going parabolic. Again, in the autonomy day, and AI days have been huge, they correlate with some of the biggest movements and Tesla stock price. Now, it may not all be because of that, but literally, he’s become the richest person in the world by endangering people. There are other people doing this technology that aren’t making those choices. And again, it’s because they have businesses that could be put at risk — with Elon, everything can be at risk.

Anyways, this is a difficult thing for regulators to get into, but that intent matters. One of the things I worry about all these other car companies, I think they’ll do a better job with level three than Tesla’s done. I think they will take fewer, blatant risks, but I question what is the utility they’re really selling their customers, because a lot of it does come down to that selling a simulacrum of self driving. If people want to pay for that, fine, but I don’t think one person should die for someone to be able to say: Look how cool it is that my car drives itself. That’s not worth anybody dying?

PM: No, I completely agree with you. You talk about how self-driving was introduced at this moment, whenTesla was having some issues, needed some investor cash to flow in. A lot of these big promises come at times when the company might be needing some money, might want to see the share price go up, might need to show investors that there’s still reason to be excited about Tesla. Recently, Elon Musk was on the stand in a lawsuit at the Delaware Chancery Court around a massive pay deal that he was granted in 2018, that came out to about $56 billion.

The terms of this deal were based on the share price hitting certain metrics, increasing certain amounts. If he saw the share price exceed these thresholds, then he would be granted stock options that would come out to be worth a whole lot of money, $56 billion at the end of the day. What did you make of what came out of that trial, or what we learned in the course of this going on? Because it does seem that this deal is linked to the things that you’re talking about, where Musk is incentivized to hype the stock up, rather than really deliver a company that actually works?

EN: I feel ludicrous, in a lot of ways, if there was a message to the board of Tesla — because one of the last things in the hardcover of the book, the softcover has an additional chapter — but was this compensation package. Because I said: Look, this company has done some amazing things. They’ve been almost all in the realm of hype. Not entirely, but a lot of it has been in the realm of hype. To me, if I were, imagine myself on the board of a Tesla in 2018, the move is: Okay, we’ve accomplished some amazing things here. What do we do? What incentives do we put in place for Elon Musk to ensure that he turns what we’ve accomplished into something sustainable and lasting. Instead, they did the opposite, they doubled down on the hype. Elon was already the biggest shareholder. Already, he was more incentivized than anybody else to pump up that stock price, so they gave him even more. Basically, I think there was one award that was tied to fundamental performance metrics, but basically, it was all stock and hype-based metrics.

Listening and seeing some of the testimony from those board members, again, this is not how a normal business works. That’s not to say that numbers are all perfect, but fundamentally corporate governance has evolved for not just altruistic reasons. It’s not just because society has demanded it, although that has been a factor. It’s proven to be in the positive long-term interests of companies. We have enough history of business in this country to know that dynamic. Exciting figures can come along and create amazing things, but then screw it all up, because there was not enough structure around them. It’s amazing listening to how self-deluded these board members are. Look, they’re getting paid insane amounts of money for going to one meeting quarterly, or whatever it is — I get it. But it also really lays bare and to me, the part that’s wild is that Tesla investors have never prioritized: Okay, we’ve accomplished a lot. What do we do to make sure that we hold on to that?

I think that’s especially important in the car business because the car business is a survival business, and Tesla has never really experienced true cyclicality. The only downturn it’s been in, was 2008. It almost didn’t last — he had to pull a funding secured to do that to get through that period, twice, actually once in 2008 and then in 2009, with a pre-announcing a federal government loan. He had to do fraud, he had to get government help, and that was at a time when they were making Roadsters by hand in a tiny little facility. Now they’re opening factories all around the world; their fixed costs are crazy. Fundamentally, Tesla still has to prove the most important thing in the car business, which is you can survive a downturn. If they don’t survive this downturn, the board will be entirely to blame for it, because all they’ve ever done is egged him on and put zero pressure incentive on him to make something that can survive.

PM: I feel like that question of whether Tesla can survive was a big one, as we saw those significant declines in the share price toward the end of last year and into the early part of this year. Of course, the board is known to be very favorable to Elon Musk — packed with the Tesla board, packed with a lot of people who are close to him, who are personally invested in what he wants to see happen — not the type of people who are actually going to challenge him and what he says and what he’s trying to do.

EN: The stock price has been too high, also, for activist investors to come in. Activist investors just say: Oh, well, there’s value that’s not being… The problem with Tesla is not that there’s not shareholder value being unlocked. The problem is they’ve created so much shareholder value, that the company itself can’t deliver the actual value to back what the shares represent. You often do get, in the capitalist system, these countervailing forces that will come into a company and say: Okay, you’ve had fun, things have been wild, but I’m going to take a board seat, and I’m going to start demanding that you return more capital to investors. Invest in certain parts of company, spin off other parts of the company, whatever it is. Tesla has become too much of a Ponzi or something, whatever it is, it’s too disintermediated from the fundamentals for that value activist investor to come in and crack skulls.

I get asked all the time: How does this all play out? And of course, I don’t know. It’s been a seven year exercise in learning to accept that I don’t know what’s going to happen next. I think one thing is definitely certain — which I feel like I got this right at the end of the book — which is that it’s not going to just stop, it’s not going to just slow down every manage. That stock rant was one of the things. The full self-driving was another breaking point, but the stock grant was really the thing that was like: Okay, there’s no more illusions about what this is anymore. We’re not building a car company, we’re building a stock promotion enterprise.

PM: Enter ludicrous mode. You talked about funding secure moments back in 2008, 2009. Obviously, the one that we’re most familiar with, is when Elon Musk tweeted out that he had funding secured in 2018, on a deal to bring the company private. Now, that is also a lawsuit that is continuing in San Francisco. Elon Musk has been on trial, as well as people who are on the board of the company, investors, because in that lawsuit, he is being sued by retail investors who say that they lost money, because this funding secured tweet was not really backed up by anything.

When we look at that trial, that lawsuit, whatever you want to call it. What are you making of what is coming out of that because I know you’ve been following that one a lot closer? Basically, I guess the short story is that Elon Musk said: The tweet did have backing to it. The Saudis were supposed to help them bring the company private, and then they pulled out. But he never had a written agreement, so he can’t actually prove it. What are you making of what’s coming out of this trial?

EN: I listened to most of his testimony in that trial, and it’s a fascinating but puzzling trial, because from the get-go the judge has made it clear, he’s instructing the jury, to assume that the tweets were false. The fact that he lied is not debatable, in the context of this trial. It comes down to ‘scienter,’ which is basically just like: What was he trying to do? As you can imagine, if you think about that, this whole trial is about how he sent out a tweet that was a lie, everyone has to accept those facts. The question is: Why and what was he trying to accomplish? What and was that against the law? Essentially, it’s an attempt to litigate intent to a large extent.

It makes the trial both fascinating and incredibly frustrating to listen to, because it really was reinforced listening to that trial, then this recent quarterly earnings thing because it’s at a point now where with Musk, where when you listen to him — whether he’s talking about the business right now, or his past decisions or whatever else — there’s no shame, there’s no effort or need to be reasonable. The question that I’ve been grappling with, and I don’t think I have a great answer right now because it so much of this it gets to the heart of of what’s going on inside his head, is: Is he bluffing and just knows that he has no choice but to continue to bluff? You get into some awkward territory here because how Elon Musk presents, how he speaks and how his thought processes are reflected in his his public statements and stuff have changed a lot over the years.

I don’t want to get into speculating about all the reasons why. He brags about not sleeping enough. I know from personal experience that doesn’t really help, but who knows what else is is going on? The point is one of my questions: Is he even capable of self-awareness at this point? He’s also become super insulated by his wealth. He’s been super insulated by this cult around himself. How much is nature? How much is nurture? How does he off-ramp from this stuff? I don’t see that off-ramp, so that’s what I’ve been looking for, listening to this trial, listening to his more recent things. Again, with a lot of background knowledge about the state of other businesses. By the way, we mentioned EV companies and EV companies, the old EV startups who looked at Tesla and went to investors and said: Look at what Tesla’s doing, fund us. Rivian was worth $150 billion not that long ago. Lucid was, I don’t know, $80 billion, or something like that.

Lucid is going to need to raise money this year. Rivian, I don’t know, I’m not familiar enough. But all of these companies are struggling. Everyone is in the off-ramp finding business. It’s hard because Silicon Valley does not really cultivate that skill, which is why Elon Musk is this mascot. He’s the mascot of that element of Silicon Valley culture that never questions himself, that never has to indulge in self-reflection, or self awareness of any kind. That through sheer force of confidence and rhetoric manifest and brings new worlds into being that by manifesting them effectively.

Again, this is to go back to the beginning of our conversation, I think this is what we’re wrestling with, because Silicon Valley needs it and can’t really off-ramp entirely from that. They’re always going to have that need for wild optimism, and let’s take a moonshot here. Capitalism, certainly, in the broader capital markets, always need some element of that. But Elon took it too far, and now Elon can’t off-ramp from his extreme version of it. While everyone has built so much around his narratives and the assumptions that underlie that really a lot of it is just his bluffs. We’ve built so much of how we think about technologies, and sectors of the economy, and what’s gonna happen with cars, and all these other things around one man’s bluffs.

So now, maybe he’s just goinng to keep laughing, and maybe he literally is not cognitively capable of off-ramping and backing down from it, but either way, it’s all of our problem. That’s really the hard part, having given him so much benefit of the doubt. How do we find a new relationship with him? It’s always felt like it was an all or nothing thing, and Elon consciously made it an all or nothing thing. I think the reality is and what people are struggling with— high up in some of the the corridors of power in finance and politics — is how do we off-ramp from this Elon trip? A long, strange trip, it obviously is not going where we hoped it would go. How do we off-ramp from it in a way that doesn’t mess up our whole relationship with optimism and everything? That is going to be difficult, it’s a problem of their own making, but it’s still a difficult problem.

PM: One of the reasons that Tesla’s board was worried about getting rid of Elon Musk is how it would affect the share price and how it would affect the company because it’s so tied up in him. To build on what you’re saying, if you’re someone like Elon Musk, obviously, we can publicly see the cult that is around him. How he’s surrounded by people who constantly praise everything that he’s doing. He’ll respond to those types of people on Twitter. Then, of course, in the text messages that came out last year, we saw how even behind the scenes, the powerful people that he is in contact with are all trying to boost his ego, are all trying to show that they’re on his side, they want to say the right things to him. They want to encourage him, they don’t want to look like they’re criticizing him.

The only person in those text messages who dared to say like: Hold on a minute dude, was Parag Agarwal, who used to be the CEO of Twitter and now is not obviously because of a whole series of events that happened there. But then, of course, on top of that, Elon Musk has been in court many, many times over the past number of years. Virtually, every single time he manages to get away with whatever he’s done, whether it’s calling that man in Thailand a pedo-guy, or buying Solar City in a deal that was clearly —

EN: — Unseemly, let’s call it.

PM: Absolutely. Time after time, he is in court or he is facing potential issues from regulators or from the government and he manages to weasel his way out of all those things. So if you’re someone like him — who has amassed all of this wealth, who is constantly praised, surrounded by people who just tell him what he wants to hear — every single time he does something that looks like it breaks a rule, that does break a rule, he never is held to account for it. I think it’s natural that you end up the way that he is.

EN: One of the really interesting things that I’ve been hearing more recently, from people who work in Wall Street and in DC, as well. Is that when you get down, you see this in the online discourse, five years ago, there was no shortage of people wanted to debate the substance of Tesla. I’ve learned over the years that those debates oftentimes would quickly devolve into name calling where a lot of the people wanting to engage in those debates, but did not understand the subject matter particularly well. So over time there’s less and less substantive debate online about Tesla and what it is and what it’s worth, and where it’s going, and what the risks are, and things like that.

What I’ve been hearing is that when you get to the staff level of Wall Street banks, or federal regulators or things like that, the people who deal with the substance of this stuff, and have to just deal with the nuts and bolts. The picture is just more and more obvious, it’s been obvious, the smartest people in a lot of these, whether it’s regulation or finance, had been wise to Elon for many years now. By the way, this has been happening in journalism, as well, where you have newsrooms that are divided. Certain people figure it out really early what the deal is with this guy and other people take a long time.

One of the things that I’ve been hearing lately, is that his support is getting stuck up at the top. What’s happening is, is that if you deal with the substance of stuff, if you listen to his testimony in these trials, and certainly his boards testimony, the things that these people say and the ways that they’re trying to have it both ways, saying: Oh, we’re so precarious, and yet we’re taking over the world, we’re manipulating the quarterly numbers, but it’s all about going to the moon or Mars. It’s just so incoherent and so unconvincing to an open-minded, reasonable person. That I think at the staff level of a lot of these organizations, the consensus has been becoming increasingly clear. I think the Twitter situation has done a lot to help clarify some of that push people off the fence.

The problem now, as you move up the hierarchies of these institutions, you get to people who aren’t really engaged in the substance of the material anymore. For them, their core, professional interactions, and dynamics are with each other, in this elite circles at the top. They’re this idea of Elon’s mythic heroism is dying very, very hard. I think you saw it at Davos. A number of CEOs of these big Wall Street banks that I know — there are people at these very banks, who are on the front lines. These are banks are sitting on $14 billion, or $13 billion or plus dollars of debt for this Twitter deal that they know is completely screwed. There’s all kinds of merger and acquisition deals that they would love to make happen, the capital literally isn’t there. So we’re getting down to the hold downs, the problem is that the hold downs are at the top.

It really reinforces something that I felt for a long time, which is that Elon Musk is very much an elite phenomenon. It always has been, if you look at the cars, you buy that car, and you’re like: I’m a good person now. It doesn’t matter how many flights I take, I have an electric car. It’s ultimately winnowing down to the core, which is this elite feel good vibes based phenomenon that is been propped up by all these narratives and some real accomplishments. But, really, the last thing to let go is the importance as a status thing within sort of elite circles, that we all agree that this man is a genius, and that he’s going to take over everything he touches. Again, we have this whole thing where there’s all this technology and economics, macroeconomics, and our relationship with tech and all these things, but it all ultimately seems to kind of boil down to the psychology of a few people. When you deconstruct all of that, then you start to really understand: Okay, this is how things actually work.

PM: Absolutely. We talked about a bit of that with Wendy Liu at the end of last year. It’s not just that people buy into the Musk way of seeing things and what he’s allowing them to believe about themselves. But of course, now as he takes over Twitter, and how he’s been managing that company has served as a model for a lot of these tech billionaires who want to slash workers and gut benefits and all these sorts of things. It’s a different way of approaching what it’s like to lead one of these companies than it was in the past decade or so. When the workers when they were paid a lot of money, when you had all these perks on campus in order to draw them in, and all these sorts of things. A shift that he is helping them all make by being the very forceful picture of what a tech CEO is going to be in this next phase of where things are going. So you definitely don’t want to throw him out at the moment where he is trying to legitimize that for you.

This has been a fascinating conversation and I want to end it my looking at the EV industry more broadly. We’ve been talking, high level, about Tesla and about how Elon Musk has used a lot of these promises in order to pump up the share price of the company, because that was what worked for him. It was what worked for his investors, it’s what worked for his board. It also played into these larger narratives about Tesla taking over the world. When we actually look at the fundamentals of the company — which is an electric car company, as we were talking about at the beginning — that is competing with a number of other vehicle companies trying to sell its vehicles into the market, have people buy them, have people interested in buying them. It seems like there are a number of challenges that it is increasingly facing in its actual business, where it is supposedly going to actually make money and grow into the future. Where you have these traditional automakers, who didn’t have electric cars for a long time are very few of them, rapidly expanding the options that are available to people.

Then on the other hand you have these changing views on Elon Musk, and what he represents to the public, and then also what Tesla represents to the public. If you buy a Tesla, you’re saying something about your relationship to Musk, or what you think about him, because that is the way that it has been sold for a long time. You can’t just immediately break that connection, especially when he’s still the CEO of the company. When he’s still controlling, he’s still the one who is the public face of it. You can’t just divorce from that. Then the other final piece I want to add to this is that through last year, we saw price increases to these vehicles again and again. Now, we begin this year with price cuts from Tesla, from Ford. I’m sure there’s other automakers doing that as well. Those are just a lot of pieces to throw into consideration there to throw to you and say: What do you make of where this is going? What it’s going to look like for Tesla, as the EV market enters a new phase?

EN: I’m gonna focus mostly on North America. Briefly, before I get into that, China has been where a lot of Tesla’s growth has come from, and one of the things that people don’t understand is that they got a totally unique deal in China, that we still don’t know the terms of. When you take away that China market growth, Tesla would be in a very different position with regard to the stock market and everything else. The fact that we don’t know what that deal is, and yet, it’s been clearly so important to their ongoing survivability, certainly as a stock promotion endeavor, is really interesting. Also, where China and the US start to match up is that Tesla has fundamentally never been good at making affordable cars.

This was one of the biggest points in “Ludicrous” is that if they just want to be a premium, like BMW or whatever, that’s always been the option. But from the very beginning, it had to be more. It had to be: Oh, no, you buy this expensive car, and it’s going to allow the poors to someday have their own Tesla. So in China, they’ve had no choice but to try and dramatically reduce the cost of the cars and they’ve done that by very quietly blowing up their entire narrative. Which is that: We’re gonna we have this unique special sauce in our partnership with Panasonic, on the battery level. Panasonic has dropped to, I think, the number five battery supplier to EVs, because Tesla’s had to go and buy from CETL and BYD. Especially, these Lithium Iron Phosphate cells, which are lower energy density, but much more affordable.

Tesla avoided these, and never developed this technology. BYD did way back, BYD was laughed for years and years and years. Everyone was like: What are you doing wasting your time with this technology, especially when Tesla came out and the performance was so much more. But again, that makes sense for premium, now Tesla has to go to totally new suppliers that doesn’t have relationships with in order to get those costs down, in addition to whatever else is going on in China.

PM: Can I add to what you’re saying there around China just briefly, as well? Because this is really important for people to understand. Tesla is pushed as the leading electric vehicle automaker in the world. Tesla sold 1.3 million cars in 2022. BYD, which is an electric vehicle maker in China, Chinese company sold 1.8 million EVs in China, alone, last year. They produce at a much lower price point, it’s a very different narrative than what Tesla is selling. I was reading in Bloomberg recently that this is particularly important, not just because of what it means for the Chinese market, but sure, there are growing restrictions on Chinese companies from the United States.

But BYD and other Chinese electric vehicle companies are in the process of going international of embarking on an international expansion, pushing out Korean and Japanese automakers, as they push into European markets and other markets around the world. One of the things that they’re doing as this electric vehicle race heats up is they’re saying: We have gotten better at creating cars, they’re more reliable — these Chinese cars — than they used to be. You can also get them much cheaper than the Western automaker cars that you’re used to buying. Look at us as an option, as we look at making this transition. Our vehicles are also being sold in a slightly different way as well, where they might be a bit smaller, they might have slightly smaller batteries, but this allows it to be a much lower price point and maybe fit in a bit better with the actual lifestyle that you’re living.

EN: No, that’s a bunch of really, really good important points there. The global car industry, but every market, has always been a little bit different. But with EVs —because EV markets are so dependent on policy, we see much more divergence between characteristics of the European market, the Chinese market, and the US market, than we saw in the legacy auto-industry. So that’s a really important point to understand. This is why when you start to look at our market and you realize: Oh, The average transaction price for an EV is over $60,000, it is $65,000, that’s a policy failure. We are rewarding people for buying expensive cars that are already cool, and we can’t produce enough of that. It doesn’t make sense at all. More importantly, it’s not sustainable.

If you look at BYD, you’ll see they have vehicles, the Seal and the Dolphin, and these are low cost cards that are. Some of them, I want to say the Dolphin or one of them, is literally designed for ride-hail drivers. Which have their own special incentives to buy electric vehicles in China, but they cannot afford expensive vehicles. Again, you see how policy is part of this, but BYD is also capable. As a company that started out as a supplier of batteries to Nokia, they were a cell phone battery supplier, with the exact opposite approach to this business from Tesla, in that they started as a supplier, as an industrial company, and have grown into this EV business. Whereas Tesla was always about the product, EV product, and the premiumness, the appeal, and the targeting the tech sector demand. They worked from opposite ends. I think that if we learn anything from from auto-industry history, it’s the people who are rooted in the fundamentals of the tastes and fashion come and go in any product, but especially in the high end of the car market. Figuring out how to industrialize things is how things really change in broad, meaningful ways.

PM: I feel like it makes sense to see BYD do that because of how the Chinese model, the efforts that it’s been doing, is to move up the value chain. It’s a battery maker that supplies Nokia cell phones, and then it moves up to electric cars and electric car batteries and things like that over time.

EN: Absolutely. Europe is a little bit of the middle ground, you can think of it between China and the US. In the US, we have less regulation than both Europe and China. As a result, we’ve allowed our EV market to become, again, this elite phenomenon where it is very much about status. Initially, it was more about the environment, but over time, it’s become much more about signaling in group status in this tech elite.

PM: Not to interrupt you too much, but look back at the EV1, and the RAV4 and the Nissan Leaf, these vehicles that were smaller and geared toward a more environmental lens. Then we enter this new stage where the defining vehicle is the Tesla sports car, which has a large battery with the massive range, and it’s very expensive to buy, that models what you’re chasing as an electric vehicle maker.

EN: I’m really glad you brought this up. The predecessor to the Model S was the Prius — I think you have to be of a certain age to remember these days. In Silicon Valley at the time there was this already this beginning of awareness that we are this economic elite that does not have a car made for us or car brand for us. I think the Prius was definitely the most techy car on the road, both in terms of the hybrid drive train was incredibly technically sophisticated. The very first generation lost money, which tech people are like this is a tech project. Even the interior was very minimalist, I loved driving the second generation Prius, it changed how you thought about driving, it made you want to drive efficiently, which is not how normal cars were.

It was a very different thing. At the time, in Silicon Valley culture, there was this thing of like: Okay, so no one’s making cars for us. We can buy BMWs and Porsches like the stock guys do or whatever, but with this, it tapped into one of the threads of Silicon Valley culture. The sort of like: Screw you guys. We don’t need material things. We’ll drink our smoothies, and we’ll just code all day. We’ll transport ourselves in these little super high tech, anonymous, boxes. People forget that the substrate on which the Model S was grown. The Model S took that and said: No, no, you’re gonna have a bigger, more powerful, sexier, whatever, more techy car. It took that and pumped it full of steroids. At the same time, one of the reasons the business has stayed viable, is that for a decade, it also had that Prius appeal where it was the uniform, it was the Allbird shoes. Everyone drives the same so it was this hybrid point between that uniform, conformity: We’re rejecting the world of cars. It was the gateway drug to the world of cars.

Now, after a decade of that, what you have is all of these, finally, the Germans and the Japanese and the Koreans are all waking up to the fact: We completely snooze on the fact that Silicon Valley and tech people were this massive premium car market, that we didn’t understand, we didn’t see coming. That is where Tesla just absolutely kicked the car industries, butt. Now they get that. Now, all of a sudden, you’re seeing this flood of new products, and the Tesla people are gonna say: Oh, well, it doesn’t compete on this, this isn’t as good as that. Tesla beats all of them.That doesn’t matter, what’s happening is that we’re evolving from this Prius mentality into another premium auto market segment.

Now, if BMW has a hot new model out, like right now the i4 is just hitting, and people are like: Oh, oh. You’ve got the Rivian and if you’re a certain type, you’ve got the Hummer, and that’s just going to continue. For us at a zoomed out, broader level, in this country, there’s a huge question of: Don’t we want our EV market to be more than just this? Within the reality of the EV market that we have, very clearly, if you look at Tesla’s product pipeline, the model S’s had one refresh in a decade now, it’s over 10 years old. The Model 3 is very slow too — I don’t know why it looks just like the Model 3. The only thing in the pipeline is the Cybertruck, which I have a lot of questions about its viability.

PM: The Roadster update, that was promised years ago, and is still nowhere to be seen.

EN: With Tesla, it’s not that the competition are going to beat them on all these metrics that people think are important, it’s the fashion show aspect of it. It’s like in the 20s, and 30s, when we went from the Ford Model T — which just absolutely I don’t even know what the market share of the Model T was — but basically, they put hundreds of companies out of busines. Everyone had a Model T, it was ubiquitous. Then all of a sudden, General Motors came along and said: What if we had eight different brands and consumer credit, and you find the brand that reflects you and your social status, and then you take out a loan, and completely transformed the car business?

That’s what we’re going to see here, and honestly, you can have whatever ideological response to that that you want. But for me, what’s important is that, we’re going to finally start seeing this phenomenon for what it really is, because the narrative has been this is for rich people, or elites, or whatever, right now. This thing that can scale and be driven down in cost. What we’re seeing is that the “The Top Secret Tesla Motors Master Plan” blog post came out in 2006, and the average transaction price for Tesla is basically $70,000 in 2022 — it was a lie. We can all finally drop the pretense that we’re saving the planet or transforming everything, and just say: EVs are the big new premium market trend in the US. It is what it is, may the hottest car win.

Let’s not put more onto it than that. Meanwhile, the business of actually electrifying the miles that we do at scale, in the most pragmatic way, we’re not going to do that by saying: Oh, let’s just take Tesla and somehow multiply it and make it cheaper without it losing its test limits, like these are illusions. We need to drop that, we need to say: Tesla created a premium car market segment. Now it’s got real competition in that that can be what it can be, but we need to reset our entire approach to proliferating electrification in the most pragmatic and impactful way, because we don’t have all the time in the world.

PM: Absolutely. We can clearly see that a lot of these premium electric vehicle models are not the most sustainable in the world, especially when you’re looking at a Hummer EV or something like that. Ed, I’m sure we could go on and talk forever, but it’s great to speak to you again. It was great to go over all these aspects of Tesla and the broader EV market and how it connects to so many of these important topics that we talk about all the time on the show. Thanks so much for taking the time.

EN: Of course, it’s always so much fun chatting with you.