Musk focusing on Tesla, not Twitter, making 'a huge difference' at EV maker, says investor

Thu, Jun 15, 2023, 2:16 PM

BRAD SMITH: Tesla shares closing the day lower. Back to life, back to reality, back-to-back losses here after the EV giant saw 13 straight days of gains. Look, it was a hot streak. Earlier this week, Bank of America analyst, though, they estimated that the US electric vehicle market will drop to 18% by 2026.

For more on the EV space, we welcome in Ross Gerber, Kawasaki Wealth Management-- Wealth Investment Management CEO. Ross, great to speak with you here today. You know, even as we kind of look at this win streak that Tesla has had, you have been one of the more vocal names around Tesla shares, whether it's, you know, thinking that Elon Musk should give up the reins to somebody else or whether it's just how they're able to make sure that they're locking in margins for the longer term. You look at a win streak like we saw. Net happy, net sad that it snapped, what goes through your mind?

ROSS GERBER: Well, I'm certainly not sad when you own 420,000 shares of Tesla that have it, you know, go up substantially and make my clients, you know, I don't know, $50 million. You know, pretty happy. Just to be clear, you know, I didn't want any change in Tesla's management. I want a change in Twitter's management, which is what we got. And by getting Elon back at Tesla and all the moves they've made just in the 30 days since Elon's really been refocused on Tesla with signing up the entire world to the Tesla charging infrastructure, for example, and having very, very positive meetings in China, we just have seen full fledge how Elon's focus makes such a huge difference in the results.

And the stock market has responded. And institutional investors have come back into the stock. And now, we're back to the valuation that Tesla deserves.

DIANE KING HALL: So Ross, Diane here. With regard to both you had been bullish on Tesla way before the rest of the market has caught up, but previously you were pushing for a board seat. Are you happy with how Tesla is being run now?

ROSS GERBER: Well, I mean, pretty much everything I was pushing for, they've done. So yeah, I'm thrilled. You know, once again, Tesla was never really against any of the ideas that I was presenting. It was really just Elon. And so I think there was just a period of time that it took for several of these things to sort of percolate into his mind, into existence. And now, things are moving in very much the direction that I had hoped. I feel a lot more confident about the succession plan and management. The changes in the board with JB Straubel, I was very much for. So I am happy to have JB and Tom Zhu on the board, which really represent operational, you know, players for Tesla.

But also, just the investor day, I thought, was super illuminating, followed by a shareholder day. That was also very illuminating to what's happening with the company and their focus. So, so when you look at Tesla as a whole, obviously, there's many challenges they face over the next year. But, you know, with Cybertruck launch imminent and the economy hopefully looking like we're through the worst of it and-- well, of the rate cycle hike. So hopefully, we won't have a recession. And going into 2024, you have to be very bullish on EV makers like Tesla.

BRAD SMITH: We've heard some on the Street call out and say that Tesla is now an AI play. Do you believe that to be true? And has Tesla disclosed enough of how much it's willing to spend on artificial intelligence at this point for you?

ROSS GERBER: Well, it's really nice that everybody's into AI. But this has been going on for a long time. You know, AI development videos and other top investment in my fund GK, along with Tesla is our top investment. And so it's been a really good year for us at GK.

But, you know, when you look at Tesla, it is an AI company, where its solution-- it's not only an AI company, but it's solution is autonomy or having cars drive themselves. So this is a much more difficult AI solution than, let's say, generative AI getting it to tell you, you know, how many, you know, stocks are in the S&P 500 or something, you know, which is 500. So it's kind of like, the market's finally realizing the full value of the software that they've been developing for a long time that a lot of people have been saying is going to be incredibly valuable. Now, I think the market is starting to say, hey, you know what, these cars do drive themselves. And that could be awesome.

DIANE KING HALL: You mentioned the Cybertruck earlier. But that has been delayed after delay. Is it-- is it ever going to come?

ROSS GERBER: Well, we don't look at Tesla timelines as delays. That would assume that the original date was actually real. So we look at Tesla when they set timelines as really goals. So they haven't achieved their goal in reaching production as quickly as we had hoped. But they certainly reaching it now. So we're now at the beginning of, can they make these and scale? And how much pain will they go through making these in scale? And we'll see in the next, probably, three to six months how successful they'll be at scaling Cybertruck production.

So we're hoping for the best. And I was just in Austin, and they're employing incredible new technologies to build this truck. So it'll be quite a challenge. So it's great to have Elon back on the factory floor really working at Tesla.

DIANE KING HALL: Well, I like the vehicles. I'm on the fence about the Cybertruck. But thank you so much for joining us, Ross Gerber. We appreciate your insight as per usual.

ROSS GERBER: Thank you.

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Musk focusing on Tesla, not Twitter, making 'a huge difference' at EV maker, says investor

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