Tesla Earnings Miss Despite Record Third-Quarter Sales Surge | Bloomberg Businessweek
Summary
Tesla Earnings: Tesla reported third-quarter profits that missed Wall Street expectations despite record electric vehicle sales, leading to a 2% drop in after-hours trading.
Investment Strategy: Ross Gerber of Gerber Kawasaki Wealth and Investment Management, which holds $80 million in Tesla shares, views Tesla as a hold due to its premium valuation, advising against buying more at current prices.
Full Self-Driving (FSD) Concerns: Gerber expressed skepticism about Tesla's vision-only FSD technology, doubting its effectiveness compared to competitors using multiple sensors like lidar and radar for redundancy.
Robo-Taxi Ambitions: Tesla's goal of developing a proprietary ride-hailing robo-taxi service is seen as challenging, with existing competition from companies like Uber, Lyft, and Waymo making market entry difficult.
Market Position: Despite challenges, Tesla continues to focus on its service and energy storage businesses, which are profitable and likened to Apple's business model of combining hardware with software services.
Infrastructure and Mobility: The discussion highlighted the potential need for infrastructure changes to accommodate widespread adoption of autonomous vehicles, with dense urban areas being more suitable for such transitions.
Long-Term Vision: Tesla remains committed to achieving its autonomous driving goals, although there are differing opinions on the feasibility and timeline for these advancements.
Transcript
[Music] Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio. >> Well, back to Tesla. Shares down 2% in the after hours. Uh the company posted thirdarter profit that fell short of Wall Street's expectations despite record EV sales. I want to bring back Ed Lllo. He's the co-host of Bloomberg Tech. And also bring in Ross Gerber. He's president and CEO of Gerber Kawasaki Wealth and Investment Management. got more than $3 billion in assets under management. He joins us from Santa Monica, California. Ross, you now have about $80 million of Tesla shares, down from 100 million earlier this year. At it at your peak, how much Tesla stock did you own? >> Um I think uh we had about one and a half times more than we have today. >> So that's not that much more. No, we've cut it our position by 60%. So that's that's fairly large. >> Are you um are you buying or selling today or buying or selling right now? >> Um neither. Neither. You know, you know, Tesla is a hold for us. You know, the people who are holding the stock at our firm, our clients very much believe in Tesla and and don't want to let go of their shares at all. And then, you know, the clients that don't want to own Tesla don't own Tesla anymore. Um but we're not recommending to buy Tesla or per se more likely recommending to sell Tesla for investors up at these prices because you're getting such a premium valuation. But but in general, we've just been holding the stock because, you know, we're we're kind of stuck with our position right now. >> What about you? We because we check in with you quarterly and you you've really changed your position on the company in recent years, in recent quarters, and your position on Elon Musk, too. Are you a believer in the company right now? >> Um, yes and no. I I I still own Tesla stock as well personally. Not a lot, but you know, I like to have some because I bought it at a dollar a share or a$150. So, it's like fun to have in my portfolio still. But, but that said, um you know, I don't know what's going to happen with full self-driving. I just don't think it works. And I think vision only systems don't work. And I'm very sure of this now. Even though I'm not an engineer, I can explain to you how humans drive. And I don't think Elon gets how humans work. I think he gets how machines work. And so I I think that Tesla's in a pickle. If they can solve full full self-driving, like I could get in my car right now and push a button and it drives me home. Like I can get in a Whimo right now and it'll drive me home no problem, then I think Tesla has a reason to buy the stock because now they've got their products working and they can grow from there. But as far as waiting for robots and cabs to pay off, it doesn't matter if full self-driving doesn't work and full self-driving doesn't work. So, nothing's going to get me excited about Tesla until it drives me home. >> Mhm. >> All right, good stuff. We're talking with Ross Gerber. Um, Ed Ledllo, I know you're reading over stuff. Come on into the conversation uh with uh Ross. >> Yeah, I mean, you know, just going through the deck, the way that Tesla explains it is that they had lower FSD revenue recognition in this quarter because of the timing of previous generation releases of FSD in the same period a year ago. Um, you know, I'm not a Tesla shareholder, as you guys know, but I do drive a Model Y, in fact, and I use FSD every day for about 60 m, 30 m to work, um, 30 mi back. I'm not on version 14 yet, but Ross is speaking to the the question which is always there. Explain the jump or the steps to the end result, the the end state. The end state is robo taxi, right? if Tesla is to be believed. And right now, you know, the the street seems kind of split on whether we understand how we go from a software platform that consumers pay for as a one-off or a subscription package to a world where the vehicles built on a on a common software platform or iterations of that platform power a proprietary ride hailing robo taxi service. you know, it's it's difficult to see the jump. And Ross can speak for himself, but just in the reporting, that's that's what we hear all the time. >> Yeah. I mean, you're 100% right in that these are completely different businesses, right? Like selling cars that drive themselves is an Apple business model and that's why I always love Tesla. When I first found Tesla, I was like, this is the Apple of cars, right? Like you build hardware and with great software and then you make money on services, right? Um, and that's really where Tesla's making a ton of money right now is on services and energy storage, which are still great businesses for Tesla. But when you talk about building an Uber-like platform, this is an extremely difficult thing that it took Uber almost a decade or more to make money doing. And Uber is very, very good at this now. And the only way they've been able to make money is by charging substantially more for the rides because Uber is not cheap anymore. and they had to subsidize rides for a decade just to build that business. So, when you actually think about Tesla scaling, if there was no competition, that'd be one thing. But there's already several cab services I can take right now, whether it be Uber, Lyft, or Whimo, that are all very good at what they do. So, you know, even if Tesla gets this to work, it's still a tough business. And the second thing I would say, Ed, you use full self driving a lot. Obviously, you probably, if I asked, do you feel comfortable turning it on and going into the backseat of your car and letting you drive that full 30 mi home? >> Uh, I've never done that or attempted it. And I I think, you know, I post quite a lot on X. My experiences, like I say, today, this is what happened. You know, I I would never get in the back of the car and turn it on. I I also would not put my my little baby boy in it either. But the way that I've tried to track it is generation by generation. >> How is it improved on the route that I take every day? The one area is really struggled with the toll boobs on the B Golden Gate Bridge. You know, that can be precarious and you can see my post on that. On your point, um, in the in the AI graph of the shareholder deck, the way that Tesla explains it is that the latest version of FSD they say has a substantial amount of the source code in the robo taxi version. And by putting it out into the real world, it gives them valuable real world data to help them improve a future robo taxi service. I don't I don't weigh in on that one way or the other. I'm just saying that's Tesla's explanation on the link between the two, the consumerf facing FSD and the same code base that will be used to power a future robo taxi service. >> Hey Ed, um Ross made the point that he doesn't believe vision only FSD or vision only self-driving works. Can you talk a little bit about that technology that that Tesla uses versus the other companies namely Whimo and um uh Amazon Amazon subsidiary as well? >> Yeah. So very simple when we say vision based system the inputs for the vehicle are only cameras on a Tesla. The cameras capture capture optical data from around the vehicle and uh use the underlying algorithm to make an onboard decision interpreting the world around them. Uh the opposite academic view is that you need to paint a richer digital picture of the world using other forms of data gathered by liar, radar, um and in some cases even going beyond that. you know like there are there are varying degrees of LAR spinning or stationary or static sorry the economic argument that Tesla and Elon Musk have always made is that having a vehicle that has multiple sensors on it is not scalable. You know there is no end result where the vehicle could be affordable for a consumer or profitable for an operator of that system to run. Um the other robo taxi companies like Whimo or Zuks who do have multiple sensors and custom versions of them say that you have to have them for redundancy. So if one of those digital pictures fails, i.e. the the v the vision one the cameras fail or the the LAR radar fails, you can still be safe because you have a rich enough digital picture of the world around you for the vehicle to make a decision based on the circumstances presented in front of it. So let me put this question to both of you and let me just start with you Ross. I mean I've gotten into Whimo. I love it and I've sat in the back seat. I've closed my eyes for like a 30 40m minute trip to an airport. I have loved it. So FSD full self-driving is it are we crazy to think that that's going to be our world going forward or do we have to change our infrastructure dramatically to make it possible going forward? like trying to understand because if the model is so >> think infrastructure is the hardest part would be the hardest part. >> Well, I'm just thinking if it's such a tortured model like are we crazy to even be talking about it? >> You you're you're getting into one of my favorite like discussion debate like issues out there right now which is the future of what mobility actually looks like. And my basic premise is that humans love to drive and are not giving it up. And I I'm now raising my children. I I thought when I had children that we would have had this master that my kids would never learn to drive, but my kids learning how to drive now. You know what I'm saying? And people love to drive. Now, younger people don't love to drive as much as older people. That's one thing in our surveys we've noticed. Okay. But I'm not giving up driving. And if I live another 30 years, I'm still going to love driving. And I love cars and I love driving fast and I love like, you know, driving the one freeway, you know, or whatever you want to call it. But, you know, humans love the independence and the functionality of having their own vehicle. We've had it started with the horse. We all had our own horse. You fought to the death to protect your horse. And and I just don't see people giving up cars anytime soon for a lot of practical reasons. Like when you're doing errands and you have to store stuff in your car or pick up your kids and then go to soccer, it's like you're not going to be taking cabs everywhere. That's just not a realistic view of the world. So unless we rejig our cities and start from scratch where I think the biggest use case would be in very dense urban environments that are very difficult for people to drive, just saying no more cars. it has to be caps. That makes sense in New York City or downtown LA, let's say. But I just don't see how you implement that because it's like millions of people already have their commuter lifestyle and I just don't see how that changes. >> All right, so Ed Lelo brings us back then to Tesla. >> If they keep talking about FSD, um I mean they're an EV company and a lot more. We know that. But I don't know, is it enough I don't know momentum? I look at the valuation like what is this company going forward? >> Well, uh I I repeat the same thing I've said every quarter for eight years. Elon Musk is often late on his predictions but gets there in the end and Tesla is clearly committed to this. That's part one. You know that that largely Tesla has made economic benefit arguments and the industry has as well. There are people that disagree with Ross in that car ownership as a model is in doubt. You know, there are multiple reasons from the cost of owning and and operating a vehicle through to generational attitude and appetite to go out and get a driving license that that people feel uh will make the technology uh more pervasive and be adopted. Where people agree with Ross is the environment, the infrastructure. Um and you'll I go back to the reporting always. I have to go back to what we've actually reported which is there is a piece of legislation currently dormant and is not moved uh beyond the proposal stage that we reported Elon Musk and other Tesla staff lobbied very hard on which is to have some federal level framework where purpose-built robo taxis that don't have steering wheels or pedals can be deployed unfettered in the real world. Um, but it doesn't address that what happens with the rest of road users and that's where academics believe we're heading for a real issue. >> All right, Ed Lela, we know you've got some stuff to do um off of these earnings. Uh, so appreciate your input throughout the day today and certainly off of Tesla's earnings. All right, we got to run. Uh, always enjoy talking with you. Um, Ross, thank you so much. Ross Gerber, president, chief executive officer of Gerber Kawasaki Wealth and Investment Management. more than three billion in assets under management and they own about $80 million worth of Tesla shares. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. >> Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. Bloomberg's Thomas Black, he recently wrote an opinion piece and he talked about the hype around humanoid robots being pretty high with forecast of nearly 1 billion humanoids in service by 2050. But the reality is that most people overestimate what robots can do at this point in their development. Got to say though, one company that's been using robots a lot and for a long time and has deployed its 1 millionth robot happens to be one of the world's largest market cap companies out there. It's also a household name. So, we wanted to check in once again with Ty Brady. He is chief technologist at Amazon Robotics. Uh he joins us from Amazon's Delivering the Future 2025 event from Amazon's DUR3. Uh it's a delivery station uh in uh Milipitus, California. Um and so we kind of want to find out where they are in terms of the world of robotics. Um Ty, I got to tell you, Tim and I loved talking to you last time, so so glad to check in with you again. First of all, this event where you are, I mean, right now I just see a curtain, but I'm assuming there's lots of stuff happening at the event. Who's there? What's going on? Tell us a little bit about it. >> Yep. Well, first of all, thank you so much for having me on. I really appreciate it, and I enjoyed our conversation as well. It's just great to be here. Uh we are our our fourth delivering the future event here. And uh there's a bunch of press that we have here and we made a couple of big announcements in robotics today. Can you tell us about them? >> If you the first is uh in our manipulation robot that we call Blue J. And what Blue J the way that you can think of that is we can you could take three assembly lines and put it in the same footprint of one. Uh what it does is help eliminate the menial, the mundane and the repetitive and it could pick more than 75% of the inventory that we actually sell in our sortable network which is a really big deal. I'm really proud of that. And I'll also say that there's something interesting about Blue Jay as well is as compared to our other bird manipulation systems uh Cardinal Sparrow and and Robin that took us about uh about 3 years to kind of design, deploy and get out to our frontline employees. Um we have actually uh done Blue J with the power of AI in just over a year. So it's really accelerated the pace of innovation. >> Hey, I think when a lot of people think about Amazon and robots, I just want to jump in because we don't have a ton of time, but I and I want we'll get to some of the other announcements. They they think about the the KA systems robots, the big acquisition at the time, you know, 2012, that was a big acquisition for Amazon and and they've seen pictures of the way that those can move large loads of of things across warehouses. But if you were to go into a state-of-the-art Amazon warehouse today, what would you see that's that's in addition to those KA robots? Yeah, in addition to our the world's first goods to person fulfillment uh uh strategy which was just a really good idea where we have more than a million robots that we manufacture actually in Massachusetts uh doing that job every day. You're going to see more of the unstructured fields, right? So you're going to see green robot that we call Proteus that can move uh big uh cargos of of packages uh to the right dock at at the right time. uh you're going to see uh many more manipulation systems that that we have in there. Uh eliminating kind of the repetitive motions that that we have. No one wants to lift a 50 pound box all day. Robin does that. Cardinal does that. Moving it into some of these uh Proteusbound uh uh uh carts that that we have. Uh you're going to see much more collaborative robotics, right? So that's where we build our robotic systems to enable people to augment what people are capable of. And uh we really believe in the philosophy of of people and machines working together. How can we build the tool set that enables our employees uh to do their job not only more efficiently but also with the with better safety in mind. >> All right. So there's this robot arm called Blue J. You just talked about it. You know, you guys are using this AI agent um called Eluna. Uh and then you're also working with augmented reality glasses to be worn by drivers in delivery trucks uh in the field. There's like so much going on. step back for a moment because you guys have a lot of data. You look at what you're doing. Um I'm just curious investors who are thinking about Amazon and what you are doing. How do they think about the long-term like ROI, return on investment when it comes to the investment you guys make in robots? Is the goal about labor efficiency, throughput, speed, or is it margin expansion uh kind of tie across your fulfillment operations? What is it? >> Yeah. Well, definitely efficiency. We we think about efficiencies and how can we gain efficiency through all the chain of our fulfillment processes. Uh for sure and and you mentioned data and data is the fuel for AI systems. Data has allowed us to bring think of the a the body of being our robotics but bring the mind to robotics allowing it to be more adaptable uh more fluid. Uh you can almost think of this as the ability to pour our robotic systems into any size building, any scale of building to amplify what our employees are already doing. We want to give them an amazing tool set. And we see that when we do that, we're more productive, right? When you do robotics, right, when you do collaborative robotics where you need both people and machines doing what they do best and they do different things better, um that it allows you to be more productive. And when you're more productive, that allows you to invest more in people. We've upskilled more than 700,000 of our employees. Uh, which is a great stat. Uh, and also in our robotics, we've expanded from the the KA days, we've expanded from just a movement solution to now movement and mobility and sortation and storage and perception systems, packing systems that have really changed the game for our customers. That's a big deal to us. >> But Ty, you know, will you need less workers? And I got to bring it up. You know, the Times had a story out. Um they talked about interviews and a cache of internal strategy documents that they saw that it reveals that your execs think that the company's on the cusp of its next big workplace shift. I'm I'm reading from the times and replacing more than half a million jobs with robots. So, you know, we know things change. I'm not in a horse and buggy anymore. I don't make things peace meal. I get it. Um I don't get tons of faxes and I don't get tons of uh pieces of physical mail. Thank God things change. Having said that, is Amazon do you guys believe that you're on the cusp of a workplace shift and that you won't need as many workers because the advancements in robotics? >> Well, there's no doubt that things change. I mean, and we're actually really proud of that and Amazon is that uh we avoid stasis at at at all cost. We change and we adapt and the nature of tasks definitely changes. There's no doubt about that. uh we are uh laser focused on efficiencies inside of our buildings. Uh but when it comes to that article, that article was speculating 10 years out, right? That's a 10-year spec speculation. And it's it's hard to to say what's going to happen in the next 10 years. But I can tell you what happened in the last 10 years. The last 10 years, which is when we seriously invested in in robotics, that we created hundreds of thousands of new jobs and new job types. And and there's been been no employer in the United States that has employed more people than Amazon >> in 10 years. I mean, that is that's and that's the power of of efficiencies and building your robots in way that that's applied and real that actually augments the human potential. >> All right. My brother say, "Am I like a dog with a bone?" So, wait. So, does that mean 10 years out it could be less jobs or we just don't know? Or you don't think that's the case? Well, you have to think about I mean there's there's jobs and there's tasks, right? So we we of course we're changing the nature of tasks. Like I'm very bullish on eliminating every menial, mundane and repetitive job out there. Nobody wants to do that. So we're going to change those tasks 100%. But we can again as as history has shown we continue to create jobs right with the goal of two things. Can you have it all? Can you be more productive which means more efficiency and can you also create a safer environment for employees? And we're actually doing both. That's what history has shown in the last 10 years. We have c better than 30% uh reduction in our o overall recordable injury rate uh over the last 5 years because of our robotics. Uh and also uh much more efficient. For example, our latest generation uh fulfillment center in shreport is 25% more efficient >> the the order. So you can have it all but you have to build your robotics in the right way that empowers people. We're speaking with Ty Brady, chief technologist at Amazon Robotics. When we think about hiring for these one-off or seasonal events like the holiday season or Amazon Prime Day, I'm wondering how you're putting pencil to paper right now and thinking about those numbers and to what extent automation has reduced Amazon's dependency on seasonal or hourly labor for holidays, for Prime Day. What does that look like or what will that look like this year, next year? Well, it's the same philosophy of of of empowering employees, whether they're they're temporary or they're full-time employees, with the the the world's best machines that help them do their job. It's the same philosophy. I'm really proud of the fact that this year we're going to offer more than 250,000 uh temporary jobs for our employees uh to come in during the holiday season. Those are good paying jobs. Really happy about that. Really pleased with that. And I'm really uh pleased with the work that our women and men have done in the robotics field designing and pioneering these new physical AI systems that help them do their jobs better. >> I got to say one thing that I've been thinking a lot about is what's going on overseas, whether it's China, whether it's Japan. Uh Bloomberg has done some reporting about service industries in Japan because they have a labor shortage that they are leaning increasingly on robotics. Have you been over there and looking at what they're doing? And I'm just curious if um you're seeing some things that are pretty impressive and that the US as a creator of things or its role in the robotics industry has to keep a watch on what's going on in other countries. >> Yeah, I I think it's easy especially in robotics to get distracted about uh you know what other people are doing. I think anybody can make a YouTube video. I think anybody can kind of you know pop in and overflate something. Uh but if you come into our world, our world is all about application. Our world is is the reality. >> All right. We were talking with Ty Brady, chief technologist, uh robotics at Amazon. Um of course, our our shot froze. Uh that's the world of technology. We're talking a lot about technology. Stuff happens. And we're hoping we can get Tai back. Uh just to finish up this conversation, >> maybe the robots are using all the Wi-Fi or robots like I don't like what he does. >> That's that that is a connectivity thing though. >> Well, it feeds into the P, right? Like you >> It's all question about resources. >> You got to charge these puppies, right? Can't just plug them in, right? If they're I don't know. >> Hey, we need recharging, too. Okay. >> Yeah, it's called food and sleep. >> For Tim, it's called food. Food and sleep. >> You know, I will say, >> do we have Ty back? Can we grab him for 20 seconds? >> Ty, 20 seconds. Forgive us. Uh, final thoughts here. >> Sorry about that. >> No, it's okay. >> Okay, let let it go. We're I'm ready for you. >> Okay, 20 seconds. Just final thoughts for our audience because we got to run. >> Uh, so final thoughts are is that uh robotics when done the right way. When you reframe your relationship with machines, you can enable more productivity, create greater efficiencies, and create a more safer environment for employees. and this collaborative mindset that we've had that we've done for the last 10 years really does uh make the day. >> Ty Brady over at Amazon. So appreciate it. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. >> We love talking to mayors. >> We do. We do. We also love talking quantum computing. And there is some news in quantum computing today. Google running an algorithm on its Willow quantum computing chip that can be repeated on a similar platform and outperformed classical computers. We spoke a little bit about this with Ed Lello earlier. The folks in Chattanooga, Tennessee have been thinking a lot about quantum computing for years. The first commercially available quantum network in the US was established there back in 2022. Back with us is Mayor Tim Kelly. He's an independent. He's the mayor of Chattanooga, Tennessee. Also with us is Janet Rayberg. She's the president and CEO elect of EPB, formerly known as the Electric Power Board of Chattanooga. Provides energy, internet, phone, and more in and around the Chattanooga area. They both join us here in the Bloomberg Interactive Brokers Studio. We should note that last year, Bloomberg Philanthropies named Chattanooga one of 25 cities selected for its American Sustainable Cities program. Bloomberg Philanthropies is founded and supported by Michael R. Bloomberg, the founder and majority owner of Bloomberg LP. And Chattanooga sustainable cities program is still ongoing. Chattanooga also part of the Bloomberg Harvard leading city procurement reform program. >> We're big believers in full disclosure. Um, great to have both of you here in studio with Tim and me. Um, Mayor Kelly, I just have to first ask you a broad question because we do want to talk a lot about quantum computing and energy in general, like because there's just so much going on. Um, the environment today, how is it in terms of running your city, being a mayor in a in a political environment, that's a tough one, >> an economic environment that may be tough. >> Yeah, it's tough. But, you know, running cities is an eminently practical exercise. And I will say uh you know our our mayor's races are nonpartisan. Uh they always have been and I stayed in that lane. Uh again I mean I I'm not here to catalog my political beliefs. They're they're pretty confusing to most people anyway. I'd say if you know Republicans think I'm a Democrat and Democrats think I'm a Republican. I'm probably doing a pretty good job. So I you know I look that has served me well in this environment because again I believe as does uh a lot of folks at Bloomberg as do rather but uh that cities are really the the foundation of our economy. It's where 90% of the GDP is generated. It's where all innovation is generated. So I'm focused on whatever is best for Chattanooga. So I can work and have managed to work with people on both sides of the aisle and uh you know in the best interest of my city. Do you do you find yourself getting pulled into the social issues that seem to define our era right now? The stuff that does dominate cable news, whether you're talking about the right or the left. >> Yeah. I I mean, the I I found myself, you know, I find people attempting to pull me into those, but I think I've gotten pretty good at uh wrestling my way out of them and trying to just translate back into simple terms, you know, is this what's best for the city? Um you know, does it work or does it not work? I mean, sometimes you can't avoid those political issues. It's not as though um you know, I don't have my own beliefs, but again, I think you just as a mayor have to take a a thoroughly practical approach to what's going to work best for the city. >> All right. So, when you think about what's best for the city, let's talk about that because you are on the ground talking to people, what they need, what you need to make sure you have a good economy, strong economy, not just today, but in the future. That quantum computing bet, you made it back in 2022. tell us about kind of give us an update or for someone who didn't hear yeah the conversation when you were last on with us kind of where you guys are on with this. >> So I'll give you the cliffnotes version uh which is that you know we took advantage of a a large federal lowinterest loan way back when during Clinton and Gore um to put in a giant municipal fiber network and that gave us um the first and fastest municipal fiber network in the country. Uh we had a lot of folks move in during COVID because, you know, you can get one gig of symmetrical speed for 67 bucks a month. Yeah. Uh pretty great. You can get 25 gigs of speed at your house in Chattanooga. Uh but it turns out that you can also do quantum computing on large loops of dark fiber. Um one particular type that uses photons and trapped ions, which is where ion began to become interested in Chattanooga. We opened and Janet can talk more about it the the the first commercially available quantum network uh and it is starting to attract a lot of investment and attention. >> So Janet come on in here because one thing that we're trying to understand is what the practical applications of quantum technology are. We spoke with Ed Lelo the co-host of our Bloomberg tech program a little earlier and Carol agreed I mean you thought healthcare first he said healthcare also this is one area of application but it's still kind of the world where >> we're thinking about what this tech can do not necessarily seeing what it can do. Have we seen any material things be developed as a result of this technology and what you're doing at Chattanooga? >> Yeah, so INQ has been working on a lot of different type of application with different industry um and and so we were interested because we're an electric company and so we have all the data for them to help us optimize our grid. So, we're doing a partnership actually with INQ, Nvidia, and Oakidge National Lab as a four-way partnership to help do use hybrid computing until quantum computing can, you know, get to where it needs to be to help us with some great optimization problem that we can't solve today. >> In terms of energy demands, tell us about that. That is like what you are seeing front and center. We, you know, the AI conversation narrative has moved from the spend and chips and so on and so forth like to basically all right, do we have enough power to do all of this? Um and there is certainly a power scramble among the big hyperscalers. What are you seeing on that front? >> Yeah. And I think that's a nationwide, you know, issue with with the energy problem. And as AI gets better, >> it is an energy problem, right? >> Yeah. I mean, as AI gets better and better, the more energy that it's going to need. And so that's where quantum comes in very important to to part of that solution is that quantum computer once it gets to the the phase that it needs to be is it can solve things at a much faster rate which uses less energy than a classical computer because it can do things in parallel versus sequential as a classical computer today. >> Where do you get the energy that you sell to people in and around Chattanooga? >> Yeah, so we buy it from uh TVA, Tennessee Valley Authority and so they generate the power and we distribute it to our customers. >> How do they generate it? they they have a diverse mix of portfolio from hydro uh different types of renewables to natural gas. Um and so you know they they're continuing to look at other options. >> Do you see that mix Oh, go ahead. >> No, I was just going to say they're also very much on the front foot in terms of advanced nuclear. >> Do you do you see that mix? This is to either of you. Do you see that mix changing and focusing less on renewables, more on nuclear as a result of the the changes out of Washington? I think you're going to see that, you know, and again, regardless of your political affiliation, if you just kind of look at the math, there's there's no way around nuclear, right? I I do think we they're giving us uh or EPB more latitude to generate some of our own power because of the anticipated demands, and I think we still have a lot of headway on solar. So, I mean, I think we'll we'll and we've got a lot of things we can do with hydro. We're we're going to actually start using bio gas at our um wastewater treatment plant to generate electricity. So we're we're looking at any and all ways that we can generate >> because my understanding when we talk about SMRs the small modular reactors it's 10 15 >> reminds us Will Wade reminds us who covers this here at Bloomberg News that we are not there right now. >> It's a while. >> We are not but we have a a pretty significant nuclear footprint with TVA already in in in the >> What would you tell people who are still kind of nervous when it comes to the nuclear >> footprint that you guys have? You know what? You know, fine. People do it, okay? Do it across the country or do it in another country. But you know the feeling here in the United >> I mean I grew up next to a nuclear power plant. I'm fine, right? >> I'm a little weird. I'm a little weird. But what would you say about that? >> Well, I mean the technology has come a long long way. That's what I would say. I mean I'd say go do your research, do your homework. They're not I mean that's why we have these discussions. That's why we have the fears. But but that that there's just not absent fusion. And I will say the state uh in the University of Tennessee is also working very very hard on fusion technology. Uh absent that breakthrough, there's really not a way. >> That's what I'm waiting for. >> When we talk we're talking about quantum today and we're talking about Google, we're talking about Silicon Valley. >> How do you get people to think about Chattanooga, Tennessee, and not Silicon Valley, not New York City, not Austin, Texas, when they're thinking about where they want to live to have a job in technology? >> Coming on Bloomberg is a is a great first step. No, we I mean, look, we talk about this all the time. It's a it's a midsize southern city with kind of a funny name and there's a bit of cognitive dissonance there. So, you know, look, we we are out telling the story. I mean, I was just in Detroit last week at a sustainable mobility conference. Uh we were at the quantum world congress. I mean, at some point it's, you know, the evidence is mounting. We are it's not just smoke. We are doing the work and it's working. >> Is it is it if you build it, they will come mentality? >> I think so. And >> have they come? >> Yes, they have come. I mean again we had uh you know uh we now have independent verification that you know 10 12,000 people moved to Chattanooga during the pandemic very you know degreed uh talented people that could work remotely and I think again our job my job as mayor is to help break that glass ceiling so that we have the level of business investment and again can build up our uh academic horsepower to be able to sustain those knowledge economy jobs. Janet, you know, when we think about um quantum computing, we spent so much time just talking about, you know, large language models and generative AI and kind of where that's going AI. Um you just talked about the power aspect or the use of less power when it comes to quantum computing, but I mean um should our conversation be shifting in terms of what we are having for an investing audience when we talk just so much about AI generally versus quantum? Well, I think that with quantum computer when it gets to uh you know the level it needs to be, you can team it up with AI and get even more powerful algorithm that comes out of it to be able to solve more complex problems. So I don't think it's one or the other. I think it's going to be a combined of you know how do you combine that and use less energy and be able to build algorithm more efficiently. So help me because when we talk about the data center buildout so does that go hand inand with the buildout of quantum computing is that part of it? So right now it's um you know the we're building a quantum computer to kind of learn more and be able to help accelerate and advance that technology with companies like ion and I think once it gets to where it needs to be then it will we can team it up with AI. >> Okay. >> Yeah. >> Yeah. And many of the implications in with quantum. >> Let me ask you basic questions because I feel like we spend so much time talking about the AI but this is something that increasingly is coming into the dialogue. >> Yeah. Now, I was just going to say the logistics is a huge vertical in Chattanooga as well. And I think the implications for quantum for logistics have huge implications for lower power demand and and and a lower carbon footprint, right? Because you're going to waste a lot less time getting stuff from A to B, right? With with route optimization, >> we're going to have to do because we talk about like the the power drag or the power demand uh and the cost. Um Mayor Kelly, I'd be remiss not to ask you, you are trying to build a city where everyone has an opportunity to thrive and prosper. We talked so much about the K-shaped economy. There's a lot of people who aren't um thriving and prospering in this environment. Um 35 seconds. What's a message to send to everybody? >> Well, we are working very hard to reform our workforce fillment system so that we so that we don't leave folks behind. And I think we have some significant opportunities to do that. Um and and we are in the midst of doing that. Again, it's it's tough out there. And I think it's going to fall more to the state government and to philanthropy, frankly, to kind of take up the slack in the meantime. But I mean, we have to play the long game. And the long game is we need some significant change to the way that we do education and workforce development in this country so that we don't leave people behind. >> Yeah, it does feel like in terms of education, we're starting to think about that. Um, come back soon. I'd love to kind of continue this conversation if we if we may. Uh, Mayor Tim Kelly of Chattanooga, Tennessee, and Janet Rayberg. She's the president, CEO, elect of EPB joining us right here in our Bloomberg Interactive Broker Studio. This is the Bloomberg Business Week Daily podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5:00 p.m. Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal. [Music]
Tesla Earnings Miss Despite Record Third-Quarter Sales Surge | Bloomberg Businessweek
Summary
Transcript
[Music] Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio. >> Well, back to Tesla. Shares down 2% in the after hours. Uh the company posted thirdarter profit that fell short of Wall Street's expectations despite record EV sales. I want to bring back Ed Lllo. He's the co-host of Bloomberg Tech. And also bring in Ross Gerber. He's president and CEO of Gerber Kawasaki Wealth and Investment Management. got more than $3 billion in assets under management. He joins us from Santa Monica, California. Ross, you now have about $80 million of Tesla shares, down from 100 million earlier this year. At it at your peak, how much Tesla stock did you own? >> Um I think uh we had about one and a half times more than we have today. >> So that's not that much more. No, we've cut it our position by 60%. So that's that's fairly large. >> Are you um are you buying or selling today or buying or selling right now? >> Um neither. Neither. You know, you know, Tesla is a hold for us. You know, the people who are holding the stock at our firm, our clients very much believe in Tesla and and don't want to let go of their shares at all. And then, you know, the clients that don't want to own Tesla don't own Tesla anymore. Um but we're not recommending to buy Tesla or per se more likely recommending to sell Tesla for investors up at these prices because you're getting such a premium valuation. But but in general, we've just been holding the stock because, you know, we're we're kind of stuck with our position right now. >> What about you? We because we check in with you quarterly and you you've really changed your position on the company in recent years, in recent quarters, and your position on Elon Musk, too. Are you a believer in the company right now? >> Um, yes and no. I I I still own Tesla stock as well personally. Not a lot, but you know, I like to have some because I bought it at a dollar a share or a$150. So, it's like fun to have in my portfolio still. But, but that said, um you know, I don't know what's going to happen with full self-driving. I just don't think it works. And I think vision only systems don't work. And I'm very sure of this now. Even though I'm not an engineer, I can explain to you how humans drive. And I don't think Elon gets how humans work. I think he gets how machines work. And so I I think that Tesla's in a pickle. If they can solve full full self-driving, like I could get in my car right now and push a button and it drives me home. Like I can get in a Whimo right now and it'll drive me home no problem, then I think Tesla has a reason to buy the stock because now they've got their products working and they can grow from there. But as far as waiting for robots and cabs to pay off, it doesn't matter if full self-driving doesn't work and full self-driving doesn't work. So, nothing's going to get me excited about Tesla until it drives me home. >> Mhm. >> All right, good stuff. We're talking with Ross Gerber. Um, Ed Ledllo, I know you're reading over stuff. Come on into the conversation uh with uh Ross. >> Yeah, I mean, you know, just going through the deck, the way that Tesla explains it is that they had lower FSD revenue recognition in this quarter because of the timing of previous generation releases of FSD in the same period a year ago. Um, you know, I'm not a Tesla shareholder, as you guys know, but I do drive a Model Y, in fact, and I use FSD every day for about 60 m, 30 m to work, um, 30 mi back. I'm not on version 14 yet, but Ross is speaking to the the question which is always there. Explain the jump or the steps to the end result, the the end state. The end state is robo taxi, right? if Tesla is to be believed. And right now, you know, the the street seems kind of split on whether we understand how we go from a software platform that consumers pay for as a one-off or a subscription package to a world where the vehicles built on a on a common software platform or iterations of that platform power a proprietary ride hailing robo taxi service. you know, it's it's difficult to see the jump. And Ross can speak for himself, but just in the reporting, that's that's what we hear all the time. >> Yeah. I mean, you're 100% right in that these are completely different businesses, right? Like selling cars that drive themselves is an Apple business model and that's why I always love Tesla. When I first found Tesla, I was like, this is the Apple of cars, right? Like you build hardware and with great software and then you make money on services, right? Um, and that's really where Tesla's making a ton of money right now is on services and energy storage, which are still great businesses for Tesla. But when you talk about building an Uber-like platform, this is an extremely difficult thing that it took Uber almost a decade or more to make money doing. And Uber is very, very good at this now. And the only way they've been able to make money is by charging substantially more for the rides because Uber is not cheap anymore. and they had to subsidize rides for a decade just to build that business. So, when you actually think about Tesla scaling, if there was no competition, that'd be one thing. But there's already several cab services I can take right now, whether it be Uber, Lyft, or Whimo, that are all very good at what they do. So, you know, even if Tesla gets this to work, it's still a tough business. And the second thing I would say, Ed, you use full self driving a lot. Obviously, you probably, if I asked, do you feel comfortable turning it on and going into the backseat of your car and letting you drive that full 30 mi home? >> Uh, I've never done that or attempted it. And I I think, you know, I post quite a lot on X. My experiences, like I say, today, this is what happened. You know, I I would never get in the back of the car and turn it on. I I also would not put my my little baby boy in it either. But the way that I've tried to track it is generation by generation. >> How is it improved on the route that I take every day? The one area is really struggled with the toll boobs on the B Golden Gate Bridge. You know, that can be precarious and you can see my post on that. On your point, um, in the in the AI graph of the shareholder deck, the way that Tesla explains it is that the latest version of FSD they say has a substantial amount of the source code in the robo taxi version. And by putting it out into the real world, it gives them valuable real world data to help them improve a future robo taxi service. I don't I don't weigh in on that one way or the other. I'm just saying that's Tesla's explanation on the link between the two, the consumerf facing FSD and the same code base that will be used to power a future robo taxi service. >> Hey Ed, um Ross made the point that he doesn't believe vision only FSD or vision only self-driving works. Can you talk a little bit about that technology that that Tesla uses versus the other companies namely Whimo and um uh Amazon Amazon subsidiary as well? >> Yeah. So very simple when we say vision based system the inputs for the vehicle are only cameras on a Tesla. The cameras capture capture optical data from around the vehicle and uh use the underlying algorithm to make an onboard decision interpreting the world around them. Uh the opposite academic view is that you need to paint a richer digital picture of the world using other forms of data gathered by liar, radar, um and in some cases even going beyond that. you know like there are there are varying degrees of LAR spinning or stationary or static sorry the economic argument that Tesla and Elon Musk have always made is that having a vehicle that has multiple sensors on it is not scalable. You know there is no end result where the vehicle could be affordable for a consumer or profitable for an operator of that system to run. Um the other robo taxi companies like Whimo or Zuks who do have multiple sensors and custom versions of them say that you have to have them for redundancy. So if one of those digital pictures fails, i.e. the the v the vision one the cameras fail or the the LAR radar fails, you can still be safe because you have a rich enough digital picture of the world around you for the vehicle to make a decision based on the circumstances presented in front of it. So let me put this question to both of you and let me just start with you Ross. I mean I've gotten into Whimo. I love it and I've sat in the back seat. I've closed my eyes for like a 30 40m minute trip to an airport. I have loved it. So FSD full self-driving is it are we crazy to think that that's going to be our world going forward or do we have to change our infrastructure dramatically to make it possible going forward? like trying to understand because if the model is so >> think infrastructure is the hardest part would be the hardest part. >> Well, I'm just thinking if it's such a tortured model like are we crazy to even be talking about it? >> You you're you're getting into one of my favorite like discussion debate like issues out there right now which is the future of what mobility actually looks like. And my basic premise is that humans love to drive and are not giving it up. And I I'm now raising my children. I I thought when I had children that we would have had this master that my kids would never learn to drive, but my kids learning how to drive now. You know what I'm saying? And people love to drive. Now, younger people don't love to drive as much as older people. That's one thing in our surveys we've noticed. Okay. But I'm not giving up driving. And if I live another 30 years, I'm still going to love driving. And I love cars and I love driving fast and I love like, you know, driving the one freeway, you know, or whatever you want to call it. But, you know, humans love the independence and the functionality of having their own vehicle. We've had it started with the horse. We all had our own horse. You fought to the death to protect your horse. And and I just don't see people giving up cars anytime soon for a lot of practical reasons. Like when you're doing errands and you have to store stuff in your car or pick up your kids and then go to soccer, it's like you're not going to be taking cabs everywhere. That's just not a realistic view of the world. So unless we rejig our cities and start from scratch where I think the biggest use case would be in very dense urban environments that are very difficult for people to drive, just saying no more cars. it has to be caps. That makes sense in New York City or downtown LA, let's say. But I just don't see how you implement that because it's like millions of people already have their commuter lifestyle and I just don't see how that changes. >> All right, so Ed Lelo brings us back then to Tesla. >> If they keep talking about FSD, um I mean they're an EV company and a lot more. We know that. But I don't know, is it enough I don't know momentum? I look at the valuation like what is this company going forward? >> Well, uh I I repeat the same thing I've said every quarter for eight years. Elon Musk is often late on his predictions but gets there in the end and Tesla is clearly committed to this. That's part one. You know that that largely Tesla has made economic benefit arguments and the industry has as well. There are people that disagree with Ross in that car ownership as a model is in doubt. You know, there are multiple reasons from the cost of owning and and operating a vehicle through to generational attitude and appetite to go out and get a driving license that that people feel uh will make the technology uh more pervasive and be adopted. Where people agree with Ross is the environment, the infrastructure. Um and you'll I go back to the reporting always. I have to go back to what we've actually reported which is there is a piece of legislation currently dormant and is not moved uh beyond the proposal stage that we reported Elon Musk and other Tesla staff lobbied very hard on which is to have some federal level framework where purpose-built robo taxis that don't have steering wheels or pedals can be deployed unfettered in the real world. Um, but it doesn't address that what happens with the rest of road users and that's where academics believe we're heading for a real issue. >> All right, Ed Lela, we know you've got some stuff to do um off of these earnings. Uh, so appreciate your input throughout the day today and certainly off of Tesla's earnings. All right, we got to run. Uh, always enjoy talking with you. Um, Ross, thank you so much. Ross Gerber, president, chief executive officer of Gerber Kawasaki Wealth and Investment Management. more than three billion in assets under management and they own about $80 million worth of Tesla shares. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. >> Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. Bloomberg's Thomas Black, he recently wrote an opinion piece and he talked about the hype around humanoid robots being pretty high with forecast of nearly 1 billion humanoids in service by 2050. But the reality is that most people overestimate what robots can do at this point in their development. Got to say though, one company that's been using robots a lot and for a long time and has deployed its 1 millionth robot happens to be one of the world's largest market cap companies out there. It's also a household name. So, we wanted to check in once again with Ty Brady. He is chief technologist at Amazon Robotics. Uh he joins us from Amazon's Delivering the Future 2025 event from Amazon's DUR3. Uh it's a delivery station uh in uh Milipitus, California. Um and so we kind of want to find out where they are in terms of the world of robotics. Um Ty, I got to tell you, Tim and I loved talking to you last time, so so glad to check in with you again. First of all, this event where you are, I mean, right now I just see a curtain, but I'm assuming there's lots of stuff happening at the event. Who's there? What's going on? Tell us a little bit about it. >> Yep. Well, first of all, thank you so much for having me on. I really appreciate it, and I enjoyed our conversation as well. It's just great to be here. Uh we are our our fourth delivering the future event here. And uh there's a bunch of press that we have here and we made a couple of big announcements in robotics today. Can you tell us about them? >> If you the first is uh in our manipulation robot that we call Blue J. And what Blue J the way that you can think of that is we can you could take three assembly lines and put it in the same footprint of one. Uh what it does is help eliminate the menial, the mundane and the repetitive and it could pick more than 75% of the inventory that we actually sell in our sortable network which is a really big deal. I'm really proud of that. And I'll also say that there's something interesting about Blue Jay as well is as compared to our other bird manipulation systems uh Cardinal Sparrow and and Robin that took us about uh about 3 years to kind of design, deploy and get out to our frontline employees. Um we have actually uh done Blue J with the power of AI in just over a year. So it's really accelerated the pace of innovation. >> Hey, I think when a lot of people think about Amazon and robots, I just want to jump in because we don't have a ton of time, but I and I want we'll get to some of the other announcements. They they think about the the KA systems robots, the big acquisition at the time, you know, 2012, that was a big acquisition for Amazon and and they've seen pictures of the way that those can move large loads of of things across warehouses. But if you were to go into a state-of-the-art Amazon warehouse today, what would you see that's that's in addition to those KA robots? Yeah, in addition to our the world's first goods to person fulfillment uh uh strategy which was just a really good idea where we have more than a million robots that we manufacture actually in Massachusetts uh doing that job every day. You're going to see more of the unstructured fields, right? So you're going to see green robot that we call Proteus that can move uh big uh cargos of of packages uh to the right dock at at the right time. uh you're going to see uh many more manipulation systems that that we have in there. Uh eliminating kind of the repetitive motions that that we have. No one wants to lift a 50 pound box all day. Robin does that. Cardinal does that. Moving it into some of these uh Proteusbound uh uh uh carts that that we have. Uh you're going to see much more collaborative robotics, right? So that's where we build our robotic systems to enable people to augment what people are capable of. And uh we really believe in the philosophy of of people and machines working together. How can we build the tool set that enables our employees uh to do their job not only more efficiently but also with the with better safety in mind. >> All right. So there's this robot arm called Blue J. You just talked about it. You know, you guys are using this AI agent um called Eluna. Uh and then you're also working with augmented reality glasses to be worn by drivers in delivery trucks uh in the field. There's like so much going on. step back for a moment because you guys have a lot of data. You look at what you're doing. Um I'm just curious investors who are thinking about Amazon and what you are doing. How do they think about the long-term like ROI, return on investment when it comes to the investment you guys make in robots? Is the goal about labor efficiency, throughput, speed, or is it margin expansion uh kind of tie across your fulfillment operations? What is it? >> Yeah. Well, definitely efficiency. We we think about efficiencies and how can we gain efficiency through all the chain of our fulfillment processes. Uh for sure and and you mentioned data and data is the fuel for AI systems. Data has allowed us to bring think of the a the body of being our robotics but bring the mind to robotics allowing it to be more adaptable uh more fluid. Uh you can almost think of this as the ability to pour our robotic systems into any size building, any scale of building to amplify what our employees are already doing. We want to give them an amazing tool set. And we see that when we do that, we're more productive, right? When you do robotics, right, when you do collaborative robotics where you need both people and machines doing what they do best and they do different things better, um that it allows you to be more productive. And when you're more productive, that allows you to invest more in people. We've upskilled more than 700,000 of our employees. Uh, which is a great stat. Uh, and also in our robotics, we've expanded from the the KA days, we've expanded from just a movement solution to now movement and mobility and sortation and storage and perception systems, packing systems that have really changed the game for our customers. That's a big deal to us. >> But Ty, you know, will you need less workers? And I got to bring it up. You know, the Times had a story out. Um they talked about interviews and a cache of internal strategy documents that they saw that it reveals that your execs think that the company's on the cusp of its next big workplace shift. I'm I'm reading from the times and replacing more than half a million jobs with robots. So, you know, we know things change. I'm not in a horse and buggy anymore. I don't make things peace meal. I get it. Um I don't get tons of faxes and I don't get tons of uh pieces of physical mail. Thank God things change. Having said that, is Amazon do you guys believe that you're on the cusp of a workplace shift and that you won't need as many workers because the advancements in robotics? >> Well, there's no doubt that things change. I mean, and we're actually really proud of that and Amazon is that uh we avoid stasis at at at all cost. We change and we adapt and the nature of tasks definitely changes. There's no doubt about that. uh we are uh laser focused on efficiencies inside of our buildings. Uh but when it comes to that article, that article was speculating 10 years out, right? That's a 10-year spec speculation. And it's it's hard to to say what's going to happen in the next 10 years. But I can tell you what happened in the last 10 years. The last 10 years, which is when we seriously invested in in robotics, that we created hundreds of thousands of new jobs and new job types. And and there's been been no employer in the United States that has employed more people than Amazon >> in 10 years. I mean, that is that's and that's the power of of efficiencies and building your robots in way that that's applied and real that actually augments the human potential. >> All right. My brother say, "Am I like a dog with a bone?" So, wait. So, does that mean 10 years out it could be less jobs or we just don't know? Or you don't think that's the case? Well, you have to think about I mean there's there's jobs and there's tasks, right? So we we of course we're changing the nature of tasks. Like I'm very bullish on eliminating every menial, mundane and repetitive job out there. Nobody wants to do that. So we're going to change those tasks 100%. But we can again as as history has shown we continue to create jobs right with the goal of two things. Can you have it all? Can you be more productive which means more efficiency and can you also create a safer environment for employees? And we're actually doing both. That's what history has shown in the last 10 years. We have c better than 30% uh reduction in our o overall recordable injury rate uh over the last 5 years because of our robotics. Uh and also uh much more efficient. For example, our latest generation uh fulfillment center in shreport is 25% more efficient >> the the order. So you can have it all but you have to build your robotics in the right way that empowers people. We're speaking with Ty Brady, chief technologist at Amazon Robotics. When we think about hiring for these one-off or seasonal events like the holiday season or Amazon Prime Day, I'm wondering how you're putting pencil to paper right now and thinking about those numbers and to what extent automation has reduced Amazon's dependency on seasonal or hourly labor for holidays, for Prime Day. What does that look like or what will that look like this year, next year? Well, it's the same philosophy of of of empowering employees, whether they're they're temporary or they're full-time employees, with the the the world's best machines that help them do their job. It's the same philosophy. I'm really proud of the fact that this year we're going to offer more than 250,000 uh temporary jobs for our employees uh to come in during the holiday season. Those are good paying jobs. Really happy about that. Really pleased with that. And I'm really uh pleased with the work that our women and men have done in the robotics field designing and pioneering these new physical AI systems that help them do their jobs better. >> I got to say one thing that I've been thinking a lot about is what's going on overseas, whether it's China, whether it's Japan. Uh Bloomberg has done some reporting about service industries in Japan because they have a labor shortage that they are leaning increasingly on robotics. Have you been over there and looking at what they're doing? And I'm just curious if um you're seeing some things that are pretty impressive and that the US as a creator of things or its role in the robotics industry has to keep a watch on what's going on in other countries. >> Yeah, I I think it's easy especially in robotics to get distracted about uh you know what other people are doing. I think anybody can make a YouTube video. I think anybody can kind of you know pop in and overflate something. Uh but if you come into our world, our world is all about application. Our world is is the reality. >> All right. We were talking with Ty Brady, chief technologist, uh robotics at Amazon. Um of course, our our shot froze. Uh that's the world of technology. We're talking a lot about technology. Stuff happens. And we're hoping we can get Tai back. Uh just to finish up this conversation, >> maybe the robots are using all the Wi-Fi or robots like I don't like what he does. >> That's that that is a connectivity thing though. >> Well, it feeds into the P, right? Like you >> It's all question about resources. >> You got to charge these puppies, right? Can't just plug them in, right? If they're I don't know. >> Hey, we need recharging, too. Okay. >> Yeah, it's called food and sleep. >> For Tim, it's called food. Food and sleep. >> You know, I will say, >> do we have Ty back? Can we grab him for 20 seconds? >> Ty, 20 seconds. Forgive us. Uh, final thoughts here. >> Sorry about that. >> No, it's okay. >> Okay, let let it go. We're I'm ready for you. >> Okay, 20 seconds. Just final thoughts for our audience because we got to run. >> Uh, so final thoughts are is that uh robotics when done the right way. When you reframe your relationship with machines, you can enable more productivity, create greater efficiencies, and create a more safer environment for employees. and this collaborative mindset that we've had that we've done for the last 10 years really does uh make the day. >> Ty Brady over at Amazon. So appreciate it. >> Stay with us. More from Bloomberg Business Week Daily coming up after this. >> You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. >> We love talking to mayors. >> We do. We do. We also love talking quantum computing. And there is some news in quantum computing today. Google running an algorithm on its Willow quantum computing chip that can be repeated on a similar platform and outperformed classical computers. We spoke a little bit about this with Ed Lello earlier. The folks in Chattanooga, Tennessee have been thinking a lot about quantum computing for years. The first commercially available quantum network in the US was established there back in 2022. Back with us is Mayor Tim Kelly. He's an independent. He's the mayor of Chattanooga, Tennessee. Also with us is Janet Rayberg. She's the president and CEO elect of EPB, formerly known as the Electric Power Board of Chattanooga. Provides energy, internet, phone, and more in and around the Chattanooga area. They both join us here in the Bloomberg Interactive Brokers Studio. We should note that last year, Bloomberg Philanthropies named Chattanooga one of 25 cities selected for its American Sustainable Cities program. Bloomberg Philanthropies is founded and supported by Michael R. Bloomberg, the founder and majority owner of Bloomberg LP. And Chattanooga sustainable cities program is still ongoing. Chattanooga also part of the Bloomberg Harvard leading city procurement reform program. >> We're big believers in full disclosure. Um, great to have both of you here in studio with Tim and me. Um, Mayor Kelly, I just have to first ask you a broad question because we do want to talk a lot about quantum computing and energy in general, like because there's just so much going on. Um, the environment today, how is it in terms of running your city, being a mayor in a in a political environment, that's a tough one, >> an economic environment that may be tough. >> Yeah, it's tough. But, you know, running cities is an eminently practical exercise. And I will say uh you know our our mayor's races are nonpartisan. Uh they always have been and I stayed in that lane. Uh again I mean I I'm not here to catalog my political beliefs. They're they're pretty confusing to most people anyway. I'd say if you know Republicans think I'm a Democrat and Democrats think I'm a Republican. I'm probably doing a pretty good job. So I you know I look that has served me well in this environment because again I believe as does uh a lot of folks at Bloomberg as do rather but uh that cities are really the the foundation of our economy. It's where 90% of the GDP is generated. It's where all innovation is generated. So I'm focused on whatever is best for Chattanooga. So I can work and have managed to work with people on both sides of the aisle and uh you know in the best interest of my city. Do you do you find yourself getting pulled into the social issues that seem to define our era right now? The stuff that does dominate cable news, whether you're talking about the right or the left. >> Yeah. I I mean, the I I found myself, you know, I find people attempting to pull me into those, but I think I've gotten pretty good at uh wrestling my way out of them and trying to just translate back into simple terms, you know, is this what's best for the city? Um you know, does it work or does it not work? I mean, sometimes you can't avoid those political issues. It's not as though um you know, I don't have my own beliefs, but again, I think you just as a mayor have to take a a thoroughly practical approach to what's going to work best for the city. >> All right. So, when you think about what's best for the city, let's talk about that because you are on the ground talking to people, what they need, what you need to make sure you have a good economy, strong economy, not just today, but in the future. That quantum computing bet, you made it back in 2022. tell us about kind of give us an update or for someone who didn't hear yeah the conversation when you were last on with us kind of where you guys are on with this. >> So I'll give you the cliffnotes version uh which is that you know we took advantage of a a large federal lowinterest loan way back when during Clinton and Gore um to put in a giant municipal fiber network and that gave us um the first and fastest municipal fiber network in the country. Uh we had a lot of folks move in during COVID because, you know, you can get one gig of symmetrical speed for 67 bucks a month. Yeah. Uh pretty great. You can get 25 gigs of speed at your house in Chattanooga. Uh but it turns out that you can also do quantum computing on large loops of dark fiber. Um one particular type that uses photons and trapped ions, which is where ion began to become interested in Chattanooga. We opened and Janet can talk more about it the the the first commercially available quantum network uh and it is starting to attract a lot of investment and attention. >> So Janet come on in here because one thing that we're trying to understand is what the practical applications of quantum technology are. We spoke with Ed Lelo the co-host of our Bloomberg tech program a little earlier and Carol agreed I mean you thought healthcare first he said healthcare also this is one area of application but it's still kind of the world where >> we're thinking about what this tech can do not necessarily seeing what it can do. Have we seen any material things be developed as a result of this technology and what you're doing at Chattanooga? >> Yeah, so INQ has been working on a lot of different type of application with different industry um and and so we were interested because we're an electric company and so we have all the data for them to help us optimize our grid. So, we're doing a partnership actually with INQ, Nvidia, and Oakidge National Lab as a four-way partnership to help do use hybrid computing until quantum computing can, you know, get to where it needs to be to help us with some great optimization problem that we can't solve today. >> In terms of energy demands, tell us about that. That is like what you are seeing front and center. We, you know, the AI conversation narrative has moved from the spend and chips and so on and so forth like to basically all right, do we have enough power to do all of this? Um and there is certainly a power scramble among the big hyperscalers. What are you seeing on that front? >> Yeah. And I think that's a nationwide, you know, issue with with the energy problem. And as AI gets better, >> it is an energy problem, right? >> Yeah. I mean, as AI gets better and better, the more energy that it's going to need. And so that's where quantum comes in very important to to part of that solution is that quantum computer once it gets to the the phase that it needs to be is it can solve things at a much faster rate which uses less energy than a classical computer because it can do things in parallel versus sequential as a classical computer today. >> Where do you get the energy that you sell to people in and around Chattanooga? >> Yeah, so we buy it from uh TVA, Tennessee Valley Authority and so they generate the power and we distribute it to our customers. >> How do they generate it? they they have a diverse mix of portfolio from hydro uh different types of renewables to natural gas. Um and so you know they they're continuing to look at other options. >> Do you see that mix Oh, go ahead. >> No, I was just going to say they're also very much on the front foot in terms of advanced nuclear. >> Do you do you see that mix? This is to either of you. Do you see that mix changing and focusing less on renewables, more on nuclear as a result of the the changes out of Washington? I think you're going to see that, you know, and again, regardless of your political affiliation, if you just kind of look at the math, there's there's no way around nuclear, right? I I do think we they're giving us uh or EPB more latitude to generate some of our own power because of the anticipated demands, and I think we still have a lot of headway on solar. So, I mean, I think we'll we'll and we've got a lot of things we can do with hydro. We're we're going to actually start using bio gas at our um wastewater treatment plant to generate electricity. So we're we're looking at any and all ways that we can generate >> because my understanding when we talk about SMRs the small modular reactors it's 10 15 >> reminds us Will Wade reminds us who covers this here at Bloomberg News that we are not there right now. >> It's a while. >> We are not but we have a a pretty significant nuclear footprint with TVA already in in in the >> What would you tell people who are still kind of nervous when it comes to the nuclear >> footprint that you guys have? You know what? You know, fine. People do it, okay? Do it across the country or do it in another country. But you know the feeling here in the United >> I mean I grew up next to a nuclear power plant. I'm fine, right? >> I'm a little weird. I'm a little weird. But what would you say about that? >> Well, I mean the technology has come a long long way. That's what I would say. I mean I'd say go do your research, do your homework. They're not I mean that's why we have these discussions. That's why we have the fears. But but that that there's just not absent fusion. And I will say the state uh in the University of Tennessee is also working very very hard on fusion technology. Uh absent that breakthrough, there's really not a way. >> That's what I'm waiting for. >> When we talk we're talking about quantum today and we're talking about Google, we're talking about Silicon Valley. >> How do you get people to think about Chattanooga, Tennessee, and not Silicon Valley, not New York City, not Austin, Texas, when they're thinking about where they want to live to have a job in technology? >> Coming on Bloomberg is a is a great first step. No, we I mean, look, we talk about this all the time. It's a it's a midsize southern city with kind of a funny name and there's a bit of cognitive dissonance there. So, you know, look, we we are out telling the story. I mean, I was just in Detroit last week at a sustainable mobility conference. Uh we were at the quantum world congress. I mean, at some point it's, you know, the evidence is mounting. We are it's not just smoke. We are doing the work and it's working. >> Is it is it if you build it, they will come mentality? >> I think so. And >> have they come? >> Yes, they have come. I mean again we had uh you know uh we now have independent verification that you know 10 12,000 people moved to Chattanooga during the pandemic very you know degreed uh talented people that could work remotely and I think again our job my job as mayor is to help break that glass ceiling so that we have the level of business investment and again can build up our uh academic horsepower to be able to sustain those knowledge economy jobs. Janet, you know, when we think about um quantum computing, we spent so much time just talking about, you know, large language models and generative AI and kind of where that's going AI. Um you just talked about the power aspect or the use of less power when it comes to quantum computing, but I mean um should our conversation be shifting in terms of what we are having for an investing audience when we talk just so much about AI generally versus quantum? Well, I think that with quantum computer when it gets to uh you know the level it needs to be, you can team it up with AI and get even more powerful algorithm that comes out of it to be able to solve more complex problems. So I don't think it's one or the other. I think it's going to be a combined of you know how do you combine that and use less energy and be able to build algorithm more efficiently. So help me because when we talk about the data center buildout so does that go hand inand with the buildout of quantum computing is that part of it? So right now it's um you know the we're building a quantum computer to kind of learn more and be able to help accelerate and advance that technology with companies like ion and I think once it gets to where it needs to be then it will we can team it up with AI. >> Okay. >> Yeah. >> Yeah. And many of the implications in with quantum. >> Let me ask you basic questions because I feel like we spend so much time talking about the AI but this is something that increasingly is coming into the dialogue. >> Yeah. Now, I was just going to say the logistics is a huge vertical in Chattanooga as well. And I think the implications for quantum for logistics have huge implications for lower power demand and and and a lower carbon footprint, right? Because you're going to waste a lot less time getting stuff from A to B, right? With with route optimization, >> we're going to have to do because we talk about like the the power drag or the power demand uh and the cost. Um Mayor Kelly, I'd be remiss not to ask you, you are trying to build a city where everyone has an opportunity to thrive and prosper. We talked so much about the K-shaped economy. There's a lot of people who aren't um thriving and prospering in this environment. Um 35 seconds. What's a message to send to everybody? >> Well, we are working very hard to reform our workforce fillment system so that we so that we don't leave folks behind. And I think we have some significant opportunities to do that. Um and and we are in the midst of doing that. Again, it's it's tough out there. And I think it's going to fall more to the state government and to philanthropy, frankly, to kind of take up the slack in the meantime. But I mean, we have to play the long game. And the long game is we need some significant change to the way that we do education and workforce development in this country so that we don't leave people behind. >> Yeah, it does feel like in terms of education, we're starting to think about that. Um, come back soon. I'd love to kind of continue this conversation if we if we may. Uh, Mayor Tim Kelly of Chattanooga, Tennessee, and Janet Rayberg. She's the president, CEO, elect of EPB joining us right here in our Bloomberg Interactive Broker Studio. This is the Bloomberg Business Week Daily podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5:00 p.m. Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal. [Music]