What is GM offering by way of low-cost vehicles? How big of a lineup offering does it really have?

They do.

I mean, they have, you know, Chevrolet Trax is selling very well.

You know, the Buick Envision, not bad.

You know, they do have a few vehicles.

The EV Chevrolet Bolt, which they just rolled it out, is one of the most popular vehicles.

EVs out there, that's going to help them reduce some of the EV losses there.

Ford reports tomorrow after the close, Steve, is there a read across from GM over to Ford?

How do you think they did in the quarter?

Uh, you know, earning-- Like you said, earnings beat actually not a, a big surprise, uh, given that production was pretty high, uh, in, in the quarter.

Um, and I think, you know, positive free cash flow is, is great versus the negative free cash flow consensus was expecting.

That's probably a function of the higher profit, um, uh, for the, for the gross profit for the quarter.

Um, I think, I think investors will like this.

Uh, if I look gleaming to their investor deck, shareholder deck, uh, they are ramping up the cyber, uh, robotaxi business.

They have, you know, unsupervised, uh, ramp-up over in three different cities.

You've been listening to us talk with Ed, um, and this kind of idea that, you know, EV is actually still a big deal at Tesla or, and they're developing and growing in markets outside the United States.

How do you think they did in the quarter?

Uh, you know, earning-- like you said, earnings beat actually not a, a big surprise, uh, given that production was pretty high, uh, in, in the quarter.

Um, and I think, you know, positive free cash flow is, is great versus the negative free cash flow consensus was expecting.

That's probably a function of the higher profit, um, uh, for the, for the gross profit for the quarter.

Um, I think, I think investors will like this.

Uh, if I look gleaming to their investor deck, shareholder deck, uh, they are ramping up the cyber, uh, robotaxi business.

They have, you know, unsupervised, uh, ramp up over in three different cities.

You've been listening to us talk with Ed, um, and this kind of idea that, you know, EV is actually still a big deal at Tesla or, and they're developing and growing in markets outside the United States.

How do you think they did in the quarter?

Uh, you know, earning-- like you said, earnings beat actually not a, a big surprise, uh, given that production was pretty high, uh, in, in the quarter.

Um, and I think, you know, positive free cash flow is, is great versus the negative free cash flow consensus was expecting.

That's probably a function of the higher profit, um, uh, for the, for the gross profit for the quarter.

Um, I think, I think investors will like this.

Uh, if I look gleaming to their investor deck, shareholder deck, uh, they are ramping up the cyber, uh, robotaxi business.

They have, you know, unsupervised, uh, ramp up over in three different cities.

You've been listening to us talk with Ed, um, and this kind of idea that, you know, EV is actually still a big deal at Tesla or, and they're developing and growing in markets outside the United States.

So talk a little bit about what Solantis is doing, because it's now looking into reviving a partnership with China's Dongfeng Motor that would involve joint car production in Europe and China.

Yeah, we actually wrote about the emerging trend of global automakers using China as a manufacturing base.

and really take the competition to the Chinese because the Chinese has done really well exporting vehicles out of China, not only in Europe, but in many parts of emerging markets, Southeast Asia, parts of Latin America.

So, you know, I think for global automakers like Stellantis, I think Volkswagen is considering doing the same thing.

GM is definitely doing it, is really to build cars in China at a low cost base and then compete with the Chinese in these emerging markets.

So what are the BYDs, the Chinese

Have GM and Ford kind of skipped making this a priority?

No, I think, first of all, there are kind of rumors in social media that Tesla is going to go back and think about reintroducing a smaller compact vehicle.

How do you guys think about it? Well, yeah,

the industry did take a lot of write offs because, you know, the EV sales are not going to be what it expected, especially in the U.S., And we were actually coming into 2026 relatively positive for the auto, the big Detroit big three, because Trump eliminated, you know, the penalties on gas guzzlers.

We thought, you know, they're going to, you know, these these automakers are going to push out these, you know, pickup trucks, SUVs with high margins.

And that's how we came in looking at the industry at the beginning of 2026.

But then this the war broke out.

right, and gas prices are at where they're at.

If you talk to the people that actually buy and sell gas, oil, it's like 150 bucks, right, on the ground.

You know, if we get higher for longer fuel prices, does that revive maybe some demand in EVs and hybrids?

Walk us through what is affected when it comes to auto tariffs by this ruling.

Yes, Carly.

The bottom line is there's no impact on the auto industry.

The auto industry, the tariffs on the auto industry is under the Section 232 of the Trade Expansion Act of 1962.

So it's not put in place by the emergency powers.

So the baseline of the 25% tariff on auto imports is still there.

Now, Trump did renegotiate with countries like South Korea and Japan to bring it down to 15.

I

Is that kind of where the industry is today?

Yeah, exactly.

Trump actually did the auto industry a major favor.

by relaxing the miles per gallon mandate.

So basically every vehicle in the big three's portfolio are currently meeting those mandates.

And what it means is less penalties, right? And no need to buy EV credits going forward.

Huge savings.

Steve, while we got you here, what's the call these days on Tesla as we talk about this EV business? But really for Tesla, we're talking about so, so much more.

What goes into that number? What does it mean about their commitment to EVs?

Yeah, it is a very big number.

It pretty much backed up the truck on these charges.

But the important thing is it's clearing the deck.

for next year, right? There is a couple of earnings tailwind for Ford and actually to their competitors in Detroit as well.

So the biggest, I think the biggest write-down, two biggest write-down is writing down the losses on their Mustang Mach-E.

You know, they've been losing around $25,000 on the EBIT line per vehicle.

How does the industry kind of view that?

How did that go over on the call here? And what's the thinking among the investor community about what may be a $1 trillion pay package?

Yeah, I'm not sure if money is important to him.

He does have a lot already.

So I do believe that it's more about the control of the company.

Look, Tesla doesn't have the dual class shares like some of the tech companies have.

So he does have that fear of getting pushed out.

And he had that experience with OpenAI.

what is a what is Elon and the company saying about uh China both as an end of Market and as a competitor globally

and steve maybe this is just me being a you know a cynical wall street guy but reading between the lines i took away that message that they were backing up as much as they possibly could from evs and if i'm an investor that's a positive for me from a profitability standpoint is that too much reading between the lines or do you think GM

and maybe even Ford and Stellantis are backing away.

Absolutely not.

They are backing away.

GM just took a $1.6 billion charge.

Most of it was to rationalize EV production capacity in the U.S.

I think everybody is seeing that EV sales in the U.S. in the next quarter, maybe two quarters, will be down quite a bit after the poll hit demand.

So what exactly did Mary Baugh have to say about the EV adoption? Did she give any specific numbers or dates, extend any dates?

Why is GM doing this and why is GM doing this now?

Look, Paul, I used to work at GM prior to being an analyst on the sell side.

And look, I think what GM is doing today is a little bit unprecedented.

because they're actually changing the direction of that ship around fairly quickly.

You know, once, you know, when the $7,500 subsidy expire, you know, they knew they had a portfolio that was not congruent with what they think sales is going to be.

So they're going to have to rationalize that portfolio.

They've been the most aggressive, if not globally, but among the top, you know, the big companies three in Detroit, in rolling out new EVs.

changed the way you're viewing the evolution to EVs that, hey, maybe it's not going to be as far as we thought or as quick as we thought? How should we think about that? Because it seems to have lost steam, and I'm not sure if it's just tied to this administration and its policies and names, or is it more market-driven?

What does that say about the car industry, Steve?

Yeah, I think those two instances really freaked out the market.

But based on our research, I think those are really contained situations to those companies and don't feel there's a broader impact.

But you never know, you know, the market's based on investor sentiment.

But we did some research on the impact on the aftermarket parts market.

Companies like O'Reilly, AutoZone, and Advanced Auto Parts are unlikely to see impact on their supply chain.

Like I said earlier, these are high commodity parts.

And therefore, this after parts is a pretty good business.

Let's talk a little bit about Stellantis and how sensitive, vulnerable it is to President Trump's tariffs.

Yeah, I think they are very sensitive to tariffs.

But I think a lot of the impact on companies like Stellantis and the Detroit Trill is really their operations in Mexico and Canada.

I think Trump is looking for them to actually move some of those production back.

into the U.S. and employ more U.S. workers.

So, I mean, there's been a lot of rhetoric and a lot of, you know, potential changes.

Changes are impending.

Is just saying that you're going to do that enough to appease the administration?

What's going on there?

Yeah, it seems like it's a never-ending cycle here.

What's happening to BMW in China is not new.

It's not new to them.

Every foreign automaker is actually facing the pressure there.

It's a hyper-competitive market.

Pricing has been spiraling down.

What's your reaction? What's the market's reaction?

Talk to us about where we are in the auto business with just how many cars are being produced these days in the U.S., and what does that mean for the used car market, like the CarMaxes of the world? Where are we today?

Yeah, I mean, it's about the annual sales in the auto industry today in the US is around 16 million.

If you include Canada, Mexico is around 18, 19 million.

The used car market is actually bigger than the new car market is very vibrant market.

And look, it's an interesting market.

There are a lot of used cars that's coming back from leases.

I remember during the COVID era, we had quite a bit of vehicle sales and prices were really high.

Is this a new, lower, normal level of production from

For more, Scarlet Flu and Stacey Vanek-Smith, we're joined by Steve Mann, Bloomberg Intelligence Global Autos and Industrials Research Analyst.

Well, it is a very serious situation, serious safety situation.

Now, first of all, there is a manual release from the interior of the vehicle.

But the safety issue is that you can't manually override the electronics and open the door from the outside.

Now, this is a an issue that's.

I'm plaguing the whole industry.

It's not just Tesla.

Are there other safety issues in particular that Tesla needs to focus on, pay attention to that could, if left unresolved, could become legal liability issues?

And like you say, you know, concerns where a solution isn't necessarily...

Yeah, I think from the investor's perspective, there is a solution.

There is a number of vehicles, for example, the Audi.

They have actually solved that issue.

And they solved it by having a double pull on the latch to actually open the vehicle manually.

So I think from an investor perspective, it is an issue.

It needs to be solved, and it's solvable.

Are there other safety issues in particular that Tesla needs to focus on, pay attention to that could, if left unresolved, could become legal liability issues?

okay so he has a bit of time and you know he's someone who will start a narrative and stay on it you mentioned fsd full self-driving where are we in that effort for tesla

Yeah, it's still below 10%.

It's probably around 5%, 6%, maybe 7% at the most.

There is still some technological hurdles that they have to overcome.

A lot of it is really getting consumers to be comfortable with it.

So take rate of 10 million subscribers, With 20 million vehicles shipped, it looks like a stretch, but it needs it because the margin for FSD is much higher than vehicle production.

Potential margins for Robotaxi is much greater than selling cars.

Is there a status update on that, or is this something that just keeps getting pushed out time and again?

Do we care about how many cars they make and whether they make any money in the old car business,

Steve? We do.

And a lot of people think that it's a full pivot towards AI.

But I think making cars and developing that AI software goes hand in hand.

It's almost like Apple and its ecosystem.

I mean, there are opportunities for Tesla to actually license the FSD, the full self-driving software out.

But I think in the meantime, it's not something he's looking to do.

Explain to me right now what the latest overhangs are right now for the company.

Do we care about how many cars they make and whether they make any money in the old car business, Steve?

We do.

And a lot of people think that it's a full pivot towards AI.

But I think making cars and developing that AI software goes hand in hand.

It's almost like Apple and its ecosystem.

I mean, there are opportunities for Tesla to actually license the FSD, the full self-driving software out.

But I think in the meantime, it's not something he's looking to do.

Explain to me right now what the latest overhangs are right now for the company.

vehicles we need batteries they need we need charging stations all that kind of stuff Steve Mann joins us Global Autos and Industrials research channels for Bloomberg intelligence uh Steve talk to us about this deal between Tesla and LG energy what is Tesla signing up for here

Well, Tesla does have a pretty sizable energy storage battery business.

So basically, these batteries are usually used at data centers, used at various utility power generation sites.

to kind of even out power production between the peaks and valleys of usage.

So it's a sizable business and more importantly, it is mundane, but it's a very profitable business.

so it's a 30 percent gross margin compared to cars that they make today they're about low teens so at least double the gross margin so very profitable um and this if the lg deal sounds uh really really promising for for that business going forward

Steve, the number one issue continues to be just... demand out there for tesla products and deliveries and things like that anything new that you can tell us here about kind of what you're hearing out there

yeah on a car front um you know earnings going to be pretty volatile i think in the next few quarters i think as many know the 7 500 ev tax credit is going away at the end of september so we should see a surge of demand not just for tesla but the whole ev market here in the u.s between now and the end of September.

Steve, what do we know about the the position of the Tesla brand right now? And is it something that can be, to the extent it's been harmed, say in Europe where they have seen some weakness, can it be repaired? What's the feeling?

It's tough.

It's going to take time.

I think it will be really helpful if Elon Musk kind of stay away from the politics for the moment and really focus on the business and marketing its vehicles.

It is a nice vehicle, Model Y.

The man has picked back up after the changeover earlier this year.

The volume is not there yet, but the issue here is you know they've just launched a new vehicle but the 7500 uh tax credit in the us is going away so the trajectory the the growth trajectory for that new vehicle and and and gross margin has been uh you know, has been derailed.

What do the U.S. automakers think about that?

Anything surprise you?

Yeah, I think, uh, if you look at the stocks down after, uh, hours, a bit, I think, uh, I think the most important thing there is they haven't given us enough, uh, visibility into the future, what their outlook is gonna be.

I mean, the numbers, they missed consensus, but if you kinda dig into it a little bit more and look under the cover, it's actually not bad.

Um, if you look at, uh, you know, automotive gross margin, excluding credits, it's actually 15%, better than last quarter of 12.5 and better than consensus, uh, estimates.

And then if you look at free cash flow, the reason why it's down versus the first quarter is because they spent an extra 900 million on CapEx, which is not a bad thing given that there's, they're launching the, uh, cheaper model, uh, and the cyber cap.

So if you exclude that 900, uh, million of a- additional CapEx, uh, their free cash flow is actually over a billion, more than 660 million in the first quarter.

How do you think Tesla's robo-taxi stands up to the other autonomous vehicle solutions that are out there right now, namely Waymo?

Well, I think the market can be very big, uh, especially i- in the US, uh, if w- we're not talking internationally.

How do you think Tesla's Robotaxi stands up to the other autonomous vehicle solutions that are out there right now, namely Waymo?

Well, I think the market can be very big, especially in the U.S., if we're not talking internationally.

There's definitely room for multiple players.

My perspective is that Tesla is using an all-camera system.

That actually gives them greater flexibility and greater scalability with that system.

Waymo and others use a combination of radars, lidars, and camera system.

Cameras are just cheaper to build.

Do we have to be worried, though, about that low number or they're going to be fine?