Tesla Offers Elon Musk an Unprecedented $1 Trillion Pay Package

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1:52Scarlet Fu:offering Elon Musk a new compensation agreement potentially worth around a trillion dollars. Remember, this is a company whose market cap right now is only one point one six trillion. I say only because you're comparing his potential pay with the market cap. That's kind of crazy. It is crazy. It is. It's a number just kind of grabs you a little bit. It's eye popping. So let's bring in Steve Mann. He's Bloomberg Intelligence Global Autos and Industrials Research Manager to discuss all of this. What is the justification that Tesla's board is offering that Elon Musk would be worth potentially a trillion dollars in pay?

2:26Yeah, trillion dollars is a lot. But I think what they're looking for by 2035 is really juice up that market cap to 8.5 trillion. And if you look at the operational targets that's tied to it, it definitely confirms that this company is moving towards AI, robotics, you know, robo-taxi. So what are some of the hurdles that are out there where Mr. Musta maybe eventually get this? Yeah. You know, it's not going to be easy for him. And it's probably designed to be that way so that, you know, it's, you know, make sure the shareholders will vote for the proposal. Don't make it too easy for him. So the easy lift is really 20 million vehicle delivery.

3:16That's going to be a no-brainer, easy to get to, given that it ships about 1.8 million a year already. But the tough part is really a 50 % take rate on FSD, the full self-driving, and a million shipments on robots. And so those are really, really tough to get. But the third thing is really the EBITDA, adjusted EBITDA of$400 billion, getting there between now and 2035.

3:47Scarlet Fu:OK, so he has a bit of time and 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 percent. It's probably around 5, 6, maybe 7 percent at the most. there is still some technological you know hurdles that they have to to to overcome and a lot of it is really getting you know consumers to be comfortable with it so take rate of you know 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.

4:33Potential margins for robo-taxi, it's much greater than selling cars. So to get to the$400 billion, he really needs to really focus on the AI capability of the company. Hey, Steve, since Elon Musk has left Doge, do we have any idea how much time he is actually spending at Tesla? Good question. Yeah, my impression is he's probably spending close to 100 percent of his time, you know, not only based on this news where he's actually laying out a plan for Tesla. But he also had a very successful launch at SpaceX recently. So, you know, the impression is that he's full on in managing his companies.

5:24Scarlet Fu:And I like that question, Paul, because we know that Elon Musk has previously been an activist and urging the board to come up with a new pay package for him. You know, he kind of suggested that maybe he could move on and do AI somewhere else and do robotics somewhere else. Yeah, I think from my perspective, I don't think he's going to go anywhere. This is still his baby. I think. So it's just empty threats. I don't want to say empty threats. there's always a possibility but i think the possibility is very low um because this is his baby and he's very very passionate about ai uh about you know energy sustainability about sending people to mars and i think all of this is you know a part of that plan so let's get back to some nuts and bolts here they got to compete against china and they're not that's tough Number one.

6:18Number two, we had some really disappointing delivery numbers, sales numbers out of Europe here. So just the day to day near term seems pretty challenging. Yeah. And also, don't forget the seven of seven five hundred dollar EV tax credit in the U.S. actually is going away at the end of September. It is going to be pretty challenging for the industry six to nine months between now and nine months from now. It is going to be very challenging. I think one bright spot, you know, if you heard BYD, one of the dominant Chinese automaker, is actually ratchet back their forecast, sales forecast. That actually tells us that, you know, maybe the pricing, cutthroat pricing competition in China may be slowing down.

7:06And that would be positive for Tesla and the rest of the industry.

7:09Scarlet Fu:Yes, if Tesla launches that low-cost EV, which there's been a lot of talk about, but we haven't actually seen any action on. Is there a status update on that, or is this something that just keeps getting pushed out time and again? Yeah, I think it's going to come up pretty soon. In the last earnings call, they pretty much projected that the car is actually ready, but they have to hold off production because they want to produce as many Model Ys and Model 3 before the end of this 7 ,500 EV tax credit goes away because they expect to sell a lot more in the next quarter or so. So I believe the car is ready, and it probably likely will have to— I would hope it will actually come to market in the new year because there's going to be, you know, Rivian is also launching a cheaper model.

8:01By then, GM with the Chevy Bolt is supposed to come online in the next six months. So they do need to launch that sooner rather than later. Stay with us. More from Bloomberg Intelligence coming up after this. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

8:43Let's create smarter business. IBM. Wise is the smart way to manage the currencies you need around the globe. If you've ever sent money internationally using a traditional bank, there's a good chance you've paid more than you realized. Hidden fees, exchange rate markups, and extra charges can quietly add up before your money even arrives. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google, helping you avoid the unwelcome surprises that often come with international transfers. Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward.

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9:47Scarlet Fu:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

10:26Scarlet Fu:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

11:13analyst for Bloomberg Intelligence. Poonam, Lululemon. I love my Lululemon. But what happened? What happened is that you like your performance, but do you like your casual wear? It's a casual wear part of the segment that's underperforming and causing for guidance to be cut on the sales side and then tariffs end minimus causing the margin hit that we're seeing. So it's a sales and a margin story here. They're both underperforming.

11:39Scarlet Fu:So what's the prescription for that? And is the company coming up with a strategy that is appeasing investors in any way? Yeah. So the biggest issue on the sales side is the fact that they're not performing well on the casual part of the business. They don't have enough newness. Currently, newness in their pipeline stands at 23 percent and they want to move it to 35 percent by next year. So we hope to see more newness, but it won't be until spring of 2026, which means the back half of the year is going to be very sluggish. That's a long time to wait for investors who have been sitting on this stock and have looked at a 48 % drop before today's trading.

12:23Scarlet Fu:Let me rephrase this. If consumers are swapping out of Lululemon, going to Aloe and Vori, what are investors swapping out Lululemon for? Well, I mean, look, I'd say the performance side of their business is doing well. So when you say swapping out from the Align leggings, perhaps, to the aloes, that might be just broadening the assortment. The real issue is on the wide leg pants, on the casual assortment. That is not trending well. That is what needs to do better. Competition has always been there. It's growing for sure, but it's always been there. Lulu knows how to compete when they have the right product.

13:01The issue is they don't have enough new product. It's not coming fast enough and it won't come overnight. They hired a new AI head to drive innovation. That should help because AI is helping improve design timelines and so much more that we do think they can speed it up. But once again, nothing's happening this year. They'll have a little bit more new, but it's not enough sales in the US are expected to decline. and and that's you know we haven't seen a decline at lululemon i can't remember when so i mean lululemon is down the stock is down 55 this year puma is down 55 adidas 25 under armor 37 are these performances in stock declines are they primarily driven by concerns about tariffs tariffs is definitely one concern but i think that's not limited to just the athletic where it's for all apparel retailing.

13:52The other is just a shift in wardrobe, right? If you think a few years back during COVID, where did the wardrobes shift? A big part of your wardrobe was comfortable, you know, performance wear, right? We all had the leggings. We were wearing them at home while we were working. We were wearing them out. Today, we're moving into a more structured wardrobe environment, which means that the closets are more balanced like they once used to be. And that's part of the reason why you're seeing underperformance also at the athletic wear companies.

14:23Scarlet Fu:So in the meantime, as Lululemon tries to get its product, its newness, its assortment back on track, it's making up for the weak sales in the U.S. with a lot of international sales. China is a big strong point. Global growth is still there. How much more can it ramp up that side of the business? There's plenty of opportunity internationally. International is only 25 % of Lululemon's total business. China's growing at over 20%, with the rest of international at around 20%. So a lot of runway there across both performance and casual wear. We think that's a bright spot that will remain a bright spot for the foreseeable future.

15:02Poonam, it's early September here, but it's certainly never too early to talk about holiday shopping. What's the expectation in your industry about how holiday shopping will be this year? I think holiday will be okay as long as there are deals. The consumer is clearly focused on deals. And we think given the current tariff situation, a lot of the inventory was up fronted. So retailers have most of Holiday now in stock in their warehouses and also, you know, starting to come into stores. We think the consumer will come for deals. They'll be choosy. They have been choosy all year. So you're looking at the Walmarts, the Amazons of the world that will probably continue to take wallet share.

15:41Scarlet Fu:Who's the strongest company in your space right now, Poonam? I think Amazon's still one of the strongest retailers out there. They can compete with their large pocketbooks. They have the consumer mindshare, and they're essentially focused on delivering value to their customer along with speed and convenience. And Walmart's still doing well across the board? Yeah, Walmart's still doing well. Both of them are thriving side by side. Walmart's a larger grocery business. Over 50 % of their sales do come from grocery, so they do benefit from that. but they are increasing their marketplace. It's over$100 billion now, their e-commerce business.

16:18Stay with us. More from Bloomberg Intelligence coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Wise is the smart way to manage the currencies you need around the globe. If you've ever sent money internationally using a traditional bank, there's a good chance you've paid more than you realized.

17:03Hidden fees, exchange rate markups, and extra charges can quietly add up before your money even arrives. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google, helping you avoid the unwelcome surprises that often come with international transfers. Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward. Wise offers 24-7 customer service and runs over 7 million daily checks to spot and stop fraud. And most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me.

17:41Join millions saving billions. Be smart. Get wise. Visit wise.com or download the wise app today. T's and C's apply.

17:53Scarlet Fu:Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

18:32Scarlet Fu:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's bring in Mandeep Singh of Bloomberg Intelligence.

19:12Scarlet Fu:Of course, he is our go-to person for all things in the tech space. Mandeep, the news here is that Broadcom is going to help open AI, design and produce an AI accelerator and AI chip starting in 2026. And this is all to, I don't know, not take market share from NVIDIA, but at least compete a little bit better with NVIDIA, isn't it? Yes, and now that they have a$10 billion backlog from this new customer OpenAI on the chip side, it's real money, so it's not just a proof of concept or anything like that. And that has always been the risk with NVIDIA's growth is because of this concentration, whether it's from the hyperscale cloud players or the model providers like OpenAI, if they were to do things on their own chip, that will have a big impact on NVIDIA.

20:09And clearly, OpenAI feels that they can optimize the chip and the model to run better on their own chip. And that's probably why you're seeing such a strong reaction. But clearly, this is a 2026 event. And so we will still have to wait in terms of how that chip is going to stack up against what NVIDIA will have in 2026. That's kind of where I wanted to go, Mandeep. I guess if I were an NVIDIA shareholder, I knew competition was coming. It just has to. But at the end of the day, I feel comfortable with the quality of my chips and my technology. Is that kind of the feeling here today? There is. And so, look, I mean, for a company like Google, which is also training their own model on their TPUs, they haven't been able to sell it to a non-Google model provider, right?

21:01So it's really optimizing for your stack, which is what Apple has done over the years. But clearly, that's worked very well for them. So Google really was the first one to train their model on their own chips. And I think that's what OpenAI is going after is they feel they can do something similar to Google. In fact, the people that they've hired to design this chip are, you know, people from Google. So they've poached a lot of people from there. And look, I think given the, you know, scale at which OpenAI and Google are operating, the chip costs are pretty substantial. So if they are able to optimize the chip even for their own use, that's going to have a big impact on the gross margins, which is why you see a big stock move on NVIDIA, because NVIDIA relies on these large hyperscalers to continue to buy chips from them.

21:56Scarlet Fu:Okay, so NVIDIA down and the shares have actually deepened their loss is now lower by 4.1%. Advanced Micro Devices is off even more, Mandeep, losing 7%. Where does this lead leave AMD? I mean, we know the revenue run rate for Broadcom now. It's over$20 billion. In fact, they guide it to acceleration. Anytime you see a company guide to accelerating revenue growth, I mean, that's great news in terms of multiple expansion. And so for a company like AMD, whose hope was this market is large enough that they will also get that lift in terms of growth rates, clearly Broadcom is growing ahead of them and substantially.

22:38I mean, they guided to$6 billion plus in next quarter. So, I mean, Broadcom has shown 10 consecutive quarters of quarter over quarter growth, and it's going to continue because that's been their guidance for 2026. So from that perspective, AMD gains seem somewhat muted when you contrast that with Broadcom's expected growth. Stay with us. More from Bloomberg Intelligence coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work.

23:23Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Wise is the smart way to manage the currencies you need around the globe. If you've ever sent money internationally using a traditional bank, there's a good chance you've paid more than you realized. Hidden fees, exchange rate markups, and extra charges can quietly add up before your money even arrives. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google, helping you avoid the unwelcome surprises that often come with international transfers.

24:00Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward. Wise offers 24-7 customer service and runs over 7 million daily checks to spot and stop fraud. And most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. Join millions, saving billions. Be smart. Get Wise. Visit wise.com or download the Wise app today. T's and C's apply.

24:35Scarlet Fu:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

25:13Scarlet Fu:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

26:00the latest reporting there. Janet Lauren joins us. Bloomberg Higher Education Finance reporter. Some turnover at Northwestern. What's going on there, Janet? Yes. So the president, Michael Schill, said he was resigning yesterday. He's been there for three years and it's been a bit tumultuous. In addition to protests and other things, he also had to deal with a settlement from the football coach who had sued the university over hazing. So he had made a deal with protesters during the height of all these protests in an effort to clear the encampment that was viewed as very unpopular.