US Regulators Investigate Tesla Door Handles

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1:40Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. U.S. auto safety regulators probe Tesla over issues with door handles on certain vehicles following a Bloomberg report. Plus, Google will invest close to$7 billion over two years in the UK to help build its AI economy. And ServiceNow expands its presence in Florida with a new regional hub. We speak with the CEO and with the developer of the site. But first, we check out what's happening in the markets. We are so close to 10 straight days of gains on the NASDAQ 100.

2:21There's a blip. We pull just slightly into the negative territory on the NASDAQ 100. only slightly, Ed. What is it? 13 points. Much anxiety as we go into the Federal Reserve policy. The decision comes tomorrow. Will we see a cut? But what about the future direction as those retail sales look pretty buoyant? Can they be as dovish in the longer term? But Ed, you're looking at perhaps what moves the markets on this exact day. Yeah. Let's get to our top story. U.S. auto safety regulators opened up an investigation into whether some Tesla vehicle doors are defective. This comes days after a Bloomberg investigation uncovered a series of incidents in which people were injured or died after they were unable to open doors when Tesla's lost power, particularly after crashes.

3:07I would note the stock is higher in this Tuesday session, up almost 2%. Bloomberg's Global Autos editor, Craig Trudell, joins us from London. Let's start with the investigation, which is a NHTSA investigation, Craig. Explain the parameters of what NHTSA is looking at and the scope of what they're looking at. Yeah, it's interesting. You know, the sort of headline information at the top of this document that NHTSA issued today refers to a pretty narrow set of vehicles. This is the 2021 Model Y. It's about 170 ,000 cars. But the issue here has the potential to be much broader because what NHTSA is looking at is Tesla's approach to its door design and the fact that its doors are reliant on electrical power in order to work.

3:58That is something that applies to all Teslas going back to the Model S that's been in production since 2012. So while Tesla is, you know, on the surface, it looks like this is a single model, a single model year. This has the potential to be something much broader. You think back to, you know, a precedent of an autopilot investigation where they were narrowly looking at how that system handled certain parameters, like how they were navigating emergency vehicles and running into, say, fire trucks or police cars. That didn't just stay narrowly focused on that one issue. They had to recall autopilot overall.

4:45It affected their vehicles in a much broader way. There is some potential for the same to play out here with this Model Y investigation. Craig, China, top regulators there have been looking at these concealed handles before already. Europe has been thinking a lot about accidents in such cases. Is it just a Tesla design? And more broadly, how are we thinking about the U.S. tackling it versus other regions? I think it's interesting because this is a design that for all of its potential flaws, at least to some degree, has been embraced and sort of copied by other manufacturers. And that's something that we included in our report last week, that a lot of electric vehicle rivals or would-be rivals to Tesla that have come onto the market over the years have kind of embraced this flush door handle design, essentially kind of innovating a door handle that maybe didn't need to be innovated.

5:43And that is something that will be very interesting for us to watch here because we also included in last week's report mention of the fact that we've already seen recalls related to the safety of door handles in, for instance, the Mustang Mach-E, the Ford SUV that is taking on the Model Y. So this has the potential to be not only a broader investigation for Tesla, but also something that NHTSA takes a closer look at across all manufacturers that have taken after Tesla from this design perspective. After NHTSA confirmed its investigation this morning, Tesla has not responded to a request for comment from Bloomberg.

6:22But we just showed, Craig, while you were speaking, the comments of Tesla's board chair, Robin Denholm, which you'll remember, Cara and I posed a question to after our original report. That's Bloomberg's Craig Trudell out of London. Thank you very much. Going back to the UK, Google will invest five billion dollars, that's six point five billion pounds. Sorry, that's six point eight billion dollars over two years into the UK to help build an AI economy in the country. The tech giant disclosed the plan just as President Trump is set to announce billions of dollars of economic deals during his visit to the UK this week.

6:54He's expected to travel with several U.S. tech leaders, including NVIDIA CEO Jensen Wang and OpenAI CEO Sam Altman. Bloomberg's U.K. correspondent Lizzie Burden joins us. And Lizzie, give us the need to know on this Alphabet deal and what else we're looking forward to. Well, as you both know, this Alphabet deal is a drop in the ocean in terms of the capex of Alphabet. But it's a big deal for the U.K. It's something that's been long in the making. The UK tech secretary is the former one. Peter Kyle is now the UK business and trade secretary, perhaps as a sign of just how important tech is to the business landscape here in the UK.

7:35But as you say, it's part of a broader suite of economic deals that we're expecting the president to announce here on his visit to Britain. We're expecting 10 billion pounds worth of deals to be announced, including a defense tech cooperation agreement. Also, partnership on nuclear. Also, bringing together the economic hubs on both sides of the Atlantic. So there's a lot at stake here for Keir Starmer. It's an unprecedented second state visit for Donald Trump here in Windsor, this 11th century castle behind me. But I have to say, this is the worst possible timing for Keir Starmer. He's just lost his UK ambassador to the US, Peter Mandelson, over his links to Jeffrey Epstein.

8:16Epstein, of course, linked to the king himself via his brother Prince Andrew and to Donald Trump. So there are going to be some very, very awkward moments, not least at the press conference at the end of the trip. For the UK, the point will be to not look like we're appeasing the president, but also to make sure that something substantive comes out from this visit, because ultimately the UK is playing its ace by deploying the king. Bloomberg's Lizzie Burden from Windsor Castle. We appreciate it. Let's return to the tech deals that we're expecting to come out of that visit and the focus on AI with Lei Chu, Chief Investment Officer for Thematic Innovation Equities and Alliance Bernstein.

8:59And more this fits into the whole array of conversation we keep having, Lei, about the need for investment in AI. We just think back to Oracle's numbers last week and how much they were showing that they've got this backlog building. We've got all the hyperscalers trying to build out. Alphabet's looking to build a data center in the UK. Are we seeing that continuing to go up and to the right at the speed that we see at the moment? Well, I think what we're seeing is actually we're hitting an inflection point in inferencing. So if you look, just broadly speaking, not just those big numbers that you quoted, but also if you look, the AI trend and the adoption and where we're seeing the step function in numbers is broadening out.

9:40So it's a broader set of companies that are starting to benefit. Whether it's the networking companies or we're seeing it in memory pricing, in storage, in hardware. So those are all signs that, you know, in terms of AI adoption, the inferencing at the edge, things are actually happening. And to me, this is a very positive sign. That means the real adoption, which will drive continued build. So if we think about it, tech innovation generally, we take step functions, right? We kind of chug along and then all of a sudden there's an inflection point and things really start to take off. And I really think we are still in the early innings of that happening and supported by all the evidence that we have seen at the micro level from the company, as well as these megatrends that you're seeing at the big macro level.

10:25The step function has already been shown in the valuations of companies. We just want to bring you some sound actually from a key investor who manages money for Peter Thiel, no less. We've been talking about how we've been looking at maybe a bubble growing in AI. Just take a listen. The AI bubble is real, and I don't think enough people talk about it. And if you were able to be an early investor in OpenAI, then congratulations, that's a great place to be. If you're coming and investing at OpenAI at a$500 billion valuation, I honestly don't know about that. So I think that is the more dominant topic that is going on, at least within Silicon Valley circles, that doesn't get talked about enough and how it shakes out, it's going to be fascinating because if you got in early, fantastic.

11:08If you're getting in today, I'm not as sure. Long time sort of managing director for the private wealth of Peter Thiel, but also with AZVC founder Jack Selby there. Are you worried about any exuberance already reflecting the valuations, even though we are at this inflection point? I think that brings an interesting point. Valuation is important. And we always said, valuation is important, but it's only related to interest in estimate revisions. So not all companies are going to succeed. There will be a lot of companies that simply put the name in their press release, and those are the ones that we say, oh, that's AI too.

11:47So it actually brings back to we have to do our due diligence. Some of them will succeed. Many of them will fail. Even if you look back to the Web 1.0, right, there were thousands of companies, but really a true few survived. and those are the leaders today. And as we look forward, I would say AI is transformative. We are early and leadership is being redefined. And that's why all the companies are rushing out to spend because it's as defensive as it is offensive. But we will find new leaders. But in the meantime, we'll also have to be prudent. Not all of them are going to succeed. And in fact, when you redefine the future of leadership, when there's a paradigm change, some of the things that we used to think that work may not work.

12:31So what is perceived to be cheap could also be more expensive than you expected. So again, it brings back to we've got to do our homework. It's easy to call everything a bubble. But underneath that, actually, there are opportunities, but there are also, you know, prudence is absolutely important. Lei, the other counterpoint to a bubble argument is that different geographies are moving at different speeds. This week exemplifies that, does it not? That you see earlier announcements for a build-out of infrastructure in the United Kingdom. Given that we haven't seen the same level of activity in Western Europe, the United Kingdom, does Alliance Bernstein change its attitude towards British equities, UK equities, European equities in that AI infrastructure supply chain?

13:21I think AI is a global phenomenon, but it's more so just tech innovation has become a crucial element in national success. So it is something that we watch closely. And I think in terms of each country, the adoption of AI, it reflects the readiness of the infrastructure, the readiness of the government. But oftentimes, it ultimately comes down to a private-public together initiative. And there will be opportunities. We've seen Sovereign being a big driver for spend. And I expect to see that continue going forward. And I also think each country will take a very different approach because the budget is different.

14:05The willingness is different. Lei, very quickly, how closely are you tracking private markets and private companies that are active here? It's very, very important for us because a big part of the AI adoptions is happening in the private market. And not to mention, if you look at these hundreds of billions of dollars, they need to be financed. And a big part of the financing is being done on the private side. So we are monitoring that trend very closely, both on the demand side and in terms of financing, which support the supply side. Lei Chu of Alliance Bernstein, great to have you back on the program.

14:41Thank you very much. Now coming up, the CEO of ServiceNow and developer Related Ross joins us to discuss efforts to turn West Palm Beach into an AI hub. Carrie, what are you looking at? I'm actually still looking at those valuations on the publicly traded side. Oracle, I mean, key player when it comes to AI infrastructure, of course, up 1.5%. This is on the back of its earnings last week, but also as the narrative around TikTok continues to unfold, will they remain a key cloud provider, an infrastructure provider? Could they even take an equity stake? We're at 1.7%. This is Bloomberg Tech.

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17:35ServiceNow is expanding its presence in Florida with a new regional innovation hub, an AI institute in West Palm Beach. The developer of the site is Related Ross, run by Stephen Ross. He's known for the Hudson Yards Redevelopment Project and, of course, ownership of the Miami Dolphins. Stephen Ross and ServiceNow CEO Bill McDermott join us now. Gentlemen, good morning. Thank you for joining us here on Bloomberg Tech. Bill, it's great to have you back on. Let's start with the ServiceNow piece. You know, in this environment, Bill, where there's such a micro focus on the talent in AI and where companies are spending resources, why does this position ServiceNow better to have this footprint in Florida?

18:19Well, there's no artificial intelligence without human intelligence, Ed. And there's no leader that can develop a project and a dream better than Stephen Ross. And you mentioned the Hudson Yards, but he also did the Time Warner Center. And we've been friends for a long time. And I always felt the trust was the ultimate human currency. and it still is, and I believed in his dream. And what I see happening here is we're building an AI institute, and in this institute we're going to have the most innovative engineers in the world. We're going to be able to prototype solutions for the public and private sector at record pace, and then we're going to move those solutions out into the market.

18:59We're also creating Knowledge University, and we're going to put the flag right here in West Palm Beach to rise up 3 million people in our economy to the AI world so they can get the better paying jobs, the creative jobs, where only humans can really excel. And I underscore we really believe it's all about putting AI to work for people because we're a job creator and we believe that AI has to be in service to people. And right here in West Palm Beach, we're role modeling that. Mr. Ross, you have a vision that West Palm Beach becomes an AI hub more than just service now. How difficult is it to convince the technology industry of your vision?

19:42And why West Palm Beach? Well, I mean, West Palm Beach is really because of Florida being the great business state it is. And knowing that South Florida is different than the rest of Florida. And it's really poised to growth and attract jobs. It's never done that before. It's always been second homes, you know, the second home to all South America, if you will. But right now, the resources of Florida, there's not a better business state. And when you look and see where people are going and the change that's occurring in this country, there's no place better positioned. So we had to really put it together to bring those things that Florida didn't have to attract business.

20:28And that's what we've been concentrating on. And fortunately now, I mean, Bill and his vision, which is second to none, really saw, at least in our opinion, in most people's opinion, but saw the possibilities and how South Florida was really different than any other place in the country. There's not a better business state in Florida to start with. So we're very fortunate. Bill, 850 jobs over the next five years, talking about$1.8 billion of economic impact. You're big on training and training people with service now. But will some of your employees move over? How much are they wanting to come to the Gold Coast?

21:11I would say we'll have 20 % of our workforce likely relocate. The demand to do that has been unbelievable. And I keep reminding people the office gets completed in 2027. So just relax. But the demand is there. I think it'll be 80 % net new jobs. You look at Florida, amazing universities across Florida. Look at our veterans. We're going to cross-train our veterans on our open AI opportunity, and they're going to get excited, and this is going to be a great place for them to grow and prosper. People that want to switch jobs and go into this industry because it's flourishing. You know, the jobs are going to get created in tech companies like ServiceNow, and we keep hiring.

21:53We're growing. we're hiring, we're prospering because the innovation is second to none. And you know something, you know this very well, Caroline and Ed. This platform connects to every cloud, it connects to every learning and every AI model, and it connects to every data source. So this will be the AI platform for business transformation. And the opportunity has never been greater than it is right now. And I'm excited to do this with my great friend, Steve, and really, really grow the company, especially in West Palm Beach for the great state of Florida. And I want to say Governor DeSantis, Mayor James, Stephen Ross, all of us work very hard behind the scenes to make this moment a reality.

22:35And Stephen, that reality is mixed use, residential, retail, office properties in this particular focus. What about data centers? Are you thinking about the future of Florida there? I know very much West Palm Beach is a place to live and to thrive. but where will your opportunities go next when it comes to technology? Well, first of all, we're just starting and really had to really develop the base for them to see the opportunities here. So we really concentrated on bringing great universities like Vanderbilt that are coming here with their business engineering tech schools. And then we had to bring in a hospital.

23:13We have Cleveland Clinic. And so we're bringing all those things that are necessary, K through 12 education, to attract companies. And that's what we've been concentrating on and working with the city, the county and the state that will really make this a place where companies really want to relocate because they can attract the best talent. Mr. Ross, thank you for that. Bill, I think a very reasonable question that your employees are going to have is whether you yourself are going to make the move to Florida and other members of leadership will make the move if you believe so much in this vision of the future for West Palm Beach.

23:49Well, you have to remember, we have a very large commitment to the state of California where we started the company in both San Diego and Santa Clara, California, which is where I'm based. But we will have executive leaders on the top management team that will be domiciled here in West Palm Beach and will be part of this amazing revolution. And I will spend a lot of time, the time, the discretionary time that I can here because I really want people to know we planted a flag today. This is a flag of opportunity, a flag of growth, and leadership starts at the top. and I've always believed that the true measure of a leader is not what you take from this world, it's what you give it.

24:32And today's service now gave it a lot. We came in here and Kelly, who runs Palm Beach County Business Development, said on stage, this is the biggest corporate move into this area in Palm Beach County in the last 30 years. I'm super proud of that and I want to make this a stunning success. So I'll be where I need to be, the leadership team will be where they need to be, but the main thing is to build a masterpiece of flywheel, of growth and innovation. I've already received several texts today on this announcement from other tech companies and systems integrators that are like, wow, what are you doing there?

25:08What's going on in West Palm? Bill, we'll see who comes on to say they're moving next. Bill McDermott, CEO of ServiceNow, Stephen Ross, CEO of Related Ross. Great to have you both. it's time now for talking tech first up amazon satellite internet venture project kuiper expects to offer service in five countries including the u.s by early 2026 it aims to compete with musk starlink and has already reached an agreement to provide onboard wi-fi for jet blue plus google well it considered selling off parts of its ad tech business to resolve monopoly charges according to a lawyer for the company now the justice department however is seeking a full divestiture of Google's advertising exchange.

25:49The two sides meet in a hearing next week.

25:58Welcome back to Bloomberg Tech. I'm taking a look at the chip sector, the Philadelphia Semiconductor Index, or SOX. We're mildly softer, down a few tenths of a percent, but earlier in the session we opened higher. And if we close in the green, that would put us on track for the ninth straight day of gains on the Sox, which is the longest streak since 2017. Stories there, I put Micron and NVIDIA. Okay, NVIDIA is down almost a percent in the moment. But year-to-date, big drivers of gains. Micron reports earning September 23rd. NVIDIA, under pressure right now, but recent momentum. And the idea, Caro, as you know, is that maybe NVIDIA is at the center of the discussions between the United States and China right now.