Podcast Summary: Unhedged - "What Makes Tesla Run?"

Release Date: June 12, 2025

Hosts: Rob Armstrong & Aidan Reuter

In this episode of Unhedged, hosted by Rob Armstrong and joined by Aidan Reuter, the discussion delves deep into the volatile nature of Tesla's stock, exploring the myriad factors influencing its unpredictable fluctuations. The conversation is rich with insights into government policies, market dynamics, and Elon Musk's pivotal role in shaping investor sentiment.

1. Tesla's Stock Volatility

The episode kicks off with a stark portrayal of Tesla's stock movements:

• Aidan Reuter highlights the erratic performance: "Tesla shares are up 14% over the last week. On the other hand, they're down 10% over the last three weeks. But on the other hand, they're up 84% over the last year. And if you bought Tesla shares in October of 2021, they are up 0% since then." (00:36)

This roller-coaster behavior sets the stage for exploring the underlying causes of such fluctuations.

2. Government Policies and the "Big Beautiful Budget Bill"

A significant portion of Tesla's performance is tied to governmental actions:

• Elon Musk discusses the impact of the budget bill: "They estimate that will impact their earnings by 2 billion." (03:32)

  The Big Beautiful Budget Bill threatens to revoke:

  • Consumer EV Tax Credits: Currently incentivizing electric vehicle purchases, their removal could reduce Tesla's operating earnings by an estimated $1.2 billion annually. (03:41)
  • Carbon Tax Credits: Eliminating these would affect manufacturer earnings, further denting Tesla's financials by an additional $2 billion. (04:08)

Aidan underscores the gravity: "There's none of the battery stuff. Tesla has this important battery business. As far as we know, the bill doesn't affect any of that stuff, does it?" (04:30)

However, Elon Musk points out that while the bill doesn't directly impact the battery sector, the broader economic repercussions and tariffs could pose challenges.

3. Tariffs and Supply Chain Challenges

Tariffs, especially those targeting China, play a critical role:

• Elon Musk elaborates: "We have very high tariffs on China... a lot of Tesla's battery supply chain in particular is global, China and other places." (06:22)

  These tariffs complicate Tesla's global operations, affecting metal procurement and assembly processes. Furthermore, the potential introduction of tariffs on copper is discussed:

  • Aidan Reuter brings up copper prices: "Copper prices have been surging in the US and they're also up in the rest of the world." (18:54)

  • Elon Musk responds favorably towards copper tariffs: "I actually think this is one of the few areas where a tariff makes sense... we have idle capacity, industrial capacity." (19:20)

4. Partisanship and Relationships with Political Figures

Elon Musk's interactions with political leaders, particularly Donald Trump, significantly influence Tesla's stock:

• Elon Musk reflects: "I would argue the unifying theory of what has been moving Tesla... has been the relationship with the government, specifically Trump's relationship with Musk." (15:30)

  The tension between Musk and Trump led to a notable 14% stock dip during a public spat. Despite attempts at reconciliation, the underlying partisanship continues to cast shadows on investor confidence. Aidan adds: "The relationship with Trump, of course, casting a shadow all over all of this." (12:26)

5. Competition and Market Dynamics

Tesla faces increasing competition, especially from Chinese EV manufacturers:

• Elon Musk mentions: "They have Chinese EVs... cheap and good competitors to Tesla." (09:44)

  Additionally, Tesla's declining sales in both the US and Europe are attributed to multiple factors, including economic downturns and stiff competition.

6. Product Delays and Challenges

Product development setbacks further strain Tesla's market position:

• Aidan Reuter points out delays: "Tesla was supposed to launch a whole new stream of affordable cars, but that has been delayed indefinitely." (11:14)

  The underperformance of the Cybertruck is also highlighted, with mixed consumer reception leading to unsold inventory: "You see a lot of images of car lots full of unbought Cybertrucks." (11:37)

7. Future Prospects: Robo Taxis

Despite current challenges, Tesla's foray into autonomous vehicles offers potential optimism:

• Aidan Reuter brings up Robo Taxis: "the robo taxis have not really materialized yet... there's some major delays." (13:37)

  Elon Musk acknowledges the delays but emphasizes ongoing efforts: "Just the other day, Musk said they're going to unleash them in Austin, Texas, kind of for a trial run later this month." (13:18)

8. Wall Street's Outlook

Market analysts have adjusted their expectations for Tesla's growth:

• Aidan Reuter cites Wall Street's revised projections: "In 2022, the street expected 4 million Teslas to get sold. That's steadily been working its way down. Now it's barely over 2." (10:33)

  This significant downward revision underscores the growing skepticism about Tesla's future sales trajectory.

9. The Unifying Theory

Bringing together the various factors, the hosts converge on the central theme:

• Elon Musk posits: "Tesla has been reliant upon the government for a lot of its operating earnings... It gets so much money and so much help from consumer tax credits." (16:00)

  The interplay between government support, political relationships, and market competition forms the crux of Tesla's current predicament.

10. Final Thoughts and Conclusion

In wrapping up, the hosts reflect on the sustainability of Tesla's market position amidst the turbulent mix of internal and external pressures. Aidan Reuter emphasizes the importance of Elon Musk's influence: "that this guy draws very strong emotions out of people and he has built a cult for himself among investors that this stock is kind of everything that it is the bet on the future." (16:23)

The episode concludes with a nod to broader market strategies, briefly touching on other investment topics before signing off.

Notable Quotes:

• "Tesla shares are up 14% over the last week. On the other hand, they're down 10% over the last three weeks." — Aidan Reuter (00:36)

• "They estimate that will impact their earnings by 2 billion." — Elon Musk (03:32)

• "We have very high tariffs on China... a lot of Tesla's battery supply chain in particular is global, China and other places." — Elon Musk (06:22)

• "I would argue the unifying theory of what has been moving Tesla... has been the relationship with the government, specifically Trump's relationship with Musk." — Elon Musk (15:30)

This episode offers a comprehensive examination of the multifaceted elements driving Tesla's stock performance, blending economic analysis with political insights to provide listeners with a nuanced understanding of one of the most dynamic companies in the market.