So Billionaire Ron Baron was on CNBC this morning at 6: a.m. and I can't believe I'm saying this at his age, with his amount of money, he's actually hustling at 6:00 a.m. and he was talking about Tesla Now just when you think that Ron Baron cannot give you any more new insights about Tesla because of how much he talks about it on mainstream media and how much fun he is actually breaking apart. He came on this morning and dropped a ton of Bombshells a ton of new info and a ton of new, valuable insights about this company which we've never discussed before.

It's absolutely unbelievable how every time he goes on these shows, he manages to do so. He just spoke last week and he had new material this week. So first of all, let's listen to what Ron had to say and then I'm going to break it apart Slice It Up dice it up and add my two cents to it. So let's get started.

There was a analyst call just yesterday. This is HSBC which really, uh, initiated coverage. They said that their price Target was $146 I Assume you probably looked at this and and probably laughed given your very bullish views on Tesla But what was so interesting about the report was that they really were trying to define the company as an EV automobile maker. Is that the way you think about this company? I Think about it as a technology company that's providing services to other Auto their own company and to others.

They can't possibly be matched by anyone else. Um, they have data technology. They make cars cheaper than was when Ford makes one of these cars an electric car. Every car they make, they lose $336,000 on $36,000 per car.

Our company now makes about $8 or $9,000 in profit. A car. They were making $155,000 in profit. A car.

But if they build a plant that cost $7 billion for a million cars, that plant was making $15 million a year. Uh, $15 billion a year on a $7 billion investment, 15 billion on a 7 billion investment. An ordinary Industrial company would make 15% on Capital 20% the most. This guy's making his Capital twice a year now.

now he's making it once a year. he's making $8 billion in a $7 billion plan. So he's the lowest cost person. Everything about the business is tiing to drive prices lower.

Uh, right now they will be in a very in in the 1900s early 1900s. the automobile companies were tremendous innovators. Uh, no longer is the case. In the 1950s they decided they were going to go for profitability and they outsourced all of their supply chain to their detriment and all these companies went bankrupt.

Hundreds of them went bankrupt. and now, uh, the way we're going is that their electric cars they drive. Um I Guess they have about 30 m a day, 30 or 40 mil a day. and they have five three million of them that are collecting data 100 million miles a day they're getting for data and then they're also getting compute that they're going to have more compute than anyone in the world in 18 months.

So to train it, have you been surprised? And this is true of the other EV makers? A lot of EV makers have put up big goals in terms of sales and then they've scaled those those goals back saying there's just not the customer demand. Do you think that is the responsibility or function of the products that these other automakers are putting out? Or do you think that there actually isn't the demand for EVS RIT large? That maybe was anticipated or expected? There's a billion and a half cars that have to be get replaced. Uh, they do about 80 million cars a year and a small percentage of those 10% are electric right now. Uh, ultimately it's going to be all electric.

Uh, but the r The reason there's not more demand is a car that are out there are not very attractive by the dealers. You you know by the core companies and they're expensive number two. And then in addition to that, the dealers who sell them. they don't want to sell them because there's nothing to service.

Dealers make all their money on servicing, so dealers sell them. they're not selling them. Talked about trying to bring prices down and that's something that Elon Musk has talked a lot about at the same time that he's going to try to bring prices down You have the potential the the potential for Tesla to become a target of the UAW which of course just made this new deal uh with the other big automakers at meaningfully higher prices. In terms of what those employees are going to be getting, what do you think about that? I think Tesas employees are the highest paid workers in the world as far as the automobile companies go because they own stock as a function of the stock and uh, that stock option would not be present in all instances if it were a unionized company when the unions were control of Fremont as soon as they had trouble, they ran from it Tesla took over that plant in Fremont after the unions had left after the company had gone bankrupt.

uh Tesla employees. There's a a good story that uh, one of the executives of and then I want to talk about yeah, yeah, no of course. uh uh. One of the executives who devised the pay plan for the employees was telling me that he's a small Jewish guy like me and he was walking through a plan and a large black man walks over to him shaved head tattoos all over the place and says Ira Ira are you the man? uh who devised the pay plan for us and uh, he says yes he said I Want you to know that I'm the first man in my family the first person in my family, to ever be able to afford a home and thank you very much.

And so the workers there make more than anyone else by far and their health care been all the benefits are better. The unions have been trying to organize Tesla Toyota all the foreign companies for years. They failed repeatedly. Why? Because those companies are not the unions not in business to keep the employees, their unions have the power uh before we move off Tesla By the way, the stock went down yesterday.

not because that report went down because of of Joe Biden President Biden Who by the way I love what he's doing for Israel but I don't like that much what he's doing in business. um some things I like uh but he's the one who said Union should organize Tesla that's what happened yesterday when the stockh town. Okay, we'll come back to to the Biden piece in just a second. Melissa Lee I think has a quick Tesla question because I know I want to talk to you about a whole bunch of other things Melissa yeah Ron thanks for taking my question.

Um, you know when you think about China how how do you think about the growth there because that's a key piece of the Tesla story Lee Auto Reported its earnings y yesterday and had strong EV guidance it's gaining market share I'm just wondering how you think about the competition but also the weakening Chinese consumer and have you discounted that portion of the Tesla story at all? Given the the Chinese economic forecast out there, um, Tesla right now is doing about a million eight cars a year. When we started investing in the company 7 years ago, when we invested between 2014 and 2016, they were doing 41,000 cars a year. So 41 ,000 cars a year to a million 8. they're on their way to 20 million cars China is about a million right now of their 2 million 8.

Uh, but uh, a large percentage of what they make in China is exported from China to Europe Uh and uh, the more they build in Europe Of course the more they're going to save on Transportation costs and duties. Uh, the idea is that China Uh invited Musk in and invited him in because the Chinese car companies had done very poorly for a long time and the promise was that he's going to help them, uh, become better Cor manufacturers and going to. he's not trying to take over the market in China better Cor manufacturers and develop a local supply chain. And so he's the only one that's ever been invited into China that's been able to not have a partner a local partner to operate their business.

So I'm convinced that they have good operations in China The person who runs their Chinese business, the uh, the Tesla business in Uh uh in Austin in fact is probably in line to be a know important person. uh at Tesla Overall, he's now he's Chinese and he runs. He was brought from China to to Texas and uh uh runs the business there. He's going to be in charge of all the automobile business.

So I think the relations they have with China are exceptionally good. Uh uh. they both people are getting something from it. uh and I think that that business will continue to grow, but he's going to open Plants all around the world.

uh for lowcost cars and wait till you see what's going to happen when all of a sudden they start selling cars instead of for 40 $1,000 a piece for $25,000 a piece which is going to happen in past a year year and a half. uh from their new model. the new model they think is going to do 5 million cars a year. 5 million cars a year for the model two that's coming I I I know we problems, we move off.

Tesla by the way. but I just want to know this: Do you believe that that autonomous cars and this whole idea of Robo taxes and the like has to happen Is that part of the valuation plan for you? And the reason I ask is you just saw that GM Crws effectively shut down their autonomous vehicle program in the US at least temporarily because they haven't been able to get it to the right place clearly Tesla hasn't been able to, hasn't gotten there yet either. And so I'm curious and you know we just had uh DK Kahi on from Uber and he said look could be another 5 or 10 years before this type of technology is really ready and we've been talking that 5 or 10 years sort of path for 5 or 10 years. Uh, we have a small investment in Cruise Uh, $30 million? Uh, and made the investment because I wanted to learn about the process that they were doing.

Every one of those cruise cars cost $250,000 $250,000 to have the equipment that's on it in order to operate autonomously. Uh, they have to be specifically in mapping every city and it's it's it's a tougher business. We were out there a couple of months ago. Uh, to drive around in one.

It was pretty amazing. You're driving along, they they pick you up at 9:00 at night. you drive around San Francisco you pull up and there's a car next to you that's also no driver in it and it pulls away and you pull away. It's like the Headless Horsemen we really something.

So uh so we have a small investment in that I Really like Kyle Uh I like the executive who was there who left and goes to went to Exon uh I think ultimately Microsoft thought they were excellent and invested in it as well. Uh, but we have a very small investment but as far as Tesla that's software. no one has that they have data, no one has that Tesla is going to have that car. They're going to be able to charge for autonomous $2 or $3,000 a car a year to have your car operate all by itself and it's virtually there.

And and I don't think people realize that they have any idea of what that's going to mean. and that's a business that Tim that business alone is going to be worth a trillion dollars. That business alone is going to be able to do $100 billion $80 billion a year revenues in three or four years and growing every time. And they'll do 20 million cars a year ultimately for themselves and then addition to that of the 80 million cars.

probably another 30 million who use their technology. Mary Barra Who I'm friendly with asked me about um I don't know a year ago could I fix her up with Elon not a date but to fix her up and I said sure I'll set it up and they went to on the company conference and they met and uh and and she hadn't met before and and then afterwards. Uh then I saw her on your program and she quoted and she said uh oh yeah Elon we text all the time, right? We text all the time and the reason that's important is that the reason they do this with the Uh charging as well the reason they're doing all that is because Tessla doesn't want to put other guys out of business. They're going to be his customers.

Those people will make the metal ultimately for a lot of cars and he will supply the guts that Intel inside of of a computer that's going to be Tesla inside of cars. That's going to be an amazing business for them. So the first thing he was asked about is the HSBC negative rating. So HSBC actually initiated coverage on Tesla and they basically said look, we're having it at $146 It's basically a bad investment at 2110.

It's not the first time we heard analysts talk bad about Tesla but the question was posed to Ron Baron and Andrew basically said look, Ron HSBC is saying it's a bad stock, what do you think and then Ron basically starts with the usual he says look, it's a company, It's going to sell a bunch of technology and services to the rest of the industry. It's not just a car producer, it's going to make money per car more than anybody can imagine it already makes right now the best margin in the industry. In fact, it's probably the only EV maker that's actually making money off of its cars. It's return on capital for its investors is unbelievable in the past, in the present, and in the future.

And they're also the Front Runners for the next big scurve which is the the self-driving the autonomous driving. They have the best technology, they have the most amount of data, and they have the best employees working on R&D So how can you think that this is a bad stock at $200 given the amount of massive upside. They have the proven track record, the number one CEO in the business and all this good stuff. So basically he broke apart and basically said look, he's not going to say it in so many words because he's not going to talk bad about HSBC but the idea was like look, they don't know what they're talking about Andro That was the main point of what he said here but without trashing.

HSBC Let's talk about the next item. He also talked about the fact that maybe there's no demand because Andrew as a part of the mainstream media establishment. he brought up the new scops against Tesla. So Tesla has been basically dealing with the scops from mainstream media on behalf of Legacy Auto, claiming that the demand for EVS is going away and you shouldn't buy EVS because they're going to be gone in a few years.

Basically, it's just a big balloon is popping right now. Etc ETA Etc Now I know why Again The Big Three is pushing this narrative through Main media because they found out that making EVS is not as simple as advertising about EVS they're going to make in a year. They've actually found out that making these is very hard. It's very difficult and it's very hard to scale.

They're basically losing so much money per vehicle, they've decided to say hey, hold on a second. we're going to go out of business trying to compete with Tesla So let's try to convince people they shouldn't buy an EV There's no demand for an EV and basically kill this narrative. It's like saying hey, remove this from the Internet It's such an old way of thinking about it. but the question was posed to Ron Baron and say look, Ron do you think there's a, you know, a decline in demand of EVS right now And he said look my guy right now uh, in the world, we're basically pushing 80 million Vehicles a year 8 z 80 million new vehicles per year? Cool.

Ultimately, the 100% of this pie will be electric. Make no mistake about it, it's just a question of time. So to tell me there's a demand problem is not seeing the future. The idea here is like this: 80 million will eventually be EVS how long it's going to take and how many years until we get there I Don't know, he didn't specify but the idea of a demand problem it's a fabrication by mainstream media on behalf of the big Auto.

The fact of the matter is Eves are here to stay EVS are here to become the new trend and the new standard and I'll explain right now what I think Ron Baron is talking about and why EVS are a little bit you know, sluggish on demand. It's not what you think, it's not what main media is telling you and I'm going to add to what Ron said. I By the way, I agree 100% Ran, They will hold 100% of the market EVs and Tesla will be a big chunk of it. But let me explain what's going on right now.

So Ran is talking about two things here and I'm going to add my third. Ron is saying look number one: H people are you know kind of skittish about the price I mean the price of these EVS are now you know higher than a $225,000 base car and times are getting tougher, etc etc etc etc. right? Number Two Run says look, the dealers aren't really pushing the EVS because it doesn't make sense. The dealers make money on the repairs, on on the parts, on the maintenance.

There's no parts repairs and maintenance for Tesla. there's just not so the dealers are not really incentivized to push Teslas sorry to push EVS right? If it's a Ford or a GM or anybody else, why would they push an EV when they can push the usual stuff shell, sh, reverse and basically then have it maintenance and replace Parts every year and make a ton of money basically by milking the customer in an aftermarket. So Ron is talking about, that is the fact. Look, the EVS are not really pushing that from the distribution side on on the side of the dealerships and there's a price kind of fear.

But let me be more clear about this and I'll explain what I think he means. You have to understand something. There's a demand curve that is being created when a new product is launched. Whenever a new technology, a new product is launched to the market, there's a problem, right? You have to find out the best way to price it.

So the new technologies usually get priced the massive premium. Whenever you have the best computer, the best graphics card you know, Tesla Model S Somebody will be willing to pay premium for this the new early adopters. They'll pay a massive premium for this. Now once you sell to all the new early adopters, then you have to move to stage two which is just sell to the excited newly adopters which are willing to pay a premium but not a super premium for the product.

Then you sell to all of them. and then you move one tier down and then so forth and so forth. and so forth. Right now Tesla hit about level four or five after they clean house on level one, two, and three, and four.

Tesla Basically dominated 70% of the first three layers of customers. All the early adopters, all the new adopters, all the excited people, Everybody who's willing to pay premium for an EV. Well, let's say 70% of them now own a Tesla and Tesla brand loyalty shows. They'll stay at Tesla customers for many, many years now.

The question is what happens when you hit Layer Four? Layer Four is the normal guy who's not excited about EVS is looking at an EV and is looking at as a comparable to a classic internal combustion engine car. You know what do you do then? Well, then you have to be competitive with pricing. So when you're talking about a $40,000 car, you now it's going to be a little bit too pricey for somebody who's looking for a base entry level vehicle. At this point, you have to start dropping prices.

It's just a matter of basically pricing. as you go down the tiers, the price has to come down. But here's the crazy part. It doesn't mean lack of demand, it just means that there's more price sensitivity.

The lower you get on the pyramid, when you get to the next level, the total addressable Market gets much much bigger. But the price sensitivity also becomes bigger. But guess what? and that's something? I Want to clarify here: CU I Don't think Ron made that point. The only company that can afford to provide competitive pricing for EVS compared to Classic Internal Combustion Engine is Tesla because Tesla has the margins to do that and still remain profitable.

The GMS, the Ford and all the rest of them are already losing money per vehicle and the current price level which is the premium price level. So Tesla dropping prices is not about demand. it's about cleaning the fifth and sixth level which will clean house again because Ford and Gem simply can't compete. If they try to, they'll go out of business.

so that's all it is. It's an offensive move by Tesla they're taking over the market literally by dropping prices. And yes, it's not going to sell as fast at the same earlier price. but it's going to sell when it's $30,000 and Ron actually talked about this in the video when it's 25.

Remember at the end of the video he said wait, wait until Tesla At $25,000 you'll see what happens then, because then we're talking about Layer seven, layer eight out of 10. That's the mass adoption. So I think that's a good point. There's no demand problem.

It's a scop. It's a complete horse manure. Ignore that now. He also was asked about the UAW and he was like basically Andrew said look, the UAW just basically bent over GM they bent over Ford I mean they're going to go for Tesla's neck right now.

What makes you think Tesla isn't you know susceptible to this and Ron said look, you have to understand something and I agree with with him 100% And I said this in my earlier video I said this sentence I said Tesla has made more employees millionaires than any other car company in the world in existence and I think Ron was saying it in different words he said look, there's no issue of U UAW UAW cannot get into Tesla because the employees in Tesla are the highest paid in the industry by a country mile without increasing the cost of goods and the cost of manufacturing through employee stock options. All of them have options, all of them stock in the company. They're invested mentally and emotionally in the success of the product and for them to let the UAW in and lose the employee stock option plans is lunacy. especially when they already have the best conditions the best, the best health care and the most exciting place to work.

The amount of people who are applying for Tesla is like you what 100 to one actually get accepted. So the idea is very simple. You know UW goes where the weakness are Tesla's employees. scoree is very very strong, They're well compensated, the conditions are great, and they're absolutely Ely excited about the company.

UW doesn't stand a chance I 100% agree with him I think what they did to JM and Ford um is going to be a crime because what it does, it pushes Jam Ford closer and faster to the brink of another bailout. but that's neither here or there now. Um, he did mention President Biden said look I love what President Biden is doing for Israel but what he's doing for Tesla is a little bit annoying and I'll explain what he means and I tweeted about this today because President Biden said look I think the Uww should get into Tesla and that's his opinion and he's entitled to no problem. But what I'm saying is look, if you're talking about Tesla doing things the way they do right now which is not unionized, right? So if Tesla's not unionized and they literally gave America The dominance in the Global Auto industry back after losing it 40 years ago to the Chinese to the Japanese to the Koreans, not that or they first it was Japanese then it was Koreans now it's Chinese So all of these car companies from around the world came in and took away the Global Auto industry from the Americans.

if you go to Europe If you go to anywhere in the world, there's just not enough us made cars except Tesla Tesla brought back America to the front of the stage to dominance in the global vehicle industry and in the upside in the future. So the reward for them doing that should not be changing the way they're doing business. I'm not personal about what Biden said. All I'm saying is like why would you want to change the way they do business, the way they interact with employees when the current way they're doing is gave them the best margins in the industry and dominance in an industry that you guys for GM lost to the Japanese, the Koreans and then the Chinese I'm just I'm in agreement with him I don't think it's a good idea and again nothing personal now uh he was also you know asked about China Well there's also a demand problem China and another fabrication and he said look, this is another narrative you know Tesla in 2016 sold 40,000 cars Tesla This year going to sell 2 million cars do at some point will sell 20 million cars.

That's just a fact. So you can talk about a demand problem here or there because of a bad year or good year. but Tesla is in route to making 20 million cars per year. Does it really matter? I Mean he's not worthy at all and you know he's basically saying look, you have to understand that once the price hits $25,000 This is the part where he said wait for the $25,000 this demand problem goes away.

It's not a demand problem, it's just a pricing strategy of how you collect the maximum amount of profit of each layer of of uh of early adopters. now. He also said something really interesting which I found really fascinating. He said look in 10, 15, 20 years GM and Ford and the rest of them all of them are going to be building the metal the metal casings that that make up your usual car but Tesla will be the brain of every single car out there because Tesla is the only one who has FSD nobody else has it.

They talked about Cruise basically shutting down there operation and and Ron said look, the cruise thing cost $250,000 per car equipment and they need pre-install maps. That was really fun to use but it's not really practical in the real world environment. when FSD we saw I hacked all ass FSD Like early early version, somebody hacked it in Ukraine in Kiev and the thing was driving itself. It's literally you can drop it anywhere with a camera.

No. Maps no crazy equipment, just basic cameras. So he also dropped a major bombshell on this. He said, look just the FSD alone because of all the licensing to the rest of the Oems, just the Fs alone is going to be a trillion dollar business that's more than Tesla is worth today.

They have the best software and they have the best data and the fastest rate of collecting data. So when you think about everything that Ron said in this interview, he clearly understands Tesla better than 99% of investors and I think you guys should listen as well. But again, this isn't financial advice, not for me, not for Mr Baron Do your research, Find that for yourself. One thing: I'll tell you that if you want to become a better long-term investor, you should learn the basics of how to do it through a system, through a process, and through eliminating emotions.

I Teach these things on our Patreon group Patreon.com Nash We have a Discord We Patreon. We have weekly Zoom meetings, weekly classes. We're absolutely excited for you to join our journey. Try it out for 30 days Minding back guarantee Patreon.com I'd love to see you there I'll see you in the next video.