Elon Musk just got the results of his lawsuit. Not only that, but Ford has some insane things to say and boy, it's gonna make all the Tesla people nervous or will it. We'll talk about all of that in this video. So first, Musk and Tesla were sued with potential damages as high as 6 to 12 billion dollars for Elon Musk's August of 2018 tweet taking Tesla private at 4 20. the SEC alleged that that tweet was false that Elon Musk had no rational basis for making that tweet. Elon Musk replied and said I totally did. Not only did I have Goldman Sachs and bankers lined up to fund it, but the Saudi Arabian private investment fund was essentially providing me with a handshake deal that they would help me buy out Tesla And even though later there was some confusion and some backtracking on that handshake deal, Elon Musk believes that at the time he made the Tweet he was completely correct in making the Tweet. The SEC ended up settling with Elon Musk and finding him 20 million dollars requiring Elon Musk to have a Twitter babysitter that is somebody who monitors Elon Musk's tweets before he actually posts his tweets now. I Actually doubt that happens, but so far the SEC has been relatively silent on whether or not Elon Musk actually is. maybe because he hasn't been tweeting stuff like taking Tesla private at 420 anymore and most of his tweets have turned more into Political tweets. But anyway, moving on from that settlement which Elon Musk says he was forced into because otherwise Banks were going to limit access to his wholesale lines of credit which would have stalled Model 3 production at Tesla and led to a potential Tesla bankruptcy. What happened today? Fast forward investors say they didn't make enough money on their Tesla option and trade contracts and they missed out on the rally. and even though the judge in the San Francisco District Judge Chan ended up telling the court Elon Musk tweets about testing taking Tesla private at 420, funding secured were untrue even though the judge said Elon Musk's tweets were untrue which would have easily set up for an appeals court claim because that could be deemed a lack of due process. Despite that, the jury ended up deciding that Elon Musk had no liability and making the Tweet funding secured and any of the trade losses that people incurred or lack of additional gains that people wanted were the fault of people themselves. And so the entire class action lawsuit was dismissed. and this is shocking given that it was in a San Francisco Court this happened. which goes to show that even people in San Francisco realized what happened to Elon Musk is BS which is pretty dang impressive. Now don't get me wrong, I Like people in San Francisco I think they're very smart and intelligent people and I think this shows Justice because it shows that the people are not as loony as the political system is in San Francisco I think the Judge system the judicial system in San Francisco is substantially more rigged Now, don't get me wrong, Okay, I'm gonna go slight tinfoil hat here, but I highly believe it. I have been in San Francisco courts I Represented myself because I had to fire my attorney in a San Francisco court because I couldn't get any Democratic attorney to represent me. Why? Because I was running for governor against the Democratic governor and nobody wanted to be seen as representing somebody fighting the Democratic governor because if you take a democratic attorney into a democratic Court while you're trying to replace the existing Governor nobody else wants to work with that attorney because you can't go against the existing Governor How dare there be a free political process? But here's the part that could potentially be slightly rigged of California courts and is potentially why: Judge Chan Okay, again, maybe slightly tinfoil had here, but potentially why Judge Chan went hard on Elon Musk suggesting to the jury that Elon Musk tweets her faults. Judge Chan is a democratic judge in the San Francisco District Democratic Judges in the San Francisco District have a very close relationship to the Governor of California Now, why does that matter? Well, it matters a lot because the Governor of California Anytime he gets sued, his cases end up in courts in Northern California San Francisco and Sacramento courts Northern District Courts And guess what those judges want? They want to be in the good graces of the Governor. Now, why would judges in Northern California want to be in the good graces of the Governor of California Oh, that's right, because the governor of California is usually seen as a stepping stone to become president. Oh well, that's interesting. So if you're the governor of California maybe you want to run to be president one day. Which is exactly what Gavin Newsom is basically revving up to do. Should Joe Biden not run for president in 2024, we widely expect Gavin Newsom to step in. Now why is that really interesting? Because if Gavin Newsom were to become president, guess what the President does? Ah, they appoint federal judges. That means you take judges from the state level and you move them up to federal judges. And guess what federal judges get to potentially become Supreme Court judges. And so you got to kind of stroke the governor as a California judge to have hopes that the California governor becomes president and then potentially you get promoted to a federal judge and maybe a Supreme Court judge in the future. It's all part of the game. So when I say I'm putting on my tinfoil hat, let's be real. Some of that stuff actually happens. It's all long-term planning. Okay, this is why the judicial system in California really mirrors whatever the hell the governor wants. So if you go against the governor, even if you have a great argument, you're more likely to lose. Now what do we have to say about Elon Musk and Tesla Well first, it's great that Elon Musk and Tesla don't have to actually deal with a potential 6 to 12 billion dollar liability. Although if this did end up being a loss, that's 6 to 12 billion dollar liability would have probably been settled down to 500 million to a billion dollars. But it's nice and after hours after the court case was decided, Tesla stock did rise about two percent. It never really made it to 200 though. So good news for those of you who do not want me to dye my hair green I will not be dyeing my hair green Tesla Did not make it. It came within a dollar and one cent and it just couldn't make it. It just didn't have the pricing power to make it there. However, what you did end up having was Tesla increasing prices for some of its model wise Model Y long range was increased 2.8 percent. Model Y a standard was increased 1.8 or 1.75 percent. However, the Model 3 rear rear wheel drive vehicle was dropped in price one point one percent. So you've had some small pricing adjustments and you did also have the IRS and Treasury Department finally providing the appropriate Clarity that was needed to indicate that now all Model Y Vehicles actually qualify for the full 7 500 federal tax EV credit including model wise that sell up to an eighty thousand dollar MSRP up from fifty five thousand dollars. This is a great win for not just Tesla but quite frankly any EV manufacturer. So this is fantastic. It is great that these tax credit rules have been clarified. So good win on the lawsuit by Musk. We learned a little bit about the rigged system we learned about EV tax credits, but what the hell did Ford just do? Okay Ford this is a laughable one. This I'm gonna bring you first to the most Salient part of the forward earnings call and I Have to tell you this part was ridiculous because they basically sell you a stock that isn't Ford And that's the funny part. So first what we want to do is we want to go to an analyst Rob Latch Rob Latch asks the question. Considering everyone's aspirations for growth in electric vehicles, do you think you can stand by pricing assumptions and maybe in another way of asking this: do you think you can sell and I'm putting this on screen now as well so you can see him just reading this verbatim from the earnings call transcript. Okay, this is what I do by the way I Read this stuff with my team team by the way. Amazing team now I Used to do all this stuff alone now I Get to do more content because I've got a great team helping me. These guys are awesome teams amazing You'll Rock uh but anyway, do you think you can sell a forty thousand dollar electric Crossover with a 20 gross margin? Now why would Rod latch be asking this question? Because Tesla Folks Tesla said worst case scenario, their gross profit margin would be 20 percent. So in other words, Rod is asking the question here. Hey, do you think you can compete with Tesla's margins and let me provide you the CEO of Ford's response. He starts off by saying that's a very important Crush question. The reality is, we will we. We are structuring our portfolio to compete in very specific segments. Now if you just read the transcript there, it seems like he's saying we will get to 20 gross margins but I actually went to listen to the audio and he corrected himself. he didn't confirm that they will. He kind of stumbled over that the way I just said. it was kind of like he did. The reality is, we were restructuring to our portfolio to compete in very specific segments. Crossover is turning to be more core Civic to the EV business blah blah blah. Talks about the lightning being sold out even though they are not profitable on the EV segment. we'll talk about that in just a moment. The real driver of our future profitability is on second Cycle products. And this is really interesting because listen to them talk about the iterative process of manufacturing. We didn't know when we designed the first three EV products. We didn't know that wiring harnesses for the machiave were longer than they needed to be. We didn't know that batteries were heavier than they needed to be. We didn't know that we under invested in braking technology to save on battery size. In other words, they're basically saying look, we've been really unprofitable at EVS because we don't know what we're doing with EV manufacturing. but we're learning. Okay, that's super normal right? So far, very, very normal to expect the iterative process of manufacturing to make a better, uh, to make a better vehicle right? To be clear, this is the earnings call so this is not an article. This is an earnings call from Ford. So they talk about how they need their learning how to manufacture better and they're very optimistic. They're also very optimistic because they have a lot of new Talent Now don't get me wrong, but when I hear they have a lot of new Talent it kind of suggests that the old Talent just don't know how to make electric vehicle and that's because obviously they're in the internal combustion engine business now. What's interesting here is they're basically selling this idea that we want to make cars with fewer Parts The CEO of Ford is basically handing it to Tesla who's making cars with fewer Parts via their Giga presses. But that's not even the entertaining part. Let's keep going. We want to play hard our strength. Our commercial truck, larger vehicles. On the category side, we don't want to have too many choices. This was a little. The transcription here wasn't great, but basically they're saying we don't want to have too many cars for people to choose from because that puts a lot of costs on our engineers and we're trying to be more profitable on electric vehicles. so we want to give people fewer cars to choose from. which is the opposite of what Legacy car automakers usually do. and it's exactly what Tesla does. You don't have that many choices. It's kind of like Ford back in the 1920s. Henry Ford You can have any cars that you want as long as it's black and it was was basically just the black. Model T right? And so they want. They like that because you can have better margins when they you do this. They're also talking about designing smaller batteries for competitive size now. I Personally think that is actually really great and it's something that Tesla's probably going to do in the future as well. You're going to end up coming out with 20 kilowatt hour battery packs as soon as people get over the head the mental Head trip that you need a big ass battery that you're lugging around. The fact of the matter is, most people don't need a big battery in their car because what it does is it adds more weight and ruins your fuel efficiency. You really only need 80 mile charges and you plug the thing in every night. so you should have a daily commuter and then maybe a more long-range vehicle. I Think that's perfect because most households have multiple cars anyway. So then this is where things get interesting. Okay, he talks about how basically we have negative pricing on electric vehicles right now and this is very true. Ford Does not expect to be profitable on electric vehicles until 2026.. there's a company called Uh Ford Authority They are a uh, they're They're sort of a news organization. It's kind of like a nine to five Mac But for cars and uh, here's the article from them where they talk about investing 50 billion dollars in electric vehicles in the next coming years, How they're trying to produce 600 000 electric vehicles by the end of 2023. This is a recent article by the way. from Feb one here and what's interesting is six hundred thousand Vehicles is a run rate of about 50 000 vehicles per month in 2022. Guess how many vehicles Ford produced per month that were electric? They want to produce fifty thousand. Guess how many they actually produced 12.. Okay, they produced 12 000 Vehicles So they wanted more than 4X how many vehicles they're making that are electric in their ramp process. Uh, they expect to get to 2 million electric vehicles by 2026..

however folks, let's make it very, very clear. all you have to do is read the headline here and we already knew this: Ford Electric vehicles Still not expected to be profitable until 2026.. think about that for a moment folks. Ford Still can't figure out how to make a buck on electric vehicles today. in 2023, as they're ramping, they still can't figure it out. Neither can Rivian. Rivian people are like, oh, Tesla lost a lot of money as well when they were ramping their cars. not on a gross profit margin basis. Tesla in 2014 when they produced as many vehicles as Rivien about 7000 Vehicles could actually go look at the earnings calls they're all public and the earnings reports Tesla had about 20 percent gross margin all the way back to 2014. in 2014 when they were doing just 7, 000 Vehicles Tesla was positive without energy credits. Let me let me just like demonstrate that to you here. Okay, look: 24, 2014 Tesla had 20 percent gross margin. without credits, it was like 29 gross margin with the credits. Okay, that was in 2014 Folks at the same time, in 2020. 2. Rivian producing about the same amount as Tesla then is negative, substantially negative on their gross profit margin. And in 2023, 2024, and 2025, Ford is also expected to have a negative gross margin. And Byd the only Electric Vehicle Manufacturer that's actually remotely killing, it is sitting at a margin of about 1.5 percent. That's really really Well, that's I mean like they're They're gross margins a little higher. Let me not confuse that here. Let's let's just stick with gross profit. I'm sorry with Byd, Just pretend. I Didn't say that for a moment because Byd, that's their net margin. That's not fair. That's their bottom line. Their gross margin is a little higher. Uh, actually. they you know they they. That's how they actually are remotely profitable. Uh, is they make Ice Vehicles They make uh, hybrid vehicles. and they're They're definitely a better company than uh when it comes to making Vehicles than like Rivien or Ford These guys can't figure it out. Uh, but the point is that Tesla back in the day of a relatively similar production of of Rivian was able to figure it out. Ford Still can't figure it out. They're not figuring it out today. they can't figure it out going forward, and they probably won't figure it out until 2026. and I Hate to say it. but even as you get to 2026, it's just hopium if they actually end up making it profitable. which is kind of remarkable. If you think about it, it's kind of embarrassing in my opinion. Now, not only is that embarrassing, but this is where things get really embarrassing I Hate to say it, but this is where the earnings call just goes ugly. You ready for this? So in the earnings call, they talk about what becomes more critical because they realize that in the future there's going to be more competition for electric vehicles. And they actually literally say, and because of that competition quote, we have to expect negative pricing. Okay, now after they talk about negative pricing, they talk about electric vehicle software becoming more critical for the business. Now this is where things in my opinion, actually get laughable because the analysts ask them, hey, how are you ever going to get profitable, right? How are you ever going to make money on electric vehicles And what Ford says is the following: I'm going to play the audio of it so you could hear it because I thought it was funny I Also posted it on Twitter Ready for this Here we go play audio on Twitter Now not the EV platforms, but our new fully updatable electric architecture Because what we've learned on Pro is we can make real money out of software, not our batteries. All right. What you learned on Profort is that we can make real money on software and he kind of says it like a creep. It felt very creepy listening to the earnings call the way he said it. But yeah, but beyond me. just like bagging on the way he said it. let's think about what he just said. He was asked by an analyst, do you think you can get to 20 gross profit margins and he talks about trying to make the manufacturing process better. We know they're not going to be profitable until 2026. We know they can't figure out how to make EVS profitable and at the same time he's warning that electric vehicles are going to be a negative pricing Market And so how does he end the answer? He ends the answer with we can make real money on software and I'm like, dude, what software clown That's what I wrote on Twitter because I'm sincere with that. What software? What software I'll tell you what software they're talking about. They're talking about the following: they're talking about their their Blue Cruise or whatever you call it. Yeah, it's Ford's Bluetooth And basically they refer to this idea that Consumer Reports suggest that Blue Cruise is a better active driving assistance system than Tesla And what they do is when you go to the ratings, you'll actually see that some of the heaviest weights are the following: Keeping driver engaged nine out of ten for Ford Unresponsive Driver 6 out of ten Clear when safe to use nine out of ten Yeah, that's because you could barely use it anywhere. So they give these bigger ratings for Ford When you scroll down to Tesla it says keeping driver engaged three out of ten clear when safe to use three out of ten Unresponsive Driver 4 out of ten And what they say is the following: Listen to this. This is ridiculous. Okay, this is the bagging that they give Tesla You ready for this It is also disappointing that Advanced Driver Autonomy Systems for some automakers allow their vehicles to drive for a long time without the driver applying any pressure to the steering wheel. So wait a second. Let's pause for a moment. Let's just think about what he said for a moment. This author of this Consumer Reports article is saying: it's disappointing that you don't have to grab the steering wheel and wobble it more often. In other words, it's disappointing that you have to be annoyed less look when I'm driving and my car is steering I don't want to have to wiggle the damn wheel all the time. It's annoying. It's really annoying I sit there I watch what the car is doing and if there's a case where I get nervous I grab the wheel and make sure it does the right thing, which it usually does. Thankfully, knock on wood if I need to take over I take over I'm paying attention. but I don't need to sit there like this the whole time if the car is driving itself, it's stupid. This is why the cameras now make you pay attention to the road with your eyes instead of always having these manual inputs. But what is Consumer Reports say? they just happen to also be uh, you know, get fundraising for fundraising and pro and remember Consumer Reports As a non-profit they you know there. there's a lot of Legacy auto uh and old school Legacy auto And oil industries that are sort of backing. uh Consumer Reports So there's some tinfoil hat you can put on regarding that, but we won't go down that road. Let's just literally look at the words that they're saying and the words they're using are. Again, it is disappointing that automakers allow their vehicles to drive for a long time without requiring the driver to apply any pressure to the steering wheel, let alone make sure the driver is actually paying attention to the road. In our tests, both Mercedes and Tesla allowed the vehicle to drive down the highway for about 30 seconds before the first audible alert was given to the driver to put a hand back on the steering wheel. So to this, I tweeted and I wrote yo Mike Monticello and Consumer Reports did you really sandbag Tesla versus Ford because quote it's disappointing Tesla Allowed the vehicle to drive 30 seconds before the first audible alert was given to the driver to put their hand back on the steering wheel. How much is Ford paying you? Serious? It's ridiculous. So in other words, Consumer Reports is trying to prop up the Ford software by bagging on Tesla because Tesla doesn't nag you enough. At the same time, the Ford CEO is talking about how important software is to their margins because when they're asked about ever being able to get to 20 gross margin, they are basically punting and saying we don't think we can ever do that without software What software Jim What software, Y'all suck. There's no surprise your stock went down six percent because you just gave terrible guidance for the future of your ability to actually compete with EVS Now what's crazy is a lot of people actually invest in the value traps like Ford because they think, oh well, they know how to manufacture cars. They're going to be able to make it. Well, apparently not. It's really embarrassing. Very embarrassing. now. I'll give you some highlights. Okay, some highlights because I don't just want to be bad. the Ford Lightning is sold out. Well, that's because they barely make the lightning again. They were only able to make about 12 000 Vehicles a month. Uh, last year. They hope to grow that, but by growing that, they're just going to lose even more money I Hate to say that again. I'm not trying to be mean here. I'm just being a realist. Ford Lost money. They had not only negative net income look, it's on screen. I'm not making this stuff up. Here's the Ford Motor Company Consolidated Statement of cash flows for the period ending: December 31st 2022 Net Income minus 2.1 billion dollars Not only did they lose money on a net basis, but guess what folks, and this is before we actually have the pricing War happening. They lost money before the pricing cuts and now they want to ramp EVs and lose money more until 2026. Ford is going to be losing money year after year after year and and if they can't make it, they're either going to continue getting subsidized by their shareholders and they'll have to continue to take on even more debt or they'll go bankrupt and somebody else will take over the sort of the ideas of the lightning. But what do you have over here? Oh my gosh, You don't even have free cash flow. You have 6.8 billion dollars of operating cash, but you spent 6.866 on Capital spending. You've got negative free cash flow. About 13 million dollars. That's not that terrible. you're pretty close, but basically any kind of cash flow you actually have, you're blowing into losing more money. It's embarrassing. Okay, trying to look at some other. I'll try try to find some other bright sides here. What do we have? They're building battery plants in Tennessee Uh, Kentucky Europe They're building a new battery facility in Turkey Enjoy the 68 inflation you got over there Ford Expects to have a hundred percent of the raw material in Lock by the end of the year so they can actually make these cars. That's great. lock in all that raw material pricing now. So when deflation happens, y'all are still stuck at high prices. That's fine. Average retail price of a Ford is 56 500 compared to forty nine thousand dollars for average across all brands and fifty two thousand dollars for Tesla. That's actually interesting. The average price of a Ford is more expensive than the average price of a Tesla or the average price of a regular car. Yet some people like to go test is a luxury auto manufacturer, so is Ford Then as well is Ford also then a luxury auto manufacturer. If the average retail price of a Ford is more expensive than a Tesla, it's ridiculous. It is a ludicrous some of these people who prop up these Legacy automakers on a pedestal suggesting that. Oh, but their valuation is good. Yeah, because they're a value trap. Come on step bro. You stuck Ford expects to build up to high volumes. They're bragging about having the best hands-free Automotive system on the market. thanks to the Consumer Reports tweet uh or post, it's ridiculous. They do expect a mild recession in the United States and Europe They expect higher industry incentives as supply and demand comes back into balance. Uh, they expect Tailwinds because of improvements in Supply chains. Great! They complained a lot about Supply chains being very inefficient and uh, they hope things get better not only in materials, but also in Freight because they took a nine billion dollar headwind in 2022..

and going forward to 2023, they actually expect a Tailwind on this department, but they still lose their money.