Elon Just Told The Economist His Real Endgame

[00:00:00] Speaker 1: So Elon Musk just recorded a brand new interview with The Economist. It's about an hour long, and to me, it was actually a pretty good interview. I think it might be the clearest look we'll get at what he actually wants, like his real goals, his own words not filtered through the headlines. Now, the funny thing is the coverage today is mostly about him fighting with the editor. But if he owned Tesla stock, I think the most useful part of that hour is different. He told you who he's building for, what he's building toward, and what he plans to do about China. So here's the plan. I picked out the five clips that I think matter. We're going to play each one of these short pieces one at a time, and I'll fill in the rest, because the full arguments are better than a quick skim. We'll start with what he said about retail investors. That one is about you. Then the killer phrase of the interview, a quasi-infinite economy, which I think is the closest he's come to stating the actual goal out loud. Then his answer to China, which comes down to electricity. Then the clip about taxes, where he walks through why he'll end up keeping about a quarter of what he has. And we finish with the exchange everyone's sharing, where he tells the editor of The Economist that the media has hated more than he is. Okay, so quick context before the first clip. This interview was done by Zaini Minton-Bedos. She's the editor-in-chief of The Economist. It went up Thursday night. If you remember, earnings was Wednesday. The interview landed the very next day. And that timing is a story inside the story. Because Q2 was a very rough print, and the stock had its worst week of the year. So one day after that, Elon sits down with the most establishment financial magazine on the planet. And this is what he said. [00:01:34] Speaker 2: You said your gross margin would be this, and it's actually slightly worse. And now we're going to punish you. And the short sellers all descend upon you. And you get a lot of pressure in the public market. You're going to get a lot of that. Yeah, so I just need some way to sort of say, Listen, guys, we're going to focus on 5-10 year or longer time horizon investments. This will depress our short-term earnings. But if you take a long-term view, and there are investors, we have many investors that do take a long-term view. In fact, I'm a big fan of the retail investors. In fact, I find our retail investors on balance, they're very insightful and have very long-term views. [00:02:14] Speaker 1: So thank you to Tesla Boomer Mama, Alexandra Mertz, for sharing that clip. Here's the quote, word for word, what Elon said. He said, I'm a big fan of the retail investors. I find our retail investors on balance are very insightful and have very long-term views. That's such a good thing to hear. Now, the full clip runs over four minutes, and the rest of it is him explaining why he thinks that. Portfolio managers, in his telling, live on a 90-day clock. Their year are four report cards. A robotexting network or human or robot program is a five- to ten-year bet, and those two clocks don't agree. Retail investors actually seized the long arc, and that same logic is his argument for keeping voting control of his companies. The long bets need protection from the quarterly clock. Why say all of this on that particular Thursday? I have a theory. The theory is this. He watched institutions wobble on Wednesday. He went out of his way to draw a line around the shareholders he actually builds for. So don't come at me saying I'm reading too much into a compliment. He's said versions of this for years. What's new is saying it there, in that room, the day after a print like that. So clip one gives you answer number one on who he really is. He's building with people on his clock. That's you and me, if you want it to be. Okay, clip two. And this is the one I'd keep if only you could keep one. Doge designer posted it. But the question underneath it is simple. What is Elon actually trying to build? The clip opens with him laying out how he sees the whole economy, digital intelligence and physical intelligence. AI is moving very fast, but it's still mostly confined to the digital world. Then he gets to the part I want you to hear in his own voice. [00:03:52] Speaker 2: But it's still somewhat confined to the digital realm. It doesn't have end effectors. You need the end effectors in the form of humanoid robotics. You need basically lots of bots in a nutshell. You need lots of bots. And then you can go from intelligence manifesting itself only digitally to shaping atoms. And you say, what is an economy? An economy is the production of goods and provision of services. And if you have vast numbers of robots with vast amounts of digital intelligence, you have a sort of a quasi-infinite economy. So this is really, the future is going to be very, very different from the past. There's no analogy or metaphor that I think illustrates the magnitude of change. [00:05:00] Speaker 1: Did you like that? So he said, a quasi-infinite economy. Love it. I think that's the most poetic version of the goal I've ever heard from him. And I wanted to sit with it for a minute. Then when he said end effectors, what does that even mean? Well, in robotics, the end effector is the hand, the gripper, the part that actually touches the world. His point is that intelligence living in a data center can think all day without ever touching the world. Put that intelligence in a human or robot, and it can shape atoms, build things, move things, provide services. Now, run the definition he gave. An economy is the production of goods and the provision of services. Today, both of those are capped by human labor. How many people you have, how many hours they'll work. Robots that make goods deliver services and eventually build more robots take that cap off. That's the quasi-infinite part. Elsewhere in the interview, he takes it one more step. He says, work becomes optional. His comparison was gardening. You can grow your own vegetables if you enjoy it, or you can let the store handle it. So what does this mean for Tesla? Well, for very few companies are building both halves of that sentence. The digital intelligence half, that's FSD and the AI chips. Grok. The physical half, that's optimists. In my opinion, the direction is right, and the timeline is the part I hold loosely, because his clocks run fast. We all know this. So that's answer number two. The goal is an economy where intelligence and labor stop being scarce. Hold that thought, because the China clip is about what could stop it. Okay, this is clip three. I'll play that soon. It's the longest one. Also from Doge Designer. Zaney asked how the U.S. competes with China and AI. And his answer, as a number in it, I had to go double check. [00:06:41] Speaker 2: These AI companies are doing as well as they are with a relatively small amount of compute. It seems that if they had a lot of compute, there's a good chance that they would be the leaders. And at some point, they probably will have a lot of compute. [00:07:04] Speaker 3: So they will, ergo, they will be the leaders. [00:07:10] Speaker 2: There's a good chance that they are the leaders at some point. You can think of, like, the constraints on AI, essentially electricity and AI chips. And then for physical AI, the robots. China's also got some very good robot companies. Whatever the limiting factor is, if it's chips or electricity, China has far more electricity than the United States. In fact, China has more electricity than the United States, Europe, and India combined. [00:07:41] Speaker 1: Okay, so let's walk through the full argument. The clip compresses a lot of it. It starts with a complement to the competition. Chinese AI companies, he says, are doing this well with a relatively small amount of compute. So give them serious compute, in his words, there's a good chance they would be the leaders. Then he talks about the constraints. Digital intelligence comes down to how many chips you have and how much electricity you can feed them. Outside China, the bottleneck is electricity. Inside China, the bottleneck is chips. And he adds a line that got way less attention than the rest. China is, quote, closer than most people realize to solving the lithography problem. If that happens, they stamp out AI chips in huge volumes. And their last constraint, false. Now, is the electricity claim actually right? So I checked the rough math. China generates a bit more than two times what the U.S. does in a year. You stack Europe and India on top of the U.S. And China still edges out the combined pile, give or take. So the line you just heard holds up. In the full interview, he also throws out a four-times figure. And that one I can only make work if you count new capacity being added each year. Where China generally is running somewhere around four times our pace. So I'd call it directionally right. And the direction is the uncomfortable part. Scary, honestly. He also makes a policy point worth 10 seconds. Later in the interview, he says, Washington can stop American companies from using Chinese models. It can't stop the rest of the world from using them. So export controls alone don't win this race. Which brings up his fix. And it's the most Elon fix imaginable. He said, put the data centers in space. Solar powered, off the grid entirely. No permits or transmission lines to fight over. That removes the electricity constraint. And the bottleneck flips back to chips where America still leads. And who's positioned to put mass in orbit cheaply? Starship. Who does solar, batteries, and power electronics at industrial scale? Tesla Energy. He's describing his race. His own companies were built to run. One honest gap before we move on. The question I can't answer yet is when a wad of compute in orbit actually gets cheaper than a wad in the ground. Once you count cooling, radiation, and replacing hardware you can't touch. I've looked and I don't have a good answer. Nobody has published math I trust on that yet. So I'm leaving that thread hanging on purpose. So answer number three. The thing he's raising is China's grid. And his response is to leave the grid behind entirely. All right. Let's get to clip four. Sawyer Mayer pulled this one. It's 90 seconds about his taxes. And for me, it's really a clip about motive. Let's listen to what he's talking about here. [00:10:18] Speaker 2: For my stock options, I pay 40% income tax on a national basis. And then because I spend, I don't know, about 30% of my time in California, thereabouts, I pay another sort of roughly a third of the California state taxes, which are now around 15%. So I pay about 45% in taxes, just so people know this. I don't know if it's quite roughly half. Then when I die, there'll be another sort of 45%, roughly half, that will be taxed. So at the end of the day, I'll probably have a quarter of whatever I have. But I think the only thing it gives me is that for some period of time, I would have control of the direction of the companies. So it's not, that's pretty much what it gets me. And until I guess the AI is so smart that it's in charge. And at that point, controlling companies won't really matter. [00:11:28] Speaker 1: Okay, so let me run the math on this one, because people misquote this. 40% federal income tax, when he exercises stock options, he spends about 30% of his time in California. So add roughly 5% there, call it 45% and the weigh-in. Then he said that at death, a state tax takes roughly another 45% of whatever is left. So you land somewhere around a quarter. Actually, run it properly, 55% survives the first cut, then 55% of that survives the second, which is about 30%. So a quarter to a third, rough math, but the shape of it stands. This is the man who already set the record for the most taxes ever paid by a human, call it 11 billion in one year, back in 2021. Now, why do I call it a motive clip? Listen to how he says it. There's no plan in there to dodge any of it. He's flat about the whole thing, almost bored. It reads like a man telling you money is downstream of the mission. Roughly half of it goes to the government at every step, and he's building anyway. There's a practical angle for Tesla holders too. So when the pay package options eventually get exercised, figure roughly half the proceeds go straight to taxes. Worth remembering next time you see a headline that says the richest man pays nothing. Answer number four, he'll keep a quarter, apparently, and he seems fine with that. Okay, last clip. The one that went everywhere and went viral. Doge Tipping posted the full exchange. Zaini suggests that a lot of people loathe Elon Musk. Watch what he does with this. [00:12:54] Speaker 2: Maybe some people do loathe me. And that's probably true. I don't care. But the fact that, as you pointed out, a quarter billion people follow me is that I think a lot more people actually like me than don't. And I think a lot more people hate you and the media more than you realize. Do you realize the media is despised? Do you realize that journalists, the view of journalists is like, a favorable view of journalists is like 15%. [00:13:29] Speaker 3: I do know that. [00:13:29] Speaker ?: I do know that. [00:13:29] Speaker 3: In the United States... [00:13:30] Speaker 2: Which means that you... So the shoe is on the other foot. They hate you. They hate you far more than they hate me. [00:13:39] Speaker 3: I think there is certainly a loss of trust in journalism. I think, in part, there have been mistakes by journalists and journalism. I totally acknowledge that. But I also think that the kind of polarized environment, particularly on social media, fostered by the kinds of things you are pushing on X, actually helps this. Makes it worse. [00:13:59] Speaker 2: I don't think so. I think you're the problem, the media. And speaking of loathing, you're loathing far more than I am. And you don't seem to even realize that. [00:14:13] Speaker 3: I think very few people know who I am relative to you. So I don't think I play in the same game. [00:14:17] Speaker 2: The media collectively. So, I mean, you're hated. [00:14:23] Speaker 1: I love it. That is so good. That's wild. Let me read the two lines that matter. First, he said, perhaps some people do loathe me. That's probably true. I don't care. And then the turn. Do you realize how despised the media is? The favorable view of journalists is around 15%. People loathe you far more than they loathe me. You don't seem to realize it. To her credit, she pushes back. She said, trust in journalism has real problems. And also that almost nobody knows who she is compared to him. So they aren't playing the same game. That's fair, honestly. Although he said, you know, he's talking about journalists. Having said that, the 15% figure is real polling territory. Trust in media has been scraping record lows for years. And that matters for you as a holder. Because short term, the market often trades the coverage. And the gap between the reporting and the filing is where the homework pays. Here's where I'm at with this. It's great television. It also gives you answer number five. He stopped optimizing for approval a long time ago. A man with a quarter of a billion followers told the editor of The Economist, to her face, on camera, that her industry is more hated than he is. So those are the five clips. Let me give you the other side, its term. There is a real bear case sitting inside the same interview. So let's give it a fair run. Start with the timelines. In the same hour, he says AI passes human intelligence in about five years. And that by 2036, we get an age of abundance where anyone can have anything they can think of. He also puts a 10 to 20% chance on AI going very badly, which is not a small number to hear from the guy building it. And this record on dates is what it is. RoboTaxi was promised for 2020, and the first real paying rise showed up in Austin in 2025. So direction, yes. Clock, fuzzy. That's what some people will claim. Second, data centers in space are a concept today. There are no orbital data center training models right now. The whole idea leans on Starship flying often and flying cheap. And that still gets proven flight by flight. Third, you can read the retail investors' praise cynically. Ugly quarter, nervous institutions, warm words for the base cost them nothing. That's a fair read. And I won't pretend otherwise. My read is different. He's said versions of this for years before this week, but hold both and decide for yourself. And the biggest one, none of this hour fixes the current quarter. Margins barely above break-even, negative cash flows are real, and the next couple of prints could stay bumpy. That's the honest frame going in. So what do you do with this as a Tesla shareholder? For me, it splits cleanly by horizon. If you're holding on to a 5 to 10-year view, you just got an hour of the CEO describing, in his own words, the exact world the product roadmap is built for. Humanity robots, AI compute, and the energy business setting underneath both. That's alignment between what he says he wants and what the company is actually spending on. And that alignment is what I want to see as a long-term shareholder. But if your horizon is the next two or three quarters, this interview does very little for you. Margins in a macro, run that show. And no clip changes the delivery number. And there's a quieter takeaway about the man himself. Across five clips, he told you he doesn't need approval. He'll keep maybe a quarter of the money. The goals and economy where work is optional. Take him at his word or don't. But the word is now on the record from this week, not from a biography. A few concrete things you can do. First, watch the full interview. Highly recommend it. It was very good. The five clips are maybe a third of it. And it's on the Economist site and their YouTube channel. Link below. Second, on the next earnings call, listen for Optimist production talk. That's the quasi-infinite economy going from a phrase in an interview to a line item. Third, keep an eye on Starship's launch cadence throughout the rest of the year. The space compute idea lives or dies on it. Fourth, watch for China lithography news. He flagged it in this interview and it barely made the coverage. And fifth, if this week's drawdown rattled you more than it should have, that's information about your position size. Quarters like this again will happen again and again. So let's zoom out a bit. It was a hostile hour with the establishment press. What came out of it was the clearest statement of its goals we've gotten all year. Build the intelligence, build the robots that carry it, and get the electricity problem out of the way. Whether it's clocks or right is a different question. And we'll track that here show by show. Hopefully you enjoyed this one and found it valuable. And if you did, please like and subscribe. That generally helps the channel. I'll see you in the next one.