Tesla is holding its annual meeting today. A key focus, of course, will be the results of that shareholder vote on Elon Musk's trillion dollar, potentially trillion dollar pay package. Philo, of course, watching this closely, as are all shareholders here, Phil, given Musk has said if he doesn't get this comp plan, you know, he may be out the door. >> Yeah. And I don't think most people believe that's going to happen, David. And I and look, when you talk with most people, they believe ultimately this is goin ...

Tesla holding its annual meeting today. We are awaiting results on the shareholder vote on Elon Musk's pay package. And joining us right now first on CNBC is Arch Invest CIO and CEO Kathy Wood.Good morning to you. We are awaiting these results. I don't know if it's a foregone conclusion.You if you look at some of the um betting markets, whether it's Ky or Poly Market, it's like a 90 plus% chance uh that Elon Musk's uh pay package is approved. Obviously, that still means that there's a 10% chance it isn't. I ...

Core Insights - Tesla reported better-than-expected revenue of $28.1 billion, surpassing the street's expectation of $26.36 billion, but missed earnings per share (EPS) at 50 cents, below the expected 55 cents [1][2] Financial Performance - Revenue exceeded expectations by approximately 6.6% [1] - EPS fell short by about 9.1% compared to market expectations [1] Market Reaction - Following the earnings report, Tesla's shares declined by approximately 1% [2] Revenue Composition - Approximately 80% of Tesla's revenues are derived from automotive sales, yet the company trades at a high price-to-earnings (PE) ratio of over 250 based on forward earnings [3] - The battery storage segment, while a high-growth area, saw a year-over-year decline of 7% last quarter, contributing only 10% to total revenues [4] Future Outlook - Investors are seeking more concrete details regarding future plans, particularly in areas such as robo-taxis and autonomous vehicle development [2][5] - There is skepticism regarding the impact of new lower-priced models (Model 3 and Model Y) on sales, as they are perceived to have lower range and capabilities [5]

Financial Performance - Tesla's Q3 revenue reached $2627 billion, a nearly $1 billion increase year-over-year [1] - Adjusted EPS stood at $053 [1] - IBIDA potentially estimates at $378 billion [1] Sales and Production - Q3 saw a quarterly record of 497000 EVs sold, boosted by the EV tax credit expiration [1] - Tesla is expected to release cheaper Model Y and Model 3 standard versions next quarter, potentially boosting sales [2] - Giga Shanghai demonstrated strong production numbers, manufacturing cars for global distribution [4][6] Strategic Initiatives - Tesla is focusing on robo taxi deployments as its primary AI initiative, shifting away from the Dojo supercomputer and utilizing Nvidia chips for AI training [2][3] - Record deployments of energy products, a high-margin business for Tesla [2] Market Dynamics - China is perceived as a potential tailwind for Tesla, with positive brand perception and strong Model Y registrations [4][5] - The key question is whether China can compensate for potential losses in North America and Europe [6]

Group 1: Tesla's Performance and Market Dynamics - Tesla achieved a record energy deployment of 12.5 gigawatts, indicating significant growth in its business across various sectors such as commercial, data center, and residential [1][2] - The upcoming third quarter earnings report will highlight the impact of regulatory credits, which generated over $1 billion in the first half of the year, contributing to a trading profit of approximately $1.3 billion [3][4] - The increase in Tesla's vehicle deliveries to 497,000 may be influenced by the recent changes in EV credits, with a rush from consumers to take advantage of the incentives before they were eliminated [5][6] Group 2: Industry Challenges and Opportunities - The automotive industry faces challenges from increased EV competition and the lack of new mass-market models from Tesla since 2020, which may affect future sales [6] - Despite potential profitability and cash flow challenges, the industry is experiencing more tailwinds than headwinds, supported by tax cuts, lower interest rates, and reduced federal regulations [10][11] - The elimination of fines for non-compliance with corporate average fuel economy standards is beneficial for manufacturers like Ford and GM, particularly for their profitable SUV and truck segments [11][12] Group 3: Used Car Market Insights - Used car prices are expected to remain high over the next 6 to 12 months due to reduced vehicle manufacturing during COVID, leading to lower supply in the market [9][10] - The performance of subprime auto and used car companies like CarMax and Carvana may serve as early indicators of consumer health, with some companies facing financial difficulties [8][10]

Auto Insurance Market Trends - The average cost of auto insurance in the US tops $2,600 per year [1] - Autonomous technology is expected to cut the number and severity of accidents, potentially lowering premiums [1] - Only about 4% of new personal cars sold by 2035 are expected to be autonomous [3] Impact of Autonomous Technology - Automatic emergency braking reduces rear-end crashes by nearly 50% [3] - Whimo reports its robo taxis had 78% fewer injury crashes and 79% fewer airbag deployment crashes than the average human driver in the same cities [5] - Goldman Sachs analysts project commercial insurance costs for robo taxis could drop from 50 cents a mile today to about 23 cents by 2040 [5] Regulatory and Future Outlook - Multi-year increases in personal auto insurance are expected to stabilize [8] - Fully automated vehicles are considered the "private jets" of the auto industry, potentially shifting claims from personal to commercial lines [13] - Premium changes are highly regulated at the state level, requiring more data and regulator comfort [14] - Liability in accidents involving self-driving vehicles will likely fall on the commercial policy of the entity that owns the car, not the passenger [16][17]

Future Outlook - The industry anticipates Tesla's market capitalization could reach $2 trillion, driven by advancements in AI, robo taxis, and physical AI [1] - The industry suggests that Tesla's deliveries might experience softness in the near term [1] - The industry believes deliveries will rebound somewhat in the second half of the year [2] Strategic Focus - The industry emphasizes that Tesla's focus extends beyond vehicle deliveries [2] - The industry views Optimus robotics, specifically scaled humanoids, as a significant component of Tesla's future [2] - The industry predicts Tesla will acquire a substantial stake in XAI, subject to a vote expected by November [2]