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Electric vehicles: Tesla is still 'the king of this transition,' Ross Gerber says

In this article:
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Ross Gerber, Gerber Kawasaki Wealth & Investment Management CEO, joined Yahoo Finance to discuss Tesla's recent troubles and the addition of Rivian to the electric vehicle industry.

Video Transcript

JARED BLIKRE: Welcome back to Yahoo Finance Live. Tesla no longer in the [INAUDIBLE] the market value of the market cap falling below a trillion dollars. Once again, the stock down 4% today, off 20% from its record high only a few weeks ago. But don't call it a bear market. And we want to talk to Ross Gerber now of Gerber Kawasaki Wealth and Investment Management. He is the CEO there. Ross, good to talk with you today. How much of this decline that we've seen has to do with Elon Musk? I believe he's reportedly sold about 6.9 billion with more on the way.

ROSS GERBER: Yeah, I mean, it's 100% Elon. You know, certainly, the stock was very high priced and priced for perfection. And having the CEO dumping potentially $20 billion of stock puts a lot of supply out on the market. And we're seeing the market react as such, not to mention he's done it in sort of a sloppy manner, you know, or a unique manner that is typical of Elon, which creates disruption, but it also creates opportunity for long-term shareholders. So we're kind of happy about it.

EMILY MCCORMICK: Ross, this is Emily here. Continuing on that point, we knew that Elon Musk was going to have to sell stock at some point to cover income taxes for exercising options that would otherwise be expiring at next August. So why do you think there was all this volatility with the stock in response to that Twitter poll last week, in response to some of the other Twitter commentary he's been making recently, when this was, in many ways, a known outcome in the coming months?

ROSS GERBER: Well, I think there's a bigger issue. You know, nothing with Elon is ever on the surface. There's a deeper issue that myself and Elon are concerned about, which is socialism in this country and the attacking of entrepreneurs and sort of painting everybody with this brush that we're not paying our fair share. You know, I pay a 53% tax rate, so I find it incredibly insulting to have Biden saying I'm not paying my fair share.

Now, in Elon's case, because he doesn't earn an income, there was a lot of criticism that he wasn't paying his fair share. So I think he's showing the effect on the capital markets. If there was something like a tax on capital, it would be devastating to the stock market to have founders across every business in America having to sell stock to pay Bernie standards as tax. So there's a bigger thing that Elon's showing, is that it's cost investors $200 billion for Elon to pay a few billion dollars in taxes.

And it's an absurd system of taxation that we have today. And it's absurd for the Democrats to be attacking the most successful people in our society. If they're going to attack rich people, they should attack all these trustafarian kids and the kids who inherit all this money and never work a day. That, I think, is a reasonable attack, you know? But Elon? I mean, this is the innovator of our time, and he's frustrated. I get it.

JARED BLIKRE: Yeah, Ross, I think-- I have tremendous respect for Elon. I'm just wondering if he went a little bit too far over the edge with some of his ad hominems against Bernie Sanders. And, you know, it kind of gets back to what you were talking about before. You have this kind of hothead CEO, but it provides investment opportunities. Does that mean that you like those dips when they happen so you can buy the stock?

ROSS GERBER: Well, you know, I don't get-- like getting the barrage of emails and messages from my clients who go into, oh, Elon's back at this again. And I say, no, he never stopped. You know, when you invest with Elon Musk, you're investing with Elon Musk. And if you're not comfortable with who he is, you shouldn't be an investor. He's made us a fortune, literally fortunes. I think it's a volatile stock because you're investing with Elon. And I call it Elon risk.

But it creates opportunities for people who can see through and see the point of what he's really trying to say. And so the fact that I felt like the stock was getting away from me and there was no way I could actually buy the stock at 1,250, now I see it at less than 1,000. If I'm an investor, I'm pretty happy I get this opportunity at Tesla again, because they're about to have an amazing run in 2022. So the company is doing great.

EMILY MCCORMICK: Ross, you talked about this amazing run coming in 2022. Can you expand a little bit more on what you see as being the catalyst here for this company in the next year?

ROSS GERBER: So what we're having right now is making me super happy is the tipping point for EVs has happened. And we've seen it with the Rivian IPO. We've seen it with Lucid's now delivering cars and how the stock has done. And now with Polestar up $3 today, as people have figured out this is a great electric car maker here with Polestar GGPI. So when you look at what Tesla has done, is they've advanced sustainable transportation, which is their mission. And now the demand for EVs, even Ford's demand for the Mach-E is off the charts.

And so, like, when you look at the demand for electric vehicles, while oil prices have soared and consumers are just getting gouged and complaining about inflation, which is all at the pump, and I'm like, you have a solution for inflation. It's an EV. So every Tesla is sold.

And now we have the rental businesses going in and buying EVs. And what I've seen from the rental companies I've talked to is they're looking at buying every EV they can. And so we've got this confluence of demand and, really, a limited supply of vehicles. And Tesla is the king of this transition. So as they ramp production with the Gigafactory in Texas coming online next year, the demand for their vehicles is off the charts. And they're getting bigger and bigger margins as they increase prices.

JARED BLIKRE: Well, as they do-- as this demand that you're seeing there for Teslas, you're not concerned that this deal with Hertz that hasn't been signed yet for 100,000 cars might just be a fleet deal that came a little bit too early? Elon Musk has maintained that it is totally a supply problem, not a demand one. I'm just wondering what you see, kind of reading between the lines.

ROSS GERBER: No, no, no, so there is no deal with Hertz, and there's not going to be a deal with Hertz. Hertz is just buying Tesla cars online. They have a team doing it now. They are-- they have cars that you can rent. They're running commercials on YouTube and full page ads in the paper, advertising you can rent a Tesla. So they're buying cars. Now you can go on right now and try to buy a low end Model 3, and you just can't. They're sold out 'til next year sometime.

So what we're seeing now is on the low end Teslas, they're all being bought by Hertz. And so you have to buy a long range model if you want to take delivery of a car. We're also seeing delivery of the Model X now, which we haven't seen all year. So with X and the Model S refresh now being delivered, plus higher margins on all their cars, plus all the advances they have with full self-driving, you know, and the Gigafactory opening in Texas, I mean, how is Tesla not one of the most exciting companies in the world?

JARED BLIKRE: Well, I think that's why we talk about it multiple times per day. We're going to have to leave it there. But Ross, thank you for stopping by here. Ross Gerber, Gerber Kawasaki Wealth and Investment Management CEO.