It’s probably one of the more unusual requests from a public company—a $1 trillion paycheck to build an “enormous robot army.” But Tesla CEO Elon Musk is in the business of selling the future and that’s a crowded field
nowadays—so it pays to go big.
Musk’s robot pitch is part of a much-needed new vision for his company. Tesla earnings dived despite growing vehicle sales, which were juiced by a rush to buy before the expiration
of a federal tax credit. An increasingly competitive EV market raises the stakes for the success of Tesla’s robo-taxi and artificial-intelligence initiatives.
The problem is it’s not clear Musk has the unique public and political profile as America’s visionary entrepreneur he once had. Nvidia CEO Jensen Huang is also keen on parlaying his AI chip success into robotics. Meanwhile, the Trump administration is less interested in the environmental benefits of EVs than the strategic advantages of domestic semiconductor manufacturing, rare-earth production, and now quantum computing, according to The Wall Street Journal.
Retail investors—traditionally some of Tesla’s biggest fans—are now spoiled for choice when it comes to narratives about companies poised to dominate future industries, be it AI plays such as Palantir or quantum stocks like IonQ. Some have even returned to an old vision of the future by bidding up former artificial-meat favorite Beyond Meat.
It’s hard to value the potential growth of such businesses, which is why speculative meme-stock manias can take hold so easily. Tesla has long traded at a price-to-earnings multiple its auto maker rivals couldn’t dream of, largely because of the credit given to Musk’s ability to make his visions into reality. Now he needs to prove it again.
—Adam Clark
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CONTENT FROM: COLUMBIA THREADNEEDLE INVESTMENTS
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Spreads are tight, but yields are (still) alright
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In our quarterly update, we delve into the impact of recent fiscal and monetary policy changes on a resilient bond market. Learn more about how we're positioning portfolios in this environment to capitalize on opportunities and manage risks.
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Tesla Earnings Disappoint as AI Ambitions Near Inflection Point
Tesla’s third-quarter results disappointed, missing Wall Street’s expectations despite delivering a record number of electric vehicles during the quarter. Lower-priced vehicles could explain some of the disappointment on profit margins. Tesla’s main focus these days is using artificial intelligence.
- CEO Elon Musk told analysts and investors that Tesla is nearing a critical inflection point with AI, which powers everything from its autonomous driving capabilities to its robots. When autonomous vehicles take over, it will hit “like a shock wave,” he said.
- Tesla’s
operating profit dropped 40% to $1.6 billion, while adjusted earnings were 50 cents a share and sales were $28.1 billion. The 12% revenue gain from a year ago followed two straight quarters of declines. The burst in sales is explained by the expiration of tax credits for EV buyers.
- Tesla said it’s hard to project volumes given changing EV policies and geopolitical uncertainty, but that Tesla’s purpose-built Cybercab was on track for 2026 production and that first-generation Optimus robot
production lines are being installed in anticipation of “volume production.”
- Tesla had about $400 million in tariff-related costs during the quarter, according to CFO Vaibhav Taneja, split between its automotive and energy businesses. Taneja said the energy business feels the weight of tariffs more relative to the cost of goods sold for that unit.
What’s Next: Shareholders vote on Musk’s proposed $1 trillion pay package leading up to Tesla’s Nov. 6 annual meeting. Proxy advisors ISS and Glass Lewis have both recommended voting against the pay. Several nonprofits and unions have also banded together to create a “Take Back Tesla” website, arguing against Musk’s pay.
—Al Root and Janet H. Cho
Federal Worker Pay Is on Ice. Dueling Bills Will Probably Fail.
Senate lawmakers have queued up plans to pay federal workers through the duration of the shutdown, but neither bill is likely to pass. That’s because neither party likes the other’s proposal, and both lack the 60 votes needed for success. But the shutdown continues after a failed Senate vote Wednesday.
- A Republican bill, sponsored by Minnesota Sen. Ron Johnson, would pay non-furloughed workers as well as contractors who support their work. The Democrat version by Maryland’s Chris Van Hollen and Michigan’s Gary Peters, aims to pay all federal workers regardless of their furlough status.
- Currently, some 700,000 civilian federal workers have been furloughed without pay, with another million or so working without pay. Military members got paid last week using unspent research funds, which some have called illegal. The Coast Guard plus some 70,000 law enforcement officers are also getting paid similarly.
- Many federal workers got a partial paycheck on Oct. 10 and could receive no pay at all this Friday. Air-traffic controllers, who must report to work, will miss their first full paycheck later this month. Other workers are being paid through funds not tied to appropriations. While no vote has been scheduled on the bills, they are expected as soon as today.
- President Donald Trump is embarking on an almost weeklong trip to Asia on Friday. Since his input is likely a necessary ingredient for a breakthrough in shutdown negotiations, his departure could mean most of the government remains closed for at least the next week.
What’s Next: Lawmakers face their next critical date on the shutdown on Nov. 1, the start of open enrollment in most states for health plans offered under the Affordable Care Act. Expiring subsidies that covered the cost of those plans for millions of Americans is a key sticking point with the funding bill.
—Anita Hamilton and Joe Light
Southwest Says Changes Are Working, Projecting a Record Fourth Quarter
