United kingdom triggers article 50. Brexit. Theresa may vows to get the best deal from the u. K. While e. U. Leaders seek an orderly withdrawal. It could have a huge impact on the economy and cause ripple affects across the globe. The Fintech Industry has been growing rapidly in the u. K. , up to 25 billion. We spoke with the u. S. General manager at a u. K. Based peertopeer Money Transfer business. It has been an interesting time in fiintech. I will explain why this is relevant. We are a platform for moving money between countries, so our customers Live International lives across borders, so the brexit vote was averse to one of the things, which is living the lives they live across borders. In the company, a lot of staff have come to london or other offices around the world and identify with the problem we solve, which is expensive bank transfers. They have the problem because they Live International lives. A lot of our staff are people who are internationals. I want to kick it off with the senior fellow at the Brookings Institute in washington d. C. You have written extensively on brexit and the adverse impacts. I want to get your thoughts on just how much is fintech going to be left behind after brexit . London had positioned itself to be a Global Fintech leader, a rare city that includes finance and technology. Brexit has thrown that into uncertainty about what will happen in terms of londons position as a Global Financial leader, and your basic ability to do business on the continent of europe. They were ahead in the global race on fintech and now the rest of the world will catch up. The u. K. Government had invested a significant amount and it will be interesting to see how much that puts them behind. The big thing that companies have been worried about is the passporting policy to sell their services elsewhere in the e. U. How damaging is this policy change going to be to Fintech Companies . It will be tremendously damaging if you dont have the ability to go into europe. Furthermore, the uncertainty about what will be in passporting will drive Investment Choices today. If you were new fintech, why would you go to london . Why wouldnt you go to berlin or amsterdam or even new york . It is a double whammy about what will happen and the uncertainty between now and then. How are you preparing for this potential loss of passporting rights . London is one of the few cities in the world that has finance and tech. So, that is a really important context. Those conditions dont exist regardless of what happens with brexit. And it takes a lot to build a fintech hub. New york is one of the few cities with talent in finance and tech. We have to see how passporting pans out. The other thing is the rights of e. U. Nationals living in the u. K. Which is important for our team. The timeline will be long. One thing that is important think about how quick Fintech Companies move it, and how slow policy moves. It is a twoyear process before things would even start. So it is a different time frame and we are thinking about different scenarios, but for us and the wider u. K. , it is business as usual. Right. There was obviously much to be determined, but in terms of passporting, are you looking to get regulated and another e. U. City to hedge against the potential outcome . With our expansion comes being regulated in the new country. That is one of the fundamental assets. We are building our own network in as many countries as we can, about 60 countries. So it is part of our normal modus operandi. To go and get regulated. It is something we have to do, not something we worry about. Come to america. Because our remittance system of International Money transmission is way too slow and costly. And we could use innovation to make peoples lives better, and fintech offers that. I would like to welcome you with open arms to try and solve these problems in the u. S. Because we have real problems in the area youre trying to solve. Fantastic. That is great to hear. We are operational here. Our customers here have process to 2 billion through the u. S. , and it is great to hear you validate that the country needs us. Cory that was joe cross and a senior fellow at the Brookings Institute. Overseas, and its biggest grapher Global Market to date, square has expanded its Payment Service to the u. K. Less than 5 of square sales are in canada, japan, and australia. Still to come, samsung unveiling a brandnew flagship phone, good samsungs exploding phone reputation finally be behind it . We will discuss. All episodes are Live Streaming on twitter at bloombergtechtv weekdays at 5 00 on the east coast, 2 00 on the west coast. This is bloomberg. Cory samsung is trying to move on from a pr nightmare. The company showed off its brandnew flagship phone with the emphasis on cool features rather than bodily harm. Samsung has unveiled its new flagship android smartphone called the galaxy s8, and the Company Knows its got to get this one right. That is because samsungs last major launch, the galaxy note 7 ended in disaster. Users posted videos showing the phone capable of overheating and catching fire. Samsung cited issues with faulty batteries, and after two rounds of global recalls, the note 7 crisis cost the company more than 6 billion. Whats more, it may have also cost samsung its lead in the global smart phone market. Samsung had beat apple every quarter before that since the end of 2014, which brings us to samsungs comeback attempt. It comes in two sizes. Both of which are larger than a latest iphone. The samsung logo has been removed from the front of the phone to make more space to use the screen. The s8 comes with encrypted facial recognition and equipment to apples siri. There is still the question, is it safe . At samsung, safety has always been our priority. The company has been touting a new eight point battery check. Investors appear confident with samsung trading near a record high. But samsung faces a test when apple is expected to rollout its 10th Anniversary Version of the iphone. Cory is this the product that turns around samsungs fortunes . We caught up with someone who does research on wearables and mobile phone markets. The phone is an important step to turning this around, but we should not look at the phone by itself. It is a beautiful phone, an elegant device. But if you look at what samsung has done, a thorough investigation, extremely transparent with the process. An eight point process in terms of quality control, so when you put that together, i have to think samsung is feeling very confident they solved the problem and addressed the issue. Even today, theyve referenced what happened and underscored the commitment to quality and safety numerous times without having to rehash the whole thing again. As far as this device coming out after the battery debacle, it is a strong first step. David, ramon called this phone beautiful and elegant with a smattering of additional features. What has the consumer reaction been like so far . It is beautiful and samsung made a good move delaying the introduction. It helps to underscore how seriously they take the process of getting it right before they release it. I think people will love this phone. Will it turn around the companys fortune . That is another matter. This company has a lot of challenges facing it, and also, they have a bigger challenge, which as you mentioned, alexa earlier, but the fact is, the smartphone era is kind of ending. We do not know what is coming next. But that could be more important in the long term. In the short term, this phone will probably sell very well. I want to take a look at samsungs market share. It fell below 20 for the first time in four years. They obviously have competition from apple on the high end, but also up and comers, so what is the main source of pressure causing this drop in market share . If you take a look at where samsung is competing, it clearly has its position staked out in the highend of the market. As you go further down the tiers into the midrange, then that low range or entrylevel range, 150 and below. That is a dangerous part of the market to play for samsung, even if they can get scale because it becomes a contest for how low can you pressure smartphone . If you look at other vendors, a number of smaller and Regional Companies are competing in asia are willing to lose money in favor of gaining market share, and that is a very, very dangerous market to play in when the market itself is growing in singledigit territory. So as far as the s8 is concerned, this will help samsung cement its position on the highend and generate some money because these are not an inexpensive devices. These will be quite pricey. In the meantime come it seems like the iphone will be the main competition until they come up with the new phone. David, what is your initial reaction on how this may stack up to what is coming for apple . David one of the things that matters is china, and not just because china has several competitors, but because the market is so vast. It is also a country, which is increasingly, putting special preference on local champions, of which huawei and oppo are two. This will keep the competition with apple relatively stable. The real open question is how great is the next iphone . We dont really know yet, but if it is great, apple still has a better brand than samsung by a long shot. It still commands the halo of the top of the market, and i dont see that changing. Cory coming up, tesla got a vote of confidence from tencent. We will look at what it means for the model three launch next. And elon musk has an unfathomable road ahead to get these cars to market. We week to a believer about his tesla goals. This is bloomberg. Cory this week revealed that tencent bought a 5 stake in tesla at 1. 8 billion, the first step in a larger partnership in the future. It was said that tencent and tesla have no detailed cooperation plan at the moment. Tesla stock jumping on the news. We talked to kevin carter. E is the founder of tencent has a process where they look for the best and Fastest Growing companies and make an investment in it. They have a large portfolio. They have invested in a lot of technology companies. Theyre really turning their plan to take ownership of this world of connected electric vehicles in the future. They are not the only players in china. Baidu has been investing. Alibaba struck a partnership, so it does not come as a surprise. Cory these are financial investments. Maybe not a partnership, but maybe a place at the table . It is unclear at this point. Partnerships and sources are telling me they would not be surprised if there were partnerships. Wechat is great for tesla to have their feed in. Cory they really want people texting more while they are driving. [laughter] 82 billion investment matters. Investment matters. What do you think they want out of it . Tencent has made close to 150 investments in private and Public Companies of all different types, but all internetrelated. This one marks one of several investments they made into the automotive space. We have seen this all over the news here. There is a number of Major Players in related industries. Uber. Er it is tesla or cooper there is a change going on in the way people and products are moved around. It is very early stages and no one is sure how it will play out. Are the automakers going to be the players . Will tesla be the player . I think they just want a seat at the table, a toe in the water position to see how things play out. Cory it helps them get cash out of china. A lot of money is fleeing china on an individual level. This lets the company have investments outside of china, so not as tied to the chinese economy. Definitely. All of chinas Biggest Companies want a seat at the table and get more capital abroad. It is unclear what the process will be like for tencent, but we are seeing financials having trouble with moneygram. Euro net is also saying there will be issues. Yes, this is a big deal for Chinese Companies and a great way for tencent to have their stake in a fastgrowing u. S. Company. Cory kevin, on tencent, china is the largest car market in the world. Do you think tencent, when you do the work on this company, do you look at this as a business that should be in automotive in different ways . They are already invested in businessmobile in other ways. They recently invested in the leading auto finance company, but one of the parts of the story that is important, while china is the largest car market, its per capita number of cars is still quite low versus the United States in particular. But this has not become a problem. In many major cities, there are restrictions on which days you can drive. This is dependent on your license plate number. We have seen of the stories of traffic jams in certain parts of china. So i think, more than any country to the extent the Autonomous Vehicle takes some of the traffic off the road, it makes a lot of sense for china as a country to be embracing Autonomous Vehicles. Which is what a lot of this investment is about. Cory that was selina wang and kevin carter. To stay with tesla, elon musk has set a high bar with the launch of model three, but that is an understatement. In order to hit the targets he has set, tesla needs to build about 430,000 model threes, more than all the electric cars sold anywhere last year. Our next guest is bullish, but does not believe in that production ramp. Morgan stanley analyst adam jonas, the global head of auto research. Our forecasts are more conservative than the companys forecast. We expect this vehicle goes into a soft launch mode in the Fourth Quarter this year. And our forecast is for 2000, not 20,000, but 2000 units delivered by the end of the year. That is a very small above zero number. The point of this year is to have those initial deliveries done to get the data and initial feedback from the community. Next year, were about 80,000 units. We are nowhere near 400,000 production. Even if you go to 2020, our number is less than half or a third. In spite of that, we are constructive on the investment story. Cory what do you think the price of the car will be . An average transaction price of 60,000. Cory that is more than 35,000. It is. We think the kind of people who will order that car wont want the 35,000 version, ok . So while they could technically deliver that, once it is speced up, the customer will come a very few will walk out at that entrylevel price. That is more of an advertisement. Cory after the acquisition of solarcity, the impact of the bomb of solarcitys cash flow statement would hit the cash flow burning tesla in a bad way. We saw that in the first quarter. How do you expect that to moderate . That will be up to them to prove, right . They have acquired another cashconsuming operation along with a sizable balance sheet, which adds even more Financial Leverage to the story. And a lot of investors thought we did not sign up for this. Throughout the summer, and we were also on the sidelines as well as we digested it. Right now, we have the cash consumption of that business in our mediumterm forecast. We have zero value for solarcity or tesla energy in our base case. We still value the company entirely as a transportation company. Cory you have battery sales in your model. And the battery business has not been working very well yet. Where is the giveandtake . The battery business was a necessary requirement for them to achieve their volume goals. They wanted to secure their own reliable supply of highquality batteries that they could have control of their cooling system and mitigate risks of fire or other problems. They needed to do that themselves. Whether the battery business becomes a separate business all their own, we have done some work with our electric Utilities Team for opportunities for stationary storage. We can come up with a few percent of the value of the company, but on a market cap of 42 billion, even bullish assumptions for tesla energy. It is still a transportation company. Cory that was Morgan Stanley analyst adam jonas. Coming up, we are going to hear from the e. U. Justice commissioner who says if President Trump tinkers with the Privacy Shield, she wont hesitate to pull it. Plus, bill nine, the science guy, joins us for words of wisdom and on what nasa should be focus on next. This is bloomberg. Cory welcome back to the best of bloomberg technology. Im cory johnson. E. U. Regulators concerned with the future of a landmark agreement from the Obama Administration that protects your personal data, called the Privacy Shield. It lets u. S. Companies like facebook and google transfer data across the atlantic, but since that deal has gone into effect, donald trump has been elected president and he has expanded u. S. Surveillance powers. Eu commissioner flew to ington this week to seek we caught up with the e. U. Justice minister during her visit. For the companies, it is crucial that they have certainty when they transfer the data, the private data across the atlantic, so for me this is important for me to be in washington and ask the new administration and new representation of the United States, what are the guarantees, which we agreed upon in the negotiations of the socalled Privacy Shield, whether they are still in place . Because this is important for both sides. Cory why is it important for the businesses . The businesses are dependent on the transfers of private data. And they, well, without a Privacy Shield, are asked to have a complicated way to guarantee the protection of data when transferring it to the United States. So having the