Elon Musk gets relatable, the U.K. wants to ban diesel trucks, and Lordstown. That and more in The Morning Shift for July 13, 2021.
1st Gear: Tesla CEO Elon Musk Is Back On The Stand For More Today
Elon is being sued by shareholders who allege that Tesla’s acquisition of SolarCity in 2016 was bad. The merits of that lawsuit are sort of neither here nor there unless you are a stakeholder of some sort, but the ongoing trial has given us some good insight into Elon as a person. He took the stand yesterday and is expected to again do so today. He said yesterday that he hates running Tesla.
From The Wall Street Journal:
The billionaire CEO, who has a record of sometimes blunt and surprising statements, said Monday that he didn’t enjoy being the boss of Tesla. “I rather hate it and I would much prefer to spend my time on design and engineering, which is what intrinsically I like doing,” he said.
Mr. Musk made the comment after opposing counsel tried to show how his “force of will” and faith in his view of Tesla’s future illustrated his ability to control the SolarCity transaction.
Elon also hates a lawyer questioning him.
Mr. Musk has already displayed flashes of his sometimes combative nature in the case, making for a confrontational witness in a 2019 deposition, calling [Randy Baron] “reprehensible” for “attacking sustainable energy.”
To explain the behaviour, Mr. Musk told the court he didn’t respect Mr. Baron because the lawyer had once worked at a law firm whose partners became engulfed in an ethics scandal and went to prison over their misdeeds. “I think you are a bad human being,” Mr. Musk said to Mr. Baron.
Mr. Baron asked Mr. Musk why SolarCity’s performance varied significantly from the projections that Tesla gave to shareholders in 2016. Mr. Musk blamed the decline in solar-panel installation and market share to Tesla’s pressing need to focus on developing its Model 3 car in 2017 and 2018. Tesla at the time was struggling to bring the car to market.
“Those were the three hardest years of my entire career,” he said, later calling the period excruciating. “The company was in dire straits. Many of the times I thought we were out of the woods, we were not.”
If Elon is grumpy about having to spend a few days in Wilmington, Delaware, in the middle of this hot vax summer, who am I to blame him.
2nd Gear: GM Still Thinks It Is A Cool New Tech Company
It is building a $US71 ($95) million “studio” in Pasadena that is focused on electric cars and autonomy and everything else we have been told the future will bring. GM is taking a flyer, to be clear, as spending $US71 ($95) million for GM is more or less the same as you or me buying a pack of gum. But, you know, for today it gets a second of good publicity.
From Automotive News:
The automaker on Tuesday said the new eight-acre campus will enable expanded advanced technology teams to accelerate its zero-crashes, zero-emissions and zero-congestion goal. The site also is closer to West Coast technology centres and leading universities and design schools. It’s slated to open in the second half of next year.
“Our positioning will allow us to attract dynamic candidates in fields that will bolster GM’s proven design capabilities and challenge conventional thinking of what our future portfolio of connected products and services can encompass,” Michael Simcoe, GM’s vice president of global design, said in a statement.
GM did not reveal how many designers it would hire at the new facility, but the automaker said it plans to significantly increase headcount from the 65 to 70 workers at the current California design studio.
It should also be said that GM’s larger push into EVs — involving tens of billions of dollars — is seriously impressive. Now, just gotta stick the landing.
3rd Gear: The U.K. Will Ban Diesel Trucks From 2040: Report
Everyone I know in the U.K. absolutely can’t stand Prime Minister Boris Johnson and, while I agree that he is a complete clown, the government there seems to be doing at least some sensible things despite his presence.
From the Financial Times:
The sale of new diesel trucks in the UK will be banned from 2040 under the government’s transport decarbonisation plan due to be unveiled on Wednesday, according to people briefed on the proposals.
The much delayed plan will include several public consultations on measures designed to cut pollution in the transport sector as the UK seeks to have net zero carbon emissions by 2050.
The paper, which has yet to be signed off by ministers, should be published on the same day as the European Commission sets out how the EU aims to meet its goal of cutting emissions by 55 per cent from 1990 levels by 2030. Brussels wants to increase taxes on polluting fuels and introduce an EU-wide levy on aviation kerosene for the first time.
Under one proposal in the UK paper, the sale of smaller diesel trucks would be banned from 2035, and larger ones weighing more than 26 tonnes from 2040, according to government and industry figures.
The schedule compares to how the government is proposing to ban the sale of new petrol and diesel cars and vans from 2030, and hybrid vehicles from 2035.
One important aspect of our electric future that is interesting is how governments are going to make up for lost gas taxes. That will probably take the form of some kind of road-use tax, or a tax on miles driven. Freedom isn’t free, etc.
4th Gear: Lordstown Motors
The New York Times has an interesting story this morning on one of the financiers behind Lordstown Motors, Trump’s favourite car startup that is also a disaster. It turns out, to no one’s surprise, that something less than due diligence was done.
It was June 2020, and [David Hamamoto], a former Goldman Sachs executive who invested in real estate, was searching for a business to take public through a merger with his shell company. He had raised $US250 ($335) million from big Wall Street investors including BlackRock, and spent more than a year looking at over 100 potential targets. If he couldn’t close a deal soon, he would have to return the money.
Then, around nine months before his deadline, bankers from Goldman gave Mr. Hamamoto an enticing pitch: Lordstown Motors, the fledgling electric truck maker that President Donald J. Trump had hailed as a saviour of jobs. What followed was a swift merger, then a debacle that put two of the biggest forces shaping the financial world on a collision course.
Since he knew little about electric vehicles, Mr. Hamamoto hired McKinsey to assess whether the technology that Lordstown had licensed from others could be put together to build an electric truck, several people briefed on the matter said. The consulting firm said the technology was viable, and the deal came together in weeks.
Mr. Hamamoto’s scrutiny of Lordstown’s business was most likely far less than the inspection that a company undergoes in a conventional initial public offering. In an I.P.O., a company is held to strict reporting standards about its finances and prospects. By contrast, SPAC mergers give companies that would find it challenging to go public on their own an easier path to the public markets.
So for a company like Lordstown — which had no revenue and no truck for sale — to succeed, having a management team that could oversee such a complicated endeavour was all the more important. But Mr. Hamamoto didn’t focus much on assessing the work experience of Lordstown’s management team, including Mr. Burns, who would continue to run the company after the SPAC merger, two people familiar with the matter said.
I recommend reading the whole story, which is a good picture of how Wall Street works. Go look at people playing the big-money slot machines at any Vegas casino and that is more or less the same as the New York Stock Exchange.
5th Gear: Ford No Longer Uses ‘Chairman’
Bill Ford is now “chair” of Ford instead of “chairman,” in an effort by the automaker to use gender-neutral language.
From the Detroit Free Press:
The Board of Directors voted on July 8 to amend Ford’s bylaws effective immediately and adopt gender-neutral language throughout, including the title “chair” in place of “chairman” as well as various others revisions. The company filing with the U.S. Securities and Exchange Commission dated July 9 shows the actual editing of the original company document with the use of markups.
Ford spokeswoman Marisa Bradley told the Free Press on Monday, “Our roles at Ford aren’t gender-exclusive and these changes help limit ambiguity, and drive the inclusive and equitable culture we’re striving for.”
A story like this is a perfect Rorschach test, as it both does matter and doesn’t. If you find yourself instinctively scoffing, look inward.
Reverse: The Deuce
Neutral: How Are You?
My local dealer took only about a week recently to fix a recall, but then also somehow double-booked me for service, which is how yesterday morning I got a call from a guy saying that he was outside my apartment building ready to pick up my car. I told him that I had cancelled the appointment, he said that it’s your car, do with it what you want, I said that I would, he said that he was here, I said that I was sorry he travelled a mile only to have to go back. The dealer had previously explained that they were transitioning to a new phone and text system, and that it was going poorly. There is nothing broken about the traditional dealership experience at all, why do you ask.