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Tesla can be especially burned by American-Chinese trade war



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Tesla's China strategy can be thrown into confusion by the commercial war, Uber's stock continues to plunge, questions about supply chains for electric vehicles in the United States, all this and more for The Morning Shift on Tuesday, May 14, 2019.

1. Gear: So about the Chinese strategy, Tesla

Yesterday, the Chinese government pulled up the trade war with the United States, and our mercantilist representatives finally admitted that yes, you probably have to pay more for things now. A small price to pay for freedom you will not say?

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The news affected some companies more than others, and perhaps Tesla more than most. The electric car company has seen China, and the growing EV market, as one of the most important strategic focuses in the medium term to increase sales. Much of this strategy is a new Gigafactory in Shanghai, but the timeline of the building that actually knocks out cars is at best unclear. China is the key to all car manufacturers, but Tesla especially needs it.

Investors are worried about a company deeply linked to China at this point, and they expressed their concerns with Tesla in yesterday's market. Here's Bloomberg:

Tesla doubled as much as 6.3% to $ 224.50, the lowest intraday since January 2017, after China's defiance of US President Donald Trump by announcing plans to raise $ 60 billion in duties US import values ​​from June 1.

It is not so much that the existing tariffs affect Tesla more than anyone else – from now on, motor vehicles are not really on the list of goods to be hit with the higher rates, but considering hardheadedness on both sides, expect no trade war to de-escalate, and many fear cars could be next.

Nevertheless, Tesla is far from the only car manufacturer working on the tariff problem. Bloomberg notes that BMW and Daimler are the largest importers of US-built vehicles in China, and their shares fell by 1.2 and 3.3 percent, respectively. But investors are probably less concerned about how the tariffs will affect their much larger businesses that have not shunned quarterly deliveries.

Anyway, a generation genius like Elon Musk can at least overcome a single trade crisis in his quest for the world domina-I mean, making a quality electric car at a reasonable price.

2. Gear: Electric cars not only grow on trees

It is true that much of the automotive industry is working to varying degrees towards more EV production. It is also true that very few countries today are capable of mass-producing electric motors. The United States is not one of them. But a new Reuters report describes how Congress is trying to change it.

One of the problems is that no one really knows the extent of the country's metal reserves we need to mine:

But how much cobalt and other minerals used to make EV is actually in the United States there is some guesswork, as the nation has done little a national survey.

Current estimates from U.S. Pat. The Geological Survey is based on annual reports, historical data from the US Bureau of Mines and other sources, according to US Demos spokesman Alex Demas.

Finding out the mineral composition in a particular region requires sending staffs into the field to take rock samples, a timely and costly effort. Murkowski's legislation will require a nationwide reserve analysis for all minerals used to create EV.

This is why Lisa Murkowski, Republican Senator from Alaska, is working on the law to address this:

The United States. Senator Lisa Murkowski, head of the Senate's Energy and Natural Resources Committee, earlier this month introduced the US Mineral Security Act to help streamline and allow for the development of mines for lithium, graphite and other EV minerals.

The two-tier legislation, which partly seeks to codify a late 2017 announcement of US mineral development by President Donald Trump, gets its first hearing before the Murkowski Committee on Tuesday.

"We have an opportunity to move from this situation of vulnerability to trusting others for our minerals, our EV supply chain," said Murkowski, a republican in Alaska.

Of course, this whole question is closely related to the entire China trade, as they currently dominate the EV production market. Again from Reuters:

"China has a big start," said Gavin Montgomery, a battery and mining analyst at the Wood Mackenzie consulting firm. "They have just been on this much longer than the rest of the world."

If you are tired of this, you will always come back to China because it will be much more where it came from.

3. Gear: Uber Stocks Falling, Falling, Falling (No, this is not like Amazon)

Investors continue to be suuuper unimpressed by Uber, as the stock fell again on its second day of trading. Almost all business publications covered this in some form or fashion, but here is the Wall Street Journal report:

Uber's share was $ 4.47 or 11% to $ 37.10 on its second day as a public corporation, and placed it 18% below the giant giant's original $ 45 offer price. It was after Uber's valuation expectations were called back in recent weeks, and the company conservatively priced conservatively in its opinion.

The opening was poor enough that Uber's CEO Dara Khosrowshahi sent an email to employees confirming the rough start, including this bit:

Remember that Facebook and Amazon post-IPO trading were incredibly difficult for those companies . And look at how they have delivered the page.

It's a little ironic that Uber, the company that created a whole lifecycle of "Uber but for" jokes, now makes use of comparing itself to other tech darlings.

Of course, Khosrowshahi's comparison is as unfortunate as any Uber Men Fors. There is a little difference between Uber-a company that has never made money and no one understands how it could without a magical savior like autonomous vehicles – with Facebook, which made hundreds of millions of dollars a quarter when it was IPO & # 39; 2012.

And comparing Uber with Amazon, a common tropic Khosrowshahi has not been shy to distribute for the obvious flattering reasons, is also deceptive in terms of IPO performance. Amazon IPO in 1997 when basically only sold books. Although Amazon did not have a profit at that time, it is because the sale was so strong that it made the appropriate decision to grow accordingly, which is not like Uber's decision to enter new markets when it is not profitable in it It is currently because it must provide incentives to both driver and rider to get them in the car.

As TechCrunch noted when it looked back on Amazon's IPO:

That Amazon was so unprofitable at its young age at the special pace of growth is impressive. The company certainly had a secular shift in the economy against digital commerce, but the company, at the time of its IPO, was in good shape.

No one, not a single analyst, has said that Uber's business is in everything resembling solid form, because unlike Amazon, Uber has not grown its turnover by 2 982 percent in the year before IPO.

Also, a good take from a Wall Street Journal report:

4. Gear: GM Says Workhorse is just like Tesla, so Lordstown will be Fine You Guys

Remember last week when Trump announced that GM is selling the Lordstown plant to a well-known EV truck launch, called Workhorse, which has very little money, and It turns out that there are only "about preliminary" conversations about the purchase of the facility?

And the workhorse, which my colleague Jason Torchinsky summed up, "is a company that started making a regular chassis, purchased by a company that converted ICE cars to EV, and is now developing a non-impressive EV pickup truck. and oddly an electric octocopter? "

In a follow-up report by Detroit News about the skepticism of the deal for many of the reasons mentioned above, GM defended the potential deal with very special logic, compared Workhorse to another EV manufacturer you might has heard of: Tesla.

"It was also once a small startup, called Tesla, building a few hundred electric cars at a large factory in Fremont, California," said GM spokesman Jim Cain, referring to Elon Musk's Tesla Inc. operating out of a plant once jointly operated by GM and Toyota Motor Corp. "Workhorse has defined a similar niche in (electric) commercial vehicles; They are one of the finalists to build new trucks for the US postal service – there is some substance there. "

Apart from the truly bizarre comparison here, floating is the potential US Postal Service contract misleading. Tom Colton, representing Workhorse in the potential deal, told me last week that they did not want to Build that USPS vehicle in Lordstown, if they were to win the contract. He managed the two are completely separate ventures.

This makes sense in view of the fact that the Lordstown facility had to be purchased by a new entity because Workhorse does not have money, but USPS The contract would be Workhorse.

So, let's pump the brakes a little On the new Tesla bit there

5. Gear: Nissan Prepares for the worst year in decades

Let's cut straight to Nissan's chief director Hiroto Saikawa on this:

"Today we hit the bottom floor," Saikawa said a press conference at the company's headquarters in Yokohama on Tuesday. "We want to get to our original level of performance for two to three years, "He added.

The company estimates a decline of 28 per cent in this year's operating profit. The main culprit is here in the US, where sales have fallen 9.3 percent after completing deep incentives ushered in former megaboss Carlos Ghosn for juice sales, especially at Rogue.

Speaking of our friend Ghosn, the Wall Street Journal reports that Tokyo prosecutors have changed their charges against him to include $ 20 million in cash payments from "a Saudi friend," Khaled Al Juffali. Hey, that's what friends are up to, right?

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Neutral: What's next for Uber?

Sure, stock prices usually need a few months to level out, but investors have sent a clear signal that they don't value uber as much as uber values. What's next for the giant giant?


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