Elon Musk’s cryptocurrency woes are mounting, more countries are voicing their concern over Biden’s Inflation Reduction Act, and Tesla is getting things moving in China. All that and more in The Morning Shift for Thursday, September 8, 2022.
Back in the 1970, the United States government decided to do something about this whole “Mafia” situation. But how do you take down an entire organization based on the crimes of a few disparate members, none of whom ever seemed to hold leadership roles? Well, you draw up something called the Racketeer Influenced and Corrupt Organizations Act (RICO), which allows prosecutors to establish a pattern of behavior that marks an enterprise as criminal — then penalize anyone who participates in that enterprise. Fifty-two years later, that law is still on the books, and now it’s being used to investigate Silicon Valley’s favorite apartheid emerald scion, Elon Musk.
Musk, Tesla, SpaceX, The Boring Company, and more are accused of racketeering around the cryptocurrency Dogecoin. A $258 billion suit claims that Musk, his companies, and other associates used the cryptocurrency for a pump-and-dump scheme, artificially inflating its value to investors then cashing out before the crypto’s value crashed. From Reuters:
The $258 billion racketeering lawsuit accusing Elon Musk of running a pyramid scheme to support the cryptocurrency Dogecoin has expanded, adding seven new investor plaintiffs and six new defendants including his tunnel construction business Boring Co.
According to an amended complaint filed on Tuesday night in Manhattan federal court, Musk, his electric car company Tesla Inc (TSLA.O), his space tourism company SpaceX, Boring and others intentionally drove up the price of Dogecoin more than 36,000% over two years and then let it crash.
By doing so, the defendants “profited tens of billions of dollars” at other Dogecoin investors’ expense, while knowing all along that the currency lacked intrinsic value and that its value “depended solely on marketing,” the complaint said.
To qualify for RICO, one first needs a “criminal enterprise” — here, seemingly the association between Musk and his companies. Next, you need two separate criminal acts occurring within the course of a decade. The suit alleges that various counts of fraud, wire fraud, negligence, false advertising, deceptive practices, illegal gambling (on the currency itself), and more fit that bill. Whether the court agrees is anyone’s guess, but the suit brings eight separate complaints — which means it might not be hard to prove the necessary two.
As soon as the United States passed the updated EV tax credits included in the Inflation Reduction Act, Hyundai and the South Korean government snapped back, claiming the protectionist language violated international law. Now, another American ally has stepped in with the same claim: Japan. From Automotive News:
Japanese Industry Minister Yasutoshi Nishimura expressed concern to his U.S. counterpart that a new U.S. law on tax credits for electric vehicles may violate international law, the Nikkei newspaper reported on Thursday.
The Ministry of Economy, Trade and Industry confirmed that Nishimura expressed concerns on the law when he met U.S. Commerce Secretary Gina Raimondo in Los Angeles on Wednesday, while Nishimura was taking part in the Indo-Pacific Economic Framework talks, but gave no further details.
The law restricts tax credits for electric vehicles to those assembled in North America.
The Japan Automobile Manufacturers Association, a major Japanese auto lobby, said last month it was concerned about the law and would keep a close watch on developments.
It seems the international EV community, as a whole, is unhappy with the U.S. right now. After we decimated our electric vehicle credits to appease one specific fossil fuel magnate, who could blame them?
July wasn’t a great month for Tesla in China. Its Shangai factory was largely shut down for upgrades, and deliveries slowed accordingly. Luckily for Tesla, however, it seems those upgrades worked — boosting the factory’s August output to nearly triple that of July. From Reuters:
Tesla (TSLA.O) sold 76,965 Chinese-made vehicles in August, nearly triple its sales from a month ago, as it quickened deliveries after ramping up output at its Shanghai plant.
The U.S. carmaker exported 42,463 Model 3s and Model Ys from China last month, the China Passenger Car Association (CPCA) said. In July, it sold 28,217 vehicles and exported 19,756.
After a scheduled upgrade disrupted most production in July, Tesla ramped up output at the Shanghai plant in August, defying heatwaves and COVID curbs that hit its suppliers in the southwest region.
Look at that, Tesla hit new production highs without even forcing employees to live in the factory and work twelve-hour shifts. Amazing how that works.
In the U.S., we don’t think much about BYD, for the simple reason that you can’t wander over to a dealer and purchase one of the company’s cars. Sure, it sells busses here, but your average consumer rarely thinks about branding as they’re shipping their kids off to school. But the company seems to understand that commuter cars bring brand awareness, and it’s making moves to earn that consideration. From Reuters:
Chinese electric vehicle (EV) maker BYD (002594.SZ) on Thursday announced it would set up a facility in Thailand to start producing 150,000 passenger cars per year from 2024.
BYD announced in a joint statement with Thai industrial developer WHA Group (WHA.BK) that a purchase agreement had been signed for 96 hectares (237 acres) of land in the eastern province of Rayong for the plant.
China’s biggest manufacturer of EVs aims to sell 10,000 units in Thailand and export to Southeast Asian and European countries.
The factory in Thailand, its latest among more than 30 other in the United States, Brazil, and India, will produce the fully electric Atto 3, BYD General Manager Asia-Pacific Sales Liu Xueliang told reporters, adding the company was also considering batteries and parts depending on demand.
Thailand is still far from the United States , but it’s a big step for BYD. Who knows, maybe we’ll be next on the list.
Dealerships may be raking in record profits, but the specter of a global economic meltdown still haunts their restless dreams and waking nightmares. Will they undergo the same suffering as 2008, when most (not all) of them saw a marked reduction in profit (without going so far as to lose money)? The owners aren’t sure, but they aren’t optimistic. From Automotive News:
Economic concerns dimmed franchised dealers’ view of the third-quarter market and their expectations for the future, Cox Automotive’s top economist said Wednesday.
Franchised dealers polled this summer for Cox’s third-quarter Dealer Sentiment Index rated their markets as still favorable but worse than 90 days earlier or at the same time in 2021. And dealer respondents anticipated a further decline in conditions during the final few months of the year.
“The economy is the source of worry and I think ... why the outlook is dimmer,” Cox Automotive Chief Economist Jonathan Smoke told Automotive News on Wednesday. “Across the board, costs are rising, the new vehicle market remains tight, and sales remarkably are holding up so far. It’s more about the uncertainty about the future and the economy that I think is framing the lower outlook.”
The industry as a whole, franchised dealers and independents, scored the third-quarter market in negative territory at 45 out of 100 on Cox’s index, which Smoke described as “an ominous signal.”
Poor, poor dealership owners. With the economy in such shambles, they may have to put off installing a fourth swimming pool at their sixth vacation home. However will they manage?
The royal family is flying to Scotland on reports of the Queen’s poor health, and BBC presenters are reportedly changing into black suits off-camera. Should something happen, this would put Charles, Elizabeth’s son and third cousin once removed, on the British throne. Does that mean they have to change the anthem back to God Save the King?