Elon Musk Is On Trial This Week For That 'Pedo Guy' Tweet

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Elon Musk is on trial for calling that cave rescuer a pedophile last year, Trump may delay China trade deal for the election, Hyundai’s got it figured out and Nissan is stalling. All of this and more in The Morning Shift for Tuesday, Dec. 3, 2019.

1st Gear: Never Tweet

You emerge from a cave after a tense couple of days trying to (and successfully) rescuing a group of trapped children only to discover a lot of people talking about some tech billionaire’s offer to build a cave submarine and save the day. You suggest it may be a PR stunt, and then a few days later the billionaire is tweeting to his millions of followers that you are a pedophile.

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That’s what happened between Vernon Unsworth, who helped rescue a soccer team from a cave in Thailand last year, and Tesla CEO Elon Musk, who is now expected to testify in defense of his “pedo guy” tweet in court this week after Unsworth sued Musk for defamation.

Here’s more from Reuters:

Unsworth told CNN on July 13, 2018, three days after the rescue was completed, that the offer was a “PR stunt” and that Musk could “stick his submarine where it hurts.”

Two days later, Musk lashed out at Unsworth in a series of tweets, including one which called him a “pedo guy.” Musk later apologized for that comment.

Unsworth has denied Musk’s accusations.

To win the defamation case, Unsworth needs to show that Musk was negligent, which does not require an intent to defame.

He must prove the tweets were false, that Musk did not use reasonable care to determine if they were true, and that people reasonably understood them to mean he was a pedophile.

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Meanwhile, Musk’s legal team is trying to argue that Unsworth provoked Musk’s allegedly defamatory response due to his comments on CNN, and Unsworth was only seeking publicity by calling Musk out.

I’m not sure that’s going to fly. I think it’s hard to back up calling the cave rescuer a pedophile just because he didn’t want to use your SpaceX submarine.

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As Bloomberg points out, this will be a tough week for Musk as he carefully navigates making this problem worse by saying something else he might regret. For his sake, here’s hoping for a relatively quiet trial. Somehow I don’t see that happening.

2nd Gear: Trump In No Hurry For China Trade Deal

The Trump administration has allegedly been hard at work trying to pencil in a new trade deal with China, holding off increasing the previously introduced tariffs from both sides in the hopes that an agreement was fast approaching.

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Now it appears, to nobody’s shock, that won’t be the case, as the President has claimed he has no deadline to get a deal struck and has now suggested that he may wait until after the 2020 presidential election to finish the job.

Here’s more on the state of the deal from Bloomberg:

Speaking to reporters on a trip to attend a summit for the 70th anniversary of NATO, Trump suggested that in some ways, it might be better to wait until after the U.S. presidential election next November.

“I like the idea of waiting until after the election for the China deal. But they want to make a deal now and we’ll see whether not the deal is going to be right. It’s got to be right,” he said. “The China trade deal is dependent on one thing: Do I want to make it? Because we’re doing very well with China right now and we could do even better with the flick of a pen.”

The U.S. and China have been trying to conclude phase one of a trade deal that White House economic adviser Larry Kudlow said more than two weeks ago was “coming down to the short strokes.” Stocks have jumped to records on optimism for a truce in an 20-month tariff war between the world’s two largest economies that has led to tariffs on some $500 billion in bilateral trade.

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For a deal that was supposedly in its “final throes” even a few days ago, it seems the U.S. side of the arrangement isn’t in any hurry, despite growing tensions over the protests in Hong Kong and the looming threat of increased tariffs that could potentially scrap any current framework of a deal and force both sides to start over.

It’s also an interesting choice for Trump, an incumbent candidate who ran on being tough on China to not want to secure the deal as a major win for his administration heading into the next election.

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3rd Gear: Hyundai Has It Figured Out: Crossovers

Hyundai’s sales have been growing for nearly 16 months straight, and it all comes down to selling a shit ton of crossovers, via Automotive News:

An expanded crossover lineup and 19 percent increase in retail deliveries drove Hyundai to another U.S. sales gain in November with volume rising 6 percent to 60,601 units. The brand’s sales have increased 15 out of the last 16 months.

Hyundai said its retail gains last month were led by four core crossovers: Santa Fe (up 26 percent), Tucson (up 31 percent), and Kona (up 39 percent), and demand for the new three-row Palisade crossover, with more than 5,000 retail units, a 21 percent increase over October. The all-new, entry-level Venue crossover made its sales debut with 290 deliveries last month.

[...]

Pickups, crossovers, SUVs and other light trucks accounted for 72.7 percent of new-vehicle retail sales through Nov. 17, the highest level ever for the month of November, J.D. Power and LMC said.

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It’s also important to note that it’s a little hard to move cars right now. It’s the end of the year, old inventories have to be heavily incentivized to sell, and this year cars are sitting in dealer inventory longer than the same time last year.

For Hyundai to find so much growth right now is just a testament to how much people want a moderate amount of styling and flair with their affordably-priced crossovers of almost literally any shape or size, and that’s Hyundai.

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4th Gear: Nissan’s New CEO’s Plan Is ‘Build Fewer Nissans’

Nissan’s new CEO, Makoto Uchida, has a tough situation on his hands as Nissan profits continue to slip, via Automotive News:

Nissan’s operating profit fell 70 percent in the July-September quarter, following a 99 percent plunge in the April-June period. For the current fiscal year ending March 31, the company expects operating profit and net income to both fall by more than half.

Operating profit margin is forecast to dwindle to 1.4 percent compared with the 2.7 percent to recorded in the previous fiscal year ended March 31.

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Uchida has a “roadmap” for turning profits around, though:

That roadmap that involves cutting 12,500 jobs worldwide, consolidating the lineup and cutting global production capacity to 6.6 million vehicles a year from 7.2 million. Saikawa’s plan also calls for rebuilding U.S. sales to 1.4 million vehicles in the fiscal year ending March 31, 2023.

It targets parent company operating profit margin of 6 percent that year.

If I were Nissan, I would simply sell more crossovers and then worry about developing some sort, any sort of strong brand identity, perhaps around updated versions of my sports cars.

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5th Gear: China’s EV Industry Is Disappointing Its Billionaires

China is full of billionaires, a few years ago a bunch of them all decided to get into some light competition by starting up a ton of new electric vehicle manufacturing companies.

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The problem there was demand for EVs was heavily subsidized by the government, demand hasn’t grown, the incentives are scaling back now, and all of these billionaires with no prior automotive manufacturing experience are now stuck with billions of dollars of investment in a market that isn’t growing as fast as everyone hoped.

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Here’s more from Bloomberg:

Some of China’s wealthiest tycoons steered billions of dollars into electric-car companies in order to fuel the country’s dreams of becoming a leader in the field. Now a reckoning may be looming as car sales slow and the government reduces subsidies for the nascent industry.

That leaves the flagship companies of Jack Ma, Pony Ma, Hui Ka Yan and Robin Li facing an increasingly steep path to profitability on their bets that electric vehicles can be smartphones-on-wheels connecting passengers to other businesses. Their capital, along with dozens of startups raising $18
billion, helped inflate an electric bubble that now looks to be in danger of popping.

China’s car market is experiencing a prolonged sales slump, prompting EV makers to slash earnings outlooks. With China considering further cuts to the subsidies for consumer purchases in order to force automakers to compete on their own, a shakeout is looming that not even the tycoons’ support may be able to prevent, said Rachel Miu, an analyst with DBS Group Holdings Ltd. in Hong Kong. “For the new kids on the block in the EV space, it’s a steep uphill climb,” she said.

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You can head over to Bloomberg to see exactly what these billionaires got with their investments, but most of it boils down to a bunch of big manufacturing facilities producing cars with only a few thousand actually sold between all of them.

Reverse: RIP The Pacer

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Neutral: How Do You Get People To Buy EVs?

As China’s electric startup bubble may be near bursting, every other major automaker is also waist deep in electric vehicle development. These huge commitments to such a major change to American and European transportation infrastructure is going to be a tough sell.

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So the question is, in a hypothetical environment with no more EV subsidies from the government, how are companies going to get people to buy an electric car over something they’re already familiar with?

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