Tesla is reportedly about to implement a hiring freeze on top of upcoming layoffs, Wells Fargo will pay billions in fines for mistreating customers and causing some to lose their cars, and Elon Musk is pissed at one unhappy Tesla investor because he called the CEO out on Twitter. All that and more in The Morning Shift for Wednesday, December 21, 2022.
Tesla has reportedly told employees that it will conduct another round of layoffs on top of a hiring freeze in the first quarter of 2023. This comes after a June announcement that CEO Elon Musk wanted executives to “pause all hiring” and cut 10 percent of the staff.
Musk said he had a “very bad feeling” about the economy, and that’s why he wanted the June cuts done. However, these cuts never materialized, and the company continued to hire thousands of people in the second half of this year. It seems like those days may be over. From Electrek:
Now Electrek has learned that Tesla is implementing a new hiring freeze and plans further layoffs, according to a reliable source familiar with the matter.
Tesla has communicated to some employees that it is stopping hiring for now. On top of the hiring freeze, Tesla also said that teams will be expected to make layoffs during the first quarter of 2023.
It’s not clear how extensive the hiring freeze will be as Tesla is still planning to expand in some manufacturing locations. No further details were made available at this time.
The moves come as Tesla’s stock has been falling all year despite the company’s financials hitting new records virtually every quarter.
That’s partly due to a broader market downturn in 2022, but Tesla’s stock has not been tracking with the rest of the market over the last few months.
This is really just the latest news showing cracks in Tesla’s armor. The automaker has recently started offering some discounts and perks on the vehicles it is producing. Those are telltale signs of demand problems for the Texas-based company.
Wells Fargo has reached a $3.7 billion settlement with federal regulators —including a record $1.7 billion fine — because of allegations it had been mistreating millions of customers for years. That mistreatment eventually led to some customers losing cars or homes.
More than $2 billion of the settlement with the Consumer Financial Protection Bureau will be used in “redress to consumers.” The CFPB cited “widespread mismanagement” of auto loans, mortgages, and deposit accounts.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” Rohit Chopra, CFPB director said in the statement obtained by Bloomberg. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.” From Bloomberg:
Under Chief Executive Officer Charlie Scharf, Wells Fargo has been trying to resolve a raft of scandals that emerged in 2016 with the revelation that the bank opened millions of bogus accounts. Problems surfaced across business lines, resulting in the ousters of two CEOs and a number of costly penalties, including the Federal Reserve’s decision to cap the firm’s assets.
The bank set aside $2 billion in the third quarter to cover a variety of regulatory and legal issues, including making harmed customers whole. Scharf warned in October that the charge “isn’t the end of it.”
The bank agreed to a consent order with the CFPB without admitting to the agency’s allegations.
According to the CFPB, the bank illegally repossessed customers’ vehicles, made mistakes on record-keeping for payments, and incorrectly charged fees and interest. The agency says the errors from the bank happened from as early as 2011 through this year.
Elon Musk has been facing mounting criticism of just about everything he touches lately, and now he’s going toe-to-toe with an investor who used to be one of Tesla’s most vocal supporters.
It all has to do with growing concerns about Musk’s ability to manage Twitter on top of his other businesses. Out of the four companies, Tesla seems to be the company most impacted by what’s been going on at Twitter, from a stock price perspective, at least. From Bloomberg:
[Musk], who has seen his fortune shrink in line with Tesla’s market capitalization, posted a tweet mocking Ross Gerber, CEO of Gerber Kawasaki Wealth Management, after the longtime investor tweeted about a perceived lack of leadership at the electric vehicle maker and said it’s “time for a shakeup.” That marked a change from the days when Tesla’s stock was soaring higher and fans like Gerber praised Musk’s managerial chops establishing the company as the early global EV marker leader.
Musk replied by asking Gerber for his “great ideas” for Tesla and its board, and telling him to go “back and read your old Securities Analysis 101 textbook.”
Gerber had previously tweeted on Dec. 16 he notified Tesla’s board that he wants to run for a seat. Other investors, including Leo KoGuan — one of Tesla’s largest individual shareholders — also have called for governance changes.
The discord comes as Tesla’s stock is down more than 60% since the start of the year, dragging its valuation below the half-trillion-dollar mark for the first time since November 2020. Musk has sold nearly $40 billion worth of Tesla stock since late last year, with much of that going to fund his purchase of Twitter — despite repeatedly saying he would stop selling down his stake. The sales, plus the depression in Tesla’s share price, have been enough to knock Musk off the top spot of the Bloomberg Billionaires Index.
Gerber responded “I like it!” when Bloomberg asked via email for his thoughts on having gotten Musk’s precious attention.
If you’re a Buick dealer and would like to continue selling vehicles with the brand, you’re going to have to invest between $300,000 and $400,000, on average, to sell future electric vehicles.
The minimum investment required of dealerships is reportedly for tooling, staff training and other EV equipment is an estimate and will vary by the size of the store. This is all according to a Buick spokesman who gave a statement to Automotive News.
Buick plans to shift to an all-EV lineup by 2030 and has said it does not plan to introduce any new gasoline-powered vehicles after 2024. The brand will use the Electra name for its EV lineup along with an alphanumeric code to distinguish the models. Buick has offered to buy out any U.S. dealers who don’t want to make the required investments to prepare to sell EVs.
The brand declined to share the number of dealerships that have elected to take the buyout offer to date. Poppitt said in the statement that “any dealer who wants to discuss this program is strongly encouraged to contact the Buick team.”
Buick had 1,963 U.S. dealerships at the start of this year, according to Automotive News’ Dealer Census.
Buick’s dealer buyout offer followed a similar offer from Cadillac, which also plans to be all-electric by 2030. About a third of Cadillac’s nearly 900 U.S. dealerships elected to take a buyout, with offers generally from $300,000 to $500,000. Cadillac dealerships will be required to invest, on average, $200,000 to prepare to sell and service EVs.
GM isn’t the only automaker mandating such investments. Ford has notably required dealers who want to sell EVs to invest somewhere between $500,000 and over $1 million depending on the certification status the store is looking to get.
Stellantis has reversed a decision to cut Chrysler Pacifica minivan production at its Windsor Assembly Plant in Ontario in half. The company will continue to operate on two shifts after it had initially planned to cut that second shift next summer.
A year ago, the automaker said it would be cutting the 1,800-person shift because of issues with — you guessed it — the supply chain. The deadline to make that cut had been extended multiple times since then, and now it seems that the plan has been scrapped altogether.
It’s anyone’s guess as to why Stellantis made this decision, as no reason was reportedly provided in the email from a spokesperson. From The Detroit News:
The reversal comes after the company announced earlier this month that it is idling indefinitely the Jeep Cherokee crossover plant in Belvidere, Illinois, at the end of February. It cited the global microchip shortage and the costs of electrification in its decision.
The plant in Windsor that employs 4,123 people is expected to be retooled starting in 2023 for a new platform to support battery-electric and plug-in hybrid vehicles as a part of a $2.8 billion investment into Stellantis’ Ontario operations. The exact time that will begin hasn’t been shared, but Stellantis has said the plant will return to a three-shift operation following the platform change.
Stellantis continues to face supply-chain disruptions and expects the challenges to continue through 2023, Mark Stewart, chief operating officer in North America, recently said. The company cancelled the day shift at the Windsor plant because of supply-chain issues.
Following the investment, Windsor will produce vehicles on the STLA Large platform that was designed for all-electric vehicles, but is flexible to support alternative power sources. AutoForecast Solutions LLC says the company will build an all-electric minivan there along with the electric replacements for the Dodge Charger and Challenger muscle cars, whose gas versions have been built at Brampton Assembly Plant in Ontario. Brampton’s future also has been secured as a part of the Ontario investment.
The Detroit News reports that Windsor will also be the home of a Stellantis and LG Energy Solutions battery lab. The $4.1 billion joint-venture battery assembly plant is being called NextStar Energy.
You really biffed this one up, didn’t you bud? Just think, this all could have been avoided if you didn’t spend $44 billion on an app no one actually likes to use.
Don’t worry, buddy. It’s going to get way worse before it gets better.