Elon Musk’s next drama: a trial over his tweets about Tesla
By Michael Liedtke in San Francisco
SAN FRANCISCO (AP) — While still grappling with the fallout from a company he did take private, beleaguered billionaire Elon Musk is now facing a trial over a company he didn’t.
Long before Musk purchased Twitter for $44 billion in October, he had set his sights on Tesla, the electric automaker where he continues to serve as CEO and from which he derives most of his wealth and fame.
Musk claimed in a August 7, 2018 tweet that he had lined up the financing to pay for a $72 billion buyout of Tesla, which he then amplified with a follow-up statement that made a deal seem imminent.
But the buyout never materialized and now Musk will have to explain his actions under oath in a federal court in San Francisco. The trial, which begins on Tuesday with jury selection, was triggered by a class-action lawsuit on behalf of investors who owned Tesla stock for a 10-day period in August 2018.
Musk’s tweets back then fueled a rally in Tesla’s stock price that abruptly ended a week later, after it became apparent that he didn’t have the funding for a buyout after all. That resulted in him scrapping his plan to take the automaker private, culminating in a $40 million settlement with U.S. securities regulators that also required him to step down as the company’s chairman.
Musk has since contended he entered that settlement under duress and maintained he believed he had locked up financial backing for a Tesla buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.
The trial’s outcome may hinge on the jury’s interpretation of Musk’s motive for tweets that U.S. District Judge Edward Chen has already decided were a falsehood.
Chen dealt Musk another setback on Friday, when he rejected Musk’s bid to transfer the trial to a federal court in Texas, where Tesla moves its headquarters in 2021. Musk had argued that negative coverage of his Twitter purchase had poisoned the jury pool in the San Francisco Bay Area.
Musk’s leadership of Twitter — where he has gutted the staff and alienated users and advertisers — has proven unpopular among Tesla’s current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65% percent decline in Tesla’s stock last year that wiped out more than $700 billion in shareholder wealth — far more than the $14 billion swing in fortune that occurred between the company’s high and low stock prices during the Aug. 7-17, 2018 period covered in the class-action lawsuit.
The lawsuit is based on the premise that Tesla’s shares wouldn’t have traded at such a wide range if Musk hadn’t dangled the prospect of buying the company for $420 per share. Tesla’s stock has split twice since then, making that $420 price worth $28 on adjusted basis now. The shares closed last week at $122.40, down from its November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame a production problem, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world’s richest person until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market’s backlash to his handling of Twitter.
The trial is likely to provide insights into Musk’s management style, given the witness list includes some of Tesla’s current and former top executives and board members, including luminaries such as Larry Ellison, Oracle co-founder, as well as James Murdoch, the son of media mogul Rupert Murdoch. The drama also may shed light on Musk’s relationship with his brother, Kimbal, who is also on the list of potential witnesses who may be called during a trial scheduled to continue through Feb. 1.
Ford says EV unit losing billions, should be seen as startup
Ford’s Chief Executive Engineer Linda Zhang unveils the Ford F-150 Lightning on May 19, 2021, in Dearborn, Mich. Ford Motor Co. announced Thursday, March 23, 2023, that their electric vehicle business has lost $3 billion before taxes during the past two years and will lose a similar amount this year as the company invests heavily in the new technology. (AP Photo/Carlos Osorio, File)
By Tom Krisher in Detroit
DETROIT (AP) — Ford Motor Co.’s electric vehicle business has lost $3 billion before taxes during the past two years and will lose a similar amount this year as the company invests heavily in the new technology.
The figures were released Thursday as Ford rolled out a new way of reporting financial results. The new business structure separates electric vehicles, the profitable internal combustion and commercial vehicle operations into three operating units.
Company officials said the electric vehicle unit, called “Ford Model e,” will be profitable before taxes by late 2026 with an 8% pretax profit margin. But they wouldn’t say exactly when it’s expected to start making money.
Chief Financial Officer John Lawler said Model e should be viewed as a startup company within Ford.
“As everyone knows, EV startups lose money while they invest in capability, develop knowledge, build (sales) volume and gain (market) share,” he said.
Model e, he said, is working on second- and even third-generation electric vehicles. It currently offers three EVs for sale in the U.S.: the Mustang Mach E SUV, the F-150 Lightning pickupand an electric Transit commercial van.
The new corporate reporting system, Lawler said, is designed to give investors more transparency than the old system of reporting results by geographic regions. The automaker calculated earnings for each of the three units during the past two calendar years.
Model e had pretax losses of $900 million in 2021 and $2.1 billion last year, and it is expected to lose $3 billion this year. In the past two years Ford has announced it would build four new battery factories and a new vehicle assembly plant as well as spending heavily to acquire raw materials to build electric vehicles.
By the end of this year, the company based in Dearborn, Michigan, expects to be building electric vehicles at a rate of 600,000 per year, reaching a rate of 2 million per year by the end of 2026.
Ford Blue, the unit that sells internal combustion and gas-electric hybrid vehicles, made just over $10 billion before taxes during the last two years. Ford Pro, the commercial vehicle unit, made $5.9 billion during those years, the company said.
For this year, Ford expects Ford Blue to post a $7 billion pretax profit, modestly better than last year. Ford Pro is expected to earn $6 billion before taxes, nearly double its earnings last year, Lawler said.
Ford was to present the new structure, announced last March, to analysts and investors on Thursday. Other business units include corporate, Ford Credit and Ford Next, a new business incubator. Shares of Ford rose 1.8% in Thursday morning trading ahead of the presentation.
Lawler said the company is changing the way it does business, not just doing an accounting exercise.
“After 120 years, we’ve essentially re-founded Ford,” he said. “We’re embracing technology and competitive disruption in our industry, fundamentally changing how we’re thinking, how we’re making decisions, and how we’re running the company.”
GM to stop making the Camaro but a successor may be in works
Justin Allgaier takes his Camaro through its paces as he drives in the NASCAR Xfinity Series auto race at Pocono Raceway, July 23, 2022, in Long Pond, Pa. The Chevrolet Camaro, for years the dream car of many teenage American males, is going out of production. General Motors, which sells the brawny muscle car, said Wednesday, March 22, 2023, that it will stop making the current generation early next year. (AP Photo/Matt Slocum)
DETROIT (AP) — The Chevrolet Camaro, for decades the dream car of many teenage American males, is going out of production.
General Motors, which sells the brawny muscle car, said Wednesday it will stop making the current generation early next year.
The future of the car, which is raced on NASCAR and other circuits, is a bit murky. GM says another generation may be in the works.
“While we are not announcing an immediate successor today, rest assured, this is not the end of Camaro’s story,” Scott Bell, vice president of Chevrolet, said in a statement.
The current sixth-generation Camaro, introduced in 2016, has done well on the racetrack, but sales have been tailing off in recent years. When the current generation Camaro came out in 2016, Chevrolet sold 72,705 of them. But by the end of 2021 that number fell almost 70% to 21,893. It rebounded a bit last year to 24,652.
GM said last of the 2024 model year of the cars will come off the assembly line in Lansing, Michigan, in January.
Spokesman Trevor Thompkins said he can’t say anything more about a future Camaro. “We’re not saying anything specific right now,” he said.
The company, he said, has an understanding with auto-racing sanctioning bodies that the sixth-generation car can continue racing. GM will have parts available and the Camaro body will stay on the race track, he said.
NASCAR said that because the Generation 6 Camaro was in production when GM originally got permission to race, it remains qualified to race in NASCAR Cup and NASCAR Xfinity Series races.
GM will offer a collector’s edition package of the 2024 Camaro RS and SS in North America, and a limited number of high-performance ZL-1 Camaros. The collector’s edition cars will have ties to the first-generation Camaro from the 1960s and its GM code name “Panther,” the company said without giving specifics.
GM’s move comes as traditional gas-powered muscle cars are starting to be phased out due to strict government fuel economy regulations, concerns about climate change and an accelerating shift toward electric vehicles.
Stellantis, will stop making gas versions of the Dodge Challenger and Charger and the Chrylser 300 big sedan by the end of this year. But the company has plans to roll out a battery-powered Charger performance car sometime in 2024.
Electric cars, with instant torque and a low center of gravity, often are faster and handle better than internal combustion vehicles.
Stellantis, formed in 2021 by combining Fiat Chrysler and France’s PSA Peugeot, earlier this week announced the last of its special edition muscle cars, the 1,025 horsepower Dodge Challenger SRT Demon 170. The company says the car can go from zero to 60 mph (97 kilometers per hour) in 1.66 seconds, making it the fastest production car on the market.
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