Good morning! It’s Thursday, June 13, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Musk Says Shareholders Love His $56 Billion Pay Package
Tesla CEO Elon Musk says shareholders are voting strongly in favor of giving him the $56 billion pay package he so badly desires as well as a proposal to move the Austin, Texas-based automaker’s legal residence from Delaware to its actual home in Texas. From Automotive News:
Musk, writing on X before the June 13 stockholders’ meeting, said, “Both shareholder resolutions are currently passing by wide margins!”
He posted two graphics that showed a significant gap between the winning “yes” votes on both items and the losing “no” votes.
Musk made his comment an hour before shareholder voting was to close on June 12 at midnight Eastern time. “Thanks for your support!!” he wrote with four heart emojis on the social media platform that he owns.
Greg Abbott, known mostly for being the Governor of Texas and a dickhead, replied to Musk, congratulating him “on getting the pay you were promised and on your new incorporation in Texas.” Musk replied simply, “Thank you.”
In a run-up to June 13’s shareholder meeting at Tesla, the automaker made a final push to persuade shareholders to vote in favor of Musk’s massive payday and the reincorporation in Texas.
“Today is your last chance to vote ahead of our Annual Stockholders’ Meeting,” Tesla wrote June 12 on X. “Protect & help grow the value of your investment in $TSLA by voting FOR redomesticating Tesla in Texas & honor the deal we collectively made with @elonmusk by voting FOR ratification of the 2018 CEO Performance Award,” the company said.
Here’s a little more on the battle for Musk to get the money he feels he deserves and why so many people don’t want him to have it:
After Delaware’s Court of Chancery invalidated Musk’s pay package Jan. 30, the billionaire CEO posted on X that Tesla would “move immediately to hold a shareholder vote” to reincorporate in Texas.
“Never incorporate your company in the state of Delaware,” Musk wrote Feb. 1.
[…]
At stake is the stock-based compensation package for Musk that was approved by shareholders in 2018 but voided by a court in January. Judge Kathaleen McCormick of Delaware’s Court of Chancery said the sum was excessive and the package was pushed by a board of directors that lacked sufficient independence from Musk.
Investment funds have been making their votes known on the pay package, for and against. A key argument in favor is that Musk met the difficult financial and operations goals set in the compensation package. Opponents cite the unprecedented size of the award and Musk’s distraction with his other companies.
Norway’s $1.7 trillion wealth fund said June 8 it was voting against the package. “We remain concerned about the total size of the award,” said Norges Bank Investment Management. The fund also voted against the original 2018 award. The California public employees’ pension fund, commonly known as CalPERS, also said it would vote against the package.
Some big-name shareholders are on board, though.
In contrast, Scottish asset manager Baillie Gifford, one of Tesla’s longest shareholders, planned to vote in favor of the compensation, according to a June 10 report from Bloomberg. The firm supports the 2018 stock award because it was tied to extremely ambitious financial targets and shareholder returns, Bloomberg said.
“I strongly believe that this is going to pass,” Mark Fields, a senior adviser at TPG Capital, said on CNBC on June 11. Many Tesla stockholders have booked significant gains over the years and see the pay package as fair. “It’s going to pass with a pretty good margin.
“If it doesn’t, that’s the big question,” added Fields, a former CEO of Ford Motor Co. “Would Musk just put less focus on Tesla, or in an extreme, would he just say, ‘I’m exiting the business, I’m going to focus on other things’?”
Wall Street firm CFRA Research said the Musk vote appears to come down to retail investors versus institutional investors.
“While we believe the measure has the widespread support of retail investors, which account for about 40 percent of TSLA’s shareholder base, the question is whether it can garner enough support from institutional investors,” said CFRA analyst Garrett Nelson.
It’s just nice to see Elon Musk, one of the little guys, get such a big pay package. I’m sure he’s going to put it to good use along with the $210 billion he already has.
2nd Gear: China To EU: Reverse ‘Wrong Practices’ On EV Tariffs
China was quick to slam new European Union tariffs on Chinese electric vehicles, calling the move “protectionist behavior” adding it hoped the EU would correct its “wrong practices” and handle trade issues through dialogue.
The reaction from China has only intensified the dispute among European and Chinese automakers. It points to clear opposition to the EU’s decision and eagerness to de-escalate the situation. From Reuters:
Industry insiders say both Europe and China have reasons for wanting to strike a deal in the months ahead to avoid the addition of billions of dollars in new costs for Chinese electric car makers, as the EU process allows for review.
China said it would take “all necessary measures” to safeguard its interests after the European Commission announced on Wednesday it would impose extra duties of up to 38.1% on imported Chinese electric cars from July.
“We urge the EU to listen carefully to the objective and rational voices from all walks of life, immediately correct its wrong practices, stop politicising economic and trade issues, and properly handle economic and trade frictions through dialogue and consultation,” Chinese foreign ministry spokesperson Lin Jian said at a regular press briefing.
There does seem to be some room left by Brussels for the two sides to continue their dialogue and find a solution that avoids the worst scenario.
“It is hoped the EU will make some serious reconsideration and stop going further in the wrong direction,” it said.
Beijing has rejected the EU and U.S. argument that China’s EV industry is running at a degree of overcapacity that threatens overseas automakers through subsidised exports. It says tariffs will slow the uptake of electric vehicles, endanger climate-change goals and push costs higher for consumers.
Here’s a little more on what the EU’s plan entails and how Chinese automakers are reacting:
The EU’s move comes less than a month after Washington revealed plans to quadruple duties for Chinese EVs to 100%.
Brussels said it also would combat Chinese subsidies with additional tariffs ranging from 17.4% for BYD to 38.1% for SAIC on top of the standard 10% car duty. That takes the highest overall rate to nearly 50%.
State-owned SAIC, which counts on joint ventures with Volkswagen and General Motors to be China’s largest automaker, said on Thursday it was deeply concerned by the tariffs.
SAIC has been China’s biggest automaker for nearly two decades but its sales have come under pressure and it has been working to reduce headcount, Reuters has reported.
Geely on Thursday expressed “great disappointment” in the move, vowing “all necessary measures” to safeguard its legitimate rights.]
Sure, this move by the EU does protect its interests and the European automotive industry, but in the end, it really does hurt the customer. There are dozens of cheap and compelling EVs coming out of China right now that folks won’t be able to buy. It’s a shame.
3rd Gear: Oil And Corn Team Up To Take On Biden Emissions Standards
In a Sharks and Jets moment, advocates of petroleum and plant-based fuels are actually joining forces to take on new pollution limits from the Biden administration they say will unlawfully force automakers to sell electric vehicles while slashing demand for their own products. You really gotta feel for these guys. (You don’t.) From Bloomberg:
Nearly three dozen companies and trade associations will open their legal fight against the vehicle standards Thursday, filing petitions with the US Court of Appeals for the District of Columbia Circuit. The challengers include such oil industry heavyweights as the American Petroleum Institute as well as the National Corn Growers Association, which backs ethanol.
Auto dealers, fuel marketers and convenience stores have also joined the effort, with at least three separate complaints being filed against the requirements, issued by the Environmental Protection Agency in March.
“Congress has not authorized EPA to effectively ban the sale of new gas and diesel cars and overhaul the US economy in such a major way,” said Chet Thompson, president of the American Fuel and Petrochemical Manufacturers association that represents refiners.
The litigation will test one of President Joe Biden’s most far-reaching climate regulations. Together with incentives in the 2022 Inflation Reduction Act, the new standards are already reshaping the US auto industry, steering it toward more emission-free vehicles. Manufacturers have announced $179 billion of investments in more than 350 electric vehicle and battery manufacturing plants across the US, according to a Natural Resources Defense Council analysis.
[…]
Opponents say the EPA overstepped its authority under the Clean Air Act by setting pollution standards that only electric vehicles can meet. The cap on carbon dioxide emissions — 85 grams per mile for model year 2032 — is too stringent for cars and light trucks burning gasoline or diesel. The EPA’s approach, however, is based on fleet-wide averages, meaning automakers can keep selling cars that exceed the cap so long as they also sell a growing number of EVs.
Critics fault the EPA for focusing on tailpipe pollution while ignoring other environmental impacts, such as when battery-powered cars use electricity generated with coal. They also accuse the agency of arbitrarily dismissing other pollution-cutting options, such as boosting gasoline octane levels, which could have expanded ethanol sales.
It’s sort of nice to see longtime foes in the oil and ethanol fields team up to continue to pollute our planet. It’s as if all of the Avengers actually wanted the world to end instead of saving it. I don’t know. I just like seeing these guys get along.
4th Gear: Waymo Recalls 672 Cars After Collision
Waymo announced on June 13 that it would be recalling 672 of its self-driving vehicles after one of the cars crashed into a wooden utility pole in Phoenix, Arizona last month. From Reuters:
The National Highway Traffic Safety Administration regulator opened an investigation in May after 22 reports of its robotaxis exhibiting driving behavior that potentially violated traffic safety laws, or demonstrating other “unexpected behavior,” including 17 collisions.
Waymo said the May Arizona collision occurred in an alleyway while executing a low-speed pullover maneuver.
Waymo said the recall remedy included a software update to improve vehicles’ detection response to pole or pole-like permanent objects, and robust mapping updates and improvements that have been installed in all of the vehicles.
Listen, I sort of get why companies like Alphabet are dumping billions upon billions of dollars into self-driving cars, but just imagine what sort of good that money could do if we all just agreed driving isn’t that hard and this money should be used elsewhere?