Insights from Yahoo Finance, Business Insider, and Semafor

Will shareholders pay Musk $55.8 billion to build AI?

Sources:  

Yahoo Finance, Reuters

After surrendering a big portion of his Tesla ownership to raise cash for his $44 billion purchase of X in 2022, Musk is now attempting to win shareholder support for a $55.8 billion pay package that would see him attain a 25% ownership stake in the the carmaker, up from his current 13%. Musk has said he sees a stake of this size as crucial to helming the company’s transition into a leader in AI and robotics, though he will likely still pursue these ambitions outside the Tesla structure if he does not get the 25% threshold, Yahoo Finance reported. Whether shareholders approve that pay package — effectively endorsing the AI track — will be dependent on the firm’s Q1 performance, which one analyst called “one of the most important moments in the company’s history.”

Tesla’s marketing tactics raise eyebrows

Sources:  

Bloomberg, Semafor, Business Insider, Daily Dot

Among the global layoffs at Tesla was a newly formed US marketing team, Bloomberg reported, yet another strategic decision that appears to go against the desires of shareholders worried about slumping sales. The company had long resisted traditional advertising on television, radio, and online, relying instead on word-of-mouth for sales, but that has changed over the past year as the threat from competitors increases, Semafor previously reported. Tesla’s move to use celebrities including Katy Perry to promote its Cybertruck was meant to turn the EV into a status symbol, according to Business Insider. However the strategy backfired after the truck was plagued by performance issues and a massive recall, leaving many unimpressed: Perry’s fans slammed the singer for promoting the problem-ridden truck.

Apple also falls victim to Chinese competitors

Sources:  

CNBC, Reuters

Tesla is not the only tech giant suffering amid intense competition from China: Apple’s iPhone shipments dropped nearly 10% this Q1, with shipments to China plummeting by 19% as competitors like Huawei and Xiaomi took over much of its market share, CNBC and Reuters reported. The decline has pushed Samsung to reclaim its title as holder of the largest global market share for smartphones, accounting for about 20.8% of sales compared with Apple’s 17.3%, Reuters reported. Chinese smartphones — while still cheaper than iPhones — are gaining traction as more premium design and software features lead customers to switch over. “Huawei’s comeback has directly impacted Apple in the premium segment,” one analyst told Reuters.

Insights from Eco Business, Bloomberg, Reuters

Treaty should set out binding reductions, not voluntary commitments

Source:  

Eco Business

Applying lessons from major global agreements of the past will help to ensure the success of the plastics treaty, a professor of environmental science wrote for Eco Business. The Montreal Protocol of 1989 proved powerful in phasing out ozone-depleting chemicals because it set out mandatory timetables and legally binding reductions, Dr Jorge Emmanuel wrote.

By contrast, agreements that rely on voluntary commitments or carbon offset schemes — up to 94% of which are worthless, according to scientific studies — are less likely to generate results. “We need to have binding global reduction targets under mandatory timetables without free riders, and those targets must be consistent with the Paris Agreement’s goal of limiting global warming to 1.5°C,” Emmanuel warned.

Petrochemical lobbyists seek to influence treaty talks

Sources:  

Reuters, Nature

While oil giants such as Shell and ExxonMobil have expressed support for the treaty, Reuters reported that behind the scenes, petrochemical lobbyists and trade groups have attempted to sway discussions away from production caps that might limit their output.

“Plastic makers want UN delegates to focus instead on waste collection, recycling and nascent waste-to-fuel technologies, areas that don’t impact their businesses,” the report stated. However, many advanced plastics projects fail to become commercially viable and the processes involved can generate toxic waste that ends up in waterways.

The role of oil lobbyists in influencing the Ottawa talks has troubled scientists, with one professor of environmental toxicology arguing in Nature that policymakers should move to insulate scientific bodies from corporate interference.

EU hopes to take the lead on plastics regulations

Source:  

Bloomberg

The European Commission has passed sweeping packaging and plastics regulations in the past four years, specifically targeting single-use plastics and reducing waste volumes. These domestic regulations could see the bloc lead by example and “add weight and leadership to international negotiations,” one plastics policy analyst told Bloomberg. The scale of Europe’s new rules could also positively influence corporate policies: “If some big companies are starting to change the way they produce their packaging for the EU market, they may also do the same for other markets,” the coordinator of Break Free from Plastic Europe, an environmental group, said.

Insights from NPR, Axios, and The American Prospect

Businesses say noncompetes are vital to protect trade secrets

Sources:  

NPR, Axios

The US Chamber of Commerce and other business groups oppose a ban on noncompetes, saying the agreements help both workers and companies by protecting trade secrets, which allows businesses to invest more in training their workforce. The chamber argued that under a ban, “companies may be less willing to pour large amounts of time and money into research and development,” because they may fear employees will take that knowledge to a competitor, NPR reported.

Noncompetes were once used to keep high-level executives from “jumping ship to rivals and taking insider knowledge with them,” Axios reported, but they’re now common even for low-wage workers who have little to no access to trade secrets. Cases litigated over the agreements have involved pharmaceutical workers, janitors, and even yoga studios.

Chamber of Commerce plans to sue, threatening FTC’s authority

Sources:  

Bloomberg, The American Prospect

The US Chamber of Commerce has said it will sue to overturn the rule, arguing that the FTC overstepped its authority and opened up “a Pandora’s box where this commission or future commissions could be literally micromanaging every aspect of the economy.”

But if the courts step in to roll back the ban, they could also restrict the FTC’s rulemaking authority more broadly, making it difficult for the commission to curb other practices it deems harmful to competition. While a legal opinion could restrict the commission’s rulemaking authority, it would “at least give the agency clarity on its own powers,” The American Prospect wrote.

Insights from The Economist and The Guardian

Tight budgets put the squeeze on spending increases

Sources:  

Resolution Foundation, Institute for Fiscal Studies, The Guardian

While the defense pledge was launched to much fanfare, policy analysts were quick to raise questions about how it would be paid for. “This is a lot easier to announce than deliver,” the Resolution Foundation’s Torsten Bell wrote on X, noting that it remains unclear how the pledge will be funded given the UK’s existing budget deficit. The government will likely have to make cuts in other spending areas to finance the defense surge, said The Institute for Fiscal Studies’ Ben Zaranko.,But, as The Guardian noted, the defense pledge includes items such as money spent on Ukraine aid, meaning that the core budget increase for the Ministry of Defense is less that it might appear at first glance.

Conservatives unlikely to remain in power to see pledge through

Sources:  

The Economist, i newspaper

While the ruling Conservatives made the spending pledge, they are unlikely to remain in power long enough to see it through, making Labour the party most likely to decide the country’s future defense budget. The main opposition party commands a dominant lead in the polls, with a general election expected by the end of this year. Labour leader Keir Starmer has said he supports spending 2.5% of GDP on defense, but has promised a major review if his party takes power to see how money is best spent. Labour’s Shadow Defense Secretary John Healey reacted with caution to the plan. “Since 2010, the Conservatives have wasted more than £15 billion mismanaging defense procurement, shrunk the Army to its smallest size since Napoleon, missed their recruitment targets every year, and allowed morale to fall to record lows,” he wrote on X.

Insights from Foreign Policy, USA Today, and New Geek

German automakers’ approach to competing with China is ‘fiction’

Source:  

Foreign Policy

German automakers are some of the loudest voices against raising EU tariffs on EVs and EV parts, arguing that cutting them instead would push Germany to become more competitive. Executives at Volkswagen and BMW believe that they need Chinese EV battery parts to keep their costs low until they can make their own, but the idea that German automakers can regain competitiveness in China is “fiction,” argued Foreign Policy’s James Crabtree. Beijing has “no interest in allowing German car companies to thrive in its market,” he wrote, noting that German automakers are losing out on building stronger ties with Japan and India by prioritizing recovery in China.

EV resale prices in US are hampering popularity

Source:  

USA Today

Plummeting EV resale values in the US have become a major “roadblock” in the expansion of EV market share across the country, USA Today reported. Over the past year, average prices for used EVs dropped by 32% compared to 3.6% for gas-powered vehicles. Coupled with higher price tags compared to Europe and Asia and inadequate charging infrastructure, the resale prices are yet another factor that “aggravate buyers’ worries that an EV isn’t worth the price or the potential headaches,” USA Today wrote. The resale value slump was largely triggered by Tesla slashing prices in an effort to remain more competitive. “Musk cutting prices made people feel like they owe $50,000 on their Tesla and now, it’s only worth $40,000,” one analyst said.

Chinese consumers are ‘numb’ to Tesla price cuts

Sources:  

Reuters, New Geek, The New York Times

China’s rapid rollout of cheap EVs is largely driving the IEA’s optimistic forecast, but Tesla’s market share is expected to drop in the country despite some of the most significant price cuts compared to its competitors, according to New Geek, a Chinese tech consumer blog. Between 2019 and 2023, Tesla’s average price in China dropped by 22%, leading to a 392% increase in sales, but Chinese EV giant BYD slashed its prices by 7% with a 1,217% sales increase during the same time period. “It is clear that consumers are becoming increasingly numb to Tesla’s price cuts,” New Geek wrote. While Tesla’s vehicles still have a better range compared to BYD’s, the blog suggested that nationalist pride is behind the fervor for BYD cars in China.

Insights from the Atlantic Council, The Wall Street Journal, and the BBC

Threat of sanctions could be enough to exert pressure on Beijing

Source:  

The Wall Street Journal

Previous threats by Washington to sanction Chinese financial institutions proved enough to shift Beijing’s behavior, The Wall Street Journal noted. Last year, an executive order by US President Joe Biden authorizing sanctions on any bank that aided the Russian military created “bottlenecks” on transactions between China and Russia, one expert told the Journal. As Chinese banks feared reprisals, they backed out of facilitating deals that could lead to sanctions, Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center think tank, said. But that threat has diminished in recent months as smaller banks that don’t use the US dollar — and so wouldn’t be struck by sanctions — have become more prevalent in Russia-China transactions. “Both Russians and Chinese are constantly adapting to the new conditions,” she said.

China has developed some resistance to possible sanctions

Source:  

The Atlantic Council

China also faces the threat of sanctions from Group of Seven nations if it carries out military provocations in Taiwan. Beijing has been preparing for such a scenario, an Atlantic Council report noted, and has created some safeguards. For instance, China is creating financial networks dominated by the yuan, rather than the US dollar, adding a small shield against any punitive actions. “A rapidly growing number of domestic and crossborder payment projects are being designed with the possibility of Western sanctions in mind,” the report found. Meanwhile, if Beijing responds to sanctions, it is unlikely to do so with tit-for-tat measures, the authors said. Instead, it “will target sectors where it can inflict asymmetric pain, particularly through the use of export controls or trade restrictions on critical goods such as rare earths.”

Chinese firms nearshoring in Mexico to avoid US sanctions

Source:  

BBC

Chinese companies have set up factories and logistics hubs in northern Mexico in recent years, part of an attempt to circumvent US sanctions or tariffs on their products, the BBC reported. Analysts believe that trend could last long-term, since the trade war between the US and China doesn’t show signs of cooling. “While the Chinese origin of the capital coming into Mexico may be uncomfortable for the policies of some countries … according to international trade legislation, those products are, to all intents and purposes, Mexican,” Juan Carlos Baker Pineda, Mexico’s former vice-minister for external trade, told the broadcaster.