People – Page 11860 – I wish I had more to offer

With Elon Musk’s visibility ‘there is incredible isolation,’ leadership expert says

Many leaders feel like Elon Musk does, says expert
3:46 PM ET Fri, 17 Aug 2018 | 03:34

Tesla CEO Elon Musk's feelings of exhaustion “are not uncommon for leaders” in his position who face growing pressure, leadership wellness expert Lowinn Kibbey told CNBC on Friday.

“I think what Musk has done is illuminate an issue that many leaders feel,” Kibbey said on CNBC's “Closing Bell.”

Following months of bizarre behavior from Musk, The New York Times published an extended interview with the Tesla CEO in which he said the past year has been “excruciating” and “the most difficult and painful” of his career. In the emotional interview, Musk revealed he has been working as much as 120 hours per week, which caused him to work through his birthday and almost miss his brother's wedding. The CEO also revealed that when he gets a rare moment of shut-eye, it is often with the help of sleep aid Ambien.

Shares of Tesla tumbled 8.9 percent Friday after the interview was published.

Kibbey is global head of the Johnson & Johnson Human Performance Institute, which runs a program that works with athletes, the military and Fortune 500 CEOs to train them for high-pressure roles. He said the nature of the CEO role, as well as other high-level executive roles, has become more stressful with the advent of social media.

“The CEO role is an incredibly, highly visible role. There is tremendous stress in it. And over the last, say, five years, that stress has grown even greater, with complete visibility — from social media, pressure from activist shareholders, short sellers,” Kibbey said.

“With that visibility, though, there is incredible isolation. It is very difficult to share what's going on in a way where you feel that people can have empathy and that you can trust them,” he added.

It's Musk's erratic behavior, both on social media and off, that has invited much of the recent criticism of his character and management style. Most recently, his tweet that he would take Tesla private at $420 per share and had “funding secured” has invited scrutiny from the Securities and Exchange Commission.

In July, he took to Twitter to call a British cave diver who assisted in the rescue of a Thai boys soccer team a “pedo guy.” During Tesla's first-quarter earnings call in May, Musk dissed analysts, cutting off Sanford Bernstein's Toni Sacconaghi because of what he called a “boring, bonehead” question. Musk later apologized to Sacconaghi and to the diver, Vernon Unsworth, for his comments.

As executive roles change, companies should change their approaches to training those executives, Kibbey said.

“There has to be a whole-person approach to this. No one has talked about this before; it's always been about what results have you driven in Q3 or Q4,” Kibbey said. “But the truth is, if that leader is not showing up physically well … if the mental, emotional resilience is not there, if the character-driven leadership is not there, that creates risk.”

The stakes may be high, but Kibbey said that doesn't mean Musk should step down as CEO and chairman. Instead, he applauded the entrepreneur for his transparency.

“This problem is common, and what Elon has done today is courageously talked about the pressure of that role,” Kibbey said.

Elon Musk’s stunning interview was a $1 billion gift to the short sellers he loathes

VCG | Getty Images
Elon Musk, Tesla CEO, addresses a press conference in October 2015.

The investors betting against Tesla just got a gift from the company's chief executive, Elon Musk.

Mr. Musk opened up on Thursday in an emotional interview with The New York Times about the toll the past year has taken on him, blaming those so-called short-sellers for much of his stress. It followed his cryptic tweet last week about converting the publicly traded company into a private one, which created a frenzy in the market.

The day after the interview, the stock of the electric-car maker tumbled 9 percent to $306.

Those losses were gains for the short-sellers. The slide in Tesla's shares generated more than $1 billion in profits for short-sellers, according to S3 Partners, a financial technology and analytics firm, which tracks the positions held by those investors.

The stock drop helped them recover much of their losses that came on Aug. 7, the day Mr. Musk tweeted he was considering taking Tesla private at a stock price of $420. Short-sellers lost $1.3 billion that day after Tesla's shares jumped 11 percent on the news.

Tesla’s slashing of expenses may be costly as Elon Musk pushes a take-private deal

Getty Images | Diego Donamaria
Tesla CEO Elon Musk.

As questions swirl about whether Tesla will go private — and the well-being of its chief executive, Elon Musk — one crucial factor looms large over the fate of the electric car company: Tesla's own financial health.

The company has undertaken drastic measures as it seeks profitability, cutting costs and even erecting a tent-covered third assembly line at its manufacturing plant. But many of those tactics may not be sustainable for long, and some could even hurt the company down the road.

The state of Tesla's balance sheet, and particularly its near-term cash position, are important to the company's future, perhaps even more so since Mr. Musk's surprise declaration on Aug. 7 that he would explore taking the company private.

In an emotional interview with The New York Times last week in which he discussed the ''excruciating'' year he has had, Mr. Musk said Tesla would soon be in the black.

''Tesla is going to be profitable and cash flow positive,'' Mr. Musk said. ''From a Tesla standpoint, I think it is a good place.''

His remarks echo what he said on the company's most recent earnings call, when he predicted the company would turn a profit in the next quarter.

More from The New York Times:
Greece's Bailout Is Ending. The Pain Is Far From Over.
Netflix Tests Promotional Videos but Users See 'Commercials'
Asia Argento, a #MeToo Leader, Made a Deal With Her Own Accuser

Mr. Musk is under intense pressure from Wall Street to make good on that promise, and Tesla has been plagued by manufacturing issues while ramping up production of its mass-market Model 3.

Meanwhile, short-sellers continue to target the stock, injecting a destabilizing element to the company's share price. Good financial results would be bad news for the hedge funds betting Tesla will fail, and serve as vindication for Mr. Musk.

And Tesla's financial position will have a significant impact on any potential effort to take Tesla private. Investors evaluating a potential take-private deal will be assessing not only Tesla's long-term prospects, but its current cash on hand and debts.

To achieve that profitability, Tesla is scrambling to slash spending in almost all areas of it operations.

In June, it announced it would lay off about 3,500 employees, about 9 percent of its work force, in a cost-cutting move. It has approached some suppliers about refunding some money Tesla has paid for projects that are still underway.

Tesla has said it is working to reduce costs by delivering completed vehicles faster. At the end of second quarter, it held inventory valued at $579 million, a figure the company said was ''a substantial increase'' from previous quarters.

And Tesla has even more drastic cost cutting plans in store. It has said it plans to cut capital expenditures by a fourth this year — to about $2.5 billion from $3.4 billion in 2017.

''There are a lot of levers they are pulling to be cash-flow neutral or positive in the second half, but there's trade-offs,'' said Toni Sacconaghi of Sanford C. Bernstein.

Tesla declined to comment for this story.

But while analysts say Tesla may very well achieve profitability soon, the spending cuts necessary to do so could be costly, delaying the introduction of new models that could help boost revenues.

''Those are not necessarily the best for the long-term growth of the company,'' Mr. Sacconaghi said. ''Cutting back on capex is not sustainable,'' he said, referring to capital expenditures. ''Cutting inventories is not sustainable.''

What's more, Tesla's push to conserve cash will soon be complicated by two bond payments that come due in the next several months.

It is scheduled to pay off a $230 million convertible bond in November, and a payment of $920 million on a second convertible bond is due next February. Tesla could pay the second bond in stock instead of cash, if its share price is above $360. It has traded above that level in recent weeks, but on Friday it closed at $305.50.

Tesla has slipped into financial difficulties, in part because of how much cash it has been using up — nearly $1 billion every three months. It ended the second quarter with $2.2 billion, down from $3.3 billion at the beginning of the year.

The company's precarious cash position prompted Moody's Investors Service to downgrade Tesla's debt in March, citing ''the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall.''

Mr. Musk has said no such capital raise would be necessary, because Tesla will soon be profitable. But Bruce Clark of Moody's said he still expected the company may have to tap the capital markets.

''The company has made some important progress with the Model 3 production and has reduced capital expenditures, but I still think they are going to need additional capital,'' Mr. Clark said. ''It's not as tight as it had been, but they have to stay on the track they've been on recently.''

Mr. Musk has said that the production issues that bedeviled Tesla earlier this year are being resolved.

In June, the company hastily built an assembly line in a gigantic tent outside the walls of its plant in Fremont, Calif., in an effort to speed up production of the Model 3. That extra assembly line — along with the removing of bottlenecks in the two indoor lines — has enabled Tesla to put the output level to 5,000 per week, up from fewer than 3,000 cars per week in May.

Those gains have required round-the-clock production, however, which may not be possible for Tesla to sustain. Other automakers have found 24-hour production is untenable in the long run because workers become burned out and machinery tends to break down more frequently.

Further complicating Tesla's financial future is a Securities and Exchange Commission inquiry into Mr. Musk's tweet announcing that he was considering taking the company private. The commission is expected to begin meeting with Tesla executives this week.

To deal with the investigation, the Tesla board and the special committee of the board evaluating a potential buyout, have each retained law firms. Additionally, the special committee has retained a crisis communications firm, and other public relations firms are angling for assignments.

Those legal fees will add up, and the threat of lengthy legal proceedings could also complicate Tesla's efforts to raise more cash should it need to.

Early Sunday morning, Mr. Musk took to Twitter and reminded his followers just how hard he is working as he struggles to make Tesla profitable.

Responding to a post from Arianna Huffington, the Huffington Post founder and member of Uber's board of directors, who suggested he take a vacation and focus on his physical and mental health, Mr. Musk said: ''I just got home from the factory. You think this is an option. It is not.''

TSLA

—

Feds on auto scandal: Fiat Chrysler sought to corrupt talks with UAW

Feds on auto scandal: Fiat Chrysler sought to corrupt talks with UAWCLOSE
Over a period of years, former Fiat Chrysler executive Al Iacobelli and former UAW Vice President General Holiefield helped to save Chrysler and then stole millions intended for worker training, authorities say.

Federal prosecutors say Fiat Chrysler Automobiles, through a key defendant in the wide-ranging training center scandal, “sought to corrupt and warp the labor-management relationship” with senior UAW officials.
The statement in a sentencing memorandum for Alphons Iacobelli, a former vice president of employee relations for FCA, is part of what appears to be a dramatic uptick in the rhetoric directed toward the automaker. The company, for its part, insisted in a response to the allegations that wrongdoing was limited to certain bad actors and did not affect contract bargaining.
Prosecutors, however, said the automaker wanted to influence labor contracts and that union officials failed in their duties to represent union members.
“FCA sought to obtain benefits, concessions and advantages in the negotiation and administration of collective bargaining agreements with the UAW in an effort to buy labor peace. High-level officials of the UAW sought to enrich themselves and live lavish lifestyles rather than zealously work on behalf of the best interests of tens of thousands of rank and file members of their union,” according to the 14-page document filed Monday.
The paperwork also says Fiat Chrysler provided more than $9 million in illegal chargebacks — money from FCA used to pay the salaries of UAW officials at the training center, a place that was supposed to provide for autoworker training — between June 2009 and July 2017. The government said Iacobelli and FCA viewed the chargebacks as a political gift to the UAW and that high-level UAW officials assigned union officials to the training center “with no intention that they would perform any real work at the NTC.”
The dollar figure suggests the government believes it was an even more pricey scheme than previously reported. Earlier stories had focused on allegations that $4.5 million had been misused, in part, on expensive clothing, jewelry and travel.
In its response to the allegations, the company called itself a victim in the case.
“FCA US firmly restates that it was a victim of illegal conduct by certain rogue individuals who formerly held leadership roles at the National Training Center (NTC), an independent legal entity. FCA US also confirms that the conduct of these individuals had no impact on the collective bargaining agreement,” according to a company statement issued Monday evening.
The company said the actions involved “a small number of bad actors, who, for personal gain, misappropriated training funds entrusted to their control and who, unfortunately, co-opted other individuals who reported to them to carry out or conceal their activity over a period of several years.”
The union has also insisted the case is limited to a few bad actors.
“The UAW has zero tolerance for corruption or wrongdoing, at any level of the organization. Now, our leadership team had no knowledge of the misconduct — which involved former union members and former auto executives — until it was brought to our attention by the government,” according to remarks last year by then-UAW President Dennis Williams.
The sentencing paperwork does, however, also focus on the specific role of Iacobelli, with the government pointing to his efforts to cooperate and suggesting a sentence of six years and four months rather than a possible eight-year sentence. Iacobelli is scheduled to be sentenced on Aug. 27.
“The court's sentence should reflect the seriousness of Iacobelli's crimes and the need to deter corporate executives, corporations, union officials and labor unions from similar conduct. At the same time, the sentence should account for Iacobelli's acceptance of responsibility and his sincere efforts at revealing vast labor-management corruption and assisting in efforts to end it,” according to the memorandum.
Prosecutors also said Iacobelli was able to avoid more than $800,000 in taxes on the “significant stream of income he directed to himself.”
Authorities previously said Iacobelli used $1 million in training center funds to buy a new pool, $35,000 pens and even a Ferrari.
Prosecutors noted that Iacobelli, for certain aspects of the negotiations and relationship with the UAW, reported directly to former FCA CEO Sergio Marchionne, who died in July.
Read more:
Fiat Chrysler-UAW scandal 'did not begin with Iacobelli,' his lawyers argue
Professor: Feds suggest UAW/Fiat Chrysler scandal was wider conspiracy
In his own sentencing memorandum, Iacobelli's attorney, David DuMouchel, argued that the corruption at the heart of the case — bribing of UAW officials with travel, jewelry, cash and more — preceded Iacobelli. DuMouchel requested a sentence of 37-46 months in prison.
Peter Henning, a Wayne State University law professor and former federal prosecutor, had noted previously that the government appeared to be more directly focusing its fire on the automaker.
He said that language in the plea agreement this year for former FCA director of employee relations Michael Brown indicates that the Justice Department sees a more widespread case.
“I think that the Justice Department is making the point that it wasn’t just lining their pockets, but that this went much deeper, that this affected the union contracts,” Henning told the Free Press in June.
Authorities said Iacobelli worked closely with the late General Holiefield, a former UAW vice president, on the scheme.
Holiefield's widow, Monica Morgan, was the first person to be sentenced in the scandal.
U.S. District Court Judge Paul Borman issued an order last week that will allow Morgan to report for prison on Oct. 1, rather than Aug. 29.
Morgan had requested the extra time “to allow her to finish putting her personal affairs in order,” according to the paperwork signed by the judge.
Last month, Morgan, a prominent metro Detroit photographer, filed paperwork to appeal her 18-month sentence on a tax charge, to which she pleaded guilty in February. That case is with the U.S. 6th Circuit Court of Appeals.
Authorities said Morgan hid $201,000 on her 2011 taxes, and Morgan, in plea documents, acknowledged that the money came from criminal activity.
Two other defendants in the case — Keith Mickens, a former labor leader, and ex-FCA analyst Jerome Durden — were expected to appear in court Friday for sentencing, but those proceedings have been rescheduled for Nov. 7.
Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence. Staff writer Tresa Baldas contributed to this report.
Read or Share this story: https://on.freep.com/2OT0y8V

Tesla investor: There couldn’t be a better time for Apple to invest in Tesla

Bull and bear debate the trade in Apple
7 Hours Ago | 04:25

Apple should buy a stake in Tesla now for the sake of both companies, Tesla investor Ross Gerber told CNBC on Monday.

“This is [Apple CEO] Tim Cook's gift of all gifts,” Gerber said on CNBC's “Squawk Alley.”

Gerber, co-founder & CEO of Gerber Kawasaki, said a potential investment from Apple in Tesla could be hugely beneficial to both companies.

Tesla has faced extensive scrutiny in the past year for a wide array of issues, including a push to meet Model 3 production goals. CEO Elon Musk, who on Friday admitted the past year has been “excruciating” and “the most difficult and painful” of his career, has come under fire for erratic behavior. Most recently, Musk rattled markets after tweeting he was planning to take Tesla public when the stock reached $420 per share and that he had “funding secured.” The tweet hasinvited scrutiny from the Securities and Exchange Commission.

“If you look at actually what Elon's problems are every day, they are operational, which is why Tim Cook was hired by Steve Jobs back in the day. Cook is perfect for this role,” Gerber said. “In the past Apple and Tesla probably wouldn't have gotten along because Musk didn't need Apple, but it is clear he needs help [now].”

And what Tesla lacks in scaling and operations, it makes up for in innovation — which Gerber says is what Apple desperately needs long-term.

With a giant cash hoard and deep-running consumer loyalty, Apple became the first publicly traded U.S. company to hit a valuation of $1 trillion in early August. It has since continued its trajectory, hitting a fresh all-time high in intraday trading on Monday. Despite Apple's recent success, however, it has its own share of pressures. Some investors worry stagnating iPhone sales could spell trouble for the company in the future.

“My biggest fear with Apple is that they have fallen so far behind in the innovation curve, I don't see where they will be five years from now,” Gerber said. “I don't think phones are going to be the primary device in a decade,” he added.

Ivan Feinseth, chief investment officer at Tigress Financial Partners, agreed Tesla could present a decent investment opportunity for Apple but said the investment wouldn't make or break the tech giant.

“I don't think Apple is on the decline. It is still on the ascent,” Feinseth said.

He said wearables and Apple's voice assistant, Siri, still present big areas for growth and innovation.

But an investment in Tesla could present a unique opportunity for Apple to “get a foothold in the development” of Tesla technology, which it usually keeps in-house.

“Apple does have enough cash, with the $240 billion they now have. With that they could buy Tesla, Ford, Fiat, Ferrari, Harley Davidson — they could buy everything,” Feinseth said.

“Why would they want to tie themselves down with owning an automobile manufacturer? If they want to be involved with the manufacturing, especially the integration of technology, taking a financial interest in Tesla would make sense,” he added.

Gerber agreed mobility could be a huge opportunity for Apple in the future. And he said the iPhone maker's secretive self-driving car project, “Project Titan,” is “going nowhere,” so Tesla would be a surer bet. If Apple were to strike a deal with Tesla that put its operating system and app store in Tesla cars, that would open up a whole new avenue for Apple to market its services and applications to customers, he said.

“Apple should buy 5, 10 percent of Tesla just to get the iOS onto that Tesla screen. Part of the Tesla story is that screen in the middle of the car, and not having Apple on that screen is going to be a huge problem for them,” he said.

Whether or not Tesla ends up private, Apple should act now, while Musk is actively searching for partners, Gerber said.

Shares of Tesla closed up 0.96 percent at $308.44. Shares of Apple closed down 0.97 percent at $215.46, after briefly touching an all-time high of $219.18 in intraday trading on Monday.

Apple and Tesla did not immediately respond to CNBC's requests for comment.

Elon Musk should consider working with distributors, delegating more, ex-Toyota exec says

Musk treated well now and maybe better if Tesla doesn't go private: Former auto exec
4 Hours Ago | 03:54

Tesla CEO Elon Musk needs to delegate more and work with an outside distributor if he's going to make the electric car maker “sustainable,” Jim Press, former COO and president of Toyota Motor Sales U.S.A., told CNBC on Monday.

“You need to have a marketing organization, have to have sales, you have to have an active distribution channel, and you really do need day-to-day management operation. You can't sit by the plant and spend the night there to run everything. You can't funnel everything through one person,” Press said on CNBC's “Closing Bell.”

Tesla has battled widespread criticism since Musk's Aug. 7 tweet that he was planning to take Tesla public and had “funding secured,” which may have violated Securities and Exchange Commission rules. In a blog post, Musk attempted to clarify that his claim about secured funding was based on repeated and ongoing conversations with Saudi Arabia's sovereign wealth fund, which was cast into doubt when it surfaced on Sunday that the fund is in talks to invest in a Tesla rival.

Going private is one way to avoid close scrutiny by the public market, which Tesla has faced in recent months as it fought to meet Model 3 production goals. Some analysts speculate Musk has wanted to take Tesla private for a while, and the press and shareholder hype surrounding Model 3 production goals hastened his ambitions.

Despite Musk's concerns, Press, who was also the deputy CEO of Chrysler, said the market has been pretty fair to Tesla so far, especially when compared with legacy motor companies, such as Ford. But now, he said, “There's some reality coming into it,” meaning Tesla will have to get profitable or face ongoing market adjustment.

“The reality is, the market treats him very well. If you look at the market cap of Tesla, $50 billion, compared to Ford, that makes a profit — the stock is about $9 — it shows the disconnect, and there is an adjustment that's occurring,” Press said.

Tesla shares closed out the day up 0.96 percent at $308.44.

To get profitable, Press added, Musk needs to learn to delegate, both within the company and without.

“I always have a saying, and that is, you don't have stress, you should give it. And [Musk] doesn't have anyone to give it to,” Press said.

Press said Musk should hire someone to “run day-to-day” operations while he works at “30,000 feet” and should look outside of the company for independent distribution channels, such as third-party dealerships.

“He is the only one that's trying to run the distribution channel and capitalize that at the same time. There's a whole opportunity there for an independent distribution channel to take half the work load off and create the sales,” Press said.

And as for going private, Press said it may be best for the carmaker to stay put, rather than risk the unknown pressures from the private market.

“I understand the frustration, but going private may not be the best. You know, the devil that you know — versus the devil you don't — may actually treat him better,” Press said.

Tesla did not immediately respond to CNBC's request for comment.

Corrupt FCA exec reported to Marchionne amid scheme

Corrupt FCA exec reported to Marchionne amid schemeDetroit — Federal prosecutors Monday drew a direct line between former Fiat Chrysler CEO Sergio Marchionne and Alphons Iacobelli amid a multimillion-dollar conspiracy to corrupt labor negotiations with the United Auto Workers.
In a federal court filing, prosecutors noted that Iacobelli, as Fiat Chrysler's top labor negotiator, reported directly to Marchionne regarding certain aspects of Fiat Chrysler's negotiations and relationship with the UAW.
It was the first time the government referred to Marchionne by title and served as the government's strongest statement about the late auto CEO and a years-long criminal conspiracy designed to wring concessions from the UAW by funneling money and illegal gifts to labor leaders. Those illegal payments included $1,000 pairs of designer shoes, first-class travel, furniture, lavish meals, parties, jewelry and custom-made Italian watches.
The conspiracy continued after Iacobelli left Fiat Chrysler in 2015, prosecutors said while adding that the former labor negotiator has helped expose “vast labor-management corruption” and is “assisting in efforts to end it.”
“The seriousness of the corruption of the labor-management relationship cannot be overstated,” Assistant U.S. Attorney David Gardey wrote in the filing. “Because of FCA’s conduct, through Iacobelli and others, tens of thousands of hourly UAW workers were deprived of the representation that they deserved and paid for in union dues.”
Prosecutors made the allegations in a federal court filing ahead of Iacobelli's sentencing for violating federal labor laws and a tax crime. The government wants Iacobelli, 59, of Rochester Hills, to spend more than six years in federal prison when U.S. District Judge Paul Borman sentences the former auto executive Aug. 27.
The filing came four days after The News reported that Marchionne gave an expensive Italian watch to United Auto Workers Vice President General Holiefield and failed to disclose the gift while being questioned by federal investigators.
In the filing Monday, prosecutors noted that UAW officials received multiple “custom-made Italian watches,” but stopped short of saying Marchionne gave the gifts.
Marchionne, 66, was never charged with a crime before he died July 25 in a Zurich hospital.
A Fiat Chrysler spokeswoman declined to comment on the federal filing.
The watches, money and illegal gifts were part of a conspiracy to buy labor peace from a cash-strapped UAW, prosecutors said.
Iacobelli is the highest-ranking Fiat Chrysler official convicted in the conspiracy. Seven people have been convicted, including Holiefield's widow, Monica Morgan-Holiefield, who was sentenced to 18 months in federal prison last month.
Iacobelli funneled millions to UAW officials through the jointly operated UAW-Chrysler National Training Center.
He also enjoyed a lavish lifestyle bankrolled by Fiat Chrysler cash.
“This additional income that Iacobelli received took many forms, including a Ferrari, jewel-encrusted pens, hundreds of thousands of dollars in improvements and additions to the pool at his residence, personal spending on his credit cards, and more,” the prosecutor wrote.
The filing Monday also came one week after Iacobelli's lawyer pushed the judge to sentence the auto executive to less than four years in prison.
Iacobelli could be sentenced to eight years in prison under terms of a plea deal. But prosecutors said he deserves a break for admitting responsibility and cooperating with the ongoing investigation.
“. . . the sentence also should account for Iacobelli’s acceptance of responsibility and his sincere efforts at revealing vast labor-management corruption and assisting in efforts to end it,” Gardey wrote.
According to prosecutors, one scheme that continued after Iacobelli's departure was reimbursing the UAW for salaries and benefits of labor officials assigned to the training center. The reimbursement is called a “chargeback.”
A “large number” of UAW officials provided little, if any, work at the training center, according to the government, which called the practice a “political gift” from Fiat Chrysler to the union.
“It was merely a corrupt mechanism whereby FCA money could be used by the UAW to keep the UAW’s costs down,” the prosecutor wrote.
From 2009 to last year, the chargebacks saved the UAW more than $9 million, according to the government.
rsnell@detroitnews.com
(313) 222-2486
Twitter: @robertsnellnews
Read or Share this story: https://detne.ws/2vYYDs4

US carmakers must win in China, but it's going to get more difficult

US carmakers must win in China, but it's going to get more difficultThe fortunes of Detroit automakers increasingly lie some 7,000 miles to the east — in China.
China is already the world's largest car market, selling 29 million light vehicles a year. By 2025, China's new car sales will be double those of the United States, analysts said. To put that in perspective, about 17.2 million new light vehicles were sold last year in the U.S., according to Kelley Blue Book data.
And while new car sales are ballooning in China, they have leveled in the U.S.
This puts Detroit's car companies at a critical juncture. They must focus on growing their sales in China if they want to sustain total profits enough to succeed elsewhere in the world.
Yet Ford and Fiat Chrysler struggled in China in the second quarter, and it isn't getting any easier in the future for them and General Motors.
“It's going to get more and more difficult to compete in China,” said John Bonnell, senior adviser of ZoZo Go, an investment advisory firm specializing in China's electric and autonomous vehicle industries. “With the heavy competition, demand for more electric vehicles, trade wars … it's not an easy business there.”
Also on Freep.com:
U.S. automaker see profits dip, predict pitfalls
Ford profit drops $1B due to China, tariffs
Detroit's reality checkThe Chinese car market is intensely competitive given the rising success of some Chinese car companies in the last few years. Then there is the looming threat of President Donald Trump's proposed 25 percent tariffs on imported cars and parts, which could inflate prices across the board.
But carmakers that succeed in China will gain a big advantage in other markets, said Bonnell.
“It will impact their performance here, eventually,” said Bonnell. “If you just have the U.S., you wouldn't have those million-dollar sales to spread to your tooling costs” and to cover other research and development expenses.
In fact, said Bonnell, looking at Volkswagen's success in China, “Its market share in Europe, since they have succeeded in China, has gone straight up.”
But the Chinese consumer has distinct needs and requires products tailored to them, said Jeremy Acevedo, manager of data strategy with Edmunds. Therefore, product becomes king if Detroit carmakers are to attract new buyers there. “They can't rely on shopper loyalty in the booming Chinese auto market,” said Acevedo.
As for Trump's proposed tariff hike and retaliation by the Chinese, Detroit Three exports to China are not a factor because they account for less than 5 percent of sales, Michael Dunne, CEO of ZoZo Go, wrote in a newsletter.
“But if tensions escalate, Chinese leaders could steer consumers away from American-brand cars,” wrote Dunne.
He noted Chinese leaders did just that in the past with Korean and Japanese cars to “great effect” when political relations soured.
“So, a reality check is in order,” said Dunne. “Intensifying competition from Chinese automakers, plus a dose of acute consumer nationalism, could spell the beginning of the end of Detroit in China.”
China salesBesides fierce competition in China — about 110 car brands are sold in China, 60 of which are Chinese — the Chinese government is also pushing automakers for more electric vehicle production by 2020, said Bonnell. It has set strict regulations around EVs, he said.
As Ford and FCA try to compete, they are already behind the curve. Through June, Ford had sold 313,000 vehicles, down 38 percent from the same period a year ago giving it a 2 percent market share in China, said Bonnell, who references data from LMC Automotive.
In that same period, FCA's Jeep brand was down 34 percent to 115,000 units. It sells such a small number of vehicles, though, that FCA's market share is negligible, said Bonnell.
For GM, through June, sales of its Buick, Chevrolet, Cadillac brands were 960,000, up 10 percent from the same period a year ago. Including GM's minority share in SAIC GM Wuling, GM's sales through June totaled 2 million, up 7 percent from the same year ago period, said Bonnell.
GM President Dan Ammann told Wall Street analysts Thursday that GM is successful in China because it has invested in the product and the dealer network there for many years.
But the market in China has been intensely competitive, Ammann said. GM continues to invest in its business there and, “Make sure we’re prepared for the next phase of the market there” as it pushes for more electric vehicles and strict emissions.
The strongest non-Chinese automaker is Volkswagen, which has seen consistent growth in China.
“They were the first one to set up in the mid-'80s and they have strong partners and worked hard to get their brand established and dealer network established,” said Bonnell. “Being the first mover offered a big advantage for them.”
Volkswagen had sold 2.1 million cars through June in China, up 7 percent from the year-ago period, he said.
Ford's problemsFord China has struggled with an aging product portfolio and a thin, unprofitable dealer network. In the second quarter, it lost $483 million, a decline of $506 million from last year, Ford's CFO Bob Shanks said in a call with analysts.
Current products in the showroom are dated. Five new models, arriving this autumn, should help, but there is a lot of lost ground to make up. Ford China sales this year could fall 25 percent below their 2016 peak of 1.2 million. That's a 300,000-vehicle hole to dig out of, Shanks said.
Shanks blamed unfavorable market factors for Ford and Lincoln imports into China, and lower net pricing, some of which is related to tariff changes.
But Ford's Jim Farley said the deterioration of Ford's business in China has been swift.
“I can assure you, we understand the importance of getting our China business back on track,” Farley, Ford's executive vice president and president of Global Markets, told analysts.
Ford will launch a new, low-priced, midsize sport utility vehicle called Territory in China early next year, Farley said. The SUV will be built in China and was developed strictly for that market. It will give Ford a better chance to compete against lower priced vehicles than it had in the past there, said Farley.
Ford combats China struggles with low-cost SUV
Ford has serious shortfalls in its go-to-market capabilities, “including inadequate dealer profitability, excess stock including our high-volume (compact) cars,” Farley said. “We haven't maintained a fresh enough product lineup for this rapidly changing and dynamic China market.”
Those missteps along with an uncompetitive cost structure hurt Ford China, and Farley said Ford is taking “urgent action.”
By the end of next year, 60 percent of Ford China's vehicle lineup will be refreshed or new, said Farley. He said Ford is improving its competitiveness with aggressive cost cuts and more localized product such as the Explorer.
“We're close to hiring a new CEO for Ford China and we have already onboarded a number of local Chinese talent in key management positions such as marketing and sales leads for both Ford and Lincoln to drive not only our strategy but they're already reinvigorating our sales,” said Farley.
But until all of Ford's SUVs are launched in China, he warned, “We'll continue to face this mix deficit.”
GM's successFord's new products will be competing against several new products from GM China, which already has a strong foothold in the market.
In the second half of the year, GM China will introduce 10 new models including the Cadillac XT4 small SUV.
“The focus is on high-demand segments including SUVs and multipurpose vehicles and luxury vehicles,” GM CEO Mary Barra said in an analyst call.
GM China reported record results in the second quarter with equity income of $600 million, up $100 million year-over-year. The bulk of those sales are from Baojun, Cadillac and Chevrolet, and GM said it had a “continued focus on cost efficiencies” there.
GM will incur higher costs in the second half because of the cost to launch new vehicles. With competitors launching new vehicles, pricing will come under pressure too, she said.
“But we remain confident in our 20 years of market strength in China,” said Barra. “Due to established local and U.S. brands and our strong Chinese partner, our current outlook does not assume any comprehensive impact in China beyond existing trade flows.”
Still, GM's growth is driven by the affordable Baojun (pronounced bow joon) brand and the surging Cadillac brand. Buick and Chevrolet are “crimped at the edges and stalling,” wrote Dunne.
Baojun is GM's ultrasubcompact that costs less than $15,000. It will account for one in every four GM China sales this year, said Dunne.
But Dunne wrote that the “squeeze on Chevy and Buick reveals a larger, deeper threat to the Detroit Three in China.” Consumers there are much less attracted to mass market global brands than they were a few years ago. Instead, they are switching to Chinese brands such as Great Wall, BYD and Geely, wrote Dunne.
Geely is China's largest private automaker. It will sell almost twice as many cars in China as FCA and Ford combined this year, said Dunne.
FCA's futureIn Fiat Chrysler's second-quarter earnings call, CEO Mike Manley acknowledged that “the biggest challenges we face, and frankly we're going to continue to face to some extent for the balance of the year, are all focused in China.”
Changes in the tariff drove down sales of Maserati cars and shipments to dealers, Manley said. But he was quick to add, “With all of these duty changes behind us, I'm clearly expecting improved sales performance,” Manley said.
That's provided that FCA manages inventory to meet demand ahead of the transition to China's tougher emission regulations, he said. FCA has lowered its expected..

After fatal accident, Uber’s vision of self-driving cars begins to blur

Getty Images
An Uber self-driving car drives down 5th Street on March 28, 2017 in San Francisco, California.

SAN FRANCISCO — After Dara Khosrowshahi took over as Uber's chief executive last August, he considered shutting the company's money-losing autonomous vehicle division. A visit to Pittsburgh this spring changed that.

In town for a leadership summit, Mr. Khosrowshahi and other Uber executives were briefed on the state of the company's self-driving vehicle research, which is based in Pittsburgh. The group was impressed by the progress its autonomous division had made in testing driverless cars in Pittsburgh and in Arizona, according to three people familiar with the ride-hailing company, who were not authorized to speak publicly. They left the meeting energized, convinced that Uber needed to forge ahead with self-driving cars, the people said.

But days after the summit, one of Uber's autonomous cars struck and killed a woman who was pushing a bicycle across a street in Tempe, Ariz. Video from the March 18 collision showed a distracted safety driver failing to react in time as the vehicle barreled into the pedestrian, Elaine Herzberg.

The accident threw Uber's autonomous vehicle efforts into flux, immediately forcing the suspension of its self-driving car tests in cities including Tempe, Pittsburgh and Toronto. Months later, Uber's executives are divided over what to do with the autonomous business, according to the people familiar with the company. While one camp is pushing Mr. Khosrowshahi to seek partnerships or even a potential sale of the unit, known as the Advanced Technologies Group, a rival contingent is arguing that developing self-driving technology is crucial to Uber's future, the people said.

Mr. Khosrowshahi remains undecided, the people said, though he has expressed a desire to partner with other companies on autonomous technologies. In recent months, Uber has started talking with a few auto manufacturers about potential partnerships, including supplying Uber's autonomous driving technology for use in Toyota's minivans, according to one person familiar with the talks. Toyota declined to comment.

More from The New York Times:
Alexa vs. Siri vs. Google: Which Can Carry on a Conversation Best?
Google Employees Protest Secret Work on Censored Search Engine for China
After the Cryptocurrency Boom: Hard Lessons for New Investors

The internal debates are unfolding at a time when many companies can ill afford to pause on autonomous technology given stiff competition from carmakers and other tech companies. In recent months, top engineers have left Uber's self-driving project for lucrative opportunities elsewhere. Uber's self-driving cars recently returned to the road in Pittsburgh but with human drivers at the wheel, meaning employees are driving around like any other motorist — except their vehicles are carrying hundreds of thousands of dollars in technology.

The issue of whether to retain or sell A.T.G. is complicated by Uber's stated intention to go public by the end of 2019. The company, valued at $62 billion, has racked up billions of dollars in losses since it was founded in 2009 and needs to persuade investors that it can eventually create a sustainably profitable business. The self-driving efforts, which have been losing $100 million to $200 million a quarter, do little to help that case. And Mr. Khosrowshahi has been shedding money-losing businesses since he joined Uber.

At a meeting in Pittsburgh on Aug. 8, according to a person briefed on the event, Mr. Khosrowshahi did not address what he would do with the self-driving efforts but told employees there that it ''is a big-time hardware manufacturing, software problem at scale. Lots of tech companies out there are going after this problem, but I think there are very few companies who are taking this on end-to-end at scale the way we are.''

In a statement, Uber said: ''Right now the entire team is focused on safely and responsibly returning to the road in autonomous mode. That's our No. 1 objective, and we have every confidence in the work they are doing to get us there.''

Uber first made its interest in self-driving cars public when it hired about 40 researchers and scientists from the National Robotics Engineering Center at Carnegie Mellon University in 2015. At the time, the company's chief executive was one of the founders of Uber, Travis Kalanick, who had decided to bet big on self-driving vehicles. He wanted to prepare Uber for a future when fleets of driverless cars could move passengers efficiently and safely around the clock.

In 2016, Uber acquired Otto, a self-driving truck start-up whose founders had decamped from Google. The deal later spurred a trade-secrets-theft lawsuit from Google's onetime self-driving car unit, Waymo. The case briefly went to trial this year, generating headlines and embarrassing revelations, before Uber settled with Waymo in February.

In its rush to get on the road with driverless cars, Uber also ran afoul of regulators. The company started testing its autonomous vehicles in San Francisco in 2016, without a permit from California's Division of Motor Vehicles. The state agency ordered Uber to apply for a permit, but the company refused, saying permits were not necessary since safety drivers were monitoring the cars. The D.M.V. ultimately revoked the registrations for the 16 self-driving cars that Uber was testing in the city.

By early this year, Uber's self-driving division was preparing to ramp up development, pushing its testing cars in Arizona to tally more miles. The goal, according to internal documents reviewed by The New York Times, was for Uber to win regulatory approval to start testing a self-driving car service in Arizona before the end of this year.

But the crash in March — the first known fatality involving a pedestrian and an autonomous car — altered everything. Since then, Uber has steadily narrowed the scope of its autonomous vehicle operations.

In May, Uber announced that it was shutting its driverless testing hub in Arizona and laying off 300 employees. A day later, preliminary findings from federal regulators investigating the crash confirmed what many self-driving car experts suspected: Uber's self-driving car should have detected a pedestrian with enough time to stop, but it failed to do so. Uber has begun a safety review and plans to publish its assessment in the coming months.

Mr. Khosrowshahi has started to subtly de-emphasize the company's role in developing driverless technology.

At a conference last year, he said it was a ''huge advantage'' for Uber to have its own autonomous technology while operating a global ride-sharing network. But this May, Mr. Khosrowshahi said that while Uber needed to have access to autonomous technology, it aimed to be ''neutral.'' He said Uber would be open to licensing its own technology or building around alternatives from other companies — a stark contrast to the company's previous approach of owning and operating the entire self-driving ''stack'' of technology and hardware.

And in July, Uber announced that it was closing its autonomous trucking business. The company instead said it would focus exclusively on building self-driving cars.

''For now, we need the focus of one team, with one clear objective,'' Eric Meyhofer, who leads Uber's driverless car efforts, wrote in an email to employees.

In the preceding months, some senior engineers and executives with expertise in self-driving vehicles had already left. One of those was Don Burnette, one of Otto's founders, who became the chief executive of a new self-driving company called Kodiak, which focuses on long-haul trucking.

''I really wanted to focus on the trucking problem, and there was not as much focus on that at Uber,'' Mr. Burnette said.

He added that Uber would most likely continue to pursue its vision of driverless cars because it and other companies ''have been working on it for so long, promising this for so long, and they have a tremendous amount of money behind them.''

Interested in All Things Tech? Get the Bits newsletter delivered to your inbox weekly for the latest from Silicon Valley and the technology industry.

Bird and Lime are protesting Santa Monica’s electric scooter recommendations

Lime and Bird are protesting recommendations in Santa Monica, Calif. that would prevent the electric scooter companies from operating in the Southern California city. We first saw the news over on Curbed LA, which reported both Lime and Bird are temporarily halting their services in Santa Monica. Last week, Santa Monica’s shared mobility device selection committee… Continue reading Bird and Lime are protesting Santa Monica’s electric scooter recommendations