Business

Tesla cuts car prices by up to 20%, qualifying some for Biden EV tax credit

Tesla Inc. cut prices across its lineup in the U.S. and major European markets in the latest effort to stoke demand after several quarters of disappointing deliveries.

The carmaker lowered the cost of the cheapest Model Y by 20% and lopped as much as $21,000 off its most expensive vehicles in its home market. Tesla also made major reductions in countries including Germany, the UK and France a week after its second round of cuts in China since October.

The drastic changes reflect the conundrum Tesla faces after having come up well short of its target for annual vehicle deliveries, despite year-end discounts and incentives that Chief Executive Officer Elon Musk swore off in the past. To continue growing and fully utilize plants that its opened or expanded in the last year, Tesla may be forced to compromise the profit margins that Wall Street celebrated when the company was production constrained.

Teslas stock fell as much as 5.5% as of 4:30 a.m. New York time Friday, before the start of regular trading. Shares of other automakers including Ford Motor Co. and Rivian Automotive Inc. also slumped.

The changes in the U.S. drop the price of Model 3 sedans and certain Model Y sport utility vehicles below the caps they needed to come under to qualify for as much as $7,500 electric vehicle tax credits.

The Treasury Department and Internal Revenue Service released guidelines late last year that irritated Musk because the Model Y didnt weigh enough to be deemed an SUV. Thats meant the vehicle is subject to the $55,000 price cap that applies to sedans, rather than the $80,000 limit for SUVs.

Tesla now notes on its website the $7,500 federal tax credit that certain customers are now eligible for will apply to vehicles it delivers through March.

While some parts of the new U.S. law went into effect on Jan. 1, the Treasury Department is still finalizing battery-content sourcing requirements that could cut the tax credit certain EVs are eligible for in half.

Toni Sacconaghi, a Bernstein analyst with the equivalent of a sell rating on Tesla shares, wrote last week that the carmaker was facing a significant demand problem and that its challenges would persist in part because its models were too expensive to qualify for tax credits.

We believe Tesla will need to either reduce its growth targets (and run its factories below capacity) or sustain and potentially increase recent price cuts globally, pressuring margins, Sacconaghi wrote in a Jan. 2 report. We see demand problems remaining until Tesla is able to introduce a lower-priced offering in volume, which may only be in 2025.

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Health officials urge China's travelers to avoid visiting their elderly parents during Chinese New Year

Ahead of the 2023 Chinese New Year holiday, which starts Jan. 21 and ends Jan. 27, Chinas health officials are asking people to stay put and protect elderly family members rather than travel and risk exacerbating Chinas ongoing COVID outbreak.

Its an agonizing decision for hundreds of millions of migrant workers and students, who may have hoped to reunite with family during the Chinese New Year (also known as Lunar New Year or Spring Festival), the first in mainland China without any COVID restrictions since the pandemic began.

Elderly people in rural communities may be infected during Spring Festival when they meet relatives and friends, Liang Wannian, who heads the countrys COVID-19 response team, told state broadcaster CCTV on Monday.

Guo Jianwen, a member of Chinas pandemic prevention team, suggested on Thursday that if Chinese people were worried about infecting their elderly relatives, dont go home to visit them. He said, You have all kinds of ways to show you care for them, you dont necessarily need to bring the virus to their home.

The question of whether to return home for Chinese New Year was a popular topic on Chinese social media, with Reuters reporting the question was the most-read item on Weibo, a Twitter-like social media platform, on Thursday.

One popular response on social media called Guos suggestion to stay home one of the few useful suggestions put forward during this period, according to The Guardian. The post reflects public frustration with the rapidly changing medical advice doled out by Chinas health experts.

What happens during Chinese New Year?

Much of Chinas urban labor force is made up of migrants from Chinas rural heartland, and many return home to see family for the Chinese New Year holiday. Students studying in the countrys universities also return home for the holidays.

China expects over 2 billion trips over the Chunyan period, a 40-day stretch of holiday travel. The period started Jan. 7 and runs through to Feb. 15.

Chinese New Year was once the worlds largest movement of people, with 3 billion trips made by passengers traveling back and forth in 2019, before the pandemic. (By comparison, the American Automobile Association estimated that over 55 million Americans made trips over the Thanksgiving holiday period in 2019.)

Yet during the pandemic, internal mobility restrictions made it difficult for some people to make Chinese New Year trips. Those considering trips feared that snap lockdowns could stop them from returning to their workplace or school, and so they opted to stay put.

How many COVID cases does China have?

Yet it may be too late for health officials advice to ward off further COVID infections. Chinas COVID outbreak is already spreading to rural communities, even as the outbreak may be peaking in major cities.

China is experiencing a surge in cases beyond anything the country has seen so far. Chinas official case and death numbers503,302 and 5,272, respectivelyunder-represent the scope of the outbreak since Beijing changed how it records COVID cases and deaths last month. Health officials have, at times, suggested that daily case counts are stretching into the tens of millions. Earlier this week, an official in Henan estimated that 90% of local residents had now caught COVID, which would put the provinces case count alone close to 90 million.

Airfinity, a U.K.-based health research firm, forecasts that over 3.5 million people are catching COVID each day, and over 20,700 people are dying of the disease daily. The company projects the outbreak to peak on Jan. 13.

Chinas health care system is already stretched by the outbreak, with hospital space and medicine running low. There are even fewer resources in Chinas countryside, with rural communities having less than half as many doctors and nurses as cities, according to the South China Morning Post. Villages have also run low on fever and cough medication, forcing communities to appeal for donations over the internet, according to the SCMP.

Beijing on Sunday ordered villages to stockpile at least two weeks worth of medicine, and set up teams of volunteer drivers to carry people to treatment centers, according to state-run paper Global Times.

To make matters worse, China has relatively low rates of vaccination among its elderly population. In early December, health officials estimated that only 40% of the countrys over-80 population had gotten the booster shot needed to protect against newer COVID variants. Outside health experts argue that China also needs to import more effective mRNA vaccines rather than rely on less-effective homegrown versions.

The World Health Organization said it was ready to work with China to handle the wave of people traveling home for the holidays, but officials said they needed more data. There are some very important information gaps that we are working with China to fill, Maria Van Kerkove, the WHOs COVID technical lead, told reporters on Wednesday. The WHO has accused China of minimizing the scope of its outbreak, particularly with regard to hospitalizations and deaths.

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82% of San Francisco's would-be jurors dislike Elon Musk with a 'passion,' his lawyers say

Elon Musks lawyers argued in their bid get his securities fraud trial moved out of San Francisco that 82% of all the prospective jurors who have an opinion of the billionaire view him negatively.

Questionnaires from almost 200 would-be jurors returned to the federal judge handling the case reinforce the argument that the Northern California jury pool for the trial starting next week is biased against Mr. Musk, and that much of the bias relates to claims in the lawsuit namely, Mr. Musks use of and honesty on Twitter, his lawyers said.

The latest filing by the Tesla Inc. CEO and new owner of Twitter Inc. is part of his push to get the case brought by Tesla shareholders moved somewhere else, preferably Texas, due to local negativity in San Francisco after Musk recently slashed Twitters workforce in his effort to remake the social media platform.

Investors allege Musks August 2018 tweets about taking the electric-car maker private with funding secured were indisputably false and cost them billions of dollars by spurring wild swings in Teslas stock price. Musk has maintained that Saudi Arabias sovereign wealth fund had agreed to support his attempt to take Tesla private.

The questionnaires, which are not publicly available, show that potential jurors dont just dislike Musk but feel a passion of negativity, his lawyers said in the filing. Details of what the jurors wrote are redacted.

The responses reveal not only that a vast majority of potential jurors hold ill-will toward Mr. Musk but that they are not afraid to declare it proudly and vividly to the court, his lawyers said.

Lawyers for the shareholders have argued that Musk is a celebrity who garners media attention around the globe much of it negative and that his presence on Twitter is partly to blame for that.

But the investors attorneys also said none of the would-be jurors work for Twitter and only two or three prospective panelists know someone employed by the company.

The potential for bias arising out of Musks management of Twitter is non-existent, they said.

A hearing on Musks request to move the case is scheduled for Friday and the trial is set to begin Jan. 17.

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Apples Tim Cook takes a rare CEO pay cut after pushback. But he'll still earn a fortune

Apple is cutting Chief Executive Officer Tim Cooks compensation by more than 40% to $49 million in 2023, citing investor guidance and a request from Cook himself to adjust his pay.

As part of the changes, the percentage of stock units awarded to Cook and tied to Apples performance will increase to 75% in 2023 from 50%, as well as in future years, the company said in a regulatory filing Thursday. For 2022, Cook received compensation of $99.4 million, including $3 million in base salary, about $83 million in stock awards and a bonus. That was up slightly from 2021, when his total pay package was $98.7 million.

Cooks latest pay was based on balanced shareholder feedback, Apples exceptional performance and a recommendation from Mr. Cook, the iPhone maker said in the filing. The company also plans to position Mr. Cooks annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years, Apple said.

Apple has drawn criticism from groups such as Institutional Shareholder Services about Cooks previous compensation package, but a majority of shareholders voted to approve it last year. ISS, a top advisory firm, complained that Cooks stock would continue to vest post-retirement and that half of the rewards didnt depend on performance criteria like the companys share price.

The $49 million in target compensation includes the same $3 million salary and $6 million bonus as in 2022, as well as an equity award value of $40 million. His equity award value in 2022 was $75 million. Cooks actual total compensation for 2023 could fluctuate based on the companys stock performance.

Cook, 62, has pledged to give away his wealth to charitable causes.

Its rare for CEOs to recommend their own compensation be docked. Pay packages have gotten increasingly lavish, and 2021 was a record year for executive compensation, according to Bloomberg data.

But shareholders have increasingly pushed back on such packages. A record number of so-called say-on-pay votes failed in 2021, which may have reflected shareholders frustrations with how companies performed during the pandemic, according to Mercer.

Apple also disclosed 2022 compensation for Chief Financial Officer Luca Maestri, General Counsel Kate Adams, retail chief Deirdre OBrien and Chief Operating Officer Jeff Williams. Those executives were all paid about $27 million including salary, stock and a bonus in 2022, slight increases from the previous year.

The Cupertino, California-based technology giant also announced that its annual shareholder meeting will take place virtually on March 10.

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Understanding the CPI: this metric can help you make better money decisions

The final Consumer Price Index (CPI) for December 2022 was released this morning and it signaled a slowdown in rising prices, marking the smallest 12-month increase since October 2021, according to the Labor Department. The steep decline was mostly due to a drop in gas prices, which fell 9.4% over the month, after a 2% decrease in November.

Indexes that saw a slight increase in December include the shelter, household furnishings and operations, motor vehicle insurance, recreation, and apparel indexes. Used cars and trucks, and airline fares decreased over the month. This most recent report also ushered in a number of year over year changes, with the energy index increasing 7.3% for the 12 months ending December, and the food index increasing 10.4%.

What is the consumer price index?

The consumer price index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The index measures the cost of items like food, gas, electricity, new vehicles, clothing, medical care, shelter, transportation, and more.

"That 'basket' of goods and services is designed to be representative of what households actually spend their money on, says Matt Kolyar, Economist at Moodys Analytics. "That spending data is derived from the Consumer Expenditure Survey that the BLS produces annually. For instance, gasoline represents roughly 4% of total spending for the average household. The CPI would give 4% 'weight' to gasoline prices. The remainder of the index captures things like rent, food, car payments, insurance, etc. The BLS collects prices of these goods and services each month to calculate changes from the month before.

What the CPI can tell you about the economy

On a macro-level, the CPI serves as an economic indicator. It tells economists and policymakers how the economy is doing and how to best shape policy to adjust for rising costs. One of the ways the Federal Reserve does that is by using one of its monetary policy tools: the federal funds rate.

The Federal Reserve is mandated to ensure price stability and the CPI offers a clue about whether they are achieving that mandate, says Kolyar. The Federal Reserves preferred measure of inflation is the personal consumer expenditures deflator, but the CPI is still given consideration. If inflation is deemed too high, the Federal Reserve has tools to indirectly destroy demand in the economy which will alleviate upward price pressures.

It also helps companies make decisions about how to run their businesses, what to spend money on, if its a wise time to borrow and expand, or if they should be implementing cost-cutting measures. And the CPI gives everyday consumers a look into how their regular expenses are changing month to month and how it will affect their wallets.

How should the CPI inform your own money choices

Checking in on the latest CPI can not only keep you up to date on whats happening with the economy, but it can help you make more informed decisions about how you manage your own personal finances.

It might play a role in which businesses youre investing in and how much. While its impossible to predict how the market will behave or how a company will perform over time, rising costs can make borrowing more expensive and put greater financial stress on companies youre invested in or are considering investing in. "For investors, this means that businesses will borrow less. Thats less expansion and investment. This makes as-of-yet unprofitable firms deemed growth stocks less attractive. Higher borrowing rates today diminishes the value of future cash flows, says Kolyar.
It can change your wage, social security payments, government pensions, government assistance, and more. Changes to the CPI can lead to cost of living adjustments (COLA) which impact how much you receive in government benefits or assistance and even lead to changes in state minimum wage rates. Knowing how much you can expect to receive in income, benefits, and payments each monthand how that could changecan help you cover your current costs and better plan for the future.
It can tell you how your budget may change and where to make adjustments. When youre out shopping for groceries and fail to pay close attention to the price tag on your items, or if you set most of your bills to auto-pay, you could miss minor increases that add up to a significant chunk of your income. Since the CPI represents all goods and services purchased for consumption by urban households, when the rate of inflation rapidly accelerates, the purchasing power of consumers quickly diminishes. That is, consumers dollars cannot buy as much as they once could, says Justin Begley, Economist at Moodys Analytics. Keeping tabs on how prices measured in the CPI are changing can help you adjust your budget to account for changing costs and ensure that your finances arent thrown off track.

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SEC accuses Gemini and Genesis of selling unregistered securities

Since the beginning of the year, Gemini and Genesistwo of cryptos top companieshave been locked in an increasingly loud dispute over an investment product that promised customers high yields for lending their crypto assets.

On Thursday, the U.S. Securities and Exchange Commission charged both companies with the unregistered offer and sale of securities to retail customers in a complaint filed in the U.S. District Court for the Southern District of New York.

Todays charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws, SEC Chair Gary Gensler wrote in a statement published on the agencys website.

Gemini is a crypto exchange founded by Cameron and Tyler Winklevoss, known for their Bitcoin fortune and ending up on the wrong side of the Facebook saga, as memorialized in The Social Network.

In 2021, Gemini partnered with Genesis Tradinga crypto lending firm thats part of Barry Silberts Digital Currency Group empireto launch a new product called Gemini Earn, where customers could earn yields approaching 8% for storing cryptocurrencies on the platform. Genesis generated the returns by loaning the money to institutional investors.

After Novembers collapse of FTX, Genesis suspended redemptions, disclosing that it had about $175 million in funds locked up on the failed exchange. That, in turn, hurt Gemini, with Cameron Winklevoss writing in an open letter to Silbert published on Jan. 2 that Genesis owed $900 million to repay around 340,000 Gemini Earn customers.

Gemini officially shut down its Earn product on Jan. 8. Two days later, in another open letter, Cameron Winklevoss demanded that DCGs board remove Silbert as CEO. Gemini Earn customers have still not been able to withdraw their crypto assets.

Thursdays SEC charges come after a report last Friday from Bloomberg that Genesis was under investigation by both the SEC and the U.S. Department of Justice for internal financial dealings. It is unclear if the investigations are related.

In its statement, the SEC said Gemini deducted an agent fee as high as 4.29% from the returns Genesis paid to Gemini Earn investors, with Genesis exercising discretion on how to use the crypto assets.

The SEC alleges that the Gemini Earn product constituted the offering of unregistered securities, bypassing required disclosures.

In the wake of FTXs collapse, the agency has faced criticism from both the crypto industry and members of Congress for failing to regulate the volatile sector. The new charges, aimed at two of cryptos major companies, will further Genslers long-stated claim that he is just getting started with taming an industry he describes as the Wild West.

As he said in a December interview, The runway is getting shorter.

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Bill Gates says we should tax the richbut maintains he wouldnt ban anyone from being a billionaire

Bill Gates says right now is the best time to be alive for all of us, but even the billionaire philanthropist seems to believe life may be too good for societys ultra-wealthy people right now.

Gates affirmed his belief that right now is dramatically the best time to be alive during his annual Ask Me Anything session on Reddit Wednesday, given the rapid pace of scientific innovations and advancements that are boosting humanitys chances of tackling existential challenges.

He discussed how momentous breakthroughs in artificial intelligence and clean energy technology are making him optimistic about the future, but also answered a number of questions on the ethics of being a billionaire, and whether it should be considered acceptable for a single person to possess that much wealth.

Gates, who has a current net worth of just over $100 billion and has had two spells atop the list of the worlds richest people, had an intriguing answer to that moral dilemma: While he agreed that super-wealthy people should be taxed higher and more billionaires should follow his lead and give away all their wealth, he does not think anyone should be stripped the chance of becoming a billionaire.

The incentive to create new companies is still a good thing I think. Even if taxes go up I still wouldnt ban anyone from being worth a billion but that is just one opinion. I have been very lucky, he wrote in the AMA.

Tax the rich, but not too much

While he supported the idea of rich people paying more in taxes, Gates defended what the private sector and personal financial motivations could accomplish as the world gears up to meet its existential challenges.

Gates foundation, and his various private enterprises focus on devising solutions to climate change, educational gaps, and lack of access to healthcare are a model for billionaire philanthropy. During his Reddit AMA, he even referred to giving away his wealth as his full time job.

But even Gates doesnt think philanthropy will be enough to address the worlds biggest threats, as the Microsoft founder remains a believer in the power of free markets under good guidance from governments. In his annual year-end letter published in December, Gates wrote philanthropy alone cant eliminate greenhouse gases. Only markets and governments can achieve that kind of pace and scale.

In the same letter, Gates pointed out that while it may seem strange to discuss the importance of profit-making ventures in a philanthropic context, the private sector and profit motives remain well-equipped to deliver fast and significant contributions as the world steps up to meet its major challenges.

But while Gates stood up for companies and the pursuit of wealth, he said in his Reddit AMA that billionaires could stand to be kept in check through higher taxes, adding he was surprised taxes have not been increased more while acknowledging things are tough for a lot of people.

I am surprised taxes have not been increased more. For example capital gains rates could be the same as ordinary income rates. I know things are tough for a lot of people, he wrote.

Gates also admitted that wealthy people, even philanthropists, can sometimes get carried away, noting that being rich can easily make you out of touch.

Gates announced last year that he plans to give virtually all of his wealth to his foundation, eventually seeking to remove himself from the list of richest people. In 2010, Gates started the Giving Pledge with his now ex-wife Melinda French Gates, along with fellow billionaire and close friend Warren Buffett. The pledgewhich began with 40 signatoriesasks billionaires who sign it to publicly commit to give the majority of their wealth to philanthropy either during their lifetimes or in their wills.

As of June 2022, the project has received 236 pledges from 28 countries.

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