Morning Brew Daily - Tesla Dethroned in China EV Market & Harvard President Resigns

Episode Date: January 3, 2024

Episode 227: Neal and Toby discuss why Tesla has lost the top EV spot to BYD in China. Plus, Harvard's president Claudine Gay resigns following the shortest tenure in the university's history and what a plane collision in Tokyo means for the airline industry as a whole. Next, how Covid slashed vast consumer choices and the 16-year old phenom that is trying to become the dart champion of the world. And finally, U-Haul released their 2023 wrapped and the states people are moving to may surprise you. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell? Today, how did 400 people survive a burning plane crash in Japan? And then new U-Haul data shows us which states people are moving to and which they are ditching. It's Wednesday, January 3rd.

Let's ride. Toby pond hockey might be going extinct. As of New Year's Day, only 0.35% of the Great Lakes were. under ice compared to the 9% on average at this point in the winter. It's the smallest amount of ice cover in the last 50 years, and it's not an anomaly. Ice levels have been dropping over the past few decades. It's still early in the winter. Sorry to remind everyone.

So ice levels could recover, but meteorologists say this is an extreme number that could have major effects on not only pond hockey, but things like ice fishing competitions. God forbid we lose our ice fishing competitions. That's a big deal. I know it is a big deal. You just offended the entire northern stretch of the United States and Canada. I'm so sorry. I am a Florida boy.

I've never done my ice fishing. Good for cold plunges, though. You can go in and no ice covering it. Before we jump into the show, we have a quick word from our sponsor, Vime. Any business owner listening to the pod knows the sinking feeling of having your data compromise. Maybe it's human error. Maybe it's a malicious attack. Either way, it stinks.

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All right, Neil, you know that feeling where someone is getting a lot bigger in your rearview mirror on the highway. Like, what the heck is this person riding my tail for? Just past me. Well, Tesla knows that feeling because, Chinese EV maker, BYD, just surpassed Tesla to become the best-selling EV maker in the world in the fourth quarter of 2003. BYD is likely a name foreign to some of you listening at home because it stayed more or less contained to China.

But luckily for BYD, China is a really big place with a lot of car buyers. Sales of new energy vehicles, which include both hybrids as well as EVs, grew 37% year-over-year in 2020. And more than one in three cars sold in China were technically EVs. And BYD itself is doing even better than that. Sales of their new energy vehicles jumped 62%, which led them to track down Big Bad Tesla and make the overtake. 90% of BYD sales are still in China, too. It's a force to be reckoned with.

It really is. This is a changing of the guard. This is China's arrival on the automotive stage. It already surpassed the U.S., South Korea, and Germany as an exporter of cars. And in 2023, wait until we get the date out, but it could pass Japan as the largest automotive exporter in the world. Yeah, and BYD is riding the wave really well. I said 90% of sales are domestically in China for the company,

but overseas sales tripled in the second half of 2023 and more than tripled from a year earlier as well. I think that the wordplay of new energy is interesting, though, because if you looked at the breakdown of what kinds of vehicles BYD is selling, it's close to like 6040-ish between EVs and hybrids. They sold 190,000 EVs last month and 149. thousand hybrid. So maybe that data of like surpassing Tesla, remember Tesla just sells EV vehicles. So they have a different definition of what new energy is, but still, forced to be reckoned with. So why is BYD so successful? I think a part of it, a huge part of it is the Chinese government.

The Chinese government has drowned this industry in subsidies. It's given over $30 billion just through consumer incentives alone. We see the U.S. trying to do that now. It's working okay. I mean, we have $7,500 tax credit for consumers, but the Chinese government has been so supportive of the industry. And then there's such intense competition. There's other, there's a hundred other automotive brands in China that BYD has to go up against. And the fact that, you know, this intense competition, we've seen it in a bunch of other industries as well in China, is you really cut your teeth and only the best of the best rise to the top. There will be 158 new car models introduced in China in 2024, 80% of which will be EVs, according to HSBC. So you talk about a crowded market.

BYD has to stay in this game in order to stay on top. So you said that a lot of people listen to this may not know BYD, but you know there were a few Americans who did know about BYD a long time ago. And those were two fellows named Charlie Munger and Warren Buffett. In 2008, Berkshire Hathaway invested, put a $230 million stake in BYWI. for 10% now that stake is worth $8 billion. Potentially one of the best investments of all the time. It is huge. So we'll see what happens with BID if they can keep their role and if they can expand to

foreign markets where the U.S. and Europe, you can be sure they're going to put up tariffs and other protections to protect domestic manufacturing. Okay, big news out of Cambridge mass yesterday as Harvard University President Claudine Gay stepped down following multiple firestorms about her leadership, having assumed the role in July, her six-month tenure as president is the shortest in the university's 388-year history. Gay, along with the presidents of MIT and Penn, came under fire for her testimony in last year's congressional hearing on anti-Semitism. While she apologized and received the support of the board, her seat got even hotter when conservative media outlets accused her of plagiarism in some of her

scholarly works in the past. An independent review from Harvard found instances where she didn't give proper citations for language she used from others, but it did not amount to the level of research misconduct. However, more accusations of plagiarism continued to drip out, and Gay ultimately said, this is not sustainable. I'm out. Gay is the second Ivy League president to resign in less than a month after Liz McGill of Penn stepped down on December 10th. Gay's critics like billionaire alumnus Bill Ackman ran a victory lap and claimed they were successful in their campaign to stem the rot that had spread through American college campuses. supporters of gay said the push to ouster was politically and racially motivated as she was the first

black president in Harvard's history and only the second woman. I mean, one of the elephants in the room here is that our highest institutions are kind of being run as many corporations that themselves have to answer to these billionaire donors in a way. I mean, private donations to U.S. colleges and universities topped $59.5 billion last year. And the core kind of problem with running as a, being a university president today is one of your main jobs is to solicit money. So when these billionaire mega donors start kind of influencing what's going on in the university, it's just kind of a, it's a bad situation for everyone involved because they shouldn't be the ones determining who is president, who is making decisions on the day-to-day basis.

Well, they would contend they are, they do want to have a role. I mean, you have Ken Griffin, the CEO of Citadel, the huge hedge fund, who has given a half a billion dollars to Harvard. You mentioned the stat about, you know, private donations ballooning, but it's not just you and me giving back to our schools. I mean, that's not going to move the needle. 80% of all donations last year came from the 1%. So it's the Bill Ackman's of the world. It's the Ken Griffins of the world. And so, yeah, I mean, Claudine Gaines first, you know, she is a president of the university.

But her main role really is as fundraiser, Harvard has a, the biggest endowment of any university by far. It has a war chest of more than $50 billion, but that endowment hadn't been doing so well recently. I think it just gained 2% in the last year. And then you look at early action applications for Harvard. It has decreased 17% this year. So, you know, the Harvard board did seem like it supported gay, but there were too many controversies going around and she stepped down. Yeah, you could understand the emotions, the frustrations around something like this, but it's a bit of a dangerous precedent for mega donors to kind of intrude into you. university life like this and to use their influence to kind of outs these university presidents.

So it's a new era we're living in. I mean, it's an old new era because they've always influenced it in some way. But seeing it just so starkly happening at Harvard at Penn is kind of eye-opening. So Ackman ran a victory lap and now he's going after the MIT president next. There was a very scary aviation situation yesterday when a Japan Airlines jet landing at a Tokyo airport crashed into a smaller plane, killing five people on that smaller plane, and sparking a fire that engulfed the bigger jet. But the word you kept hearing when reading more about this collision. Miracle.

That's because all of the crew and passengers, 391 of them, got out of the Japan Airlines plane safely before it was ravaged by the flames. People who were on the plane described a hellish situation where smoke was coming in from the rear of the aircraft. It was getting very hot, and they all scrambled for the only emergency exits that were available at the front. Aviation experts said the crew and their training had a lot to do with everyone making it out, okay, calling it a textbook evacuation. Authorities have launched an investigation into how this could have happened, considering that the Japan Airlines jet was

cleared to land on the runway where the other plane was apparently located. So there are still out of details to be explained, but the main takeaway, a miraculous escape from a burning fuselage with only seconds to spare. It could have been a lot, lot worse. Yeah, the crew did incredibly well. all the passengers on board also did incredibly well. But you kind of put this accident in context of the broader airline industry right now, and if we want to return to American soil a little bit, I mean, for the 12-month period ending August of this year, or of last year, for which data was available, there were about 300 accounts of near collisions involving commercial airlines. So it just goes to show you that even though we are not seeing these big, fiery crashes like

we just saw in Japan, a lot of these close calls are happening every day at U.S. airports. even though there's been no major U.S. plane crashes for more than a decade, this is becoming more and more frequent as the FAA is kind of overworking their attendance. Right. The number one cause of these close calls or any sort of dangerous or scary situation at airports seems to be short staffing of air traffic controllers. As of last May, only three of the 313 air traffic facilities around the U.S. had enough controllers to meet targets set by the FAA and the union representing controllers. So these people are being very overworked and they're short-staffed.

The U.S. aviation industry says it's the safest in the world, and it may be true because there has not been a fatal airline crash involving a major U.S. airline since 2009. So there's been a record streak of 14 years where nothing bad has happened, but there are a decent amount of close calls that anybody flying probably doesn't want to be aware of. I mean, the sheer load of flights they have to deal with is insane. The FAA manages about 45,000 flights across the U.S. per day. I mean, DFW, Dallas-Fort Worth, for example, manages one landing or takeoff every 20 seconds. And if you look at the data that there's around 1,000 fewer fully certified controllers now than a decade ago,

how are you dealing with this massive increase? And we're seeing more close calls. I want to go back to the Japan one real quick, because this is going to be huge for understanding how planes burn. And it's just going to be a treasure trove of data. This is a new plane, the Airbus A350. It just came into service in 2015. And it's made different. That and the Boeing 787 are made differently than the older planes, which are made of aluminum.

This one is made of carbon fiber composites. And you can't just, like, set a $40 million plane on fire to see how it burns. So the fact that this happened, everyone was safe, and now aviation industry is going to be able to do so much investigation on how this plane burned. And it held up like a boss. So they're really happy with what happened here, I mean, given the circumstances, and they're going to learn a lot more about this plane and others like it in the future. Okay, before we jump into our next story, we're going to take a quick break. You said this place was steps from the water.

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The pandemic did a number on consumer choices. A Wall Street Journal article found that Coca-Cola has reduced its brands to 200 from 400. Utah-based furniture company Logan reduced its lines to 3,500 product choices down. from almost 11,000 items, and Yankee Candle Maker Newell Brands has retired 50 different types of candles. Brands are choosing efficiency now over variety and are more than happy to lose certain customer segments if it means they don't have to spend too much on smaller niches. Macy's president, Tony Spring, told analysts in November that the customer today does not want an endless aisle. And that's reflected in the products we're seeing on shelf these days.

New items made up about 2% of products in stores in 2023 in Beauty, footwear and toys, down from 5% of items in 2019. So it's not just your mind playing tricks on you. You really do have less choices when you go shopping these days. That's fine. People don't want so many choices. This is really a result of the pandemic. So before the pandemic, there was this concept called the endless aisle and the growth of

e-commerce and people scrolling and shopping on websites meant that brands were like, hey, why don't I segment our products a million different ways? I'll make a handbag that has a leather strap. It has a chain strap. I'll make five different types of this shade of red. And it turns out that when the pandemic happened, supply chains got all out of whack, and these companies had to really prioritize more of their hero products, what they call. So I think there was a streamlining.

You said Coca-Cola cut all of its brands in half. But I think ultimately what you hear these CEOs saying is, why did we do this in the first place? We were wasting so much money. people don't necessarily want so much choice. They want really good products. And I think the fact that we're seeing these sort of slimmed down product categories carry on into 24 now shows that maybe this whole personalization wave was a mistake. Yeah, I mean, just look no further than grocery stores.

Large grocers used to think that they need to carry everything or else you might lose the customer to the store down the road or something. But now large grocery stores have reduced fresh food offerings, like, fruit, your dairy products, your deli meats, buy around 15 to 20%. It's just fewer items to manage in a slimming of product options, which also reduces food waste for them. I do think a lot of executives are probably looking back at maybe the before times before the pandemic and just definitely going, what the heck were you thinking? I think there was a wave of, like the hype around personalization. I mean, I think it works

for some companies. The T.J. Maxes of the world, like the bargain hunting retailers, where you go in and the clutter is the point and you go on this treasure. hunt. I think it works for them. Starbucks is another company where I think the personalization has worked well because you look at TikTok and everyone's making their own drinks. But I think for the vast majority of companies, more choice doesn't equal more purchases. And this has been proven out in science. In 2000, there was a study where these scientists presented customers with 24 types of jams, okay? And only 3% of consumers actually made a purchase when presented with 24 types of jams. When they were presented with six types of jams,

30% made a purchase. So people don't want diner menus anymore. I don't. I got to know what those jams are, though. What's the sixth they whittled it down to? I think that plays a role in this as well. All right. Now I want to introduce you all to Luke the Newk Littler.

He is 16 years old, loves eating kebabs and playing Xbox, and later today he's competing in the finals of the World Darts Championship. Luke is the best story in sports right now. At 16, the Englishman is the youngest person ever to make the real. reach the darts final, and if he wins, he'll be the youngest to hoist the Sid Waddle trophy by a full eight years. His sublime performance is also drawing out the best of British commentators have to offer. One said, Luke doesn't need to use the force. He is the force. All right, so you get the idea about Luke. He's a prodigy, very likable dude, but you probably want me

to address the elephant in the room. We're talking about darts, the game you play when you need something to do with your hands at a bar. Well, in Europe, darts is serious business, and it's only getting more popular, Luke's quarterfinal match drew 1.4 million viewers and overall viewership for the Darts World Championship has jumped by nearly 900% from 1999 to 2023. Luke has already made 200,000 pounds from his play, and he could rake in a lot more if he wins today. The total purse is 3.6 million pounds. The dude is electric. After winning his second round match, he celebrated by treating himself to a kebab and a can of tango. He has since been offered free kebabs for life by a London kebab.

house. He really is just leaving the dream as this 16-year-old prodigy. Listen to this quote from him. People are chanting, necking beers. It's crazy. It's hard to focus. They are chanting your name. Imagine being 16. You can't even drink and you're being cheered on by the most raucous crowds Britain has to offer. Right. I want to talk about the raucous crowds because this is the Super Bowl of darts. It's held in this historic venue. There are thousands of people who come out and it's kind of like Comic-Con. People are dressed as Power Rangers. People are dressed as minions and there's just such a good vibe going around because no one really has a huge stake in who wins or not. It's not like a soccer match where the away supporters and the home

supporters have to be separated. Everyone's in there having a good time. And I should say, getting extremely drunk as Luke mentioned. So this seems like one of the best spectator events to go to in the world happens every year from Christmas to New Year's and it's become a huge business in Britain and across Europe. CNN had a great line. Alcohol consumption is measured in pitchers, not pints, which just gives you a sense of what kind of environment that these players are playing in. Do we think it's a sport? What's your take? Oh, certainly. I mean, I don't know what the definition of a sport is, but being very good at darts and throwing with precision the way these guys do in concentration, I think it's absolutely a sport. I don't, you know, don't know the Oxford

English dictionary definition of a sport. And I do think if sports need that element of drama or theater to them, Darts has that in speed. So if that's, That is some part of your definition of sports, then 100%. I really hope he wins. He's going up against another guy named Luke, who's the number one in the world today. But it's going to be a huge event. Absolutely. Every so often, we come across one of those macro data drops that we just have to share with you all.

And today's comes from U-Haul. Every year the transportation company calculates which states are growing by measuring each state's net loss or gain of one-way equipment from customer transactions in a year. In other words, who is snagging U-Haul trucks on a one-way ticket out of Dodge, and where are they driving them? And this year, you can do your drum roll please at home. Texas came out on top as a state that netted the largest number of movers for the third year in a row. Behind Texas, our Florida, followed by North Carolina, South Carolina, in Tennessee. As for the biggest net loser, it was California for the fourth year in a row. This feels about right, wouldn't you say? It does. I mean, I don't know if we should take U-Haul day.

as, I mean, we have the census, right? We have actual government data to tell us where people are moving, but it is kind of interesting to think of U-Haul trucks moving in and out as a proxy for where people are moving. And people are just moving to the southeast. It's crazy. Everyone wants to be in the SEC. Everyone wants to leave the PAC 12. It's what we're seeing in college football. I mean, the six fastest growing states in the South, Florida, Texas, Georgia, the Carolinas, in Tennessee now account for a greater share of U.S. GDP than what we typically consider the economic powerhouse, which is the Ascela Corridor from D.C. to Boston. And so the southeast is just absolutely rising. It's got fast-growing cities. It's got cheaper land. It's got

plentiful jobs. This is just the economic powerhouse of the nation right now. I also want to shout out Idaho, though, because if we look at the rest of the top 10, Idaho, Washington, Arizona, Colorado, and Virginia round out the top 10 states for growth. Going from the southeast, the warm climates to Idaho, I think you're a mountain west. Yeah, Mountain West. You're a big Mountain Time person. Mountain time is the best time. We know you're a truther. The bottom five states for growth are, in addition to California, Michigan, New Jersey, Illinois, and Massachusetts, Neil.

What's up with that? What's up with that? People don't want to live in the northeast anymore. There's no more pond hockey. Very true. I also wonder if there's something to be said about the type of person who rents a U-Haul, and if that influences the data, because maybe someone who's moving to Texas would be more likely to pack up a U-Haul. and do it themselves.

So again, you said their census data. So I think maybe we're seeing some reflections on like the type of people moving, not necessarily some macro trends on where people are moving. I was absolutely thinking that, but I didn't want to bring it up for fear of offending anybody or creating any stereotypes. Yeah, it's a compliment.

But yes, California, they're going more out than in, that's for sure. Okay, that is our show for this Wednesday. It's already Wednesday. Already Wednesday. Love a short week. As always, you can send your thoughts on the show or say what up at our email address, morning brew daily at morningbrew.com.

Let's roll the credits. Emily Milliron is our editor and producer. Samantha Velaes and Raymond Loo are associate producers. Yucenoa Ogu is our technical director. Billy Medino is on audio. Hair and makeup is in a kebab coma this morning. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars.

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