Morning Brew Daily - Tesla Sales Jump in Q2 & The 'Despicable Me 4' Marketing Blitz

Episode Date: July 3, 2024

Episode 357: Neal and Toby break down Tesla's latest sales report and what it means for the EV maker. Plus, the gambling scandal rocking British politics and how the minions in 'Despicable Me 4' help train Olympians. Then Neal shares his favorite numbers and why smashburgers are taking over at high-end restaurants. Expand your world with Meta AI. Now on Instagram, WhatsApp, Facebook and Messenger. Get your Morning Brew Daily Mug HERE: https://shop.morningbrew.com/products/morning-brew-daily-mug?utm_medium=youtube&utm_source=mbd&utm_campaign=mug 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 U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning, Brew Daily show. I'm Neil Fryman. And I'm Toby Howell.

Today, can $30 popcorn buckets save movie theaters? Then Tesla sales numbers for the quarter came in and you know what? I'm not going to spoil it for you. Just keep on listening. It's Wednesday, July 3rd. Let's ride.

If you're listening to this on Wednesday, you're actually hearing our voices from Tuesday afternoon. That's because the brew offices are closed tomorrow ahead of July 4th, but worry not. The MBD crew stayed late to bring you a cup of hot business news. Might as well preview what we've got going on the rest of the week, too. There are two very cool interviews coming out Thursday and Friday. The first is with the guy who hosts the Nathan's famous hot dog eating contest every July 4th

about what the heck happened with Joey Chestnut and the future of competitive eating. It was fascinating. He had the entire control room locked on his every word. And then we followed that up with another banger in interview with WNBA Commissioner Kathy Engelbert. She was great. Also, she was the former CEO of Deloitte, so the Caitlin Clark era probably feels like a walk in the park compared to managing 400,000 consultants. A splendid week of shows on deck, but first, a word from our sponsor, Meta AI. There's a saying you may have heard in sports, the best ability is availability. How are you going to tie this to AI?

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celebrating its 40th anniversary. You win? Details at yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. Tesla reported its second consecutive drop in quarterly deliveries this week, but like the amusement park ride you revisit as an adult, the drop wasn't as bad as you might have expected. For a second quarter in a row, deliveries were down nearly 5% compared to last year, but analysts were bracing for a 6% decline, so a win is a win. Still, it's a sign that the industry-wide EV slowdown that everyone has been forecasting is here, and it's affecting Elon and Tesla. Some of it is Tesla's own doing. Its first new model in years, the cyber truck has faced production issues and recalls, while demand as a whole has been lukewarm.

Overall, though, it's hard to get a car market trained on new tricks. Get excited for old dogs, and Tesla is struggling to grow off its older lineup of vehicles. Neil, how would you judge these latest delivery numbers from Tesla? Yeah, I mean, the bar was set extremely low, and I guess they cleared it, which is why its stock is up right now. But there's only so many quarters that Tesla can just keep. rolling out the same lineup like the Warriors and expect people to buy in. They need fresh meat. They need new cars. And it doesn't appear to be coming anytime soon. The one thing that

Tesla has to look forward to and that they've been hyping everyone about is this August 8th event where they're supposed to announce a robotaxie. But as we know, it takes forever to get the self-driving stuff off the ground and approved by regulators. So the thing that really Tesla needs is a low-priced EV, which may come next year. But we just have zero detail. on it. So Tesla's been riding the Model 3 and the Model 3 and the Model Y, which account for the vast majority of their sales. The Model Y is about to be five years old. And it seems like consumers are changing or are looking at different EVs. Every automaker now has a pretty robust EV lineup. And Tesla just seems to be loosening its luster a little bit. Just to put those

delivery numbers into perspective, though, Tesla still laps the competition. It delivered over 400 and 40,000 vehicles this past quarter. It's lapping other brands. If you look at Ford, Ford sold 72,000 electric vehicles in all of 2023. GM delivered 75,000. Tesla's sitting at that big 44,000 number. That being said, a lot of brands are growing much faster than Tesla. I mean, Hyundai, Hyundai and Kia were up 56% in the first quarter of the year. BMW up 57% Rivian, 60% Mercedes, 67% Toyota 85. So you're seeing these very, very robust double-digit growth from other brands not named Tesla, even though they are much smaller in terms of total delivery numbers.

Yeah, it might be a case of just two EV markets. There's Tesla and there's everyone else. Tesla is plateauing at the moment. They say they're in between two growth cycles and everyone else is growing so fast. So you heard so many calls at the beginning of this year and the end of last year that a warning about a major EV slowdown, but when you actually go and dig through the numbers, it seems like Tesla is, you know, a straight line and everyone else is going straight up. Just look at Ford's F-150 Lightning. They sold 91% more lightnings this quarter than over last year.

So there is growth in the market. They're expecting EV sales to grow 23% over the course of 2024. That's not the insane growth that we saw in the 40s last in the 40%tile last year. year, but it still is not nothing, and it's probably a little bit better than what people were expecting when you just look at Tesla as the bellwether. Of course, the big bad boogeyman in the EV market is BYD, and they reported sales of 426,000 EVs in the second quarter, which was a 21% increase over the same period last year. So it is coming for Tesla's title. It briefly overtook its thrown as the biggest EV maker in the world, depending on how you actually classified EVs, but that sales growth, obviously, 21% is much bigger than a 5% loss. So BYD is breathing

down Tesla's neck. Meanwhile, Elon's just like, well, I just got this pay package approved for $56 billion. So I'm chilling. Tomorrow, while you are bumping Lee Greenwood and eating highly processed beef, people in Britain will be heading to the polls to vote in a pivotal general election. After 14 years in power, Prime Minister Rishi Sunak's conservative party is expected to be replaced by the opposition Labor Party in a landslide. But in the weeks leading up to the vote, the election has been thrown into chaos by a betting scandal involving politicians. Yes, here in the U.S., we have scandals over basketball players, betting on their own games.

In the U.K., they have scandals over politicians betting on their own elections, which is legal. Around 15 conservative party officials are being investigated, though, by the gambling regulator for placing a flutter, British, for a small bet, on the date of the date of the election. election. Back in May, Sunak surprised everyone by calling for an election on July 4th, but it turns out that some officials had bet that an election would happen in July before then. So maybe some people weren't that surprised, and that's exactly what this investigation hopes to find out. The entire saga has raised questions over the ethics of allowing politicians to place bets on elections in a

country where placing bets is a national pastime. It is a part of British culture through and through. I mean, a bookmaker in Lung, said that a lot of people have come up. to him asking, could he give odds on whether the police would press criminal charges over the political betting scandal? The Brits just truly love betting. It is interesting, too, because professional soccer players in Britain, they're not allowed to bet on soccer. Jockeys, they can't bet on horses, but politicians are allowed to bet on politics as long as they don't cheat by using insider information. So, of course, you're going to have these politicians wrapped up in these scandals, even if they're placing flutter bets or much larger bets. And speaking of larger bets,

probably the most brazen example of this is there was this conservative candidate Philip Davies. He placed an 8,000 pound bet that he would lose his district in the coming vote. So he placed that emotional hedge right there and said, hey, well, if I win, then my bet loses, but I still win. If I lose, hey, well, I still made a couple thousand bucks. So good for me. But that is, he apologized for that and they actually booted him from the party. But this is just the most probably the most stark example.

of how the bizarre world in Britain where politicians can bet on their own races. He told the son, too, that he had placed to bet he would lose his district during election in 2005. So this is not his first time doing it. There's so many weird wrinkles to betting life in the United Kingdom. One, for instance, compared to U.S. gambling,

British gambling's winnings are tax-free, so that's a big part of the culture. I also always will remember this story, too. Roy McElroy's parents bet on him to win, a major championship while he was just 10 years old by the time he was 25, they got paid out. Because again, anyone who's willing to set the market for something you're willing to bet on, the bookies are there for it. And then there was also when Liz Trust took over Prime Minister in 2022, there was this British

cowboy that put up a webcam of a head of lettuce and literally went to bookies and said, will you put odds on what will last longer? Liz Trust as Prime Minister or the head of lettuce and the head of lettuce actually won. So so many funny gambling stories out of the UK. If you're in the U.S. and you're listening to this thinking, hey, can I bet on the presidential election or can I have been on ahead of lettuce to outlast any of our candidates? Well, the answer is yes, there do exist prediction markets, some in the U.S., some offshore. One of the most famous examples is called Predict it. And these prediction markets have come under fire by regulators, the CFTC.

The CFTC is trying to get them banned currently. Now the whole process is being held up in court. so the legality of them is in question. But a lot of economists love prediction markets because it's a really very, you know, it's a great window into public opinion, the way the public is thinking. Economists have called it some of the most useful gambling

that you could ever see compared to sports. So this whole saga in the United States is being held up the answers. Yes, there is a cloud of uncertainty. But I remember, like, right after the debate happened last week, we were like, so what are the prediction market saying? because it's a very useful indicator of what people are thinking. We saw Trump go up and Biden go down.

Right. It's a more real-time indicator compared to polling data, which is the methodology sometimes is a little confusing and also is a lagging indicator. So, yeah, prediction markets are a big deal. What are the prediction, or what is the gambling market saying about the UK election? Who is forecasted to win? Well, so if you bet on the election, if you put five pounds on the Labor Party, your payout will be 5.15 pounds. So they are the heavy favorite. But if you want to go for the Tories, the conservatives, you will get, if you wage your five pounds, you will get 2505 pounds.

So that's like kind of putting an exact score on a basketball game or something with very, very, very low odds. So we should see labor trounds based on these odds. It's an Olympic summer, a hot rap boy summer, and a brat summer. But don't you dare sleep on the fact that it's also a minion summer? Yes, the gibberish-speaking yellow disciples of Gru are once again getting. their time on the big stream as Dispicable Me Four hits theaters on Wednesday. They may be shaped like fire hydrants, but the minions are a cultural force these days wielded by Illumination owner Comcast to turn out money. There is a popcorn bucket that will accompany the movie

released shaped like Gru's baby character that will run you 30 bucks. There's also the minions inescapable presence in the commercials NBC Universal has been running to market the Olympics. And there's the fact that both Despiculmee 3 and standalone Minions movie grossed over $1 billion at the box office. Neil, they may love banana, but minions know how to bring home the bacon. They do. Let's focus on something you may want to put bacon on, which is popcorn. I've never done it. But this popcorn bucket has become an absolute sensation.

Movies have been handing out popcorn buckets with their branded merch for decades. now, but it seemed like over the past year, these things became the hottest collectible item ever, and it started with Dune 2 popcorn bucket, which some said was sexually suggestive. But then after that happened, literally every movie that came out unleashed a particular specialized popcorn bucket, including Despicably Me 4, which now has one that is hands-free, so you don't have to carry it and you can just eat with it. So this went viral on TikTok. Everyone said they want it.

It's probably sold out. You can't get your hands on it. But just every movie from Barbie to Quantum Mania to Taylor Swift's Eres Tour for the new Ghostbusters has come out with a specialized popcorn bucket and the biggest launch yet maybe Deadpool and Wolverine. Yeah, Deadpool and Wolverine really leaned into the sexually suggestive nature of the Dune 2 bucket and just put Wolverine out there with his mouth open. So it is definitely a marketing stunt where they are trying to go viral. And it's big for theater chains too because cinema.

is exclusively selling actually a custom drink for the Minions movie with a drink topper. So if you really want the merch, you really want to participate in like a TikTok trend or something like that, you have to go to the specific chain. And it's been big revenue drivers, too, for chains like Cinemark and AMC. Yeah, I mean, just look at this stat. So AMC's admissions revenue was down 20% in 2023. So there's selling 20% fewer tickets for actual movies. So where is the growth coming from?

Well, food and bev and miscellaneous revenue, which is this merchandise, held flat since 2019. So this is the only area of, it's not even growth, but only area that's held steady is this merchandise. It's the food and concessions. Then they're making much less money on the actual movies. So people are going, the fewer people are going to the movie, but they are seeming to spend a lot of money once they go. And these popcorn buckets go for $30. So if they can sell, you know, one in ten, one in ten people who go to the movies, a popcorn bucket, then that is like the only area of growth that they have. I'll put you on the spot here.

Do we think Despicable Me Four brings in over, under one billion dollars? At the box office? No, I don't think. I mean, we just had Inside Out 2, which scored a billion dollars. And I'm not sure how many, you know, there's, that's a condensed, I mean, Inside Out Two, to Three Weeks ago. So I don't think you can go back to back billion dollar movies that are animated family-friendly ones. I don't think the popcorn

bucket can take the minions to that level. Keep on doubting the minions. They will prove you wrong. Up next, we get into some burger making trends ahead of the best holiday for grilling stuff. Kayak gets my flight, hotel, and rental car right. So I can tune out travel advice

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Neal's Numbers! Yes, here's a special Wednesday edition of Neal's Numbers, the segment where I share three stats from the week's news that will cause you to declare your independence from ignorance. My first number is more of a record and an ominous one. that Hurricane Barrel, which is currently leaving a trail of destruction across the Caribbean, is the strongest Atlantic hurricane ever to form this early in the season. It grew from a tropical depression on Friday to a monster category five yesterday with wind gusts

of over 200 miles per hour. It made landfall in the Caribbean's windward islands on Monday, and now it's heading east-west, sorry, and it is expected to lash Jamaica on Wednesday. the storm is leaving meteorologist jaws on the floor. Some of their quotes, Beryl is rewriting the history books in the wrong ways. It's hard to communicate how unbelievable it is. And Toby, Beryl strength is a really bad sign

given how early we are in the Atlantic hurricane season. Yeah, the speed, the strength, the earliest, these are all factors that are causing climatologists to say this is something we've never seen before. There's also a couple factors that forecasters are predicting will lead to a very hyperactive hurricane season and that also contributed to barrel strength is that one, there's weak winds at high altitude

which just makes it easier for storms to form. But there's also a budding La Nenia weather pattern for running. But the biggest factor is these really, really hot surface sea temperatures. Right now, they're running 2 to 4 degrees above average. And that is just, it's like bathwater for a hurricane. It makes it much, much stronger, which is why we're forecast to see more storms and we're already seeing one of the biggest and most intense storms

ever at this date in the year. Yeah, the temperatures down where the hurricanes are forming are at September levels, and it's July now. So my second number is a change to the work week that just went into effect in Greece. And you're probably guessing the number is four, the ever popular Holy Grail four-day work week, but no, it's six. Greece is making the work week longer. The country introduced a six-day working week for some businesses in an attempt to reverse declining productivity and employment. It applies to private businesses that provide round-the-clock services and provides workers the option of clocking in for an additional two hours per day or an extra eight-hour shift. As you can imagine, unions and opponents of the pro-business government

blasted the move, calling it a major step back for a workforce that already spends more time in the office than anywhere else in Europe. In fact, people in Greece work more hours than people in the U.S. and Japan, according to the OECD. But the government says, They've got a ticking demographic time bomb on their hands, and they need to do something. About 500,000 young educated Greeks have left the country since the debt crisis sprung up in 2009. This was an insane headline to read. It is cognitive distance because you're reading. You say, is that supposed to say six-day work week?

That's definitely supposed to say four. But no, Greece has a very pro-business, very prime minister that wants to kind of combat these twin perils, as he called it, of shrinking population, and shortage of skilled workers. And it is a real crisis there. Because if you lose 500,000 young skilled workers since the financial crisis, there's not that many workers there. So either you have to drop in productivity or you've got to increase the amount of hours you're working.

And apparently they think that increasing new hours is the way to go. I can't think of a more unpopular policy. I mean, he said it that he would do it to sort of bring workers out of the shadows that weren't getting paid overtime and bring it above board. Sure. But I don't know. Whenever you have media outlets saying Greece moves to a six-day work week,

I just don't see how that is particularly tenable. So we'll see what happens there. My final number is $200,000, which is how much revenue New York City's congestion pricing would have generated from a single hour on Monday morning the first weekday commute it would have been in effect. And I say would because though it seemed cleared for takeoff July 1st, it was scrapped by the governor last month

in a move that drew a lot of outrage and some appointments. With the plan on ice, the New York Times reporters fanned out across the city to count the number of cars that entered the congestion zone from 8 a.m. to 9 a.m. on Monday morning and would have had to pay a $15 toll to enter Manhattan. They counted 22,252 cars, trucks, motorcycles, and buses, and calculated the 200,000 figure based on certain exemptions, some types of vehicles would have been awarded. So, 200K, that is a lot of money for one hour and would have contributed to the $1 billion, the city was hoping to raise through congestion pricing to invest in transit projects. It's not just that they are missing out on $200,000 a day. It's also about the money that they already plowed into the project as well. I mean, the tolling infrastructure alone that they installed for the program costs roughly half a billion dollars.

They hired this whole 100-person office to help with customer support and everything. That costs a lot of money as well. The overall project had a price like of around $700 million. So you see this $200,000 number. It sounds like a lot, but also we're not getting that at all anymore. So it is just puts into perspective how big of a 180 this was and how much money went into it and how much money they're losing out every day. Yeah, legislators still think they may be able to convince Kathy Hokel, the governor, to reverse her reversal. And maybe Institute a toll that's not $15, but is a little less.

And that's more politically palatable. So we'll see what has to happen there. I mean, Kokel, Hokel, I don't know if she can. she doesn't have a lot of good options either way. No, she doesn't have a lot of goodwill left either. I do just want to give a shout out to the New York Times for doing this. Really cool. Because it was.

You said they fanned out around the city. They sent 27 people out to these major arteries to count trucks and buses and everyone entering. They also said this is a rough census scale. We definitely undercount it as well because they only looked at those main arteries. So it is interesting to see just how sometimes you got to get on the, literally stand by a street corner with your little counterout to do. some reporting. Well, it's the day before 4th of July, which means it's time to dig into the really important news for this time of year. Burger trends. So go ahead and start fantasizing about bringing your Blackstone up to temperature because the first trend to keep an eye on this

year is the smushification of burgers. Gone are the thick, beefy patties you're used to seeing at expensive steakhouses. In their place are thinner, crispier, easier to bite, smash burgers. Now, some fast food joints have been on this for years now, Shake Shack and Smash Burger, being the two that come to mind. But higher-end restaurants have been jumping on the smash patty trend as well as demand from consumers rise. Searches for Smash Burger and Yelp more than doubled in 2023 from 2019. And I was certainly one of them, Neil, smash burgers are the superior way to consumer burger. And I think a lot of people listening would agree. Yeah, this might have to do with inflation. I mean, a fancy burger with, you know, quarter pound of meat is over $20, ranging on $30 at some

places here in New York City. A smash burger is typically a lot less, but I mean, I know we both prefer them. I love the potato bun. I love the caramelized onions. I don't need the lettuce and tomato. I like the crunch, the texture that seems to be a big part of why people like smash burgers. To me, it's a superior product. I know one may, you know, these, these burger snobs out there listening, might think that a, you know, a traditional classic thicker burger has a higher ceiling than a smashburger, and I will probably grant you that. Smashburger doesn't have a high, a particularly high ceiling. It's good. It's not like ever going to overwhelm you, but it has a very high floor as well. They're almost never bad because they're just not bad. You can load them up with mayo and ketchup,

and then they taste pretty good. I agree. The consistency here is what you really marvel at, because you're cooking it too well done. You're smashing it down. There's not, it's not going to be medium rare. So I do think that you're right. You're never going to get the most magical buy you've ever had because there's just not as much meat there. But that is what I think elevates it is the texture, first of all. I just think the texture, the biggest part. I love those little crispy edges. You top it with some crispy cheese as well. Maximum crisp there. I'm all in on the smash burger trend. The next burger trend is more of a flop, actually, and that is fast food chain's failed attempts to introduce plant-based burgers to their menus. McDonald's pulled the plug on its

Mick Plant burger recently discontinuing a year's long pilot program and both San Francisco and the Dallas-Fort Worth area after customers McPanded. Joe Erlinger, who heads U.S. operations for McDanks, said the experiment, said of the experiment, I don't think the U.S. consumer is coming to McDonald's or looking for McPlan or other plant-based proteins. Neil, feels like we could have seen this one coming. No, they were just not selling these at all. At these locations that had the McPlant Burger, they were selling 20 a day maximum.

And in certain rural areas, they were just going three to five a day. So this experiment was a total flop. So I guess kudos on McDonald's on realizing when they had a dud on their hands and moving on to other growth areas. And those growth areas are chicken, basically, because they're now selling more chicken than burgers. So they're doing away with this plant-based experiment, which has definitely been in decline or stagnating over the past few years across the board and focusing more on chicken, which is what everyone seems to want these days for their protein. Yeah, overall sales of plant-based food alternatives fell to $277 million. that's down from $528 million, just three years earlier. Remember, we've talked about plant-based burgers trying to reformulate their burgers in order to get customers back in. Beyond Meat announced

earlier this year that they were on their fourth generation of their core beat platform, which if you're calling it a core beef platform, something's a little wrong there. But they just announced a new burger recipe to try to say relevant. They tried to market it as more healthy. It was interesting, too, because last summer, Impossible Meat took the opposite approach to revive its products, revive its sales. Rather than focus on health benefits, they started releasing indulgent burgers that they say are more premium

has that indulgent feel of a real burger. So they're throwing everything at the board right now, but I think... Like a smash burger. They should make a... What would a Smash McPlant Burger call it? Just like peas everywhere. Yeah, just...

Disintegrated peas. Mushy peas if we go back to our UK story. But yeah, we probably could have seen this coming. Finally, our last burger trend has to do with the tools you use to cook it, Grills are having a bit of a post-pandemic sales slowdown. Higher-end grill maker Trigger sold $77 million of grills in its most recent quarter, down from $156 million.

It raked in during the second quarter of 2021. Weber, the best-selling grill, has also seen its market share declined since 2020. Could just be a life cycle thing. Grills bought in the pandemic might start needing to be replaced next year, which could result in an uptick in sales again. Or it could just be that 2020 and 2021, those were some outlier years. everyone just who wanted a new grill has a new grill. I mean, 21 million grills and smokers were sold in 2020. They have an average life cycle of five years. I don't think anyone is looking at their

grill they bought during the pandemic and saying, well, I need an upgrade. Just kidding. There are probably a lot of dads out there who are like, man, I could love a new grill for my birthday coming up. Why don't you get me a new one for their father's day? But I do just think that everyone who has a grill has a grill right now and they're not looking to upgrade over the next one or two years. It's It's not like people aren't grilling outside. They are. It's just they have a grill. So if I was the grilling industry, I would just kind of bear down, hibernate for a little bit,

and be ready with some freaking awesome smokers coming up when people need to upgrade. What's your preferred grill? You're a charcoal guy? Oh, yeah. I've never been able to deal with- We grew up with charcoal. We have the chimney. The chimney makes it a lot easier.

So if you just put in the chimney, you light up the coals and then you dump it in like this fiery flame. It's crazy when the flame shoot out. but it tastes so much better than a grasskill. It is much harder. It takes a lot more effort, but it tastes so good. All right, I'm going over to your house for the Fourth of July cookout. Okay, well, yeah, we actually swapped out our charcoal go for gas grill.

Anyway, let's wrap it up there. Everyone go out and have yourself an amazing Fourth of July, whether it's at a lake, beach, mountain cabin, backyard. We wish you the level of joy only a gallon of potato salad can bring. Look, I'm not sure how intently we will be checking our email, but absolutely fire away. Any messages to Morning Brew Daily at MorningBrewd.com. Let's roll the credits. Emily Milliron is our executive producer.

Raymond Lute is our producer. Olivia Graham is our associate producer. Ed Lewis is our technical director. Billy Minino is on audio. Hair and makeup is reminding you to listen to our interview episodes tomorrow and Friday. They're pretty spectacular. Devin Emery is our chief content officer

and our show is the production of Morning Brew. Great show day, Neil. Let's run it back tomorrow.