Tesla Shareholders Rush To Sue Elon Musk Before The Company Moves To Texas
Good morning! It’s Friday, June 14, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
Tesla’s Cybertruck Has Finally Arrived
1st Gear: Tesla Faces Lawsuits In Delaware Blasting Elon Musk’s Behavior
Elon Musk will be waking up happy today after shareholders in Tesla passed his mammoth pay package that’s worth an estimated $56 billion. In a vote among shareholders, investors were asked to approve the pay package as well as a move for the company’s registered office out of Delaware and into Texas, where similarly massive payouts won’t face as much restriction in the future.
Before Tesla can move its registered state to Texas, however, it’s facing a barrage of legal issues as shareholders who weren’t a fan of Musk’s massive pay package rush to sue the company while it still can. The electric vehicle maker is currently facing at least three legal challenges in Delaware, according to reports from Bloomberg. As per the site:
At least three suits accusing Musk of various forms of mismanagement have landed in Delaware Chancery Court in the last week. They arrived just before the billionaire entrepreneur persuaded shareholders at Tesla’s annual meeting Thursday to back proposals to revive his $56 billion pay package and reincorporate the electric-car maker in the company-friendly Lone Star state.
In one lawsuit, the world’s third-richest person was blasted for allegedly trying to force investors into voting for the Texas move and his pay package with threats about shifting artificial intelligence assets away from Tesla. In another, he was called out by a shareholder who said he diverted Tesla resources in his 2022 effort to acquire Twitter Inc. On Thursday a third suit alleged that he’s betraying Tesla to build his artificial intelligence startup.
The case accusing Musk of deserting Tesla in his endless chase for artificial intelligence is the latest legal battle to hit the Tesla boss. Filed by the Cleveland Bakers and Teamsters Pension Fund, the case argues that Musk has “plundered” resources from the automaker to develop AI that could benefit other companies. Worse still, it argues that the company board has turned a blind eye to the practice, which has created “billions in AI-related value at a company other than Tesla.”
The timing of the cases is important, as when Tesla moves to its state of incorporation to Texas it will become much harder to fight cases against Musk. According to Bloomberg, the state is currently rolling out a new business-court system that many experts think will look much more favorably upon corporate bosses such as the Tesla CEO.
2nd Gear: Boeing Finds New Flaws With Its Planes
After stories of door plugs coming loose, engines failing and wheels falling off its planes, you might have thought that Boeing would have gotten to the bottom of its build quality issues by now. However, new issues are rising to the surface as it continues to battle through a federal probe into its production practices.
While the feds were looking into the production of the troublesome 737 Max aircraft lineup, Boeing quietly uncovered issues with another of its planes: the 787 Dreamliner. The plane maker reportedly found defects in the fuselage of some undelivered planes, according to a report from Reuters. As the site reports:
Boeing is investigating a new quality problem with its 787 Dreamliner after discovering that hundreds of fasteners have been incorrectly installed on the fuselages of some undelivered jets, two people familiar with the matter said.
The latest in a series of manufacturing snags affecting the U.S. planemaker involves incorrect “torquing” or tightening in a Boeing plant of more than 900 fasteners per plane – split equally between both sides of the jet’s mid-body, they said.
The issue might sound like a serious defect, however Boeing assured reporters that there is no immediate risk to in-service Dreamliners, reports Reuters. The company has also launched an investigation into the issue to try and understand how the problem arose and the best way to ensure it doesn’t happen again. In a statement shared with Reuters, a Boeing spokesperson said:
Our 787 team is checking fasteners in the side-of-body area of some undelivered 787 Dreamliner airplanes to ensure they meet our engineering specifications. The in-service fleet can continue to safely operate.
The issue isn’t the first problem to arise with the wide body 787 airliner. When it first launched, the high-tech build of the plane caused several issues including fires onboard caused by its lithium-ion batteries.
3rd Gear: Chinese Automakers Sell More Cars Than American Brands
Many people fear that Chinese automakers are taking over. After all, they’re managing to ship some impressive electric cars that are showing the rest of the world how it should be done. And while they haven’t quite taken America by storm just yet, they are showing up U.S. automakers and last year sold more cars than American automakers for the first time.
In 2023, Chinese automakers saw sales rise more than 20 percent, according to a new report from Automotive News. The impressive increase in sales means that China sold roughly 2 million more cars than America in 2023. As Automotive News reports:
Combined sales from Chinese manufacturers exceeded those of American manufacturers for the first time in 2023, JATO said. Chinese brands sold 13.43 million new light vehicles, a 23 percent increase, while American brands sold 11.93 million cars and light trucks, a 9 percent rise over 2022.
When it comes to the best selling car for the year, that title went to a model that straddles both continents: the Tesla Model Y. The American automaker’s mid-size SUV is currently produced in China and the U.S. and Tesla was able to ship an impressive 1.22 million vehicles globally. That figure was up 64 percent over the year before, and meant that the Tesla outsold models like the Toyota RAV4 and the Honda CR-V.
The boom in sales for the Model Y follows a period of expansion for the SUV, with Tesla expanding production of the car in the U.S., China and Europe. It also came when price cuts ran rife across Tesla’s lineup in an EV price war started by the Californian company.
4th Gear: New Car Prices Keep Falling
We’re used to things getting more and more expensive these days, with everything from house prices to groceries and even concert tickets getting increasingly pricey. However, the price of a new car is apparently something that’s bucking this trend, with costs down one percent last month.
The latest dip in new car prices, while small, is the latest in a continued trend for new car sales, with new car prices falling for the last eight months, according to a report from Time. The dip, Time says, is as a result of higher inventories, as the site explains:
One big reason dealers like have so much inventory compared to a year ago is pandemic-related. As automakers suspended production during COVID-19, shipping lanes became clogged, and semiconductors were in short supply. Dealers had a difficult time getting cars on their lots as a result. There were so few cars available in 2021 and 2022 that sellers could charge soaring prices to people desperate for a vehicle. (Including me.) Consumers, flush with cash from stimulus packages, competed over the limited number of cars available, driving up prices further.
This continued until the end of last year. Now, though, dealers have a lot more cars—so many that they are incentivized to sell them if they sit around too long. There were 2.89 million cars available at the beginning of June, the highest number since late 2020 and a 55% increase from a year ago, according to Cox Automotive’s vAuto Live Market View.
However, while lower sticker prices might be a reason for some to celebrate, it doesn’t necessarily mean cars are more affordable for normal buyers. Lower prices have been accompanied by higher interest rates on certain auto loans, which is having wide-reaching implications for the auto industry.
Reverse: In The Computer?!
On The Radio: Talking Heads – ‘This Must Be the Place’
Talking Heads – This Must Be the Place (Naive Melody) (Official Video)
