Big Oil doesn’t like a carbon tax, I’m shocked, Chinese spies blamed for plane tech theft, GM profit surges while Mazda sees losses, and Elon Musk is busy trying to make things happen at SpaceX. All of this and more in The Morning Shift for a very spooky Wednesday, Oct. 31, 2018.



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1st Gear: GM Over-Performed This Quarter

Despite low Wall Street estimates for the quarter, General Motors managed to beat expectations and post a $2.5 billion profit, as Automotive News reports:

Stronger-than-expected results in China and North America propelled General Motors to a 25 percent increase in pretax profit in the third quarter and net income of $2.5 billion. GM’s revenue increased 6.4 percent to $35.8 billion in the third quarter. The company announced a global profit margin of 8.8 percent, including 10.2 percent in North America.﻿



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Expectations were low due to slowing sales in GM’s key markets of China and the U.S., but the popularity of higher priced Cadillacs, including the new XT4, and other popular crossovers and SUVs made up for any losses from slipping retail sales.

Maybe Cadillac can pull something off yet again, after all.

On top of the good news, GM is evidently trying to stay ahead of its profits by offering voluntary severance to its salaried employees, according to a statement obtained by Reuters’ David Shepardson:


Good luck to all.

2nd Gear: Mazda Ain’t Doing So Hot

Unlike GM’s surprise success, Mazda posted a somewhat unsurprising operating loss this quarter, in part due to flooding that shut down Japanese production, which took out production of a potential 44,000 cars, which Mazda claims hit sales directly by up to 22,000 units.


But that wasn’t Mazda’s only problem, as Automotive News reports:

The automaker booked an operating loss of 2.2 billion yen ($19.4 million) in the fiscal second quarter ended Sept. 30, the Japanese automaker said on Wednesday in its quarterly earnings report. The downturn reversed a quarterly operating profit of 36.6 billion yen ($322 million) a year earlier. Net income tumbled 86 percent to 3.8 billion yen ($33.4 million) in the July-September period. Revenue flatlined at 856.0 billion yen ($7.53 billion), as worldwide retail sales declined 3 percent to 392,000 units in the three months, losing ground in North America, Japan and China.﻿




Currency exchange, European environmental regulations, recalls, and investment in an overhaul of its U.S. retail sales model also hurt Mazda. The company is working to upgrade the U.S. dealer network before completion of its new Alabama factory starts churning out more crossovers.

We’re also supposed to see a new Mazda 3 soon, so that may help get things back on track somewhat.


3rd Gear: Oil Companies Spend Big Against Washington’s Carbon Tax

Washington State has proposed what could become the first enacted carbon tax in the country as a ballot measure in the upcoming election, and major oil companies have shoveled out over $30 million to campaign against it—over double the spending of environmental groups and celebrities in support of the bill, according to Reuters:

The state’s Carbon Emissions Fee and Revenue Allocation Initiative, known as Initiative 1631, would impose a $15 fee on each metric ton of carbon released to the atmosphere, rising $2 a year until the state’s 2035 emissions target is met. It would generate $2.3 billion over five years for clean energy and air programs if it is passed by voters in next week’s election, according to a state analysis.

[...]

If the measure passes, the oil industry is likely to feel the most pain since transportation is the largest contributor of greenhouse gas emissions in Washington at 43 percent, according to a state report from 2016.﻿




The opposition made up of oil companies and interest groups include BP, Phillips 66, and Andeavor, which all manage oil refineries in Washington State. Opposition money amounted to $31.2 million, raised through an organization called Western States Petroleum Association.

In contrast, money raised in support of the ballot measure only added up to $15.2 million, including money from activists like Bill Gates and Michael Bloomberg, and groups like The Nature Conservancy and the League of Conservation Voters. Both groups targeted mail flyers and TV ads to try and sway voter opinion.


According to Reuters, about 50 percent of voters support the ballot measure, 36 percent are against, leaving 14 percent undecided. We’ll see if Big Oil’s money has more of an impact next week.

4th Gear: Space Boy Wants His Skynet Faster

Elon Musk may be the “nothing” of Tesla now, but he’s still the CEO of SpaceX, and boy is he sure acting like it. Back in June, he reportedly flew to the SpaceX offices in Seattle just to fire seven managers for not working fast enough to develop and launch the company’s Starlink satellite internet, uh, satellites, Reuters reports:

Within hours of landing, Musk had fired at least seven members of the program’s senior management team at the Redmond, Washington, office, the culmination of disagreements over the pace at which the team was developing and testing its Starlink satellites, according to the two SpaceX employees with direct knowledge of the situation. Known for pushing aggressive deadlines, Musk quickly brought in new managers from SpaceX headquarters in California to replace a number of the managers he fired. Their mandate: Launch SpaceX’s first batch of U.S.-made satellites by the middle of next year, the sources said.﻿




The big news here is the timeline with which SpaceX is now planning to launch Starlink, which was previously unclear. The company’s satellite internet venture is meant to turnaround and fun Musk’s dream of developing and launching a series of Mars missions, eventually leading to the first manned mission to our red cousin.



But apart from the seven managers Musk sacked and replaced earlier this year, the company has generally struggled to retain staff. Here’s more from Reuters:

Currently, about 300 SpaceX employees work on Starlink in Redmond, the sources said. According to GeekWire, Musk said in 2015 the Redmond operation would have “probably several hundred people, maybe a thousand people” after 3-4 years in operation. So far this year, about 50 employees left the company “on their own accord,” one of the SpaceX employees said, though the reason for those departures was unclear. Overall, SpaceX employs more than 6,000 staff.


Update, 8:24 p.m.: Sources speaking to Jalopnik have indicated to us the Reuters report is inaccurate about the manager firings, claiming not all of the mentioned employees were fired immediately, and some left of their own accord.

Something else Reuters’ reporting is unclear on is whether the 50 departed employees since the start of the year are related the reorganization mentioned in the quoted article.


The rest of this article continues as originally published below.

The delays in development of Starlink come between Musk and his engineers, which are pushing for a patient approach to testing several generations of development satellites before launching. But SpaceX, and Musk, have found success in the aerospace and automotive markets by avoiding this approach and rushing cars and rockets through development, and while it has its problems, it’s also been mostly successful.


The ambitious Starlink program is rushing to fight off competition from Canada’s Telesat and another, OneWeb, and plans to be online (haha) by 2020. SpaceX’s two test satellites already in orbit have functioned as intended, and the company ultimately plans a network of over 4,400 satellites total.

5th Gear: Alleged Chinese Spies Like U.S. Planes

The U.S. Department of Justice has charged 10 people in a conspiracy to steal commercial aircraft technology, two of which the U.S. government alleges are spies working for the Chinese security ministry, according to Bloomberg:

The U.S. Justice Department said Tuesday the Chinese intelligence officers worked with hackers and “co-opted company insiders” to acquire commercial aviation technology in a campaign of computer intrusions that lasted more than five years. They sought to obtain intellectual property and confidential business data, including information related to a turbofan engine used in commercial airliners, the government said.﻿




The new charges feed into President Trump’s trade war with China, alleging that China is working to steal trade secrets in an effort to boost its state-owned aircraft manufacturing to be on par with the likes of Boeing and Airbus. This new case concerns the development of a turbofan engine by Capstone Turbine, a Los Angeles-based turbine company.



China’s Ministry of Foreign Affairs claims the allegations are fabricated, but they would say that, wouldn’t they.


Reverse: Toyota Plants the Seeds of American Domination


Neutral: Do You Think Mazda Can Turn Things Around?

Holding out hope that Mazda isn’t set back in production of over 40,000 cars every year going forward, what are the odds that they can manage to stay afloat? Why aren’t people buying Mazdas?