The electric carmaker, Tesla, is finally launching its long-awaited standard Model 3 and announces that they will take the e-commerce route.
Tesla CEO, Elon Musk, announced that it would be bringing the long-promised, Model 3 with a base price cut of $35,000. The automaker previously promised this to its consumers ever since it revealed the mid-size sedan in 2016. This move is a significant decrease from the previous models that cost $45,000 base price.
The base model of the Model 3 will have 220 miles of range, a top speed of 130 miles-per-hour and accelerate from 0 to 60 mph in 5.6 seconds, the company said.
Also, they will also be releasing the Model 3 Standard Range Plus with 240 miles of range, a top speed of 140 miles-per-hour and accelerate from 0-60 mph in 5.3 seconds at the base price of $37,000.
Musk said he anticipates demand of more than 500,000 Model 3s a year. The company delivered 145,610 Model 3s in 2018 at a previous $45,000 with 260 miles of range.
“The interior will be slightly better than was originally promised,” Musk told reporters on a conference call Thursday, adding that the base price doesn’t factor in tax incentives or gas savings that may further lower the cost of buying and owning a Tesla.
“It’s an incredible car, and at $35,000 there are still some pretty significant consumer tax credits that can be had,” Musk said.
Moreover, Tesla is also changing the customer shopping experience. People can no go to Galleries and try the vehicles before buying. The automaker now also offer full refunds if a car is returned within a week or reaching 1,000 miles.
Critics are skeptical with Tesla’s decision of bringing the price range of the Model 3 much lower compared to other models and how it could affect profits.
The company won’t profit in the first quarter, Musk said, although he expects Tesla will return to profitability in the second quarter.
“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely,” Musk said.
In addition, Tesla is converting to a pure e-commerce system where all sales can now be accomplished online through a
“You can buy your car on your phone in about one minute in the US,” Musk said. “We will still have stores, but they will be converted to galleries and information centers.”
There aren’t many showrooms across the USA as Tesla is focused on catering to well-off communities but the company is closing some stores to reduce head count and ultimately, expenses.
The cut is necessary to enable the company to sell the car at a much cheaper price.
“There’s just no way around that, I wish there was some other way,” Musk said. “It is excruciatingly difficult to make this car for $35,000 and still be financially sustainable,” he added.
Tesla did need the lower-priced Model 3 to draw in that larger market they have been aiming for, but they will have to carefully weigh the benefits of selling a lot of cheaper cars against making greater profits, said Wedbush analyst Dan Ives.
“I kind of view it as a balancing act, but a key ingredient to their success in the long term was coming out with a $35000 vehicle that can have more mass demand and ultimately get to a gross margin profile in line with targets,” Ives said.
However, some analysts argue that releasing a cheaper model would affect gross margins as consumers would flock the cheaper alternative and abandon the higher priced model that brought in higher gross margins for the company.
“Tesla’s blended average sales price between the Model 3, S and X was approximately $66,800 last quarter, so this is really going to degrade their average price realizations. It might be different if Tesla had the production capacity to drive volume and margin for this lower priced version, but they don’t currently and to add the incremental capacity would require significant additional capital investment,” said Garrett Nelson from CFRA.
The company prioritized the production of more expensive versions of the car in order to keep profit margins high. Musk has defended the decision by saying that making lower-priced versions was unprofitable and would cause Tesla to ‘die’, as reported by CNBC
The company’s shares were halted, and Tesla suspended all orders on its website ahead of Thursday’s news. It also redirected users to a page teasing a mystery announcement Musk promised to reveal at 5 p.m. ET, saying: “The wait is almost over.”
Political Stand-Off: Chinese-Canadian Goods
Canada cites 900 Chinese products with “detected problems” while China continues with bans against Canadian agriculture and poultry
The political storm between China and Canada continues to brew as the tirade affects imports and exports from both countries. Specifically, Canada released a report citing that they have detected hazardous contents in Chinese products and, as well as, the Chinese government against Canadian goods.
According to the list compiled by the Canadian Food Inspection Agency, officials flagged and intercepted almost 900 food products coming from China due to inadequate processing that could potentially serve harm upon consumption.
The inadequacies mentioned above involve faulty labels, unmentioned allergens, and harmful contaminants that included glass and metal or gum balls with “extraneous” metal, to three-minute chow mein that contained an insect, and with spicy octopus flagged for a “non-specific hazard.”
Agriculture Minister Marie-Claude Bibeau said in an emailed statement that the issues in the CFIA list do not necessarily correlate to a particular problem with imported food products from foreign countries.
“This is a list of cases reported to the CFIA that informs operational and follow-up activities to verify compliance and take any appropriate actions, in accordance with laws and regulations,” Bibeau said.
“The Canadian food safety system is strong and recognized as one of the best in the world and the government is confident in all products approved by the CFIA as safe for local consumption as well as for export.”
The CFIA list was a compilation of “detected problems” that comprises two years back between the beginning of 2017 to February of this year.
However, the Chinese government, on the other hand, has been making significant moves against Candian products, specifically citing its agricultural and poultry goods.
In June this year, China has released a ban on Canadian pork and beef because of a banned feed additive called ractopamine that was discovered in a shipment. Notably, ractopamine is not banned in North America, but Canada decided to nearly ban its use completely.
In light of the situation, Canadian officials conducted an investigation over the alleged meat shipments, and the CFIA determined that the export certificate for the shipment was fabricated.
“This certificate, as well as pork products which accompanied the certificate, are of unknown origin and not related to the Canadian food inspection system,” said Bibeau in a statement. Meanwhile, a statement by China’s embassy in Ottawa said the investigation uncovered at least 188 forged veterinary health certificates and argued the Canadian system had “obvious safety loopholes.”
Before the ban, exports to China saw a dramatic increase mainly due to the large demand from the country amidst the on-going African swine flu fever ravaging their poultry. In the first five months of this year, Canada shipped $420m worth of pork, almost double the same period in 2018. Meanwhile, beef shipments jumped 300% to $82m.
On other products, China has also blocked imports on Canadian canola seeds citing that pests were discovered in some shipments, a charge Canada firmly denies. However, the country is having a hard time sending officials to investigate and validate the matter.
Overall canola exports fell by C$47 million (US$47.91 million) in April, or 14.7%, as shipments to China stopped, Statistics Canada said on Thursday.
“We are… worried about their actions on canola and the potential for other actions against other products,” Canadian Prime Minister Justin Trudeau said during a televised news conference last June.
From a political point of view, China’s moves are meant to pressure the democratic country to release Meng Wanzhou, Huawei’s chief financial officer from Canadian detention.
In December last year, Canadian officials detained Wanzhou at a Canadian airport on behalf of the United States under claims of national security and also with bank and wire fraud to violate American sanctions against Iran.
Both Wanzhou and Huawei denied the allegations and has counter-filed a lawsuit alleging that she was illegally detained.
Meanwhile, China detained former Canadian diplomat Michael Kovrig and Canadian entrepreneur Michael Spavor on December 10th, shortly after Meng’s alleged illegal detention.
In light of current situation between US-China political proceedings, however, the rift between China and Canada may be alleviated as US President Donald Trump said in a series of tweets after the G20 summit that he met with Chinese President Xi Jin Ping and that he “had a great meeting with President Xi of China yesterday, far better than expected.”
Furthermore, he said that “importantly, we have opened up negotiations again with China as our relationship with them continues to be a very good one. The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good!”
Recent Effect Of ‘Entity List’ Issue: Huawei Will Lay-off Hundreds Of Employees
Huawei is set to lay-off hundreds of Futurewei employees across the US.
Huawei announced extensive lay-offs in its US operations, with hundreds of Americans losing their jobs.
Lay-offs are expected to happen in Huawei’s US-based research and development arm named Futurewei Technologies, Inc. Currently, the R&D company employs 850 workers. The company’s labs have divisions in Texas, California, and Washington.
Employees who were born in China can choose to go back to their homeland and keep their jobs.
According to a report by The Wall Street Journal, several employees have received notification about their dismissal. More employee removals should be expected in the next few months.
A month ago, Huawei implemented countermeasures to ensure Futurewei will not be implicated in its parent company’s issues. Futurewei’s IT system was moved to a separate one, and aside from systems, Futurewei can no longer use Huawei’s logo and name in any type of communications. The company goes so far as to banning its Huawei employees from going into Futurewei offices.
However, this strategy did not work. Despite the distance Futurewei has placed between it and its parent company, it was not spared from the planned lay-offs.
The decision to have massive lay-offs came from Huawei’s controversial involvement in the on-going US-Chinese trade conflicts. Huawei was placed in the Entity List last May, effectively restricting US suppliers to provide service to the Chinese firm, unless the government has issued a license. Any sharing of data on US technology is also included in the restriction.
Huawei was placed in the list, along with 68 affiliates, due to speculations that the company is conducting espionage activities for China.
The Futurewei staff has also been restricted to communicate with Huawei’s Chinese counterparts. According to anonymous sources from Engadget, Futurewei staff cannot share information with its colleagues in China offices because the data or information may be considered as US technology.
The dismissals are pushing through despite President Donald Trump’s promise to ease the restrictions set last May. Huawei executive and chairman Liang Hua shared that there’s no change done since the report.
“So far we haven’t seen any tangible change,” Liang said in a news conference held in Shenzhen, China.
Last Wednesday, US Commerce Secretary of Wilbur Ross clarified what “easing restrictions” meant. In a speech reported by the New York Times, Ross said that they would be more lenient and issue more licenses as long as is deemed no threat to US national security. However, Ross stressed that Huawei will still be on the Entity List.
Ross also did not provide a comprehensive definition of what constitutes a threat to the US National Security.
“We’re not saying that just because things have relaxed a little, we’re fine with being on the blacklist,” Liang said as reported by the Associated Press. “Actually, we believe our listing on the blacklist should be lifted completely.”
The effect of the Entity list is subjecting Huawei to a tremendous loss in revenue. According to Huawei CEO Ren Zhengfei, the estimated loss is around $30 billion in 2019 and 2020. Before the Entity List ban, Ren said he expected a sales increase of at least 30% this year.
Other Effects of the Entity List
Reducing the workforce is just the recent effect of Huawei’s inclusion in the Entity List.
Starting May, US companies such as Google and Facebook have reportedly withheld their products and services for the China-based company.
Google has withdrawn its Android operating system (OS) for future Huawei products. Google Play Store and other services like Google Play Protect security will no longer be available in future phones or laptops.
However, Google has assured customers who have existing Huawei phones that their OS and services will still be intact. Security updates will still be available to any current Huawei phone users.
In March, Huawei had shared that it was building its OS when Google limited its services for Huawei to what’s available in its open source. The China-based OS is called HongMeng and has excited Huawei fans when CEO Ren announced that it’s 60% faster than the current Android OS.
However, Liang has recently informed the public that the HongMeng OS is not meant to be a replacement of the Android OS. “We haven’t decided yet if HongMeng can be developed as a smartphone operating system in the future,” Liang said in the Szenzhen news conference.
Another service blocked is Facebook’s suspension of pre-installed apps on Huawei smartphones. Although, the apps will still be available for download for any Huawei users. Facebook, WhatsApp, and Instagram will not be loaded in the phones right out of the box.
Amazon’s Workers Plan To Disrupt Prime Day With An Organized Strike
Customers are hyped with Amazon’s Prime Day, that’s starting on Monday. For 48 hours, deals on products ranging in technology, kitchen and household items, books, gaming, and clothing will be on sale for Prime Members. What’s more exciting is that Amazon promises one-day shipping for everyone who participates.
However, while Prime members shout for joy at the one-day shipping, Amazon warehouse staffs are screaming in protests. Workers from the company’s warehouse in Shakopee, Minnesota announced that they would be on strike on Prime Day.
Amazon’s workers are demanding safer working conditions and secure jobs. During the strike, the workers will leave the warehouse facility and protest outside. The strike will last for six hours.
The workers are asking the tech retail giant to make temporary jobs into full-time jobs — to make all benefits available for all employees. They also want the company to reduce quotas, which are considered unsafe for the workers.
With regards to quota, Amazon workers are required to meet a specific quota of products to be moved, which fluctuates during the holiday rush. Workers hustle around the warehouse floor to meet the demands. If a worker is not able to meet his or her quota, the company have grounds to fire him or her.
Previous warehouse workers have shared to others about the enormous physical pain, unhealthy need to always rush (especially during holidays), and condescending management practices they’ve received while working for Amazon.
Warehouse employees are not alone in their fight. A group of Amazon engineers is flying to Minnesota to join the strike.
Previous strikes held by Amazon workers happened last December 2018 and March of this year. A group of workers has asked supervisors not to count their prayer time and bathroom breaks against their productivity rate. They also called for a better work situation, such as converting temporary staff into full-time workers.
Apart from the strikes in Minnesota, warehouse workers in Amazon’s Staten Island facility are also working hard on building their own union. From the employees’ perspective, negotiating a labor contract with the tech giant through a worker’s union is the only way to improve their working conditions.
Amazon has claimed to have made the necessary changes to adhere to the strike group’s demands.
Strikes in Other Countries
Amazon’s worker relation problems are not limited to the US alone. Strikes in Europe are more frequent compared in America.
In July 2018, workers from across Europe walked out of their job to protest their poor working conditions. Amazon workers from Germany, Spain, and Poland went on a strike during Amazon’s busiest day — Prime Day.
According to Stefanie Nutzenberger, an official at German trade union Verdi, said, “The message is clear — while the online giant gets rich, it is saving money on the health of its workers.”
Union representatives in Germany accused Amazon of freezing salaries and reducing the pay of medical leaves.
In Spain, around 1,000 Amazon employees walked out for three days over a dispute with the management regarding reducing workers’ rights. Last year’s walkout was the second strike conducted by the workers in Spain.
Meanwhile, workers in Poland did not walk out of the facility; instead only work the minimum amount of work (as stipulated in their contracts) before going home for the day. Their tactic has significantly slowed down the productivity of the company.
To address workers concerns about limited opportunities for growth, Amazon announced that they would be spending around $700 million within the next six years on a training program for its staff.
The plan is being called “Upskilling 2025.” It will be available for 100,000 workers.
The aim is to train Amazon’s workers with skills that will progress them into advanced jobs within and outside of the company. One of the career path available is for fulfillment center workers. Those working in the warehouses could be trained for technical roles in IT.
Aside from classroom training, the company aims to have on-the-job training through its Amazon Apprenticeship program.
The company is working on providing chances for its staff to transition from physical manual labor to a desk job. This is because Amazon envisions to use robots and artificial intelligence in replacing human jobs.
The company said in a statement via CNN, “Through its Upskilling 2025 pledge, Amazon is focused on creating pathways to careers in areas that will continue growing in years to come, including healthcare, machine learning, manufacturing, robotics, computer science, cloud computing, and more.”
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