Automakers Are Out on EVs & Kim K Bets on Menswear

0:00Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact. You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell.

0:34On today's pod, can Kim Kardashian get men to buy shapewear? Then the vibes are off in the electric vehicle industry as demand has begun to slow, leaving automakers caught between a strike and a hard place. It's Monday, October 30th. Let's ride.

0:53Neil, Halloween is tomorrow, and even though I'm sure many of you got your scary on this past weekend, we want to participate in the festivities. we're going to host a mbd halloween costume contest on our twitter and instagram today and tomorrow to enter post a picture of your costume and tag us at mb daily show on both twitter and instagram we'll pick a winner on wednesday of this week to send a morning brew daily mug to there is a catch though if you dress up as neil and i with a friend a spouse your kids your dog you automatically get a mug so two days to win either have the best halloween costume we've ever seen or go dressed up as your humble podcast host, Neil and Toby.

1:35Is my costume just an Ole Miss t-shirt? No, yours is a dark academia, very handsome, very smart, very wise. That's how you be, Neil. Okay, that's what Toby says. Anyway, yeah, definitely hit us up at MB Daily Show. MB Daily Show. Thank you, Neil. Before we jump into the news, we've got a quick word from our sponsor, Yahoo Finance. Neil, I was walking down the street this past weekend and someone called my name out. Famous. Thank you. But get this. One guy says, love the show, et cetera, et cetera. But then his friend says, oh, is that the Yahoo Finance guy? No way. I'm serious. I swear he heard it over the Alexa when his friend was listening to it.

2:12And the only thing that stood out was the Yahoo Finance ads. You got to love that. But OK, Neil, I actually have to do this ad. Yahoo Finance is the number one platform for navigating the financial landscape, whatever your goals are. If you want access to an unparalleled suite of real-time news updates and actionable data, head to finance.yahoo.com today or download the Yahoo Finance mobile app to get it directly on your phone. I'm Scott Hanson, host of NFL Red Zone. Lowe's knows Sundays hit different when you earn them. We've got you covered with outdoor power equipment from Cobalt and everything you need to weatherproof your deck with Trex Decking.

2:51Plus, with lawn care from Scott's and, of course, Pit Boss grills and accessories, you can get a home field advantage all season long. So get to Lowe's, get it done, and earn your Sunday. Lowe's, official partner of the NFL. Let's dive into the news. For a long time, EVs have been the crown jewel of the auto industry. They were touted as the futures on earnings calls, called the solution to the industry's carbon emissions problem, and were supposed to drive sales into the next decades. Yet, cracks in that vision are beginning to show. GM and Honda said last week that they are abandoning an agreement forged just over a year and a half ago that was supposed to use GM's next-gen batteries to help produce an affordable line of lower-priced EVs.

3:35Also, GM quietly abandoned its self-imposed target to build 400 ,000 EVs by mid-2024, while Ford pushed back its target of building 600 ,000 EVs by 2024 as well. And surprisingly, Hertz is also backing off its big EV plans after agreeing to buy nearly 200 ,000 cars from Tesla and Polestar because they are just way too costly to maintain. Now they are saying that they are over-fleeted with EVs, which is not something you'd have expected to hear even a year ago. Neil, it feels like the auto industry is finally coming to terms with the fact that there's still a bit of a bumpy road ahead when it comes to an electric future.

4:11Right. Just like any new technology, you have the early adopters and it looks like all the early adopters of EVs have adopted and the rest of the mainstream consumers have just not fully bought in yet. It's totally one of those things where price points are still becoming the main issue. EVs are still a lot more expensive than the normal gas cars. You know, who's looking pretty dang good right now is actually Toyota, because Toyota was one of those companies that didn't go all in on EVs. They said hybrid is probably the way forward because people still want to have some gas in their cars, basically.

4:44And so they're saying that the market for hybrids is smoking hot. And last month, Toyota had a little more than a week's worth of Prius hybrids in stock compared to more than two months' supplies of its electric SUVs. So it just goes to show you where the demand is in terms of the hybrid electric vehicles. I don't remember the last time I saw Prius on the road. They're everywhere, apparently. Yeah, it speaks to concerns over the lack of charging network. Just to put some numbers on this, EVs are still growing at a pretty brisk pace, but it's not what it was. Year-over-year sales growth in the third quarters of 2021 and 2022 were 75%.

5:17This year, the increase was 50%. So people are still buying EVs, but yeah, that pace has slowed down pretty dramatically. Yeah, and if you look at some of the factory news that is coming in as well, GM said two weeks ago it was delaying the opening of an electric pickup truck factory in Michigan, And then the Wall Street Journal also reported that Ford was considering cutting work shifts back out of its Ford F-150 Lightning pickup truck plants, which was crazy to say. Just two years ago, they couldn't make enough Lightnings. And then even Elon Musk was on his earnings call for Tesla was worried that maybe they would slow down work on the new Gigafactory in Mexico.

5:51So it is it all kind of hit at once where all this EV news where people just started leveling off demand a little bit. So there's, as I said, there's some cracks showing in this vision. One interesting angle to why people may not be buying EVs is politics, of course. There's a huge political divide in terms of who's buying EVs with Democrats shelling out for EVs, Republicans maybe not as much. In the U.S., for every five Democrats owning an EV, there are two Republicans. And there was this new working paper from UC Berkeley that showed from 2012 to 2022, about half of all EVs went to the 10 percent most Democratic counties.

6:29And about one third went to the top 5%. So just like anything in our days, these days, EVs have become extremely politicized with Republicans considering it maybe a little bit woke. And I think that's because the Biden administration has pushed so hard for EVs with subsidies and other ways to increase EV production. And so it's becoming this political football. Even you have CEOs of Ford and other automakers lamenting the fact that it has become so politicized. And they're having a lot of trouble selling to red states. That 10 % stat is crazy to me. That's amazing right there. Thank you for that stat, Neil.

7:05Okay, wow. Thank you for thanking me about that stat. Okay, let's run through some major news headlines from the weekend. Starting out with the Israel-Hamas war, Israel expanded its ground operation deeper into the Gaza Strip in an attempt to dismantle Hamas. But so far, it hasn't been the massive, large-scale ground effort that many were expecting. This could be due to U.S. pressure on Israel to use a more targeted, cautious approach to a ground war to lower the risk of a wider regional conflict, minimize casualties and secure the release of the 230 hostages that were taken back to Gaza. In heavily bombarded Gaza, the humanitarian crisis is getting so dire that thousands of people broke into U.N.

7:42warehouses to grab flour and basic survival items like hygiene products, which aid groups said showed the despair and desperation of people living in the territory during the war. Two things I want to touch on from an economic perspective here. One goes back to concerns over a wider regional conflict that involves Iran proxies in the Middle East. So far, that hasn't spooked global investors. And you can see that plainly in oil prices, which sit at about$85 a barrel currently, down from their peak of$90 during the war. Any perceived threat to crude shipments in the oil-heavy Middle East would send prices skyrocketing.

8:17But as of now, there have been no oil shipment disruptions. disruptions. Meanwhile, U.S. stocks are rising before the bell this morning and another sign that investors appear relieved by Israel's more cautious ground approach. The second item is that Elon Musk has once again entered the geopolitical fray after Israel's airstrikes knocked out nearly all communications to Gaza Friday night, essentially cutting off the people there from the outside world. Elon said he'd allow his Starlink satellite network to support communications in Gaza for internationally recognized aid organizations. However, his statements ticked off Israel, which said it would fight Starlink from being deployed in Gaza, claiming that Hamas would use it for terrorist purposes.

8:54Musk said he'd take extraordinary measures to confirm it's only used for humanitarian reasons. But Toby, once again, this guy is finding himself in the middle of a global war. Yeah, it's pretty wild just how much Elon Musk has become a focal point in some of these global conflicts. Remember, he also provided Starlink connectivity to Ukraine, but then made the controversial decision to shut it off during a Ukrainian attack on a Russian naval fleet last year. so yeah just shows how much this one man has become a central geopolitical figure with outside influence satellite communications yeah it's a big deal let's move on to our next headline which is a sad one for sure former friends star matthew perry passed away on saturday at 54 years old the official cause of death is pending a coroner's investigation but he was found unresponsive in a hot tub at his home no drugs were found at the scene and police responded to a report of a cardiac arrest TMZ reported Perry is obviously most known for his time spent playing Chandler being on friends which ran for a decade starting back in 1994 friends needs no introduction and became so large that by the end of the run the cast negotiated a deal that paid each main actor more than 1 million dollars an episode to continue in its final seasons but success on friends came with a price and Perry also publicly struggled with a drug and alcohol addiction according to his 2022 memoir.

10:13He spent at least$7 million on treatment and had 65 stints in detox beginning at the age of 26. Neil, I know a lot of our listeners have no doubt been touched by Friends in some way, shape or form. So this news definitely hit hard over the weekend. Yeah, it's super sad. I was not, I don't, I haven't seen a single episode of Friends, but you just know how popular it was, how his character was so witty and sarcastic and just a very beloved person at all of these celebrities and other French co-stars, you know, sharing their memories of him. One thing that I didn't know about Matthew Perry that I learned about this weekend, that he was an obsessive collector of Batman memorabilia.

10:48So he once actually paid$20 million for an apartment that he said he wound up hating because it seemed like the kind of place that Batman's alter ego, Bruce Wayne, would live in. And then he also, one time he called one of his assistants, Alfred, in reference to it. And he just loved collecting all this Batman memorabilia. So, yeah, just an interesting and he definitely wanted to be remembered for something beyond just his friend's career and was also a public advocate for addiction. So let's head to the auto strike where it is two down, one to go. Last week, we discussed how the United Auto Workers Union reached a tentative deal with Ford to end its six week strike.

11:26And this weekend, it agreed to a similar contract with Stellantis, the maker of Chrysler and Dodge. That leaves GM as the only Detroit automaker that's still suffering from the wrath of UAW president Sean Fain. Like the historic Ford deal, the Stellantis labor contract give workers a 25 % hourly pay raise plus cost of living allowances. By 2028, the highest wage will be will top$42 an hour. Another big win for unionized labor and one that was expected after Ford's deal put pressure on the other automakers to finally sign the dotted line. But GM is the last holdout and the situation is only escalating.

11:59Even as it wrapped up its strike against the other two companies, the UAW expanded its walkouts to include even more GM plans as the two sides can't come to terms over GM's legions of temp workers. GM has a lot more temp workers than Ford, up to 10 % at any given time, and they're proving to be the final sticking point before a deal can come together. Yeah, that's definitely the biggest difference, that it would just be so costly to give them 150 % raises in some cases. So it does seem like that outsized amount of temp workers is what is hanging this deal up. But light at the end of the tunnel.

12:32Yeah, these companies have had their earnings calls over recent weeks, and we've started to finally get a scope of how much the strike is costing them. Ford said the work stoppage cost$1.3 billion. And then GM also said the strike has cost$800 million, a tally that is only rising. Yeah, it's only going to get bigger. Okay, for our final headline, I want to circle back on the Panera lemonade story we spoke about last week. Panera restaurants are now adding a label to its highly caffeinated lemonade following a lawsuit filed against a chain after a college student with an underlying heart condition passed away after drinking it.

13:06A large charged lemonade has 390 milligrams of caffeine, which is more than a Monster and Red Bull combined, as well as the equivalent of almost 30 teaspoonfuls of sugar. So going forward, Panera restaurants will disclose that the lemonade is enhanced and should be consumed in moderation and is not recommended for children, people sensitive to caffeine or pregnant or nursing women. Neil, a small victory, but the family's legal team says it's only a baby step because it still does not provide context for the amount of caffeine in the drinks, nor does it explain that it contains additional stimulants.

13:36Right. The lawyer for the family said it's misleading in the sense that it's not indicating that it is an energy drink. So they're saying it's a small victory, but they'd like to see Panera do a lot more. One angle of this case that I thought was interesting was that Charged Lemonade was part of Panera's unlimited sip club, which means it was out for anyone to go get unlimited refills as well. So that's another thing the lawyer is pushing for is trying to get this very, very caffeinated drink behind the counters and not provide a limited refills because it gets dangerous if you're drinking multiples of these.

14:06All right, Neil, before we jump into our next story, we're going to take a quick break.

14:12Tonight on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not Play Play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon, series premiere Tonight on NBC.

15:10dot com. Let's head to our winners of the weekend, the segment where Toby and I pick two people or two things that had A.J. Brown level performances this weekend. Toby, you won the pre-show milk jugging contest, so you get to go first. My stomach hurts, but thank you, Neil. My winner of the weekend is Boomers. Bank of America issued a trade recommendation last Friday saying that Boomers are flush with cash and benefiting from high interest rates, juicing their savings account, while the youths are struggling under sky-high rents and mortgage rates. So Bank of America's recommendation is literally to buy old people stocks and get out of anything whose main customer knows what B-Real is.

15:50The winning sectors, according to analysts, are things like healthcare, entertainment, and home improvement, all places that boomers with disposable income are more likely to spend, while the losers are likely to be clothing retailers popular with the youths like Revolve. Boomers are just much stronger consumers right now in Bank of America's eyes. since they're more insulated from rising interest rates, have generally saved more and are less exposed to the crazy mortgage rates right now because they likely already own a house. So boomers are my winners because in the words of Bank of America's analysts, go long boomer stocks and short millennial stocks.

16:24It just kind of flies in the face of business conventional wisdom, which is to go after the youngest consumers and drag them along over the course of their life. And so it is just kind of funny to see that boomers have become such a powerful spending force as our population ages. Yeah, and the one industry that is by far the most exposed to boomers is cruise lines. They represent roughly 40 % of their tripgoers boomers do. And the S &P Hotels, Resorts, and Cruise Lines Index is up nearly 28 % this year. So it is pretty wild that, I mean, if you just logically think about, like, all right, what are seniors doing in terms of travel?

16:59It's definitely cruise lines. So that's why cruises have been doing so well. We're not investment advisors, but Bank of America suggests this. estimate something that might be worth looking into it because americans age 65 and up accounted for 22 of all spending last year which is the highest share on record and now 17.7 of the population is 65 and older in 2010 it was just 13 so this is a dramatic increase in the older population they have a lot of money to spend my thinking though is that a wealth transfer has to happen eventually like it's going to get passed down through generations so maybe this is one of It's a day trade.

17:33Right. You're like chasing something, a trend that's moving in the opposite direction. But for the time being, go long boomers. My winners are two U.S. states, Texas and your home state of Florida. That's because new U.S. census data shows that those two states had the largest influx of people moving to them last year. And of course, for every winner, there is a loser. New York and California experienced the steepest out migration with 820 ,000 people moving out of California last year and 550 ,000 out of New York. You might have heard complaints from your Texas friends that Texas is being swamped by Californians and they may have a point.

18:09The top state to state migration was California to Texas. Of the 8.2 million Americans who moved states last year, 100 ,000 of them moved from California to Texas. And it's not exactly a mystery why California and New York are losing this tug of war. The cost of living has soared in coastal areas such as California, New York, and you can generally find cheaper housing and lower taxes down south. Yeah, I think I did it totally wrong, Neil, because I moved from Florida to New York. So maybe I'm just doing this wrong. I also found a funny survey from March of this year, which surveyed a thousand Americans.

18:41It was from home by a real estate analysis company. And they said about 75 percent of people who moved had some sort of regrets over it. And 44 percent of people reported crying at least once during the process. So even though - Moving is traumatic. It is so traumatic. Especially when you're moving out of New York. Yeah. And then it was also equal amount of people's wish they moved into a bigger place and a smaller place. So I guess there's just no thread in the needle here. But yeah, we're seeing these migrations and cost of living is just becoming more and more important. So I think - I think at some point, Florida is going to not be as attractive anymore because it's going to become so expensive.

19:13I mean, it's just recently passed New York as the second largest real estate market in the country at$3.85 trillion. dollars so people are you're already seeing in this same census data you're already seeing people move from florida to georgia to tennessee to knoxville places like that because florida is getting a little ridiculous too ridiculous all right our next story is big for any of the guys out there listening to this while rocking underwear that has seen better days kim kardashian shapewear brand skims announced last week that is getting into the menswear space rolling out a line of briefs, boxers, and t-shirts made for men.

19:49In typical Kardashian fashion, there were plenty of big names attached to the project. And the announcement came with photo shoots from the NFL's Nick Bosa, the NBA's Shai Gilgis-Alexander, and soccer superstar Neymar clad in new Skims products and nothing else. This is the first big expansion for Skims, which has quickly become an absolutely massive company. In just four years, Skims is likely valued at around$4 billion. And this year it expects to do$750 million in sales up 50 % compared to last year. Now, much to the chagrin of Bank of America analysts, 70 % of its shoppers are millennials or Gen Z and 10 % are men.

20:26Neil, that 10 % is what makes this announcement so intriguing. Skim's co-founder, Jens Greeds, said that that means 50 million men visited the site over the past few months. So it's not a small number by any means. And yet, should you launch a new product catered to just 10 % of your audience? Either way - Well, it's hoping to grow the pie. Yeah, they certainly look comfortable. I thought about this a lot. It's all I thought about yesterday. I think I'm generally pretty bullish because this is a very powerful brand. They did a smart launch with all of these athletes. And then when you look at the underwear space, I mean, it's dominated by Hanes and Fruit of the Loom, which are just these very classic legacy brands.

21:02I mean, I think Warren Buffett owns Fruit of the Loom. So if there any was an industry that could be disrupted with a little higher end, better quality fabric, then I think underwear could be. I think the bigger question is this shapewear thing, which is where Skims gets most of its revenue and drives most of its business, is can you get men to wear shapewear? Because that market does not exist right now. What do you think? I was seeing Bloomberg opinion pieces. I was seeing a GQ piece saying that it's going to be very hard just given the state of masculinity in America to get men to adopt shapewear.

21:35But I think that shapewear is not going to be the main thing they adopt here. I think you spoke to it perfectly. Men want really nice underwear. Like we are kind of scratching the bottom of the barrel because Fruit of the Lumen Hanes, they're just not getting the job done. So like people, it is one of the things where I have friends who just swear by like the Lulus of the world where if they get a high quality underwear, then it's just a fantastic thing for them. So I think Skims knows fabric in that. I mean, I haven't tried them on yet, but they look they look quite comfortable. So I am bullish as well.

22:04lululemon's a good uh a good uh company to talk about because in 2014 it didn't have any menswear it launched that that year now it's doing 1.5 billion dollars in men's sales so that was if you go back to 2014 we did this podcast we'd be like lululemon getting into men's like you're crazy and now you know it's definitely a big brand for a bunch of our friends just high quality good clothes or it doesn't matter across gender so if skims can produce something that is high quality I think they'll do all right. Okay, let's wrap up our show with a preview of the week ahead. Toby, it is so packed. And if we are ever scrambling for stories this week, we should quit.

22:39Today, President Biden is expected to issue a sweeping executive order on AI in the U.S.'s most significant single effort to regulate the high-flying industry. While executive orders are criticized for not having teeth, it'll aim to leverage the government's role as a top technology customer by requiring advanced AI models to undergo assessments before they can be used by federal workers and would also ease barriers to immigration for highly skilled workers in an attempt to boost the U.S.'s technological edge. Yeah, obviously you have to see exactly what's in this, but the immigration piece is huge because it keeps the U.S.

23:12as a leader in the space while responsibly putting up safeguards without also overreaching too far. So definitely interested to see exactly what's in this, but I love the immigration piece. Something we'll definitely talk about tomorrow. Also today, Apple will host its final product release of the year. It's called Scary Fast, which is probably a reference to Halloween, but also its first M3 three nanometer processors that will come in a new MacBook Pro laptops and iMac desktops. One twist to this event, it's being held in prime time, 5 p.m. Pacific time compared to its typical morning events.