BYD Zooms By Tesla & The Boston Celtics Sell for Over $6B

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0:27Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Kyle Heggie. Today, an NBA franchise set the record for the most expensive sale in pro sports history. And the U.S. hits its lowest ranking ever in the World Happiness Report. It's Friday, March 21st. Let's ride.

0:49Kyle's here. Manu Ginobili, sixth man of the year, is back to fill in for Toby today. Kyle, how are you feeling this Friday? I'm feeling great. It's good to be back in the Manu Ginobili spot. So ever since Buy Now, Pay Later giant Klarna filed for an IPO last week. It's been inking partnerships left and right. And its latest move yesterday raised a lot of eyebrows and led to a lot of jokes. It made a deal with DoorDash to put its payments tech into the delivery app. So now you will be able to pay for your DoorDash burrito or pad thai in four equal interest-free installments or even defer payments until what Klarna calls a more convenient time.

1:28Kyle, are you on board with Eat Now, Pay Later? I think I'm on board. I feel like I'm doing something wrong. My Grubhub orders, my DoorDash orders, they've never been that big. Like, should I be ordering more stuff? And I need to be hitting, like, triple digits here? No, that's not. I don't think that's the point here. It's just to establish Klarna as the go. I mean, yes, this is the business strategy behind it. To establish Klarna as sort of the go-to payments portal that you go to whenever you buy anything doesn't matter the size. But obviously, the size of the order of what you typically do on DoorDash is not that big, which led to a huge social media joke fest around this news yesterday.

2:09I'm going for over$100 on Taco Bell later today. All right. Try it out. Before we jump into the show, a quick word from our sponsor, Sophos. Kyle, I have a question for you. Do you ever feel stretched a little too thin? The days where I wake up early with the Morning Brew daily crew are certainly longer than others. I hear that. Well, whenever you need a little extra backup, Sophos is there. They make sure your cybersecurity is locked up tight. Now that you mention it, I do remember you and Toby talking about the importance of defense and offense yesterday. Exactly. With Sophos, no matter your business's size, you get enterprise-grade technology and real-world expertise always in sync, always in your corner.

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3:26Get started today at linkedin.com slash campaign. Terms and conditions apply. Well, I think this is a first, but because there's such big stories, we're kicking off our Friday show with Stock of the Week, Dog of the Week, the segment where Kyle and I pick one stock that's got McNeese State-level aura and another that got bounced in the first round. Today, we're doing a two-for-one special, kind of like PERT shampoo and conditioner. Our stock of the week is Chinese electric vehicle giant BYD, and our dog is its U.S. rival Tesla. BYD shares soared to a record high this week after making an astonishing claim.

4:02It said it had developed a new charging system that could add nearly 300 miles from five minutes of charging, or about how long it takes to fill up a tank of gas. This ultra-fast charging innovation was called a game-changer by experts and rocked the auto world, Solving the problem of range anxiety and long charging times could convince more shoppers to choose BYD over competitors in China, the world's biggest market for EVs. As for Tesla, the company may be in its most turbulent stretch in its history. It issued another Cybertruck recall number eight. Sales are in reverse. Sometimes violent protests have erupted across showrooms and charging stations.

4:41And major investors and analysts are calling for drastic changes as CEO Elon Musk emerges as the public face of the Trump administration. Shares are down nearly 5 percent this week and they fall in nearly 40 percent this year. The worst performer in the S &P 500. But let's start with BYD, Kyle. This Chinese car company is taking over the world. You can't miss it seemingly these days. And if this charging claim is true, this brings about BYD up to 80 kilometers per minute for charging compared to Tesla's 18. So if this proves to be true and they can build a network, this is a leap in terms of charging an electric vehicle.

5:17What I think is really interesting about BYD, it's not just about the technology, but this also illuminates the kind of geopolitical trade uncertainties as well. Kim Sung-tae, an executive at the Korea Battery Industry Association, said, quote, Our companies will maintain their dominance in the U.S. market as long as the IRA, the Inflation Reduction Act, is maintained, referring to Biden-era legislation, which excluded electrical vehicle tax credits to Chinese car companies. And so you don't see a lot of BYDs in the U.S. because of the trade. Any. Yeah, any because of the trade regulations. However, they are taking over the world.

5:54And so that will be really interesting to see how it plays out with tariffs and trade uncertainty only increasing. Right. So last year, the Biden administration, when he was president, implemented 100 percent tariffs on Chinese electric vehicles to protect the Detroit automakers. Canada also has 100 percent tariffs. The EU has about 80, 90 percent tariffs on BYD and other Chinese electric vehicle makers to protect the domestic industries. But still, BYD is becoming an export power powerhouse. It already has 15 percent market share in China, which is the world's largest market for EVs. But it has absolutely expanded its reach to developing markets, and it's going toe-to-toe with these other automakers in places like South Africa, Turkey, Chile, South America.

6:39In South Africa, China-made vehicles accounted for nearly 10 % of sales last year, which is five times the volume sold in 2019. Go to Turkey, Chinese brands claimed an 8 % share in the first six months of 2024. That's up from basically zero in 2022. So you're seeing a global turf war being fought between really cheap and high quality Chinese cars, which it was crazy because they could not they were not an export powerhouse at all. This is Germany and the United States domain and South Korea and Japan. But they are running that playbook and we'll see whether they come to the United States shores.

7:16But it is unlikely, given that there are 100 percent tariffs on BYD and other Chinese EVs to protect the local industry. Yeah, you're spot on. I mean, those stats you read a lot. China sends more vehicles abroad than any other country. Its passenger car exports surged nearly 20 percent to 4.9 million in 2024 alone. And so I think we're seeing global influence of China through car exportation only increase. And it'll be really interesting to see how that plays out. The other thing is, going back to the technology, the self-driving technology that BYD has and is enabling everyone who buys a BYD car to get is also putting pressure on Tesla where you actually have to pay for that feature.

7:59Right. So in China, where Tesla and BYD are going at it on the roads, Tesla charges you$8 ,800 to buy driver assistance features. BYD offers that for free. A number of other Chinese EV makers also offer driver assistance for free. So Tesla will certainly be facing pressure to bring those costs down, because when you're looking at whether to buy a Tesla or a BYD, that$8 ,800, if more consumers do want those driver assistance features, when you're looking at not paying anything or$8 ,800, which is nearly the cost of the cheapest BYD model, that can certainly go into your decision making. Let's move on to Tesla, the dog of the week.

8:41This company is really going through it right now. Now, there was a major note published by an analyst who was one of the biggest Tesla bulls on Wall Street that is making waves this week. Dan Ives, who's at Wedbush Security, said, let's call it like it is. Tesla is going through a crisis and there is one person who can fix it. Musk, as someone who is a core bull and believer in the Tesla long term growth story, I loudly urge Musk and the board to step up, stop being silent and help resolve this crisis forming at Tesla. That's what I've said. And with the crisis he's referring to is all of this violence that has been waged against Tesla showrooms and vehicles across the United States and across the world as well.

9:27Sinking sales in Europe and in China and in the United States. They've gone into reverse and a plunging stock price, the worst on the S &P 500. Yeah, the stock price is down 42%, nearly 42 % this year. It originally rose a bit due to Musk's relationship with President Trump. That has been nearly wiped out this year. The other thing that's concerning for Tesla, some data from Morning Consult, their favorable and unfavorable ratings, it used to be pretty wide. People really had a positive, rosy view of Tesla. Now, according to January 2025, 35 % of people have a favorable view and 30 % have an unfavorable view.

10:04So that gap has really, really shrunk and the brand has become less rosy in the eyes of a lot of consumers. So a falling stock price, a falling brand, it is probably a crisis at Tesla. JP Morgan, analyst Ryan Brickman, wrote in a research note this week, We've struggled to think of anything analogous in the history of the automotive industry in which a brand has lost so much value so quickly. And perhaps that brand erosion fell even more this week when Tesla announced its eighth recall of the Cybertruck. About 46 ,000 of them. They need to fix an exterior panel that could detach while driving.

10:41That happened yesterday. So, yeah, you have investors and analysts calling on Elon Musk to make a public statement saying how he's going to balance his duties in Washington with Doge with also running Tesla and all of his other companies. Yeah. And we I mean, we have some like maybe unforced errors at Tesla. But going back to the stock of the week, BYD, the competition is also increasing. So there's a lot of pressure from all directions to Tesla. Yesterday afternoon, President Trump signed an executive order directing Education Secretary Linda McMahon to dismantle her own department. Trump and many conservative critics have argued that the Education Department is wasteful financially and educational outcomes would be better if left to individual states to manage.

11:21Among its many programs, such as tracking student achievement and supporting students with disabilities, the Education Department is essentially a giant bank overseeing a massive portfolio of student loans,$1.6 trillion belonging to over 44 million American borrowers. In fact, it's the third largest source of household debt in the United States. The proposed wind down of the Education Department has raised a lot of uncertainty over how those loans would be administered going forward. The White House yesterday tried to calm those fears, saying that even as it's stripped for parts, the Education Department's critical functions would continue, such as the oversight of student loans and Pell grants, which provides aids to students below a certain income threshold.

12:03Still, Trump's goal is to make the agency a shell of its former self and ultimately eliminate it. But expect court challenges because it would take an act of Congress to fully abolish the department. get ready for what the New York Times called a seismic legal battle over the federal government's role in the nation's schools. Taking a look at the stuff that's adjacent to the loans, like a public service loan forgiveness. So once you have a loan, how does the government help you pay that back? It gives people that work in public service and nurse a firefighter the opportunity for their loans to go away after they've made payments for 10 years.

12:35It's like unclear what is going to happen to that program. There's a lot of questions still here on the kind of domino effects that this decision will have. Conservatives have been criticizing the education department since 1980 and think that states and local governments should oversee education and student loans more broadly. But when we're talking student loans specifically, if you want to move the the portfolio of one point six trillion dollars somewhere from the education department, the question is which which new department oversees and what expertise or skills do they have as banking managers to disperse loans and collect that revenue and all that stuff?

13:14Well, one place where they could go ultimately is the Treasury Department. Some advocates of this move say that the Treasury Department is, you know, has the banking expertise. It has the know-how to be able to administer such a cumbersome and massive program. Trump has also floated the Small Business Administration. And some, even on the more extreme level, would say we should privatize everything about the student loan process. That would be a seed change. 92 % of student loans are from the public sphere currently. So the main thrust might be that it moves to the Treasury Department if the Education Department is totally wound down.

13:56Critics of moving into the Treasury Department say, like, this will be messy and we have a lot of things tied up in student loans right now. We should not be moving this huge chunk of loans from one department to the next. We don't know what could get caught in the middle. They acknowledge that maybe this process, the student loan apparatus as managed by the education department isn't the best. They acknowledge there are certain mistakes, but moving it wholesale from one agency to the next would be a mistake. You mentioned that it would likely take an act of Congress to officially wind this down.

14:28The House actually considered an amendment to close the agency in 2023. 60 Republicans joined with Democrats in imposing it. So it's even unclear if Congress has the appetite for this. However, there's been agencies in the past that were phased out. The Interstate Commerce Commission and the Civil Aeronautics Board were two of them. And then additionally, no cabinet-level department has been abolished outright since the U.S. Postal Service replaced the Post Office Department nearly a half century ago. So there's some precedent, but not a whole lot of precedent for doing something like this. Expect major legal battles ahead over the fate of the Education Department.

15:01Up next, Snow White and the never-ending controversies. eczema isn't always obvious but it's real and so is the relief from ebglyss after an initial dosing phase about four in ten people taking ebglyss achieved itch relief and clear or almost clear skin at 16 weeks and most of those people maintain skin that's still more clear at one year with monthly dosing ebglyss libra kizumab lbkz a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies.

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16:53This sale is the highest of any sports franchise and pretty easily surpasses the$4 billion and$3.5 billion paid in 2022 and 2023, respectively, for the Phoenix Suns and the Dallas Mavericks, the last two NBA franchises to be sold before the Celtics. Now, in the background, the valuation of sports franchises have been skyrocketing amidst a general rule change most leagues have adopted, allowing private equity firms to take stakes in teams, making it harder for a single individual or a family to own a team outright. Now, who was selling the team? Well, the Celtics majority owner was Wick Grosbeck.

17:31A group led by Grosbeck bought the Celtics in 2002 for$360 million. And if you felt bad for Wick for only making a 20x investment here, don't worry. Hopefully the two championships the Celtics won during his tenure will help him sleep at night. Final note, the deal still needs approval from the NBA's Board of Governors, and so it should take a few months to officially close. Neil, when is Morning Brew going to buy a franchise? We got to get in the mix here. We're trying. It's getting a little out of our price range,$6.1 billion. And Axios also reported that$6.1 is not going to be the end price here.

18:07There's going to be another round of investment that eventually bumps the price up to$7.3 billion. And it shows the marquee nature of that Celtics brand. They're coming off a national championship. They've won 18 titles, most of any NBA team ever. But when you talk about Bill Chisholm, when this news dropped yesterday, people were like, who? This guy didn't even have a Wikipedia page before he led an investor group to buy to buy the Boston Celtics. He's the co-founder of Symphony Technology Group, which is out of Menlo Park, Silicon Valley, California. He grew up on the north shore of Massachusetts as he's a huge Celtics fan and went to Dartmouth.

18:50So he's a New England guy. He went to the West Coast to make his fortune. is coming back to buy the Celtics and is paying a lot to do so. But there's a lot to, you know, a lot to like about buying a sports franchise now because of what you said. Valuations are booming. There's huge TV rights deals coming. And this also sets the stage for NBA expansion. Yes, that is a really interesting angle. And because of these increased valuations, the fee that would be dispersed to all the teams for allowing another team to enter the league would increase. And just the competition for buying a franchise is really, really heating up.

19:26Steve Pagliakua, who's a minority owner of the Celtics or was, actually put together a group to try to buy it. He was like, we've got the best people. We have the best technology. We would not have any debt financing. And he was rejected for another offer. So people really want to buy franchises. They're the things that even sometimes a billionaire can't buy outright. There's also a sports angle here, which is the team is quite good and the roster is very expensive. And so they're getting into luxury tax bill territory. And so it's still unclear just how much this new ownership group will be willing to put money into it or pay these luxury taxes.

20:02Although he did say, quote, I bleed green. I love the Celtics and it's all about winning. So we'll see if Bill is ready to foot the bill. We'll see whether he's ready to foot the bill because this team is going to cost$400 million in payroll and taxes coming up. Yeah, Jason Tatum, Jalen Brown, they're probably staying, but who knows about the rest of this team? Yeah, something to watch going forward. Let's move on to our next story. The new Disney remake of Snow White comes out today, and it's unclear which is more entertaining, the actual movie or the behind-the-scenes story of this movie's journey to the big screen, which makes eating a poisoned apple look like child's play.

20:40So here's the details, Neil. First, just some bad luck. COVID cases flare up in London just as production gets underway, forcing Disney to increase safety protocols, which starts to bloat the budget. Then one of the sets catches fire and has to be redone. And the 2023 actor strike and complication from Gal Gadot, who plays the evil queen, her pregnancy forced Disney to halt reshoots, do visual effects over again. Then, just on top of bad luck, people think Disney made a lot of unforced errors during the production of this movie. The star of the movie, Rachel Zegler, made some comments that people implied throwing shade at the OG Snow White movie, so some fans were put off by those.

21:19In addition, many thought Disney flubbed this response to some leaked images that came out from the movie, which had people concerned that they actually just scrubbed the dwarves entirely from the movie. On the other hand, stars like Peter Dinklage felt like the movie was perpetuating negative stereotypes. These unforced errors, I think, highlight the difficult cultural landscape Disney has tried to navigate over the years making this movie, seemingly angering people no matter what they did. The whole role could be summarized by the trailer stats, which have passed over 1.5 million dislikes on YouTube.

21:53Neil, is this actually a big deal or is this movie going to be just fine? Well, we'll find out this weekend. I mean, Disney has done this series of live action remakes, Little Mermaid, Lion King, Mufasa, Aladdin, Beauty and the Beast. They have Lilo and Stitch come and Moana coming up where they take their old animated movies and in terms of and make them into live action. Very weird looking remakes. But I guess people watch them. But Snow White is very interesting IP because it came out in 1937, a long, long time ago. So a lot longer than some of these other live action remakes. So if you are trying to get kids excited about certain princesses and getting them to come to your theme parks and just be involved with this particular IP, Snow White might not be on their radar.

22:42So this is a big deal for Disney to get Snow White back on the forefront of people's minds so they can get that Disney flywheel going. You see the movie, then you go to the parks, then you buy the toys, et cetera, et cetera. Then you watch the show on Disney+. So this is very important for Disney to get Snow White back on the forefront of kids' radars. Yeah, I think you hit the nail on the head, and there was actually these rumors that they might kick it to streaming, like, oh, this is not going to perform well. Let's just put it on Disney+. The budget had risen to$270 million, and Disney +, would have had to absorb those costs.

23:12And Disney has made this whole point of making their streaming much more profitable. So to the big screen, it's going to go based on ticket presales and some surveys of moviegoers. Snow White, it's expected to collect between$45 million and$50 million at domestic theaters over the weekend, again, according to box office analysts. And so that's a decent number. But in the 15 years that the company has been producing them, none of these big budget entries have exclusively arrived in theaters to less than$58 million. So this would actually be kind of a down round for Disney if it does hit those numbers as projected.

23:44These live action remakes do generally really well at the box office. Last year, Mufasa, the Lion King film, which you didn't know existed, made over$713 million globally. Beauty and the Beast back in 2017 opened$175 million domestically. So these are huge, potentially huge movies. And, you know, we'll be back on Monday with an update on how this did at the box office. despite all of the controversies. Reviewers said this was one of the better remakes of them all. Yeah, and David A. Gross, a box office analyst, actually said never doubt the babysitter effect, which is if you're babysitting kids and you need to entertain a six-year-old, you take him to the movies.

24:28Probably why I'd never heard of Mufasa, yet it did 700 million. So the babysitter effect might save Disney here. Finally, Happy Friday hits different today because the annual World Happiness Report ranking countries by how happy their citizens are just dropped. and I'm going to have to ask the creators of Nokia and an epic sauna culture to wipe that grin off your face. For the eighth year in a row, Finland was found to be the happiest country in the world, followed by fellow Nordic nations, Denmark, Iceland, and Sweden, which was the same order as last year. Why are Finns so dang happy? Residents say there's a great deal of trust, connection, and knowing your fellow people have your back, especially when it's dripping with steam.