Closing Time

Ford posts stellar June sales. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

July 6, 2022

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TOGETHER WITH

Good morning.

On Tuesday, Costco began limiting gasoline sales in New Jersey only to those who are paying members of the retailer.

Costco typically sells gas for below market value — for example, a gallon of their regular gasoline cost $4.55 in New Jersey on Tuesday, 25 cents less than the statewide average. Why only New Jersey? Don't ask questions, fuhgeddaboudit.

Morning Brief

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Livestreamed e-commerce proves futile for TikTok.

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An Australian startup is fundraising for a sun-sized, transformational solar project.

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Gas may be expensive, but Ford saw a massive sales increase in June.

Social Media

TikTok Places its E-commerce Plans on Ice

TikTok, which overtook Google as the most visited website last year, won't be leapfrogging Amazon in the e-commerce business any time soon.

The short-form video app has quietly put a hold on plans to expand its e-commerce feature to the US and Europe after a British launch failed to earn any quid and left staff feeling a bit brassed off.

God Save The Livestream

E-commerce, traditionally the province of static websites like Amazon, is becoming an increasingly lucrative revenue source for live streaming platforms starring fashion and culture influencers. For instance, TikTok's China-based parent company ByteDance tripled the number of products sold on TikTok's Chinese sister app Douyin to 10 billion last year.

TikTok's e-commerce feature, TikTok Shop, lets brands and influencers sell products on live broadcasts — a sort of 21st-century upgrade to QVC, where purchases can be completed in only a few quick taps and TikTok rakes in a 5% commission. The company planned to launch the feature in the US, Germany, France, Italy, and Spain this year, but an underwhelming rollout in the UK has put those hopes in the bin:

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A Financial Times investigation revealed last month that UK employees on TikTok's e-commerce initiative were expected to work 12-hour days, disciplined if they didn't respond to work during out-of-office hours, and were burdened with "unrealistic targets" of £400,000 a month in total livestream sales (a successful stream makes about £5,000). At least 20 staff resigned, knackered by the brutal working conditions.

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TikTok Shop is operating at a loss in the UK, sources at the company told the FT, and many livestreams fail to make a single sale.

Culture Clash: European brands, concerned with maintaining their reputation for quality, have been averse to TikTok's e-commerce model, which involves huge discounts often subsidized by the social media company. "The model doesn't work because it is a different market and ecosystem in the UK but management doesn't listen and refuses to make changes," one employee told the FT.

Infrastructure

Macquarie, Moelis Tapped to Raise $20 Billion For Giant Solar, Sea Cable Project

On a continent where it's summertime at Chrissie (that's Christmas) and barbie (that's barbeque) season extends all the way through "winter," sun is in no short supply.

That's why Australian energy start-up Sun Cable has tapped two of the world's top investment banks — Down Under's own Macquarie and Wall Street's Moelis — to raise $20 billion for a massive solar farm. If that wasn't ambitious enough, they also want to attach it to the world's largest undersea cable.

Scorchers to Dollars

Australia produces 2.4% of global energy and exports more than three-quarters of that output, worth roughly $55 billion, according to the country's federal government. Today, most of the energy from Down Under is sourced from fossil fuel projects. As the world pivots towards clean energy, the continent with the most solar coverage in the world has a pretty obvious advantage to unlock.

"In theory, there is enough sun falling on a square of about 50 kilometers by 50 kilometers (or 0.03% of Australia) to provide all of Australia's electricity," Wes Stein, chief solar technologist at the Commonwealth Scientific and Industrial Research Organisation, told the Australian Broadcasting Corporation. "Obviously storage is needed, but that's another issue." Getting to that point will take a lot of hard yakka (work), which Sun Cable's project hopes to put a dent in:

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The company plans to build 20 gigawatts of solar capacity and 40 gigawatt hours of battery storage in a remote part of northern Australia. The project will be the first Australian renewables development worth tens of billions to seek full funding on capital markets, according to the Financial Times.

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The viability of Sun Cable's plans depends entirely on Singapore's energy regulator, which must decide whether to grant the company a permit to build a 4,200-kilometer undersea cable to the island nation as part of a tender program seeking 4GW of continuous clean energy supply by 2035. That cable would become the largest in the world by a huge margin, blowing the 720-kilometer North Sea Link between the UK and Norway out of the water.

Race to the Finish: Sun Cable was proclaimed "investment ready" by the Australian government last month, and is targeting a 2029 completion date for the massive project. But it's not alone in ambitions: a 26GW wind and solar farm development in Western Australia is backed by oil giant BP. If all goes as planned, Aussies' energy sector will be as sunny as their disposition.

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Automobiles

Ford Sees Sales Spike in Latest Earning Report

(A Ford F-150; Photo by RL GNZLZ)

Sky-high gas prices may have some eyeing a bicycle or the bus, but there's one auto brand still convincing consumers to stick with cars.

Despite all the reasons not to be driving right now, Ford's sales increased 1.8% year-over-year in its second-quarter earnings report delivered on Tuesday — including a logic-defying 32% increase in June.

What the Truck

The automotive industry is getting hammered this year. Overall industry sales are down about 20% through the first six months, and 11% last month. While Ford hasn't been totally immune from the supply chain challenges still putting a dent in the industry, strong demand for trucks, particularly electric trucks, helped the company breeze past peers:

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Sales of the popular F-series trucks jumped over 25% to around 57,000 in June, around 40,000 more than the closest competitor, Ford said. That's good for nearly 40% of the company's overall sales mix.

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Sales of the F-150 Lightning, E-Transit, and Mustang Mach-E — electric vehicles liberated from the gas crisis — hit 4,353 units, up over 75%. EV sales are now at nearly 23,000 overall in the year, another increase over 75%.

Dealer Bust: A record 50% of retail sales came from direct orders, rather than from regular-old dealer lots, which have struggled to keep vehicles in rotation. Automakers have been encouraging customers recently to order directly as a means to keep better tabs on demand and supply chain logistics.

Recharging: Ford's EV success is more bad news for Tesla. After disappointing sales and a record month of production, Elon Musk's flagship company is halting production at multiple plants to let demand catch up with supply. Meanwhile, China-based and Warren Buffett-backed BYD officially overtook Tesla as the world's biggest EV producer by sales. At least plant workers will get a nice unplanned vacation before reigniting their quest to reclaim the EV throne.

Extra Upside

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Artificial Intelligence will help referee this year's World Cup.

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Flying to Sweden or Denmark soon? Check your trip, Scandinavian Airlines filed for bankruptcy in the US.

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How's this for a stat? In 1950 you could buy a cup of coffee for $0.22. Today, that same piping hot cup of brew costs $2.38. In 2022, we can all feel the acute pain associated with this phenomenon known as inflation. The key question to understanding this quagmire is unpacking the economic forces that cause it and analyzing the historical precedents. Check out this article from FinMasters to learn more.