Tesla's Troubles Are Piling Up While Elon Musk Is Distracted With Twitter

Sean O'Kane

December 8, 2022

(Bloomberg) — While Elon Musk is busy overhauling newly acquired Twitter Inc., Tesla Inc. is facing increasingly urgent issues and testing the faith of some of its chief executive’s biggest fans.

Weakening demand in China is forcing the electric-vehicle maker to slow production and delay hiring at its Shanghai factory. Its top executive for that market has been called in to help out at its newest plant, in Texas, which isn’t ramping up as planned. And Tesla’s stock, which has lost more than $500 billion in market value this year, is under renewed pressure as Musk’s advisers weigh using the billionaire’s shares as collateral for new loans to replace Twitter debt.

The revelations just from the past few days have raised concerns with shareholders already worried about Musk’s priorities since he took the helm of yet another company.

“Tesla board is missing in action,” Leo KoGuan, one of Tesla’s largest individual shareholders, tweeted Wednesday as he suggested a stock buyback. He and another outspoken Tesla investor, Ross Gerber, are calling for the board to add a director who would represent retail shareholders.

Musk himself has said he has “too much work” on his plate, and is handling it by sometimes sleeping in the office. Whereas in the past he slumbered at Tesla facilities, lately he’s hibernated at Twitter’s San Francisco headquarters.

”I continue to oversee both Tesla & SpaceX, but the teams there are so good that often little is needed from me,” Musk tweeted Thursday. “Tesla Team has done incredibly well, despite extremely difficult times,” he said earlier in the day, citing the European energy crisis, real estate downturn in China, and US interest rates as macroeconomic challenges.

The volatile recent stretch muddies the close of a year in which Tesla is still expected to achieve record sales and retain its crown as the world’s largest EV maker. It hasn’t been immune, however, from the slowdown in China’s car market and recessionary conditions in Europe. In October, Chief Financial Officer Zachary Kirkhorn said the company expects to come up just short of the 50% growth in vehicle deliveries that the company has repeatedly said it’s expecting over several years.

Tesla’s plant in Austin, Texas, is scaling slower than expected, with a new form of lithium-ion battery cells not yet ready for volume production. Against that backdrop, the company tapped Tom Zhu, a key executive in China who oversaw construction of the Shanghai factory, to oversee operations in Austin, Bloomberg reported Wednesday.

In Shanghai, Tesla is shortening production shifts and delaying start dates for some newly hired employees, Bloomberg reported Thursday, the latest signs that demand for Tesla EVs in China isn’t meeting expectations. That came after Bloomberg reported earlier this week that Tesla planned to cut production on the Model Y and Model 3 production lines in Shanghai by about 20%.

Tesla will have a lot on its plate in 2023. The company recently started delivering its long-awaited Semi truck several years late and plans to finally start producing its first pickup, the Cybertruck.

The buyback some investors have been asking for may also be in the cards. Musk said during the company’s last earnings call that the board generally thought a buyback made sense, and that something on the order of $5 billion to $10 billion was possible. Last month, he tweeted that the decision will be up to Tesla’s directors.

Musk and Tesla didn’t respond to requests Thursday for comment. A representative for the company said earlier that Bloomberg’s report of plans to cut output in Shanghai was “untrue,” without elaborating.

Tesla shares slipped less than 1% at the close in New York, trading lower for a fourth consecutive day. The stock has plunged 51% this year.

—With assistance from Chunying Zhang.

Post-pandemic, consumers want things to return to normal. Employees? Not so much

Published: Dec. 11, 2022 
Associated Press

Shoppers are seen in a Kroger supermarket on October 14, 2022, in Atlanta, Georgia. ELIJAH NOUVELAGE/AGENCE FRANCE-PRESSE/GETTY IMAGES

NEW YORK (AP) — Before the pandemic, Cheryl Woodard used to take her daughter and her friends to eat at a local IHOP DIN, -2.03% in Laurel, Maryland after their dance practice. But now they hardly go there anymore because it closes too early.

“It is a little frustrating because it’s not as convenient as it used to be,” said Woodard, 54, who also does most of her shopping online these days instead of in person because of stores limiting their hours.

Before the pandemic, consumers had gotten accustomed to instant gratification: packages and groceries delivered to their doorstep in less than an hour, stores that stayed open around the clock to serve their every need.

But more than two and a half years later in a world yearning for normalcy, many workers are fed up and don’t want to go back to the way things were. They are demanding better schedules, and sometimes even quitting their jobs altogether.

As a consequence, many businesses still haven’t been able to resume the same hours of operations or services as they continue to grapple with labor shortages. Others have made changes in the name of efficiency. For instance, Walmart WMT, -1.80%, the nation’s largest retailer and private employer, announced this past summer it doesn’t have any plans for its supercenters to return to its pre-pandemic 24-hour daily operations.

IHOP says a vast majority of its locations have returned to their pre-pandemic hours and some have even expanded them. But others, like the Laurel location that Woodward used to frequent, have indeed cut back.

The changes are creating a disconnect between customers who want to shop and dine like they used to during pre-pandemic times and exhausted employees who no longer want to work those long hours — a push-pull that is only being heightened during the busy holiday shopping season.

“Nobody is winning,” said Sadie Cherney, a franchise owner with three resale Clothes Mentor boutiques in South Carolina. “It is so demoralizing to see that you are falling short on both ends.”

Across all industries, the average number of hours worked per week per worker totaled 34.4 hours in November, unchanged from February 2020, according to the Bureau of Labor Statistics. But for the retail industry, it slipped 1.6% to 30.2 hours per week during the same period. Hours worked at restaurants were down by similar amount in October, according to the most recent data.

Meanwhile, the National Restaurant Association’s most recent monthly survey of 4,200 restaurant operators conducted in early August found that 60% of restaurants reduced hours of operation on the days they were open, while 38% closed on the days they would normally be open compared to right before the pandemic. And a report published by food and beverage research firm Dataessential showed the average U.S. restaurant as of October was open around six fewer hours per week than in 2019 — a 7.5% decline.

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Cherney noted her stores returned to pre-pandemic hours last year but with the worsening labor shortages and higher labor costs, she has struggled to keep those same hours this year.

Her store in Columbia is open one hour later, but she had to offer wage increases to her workers. For her two other locations in Greenville and Spartanburg, hours have been reduced for personal shopping appointments throughout the week, and no longer accept second-hand clothing from shoppers on Sundays.

Cherney noted customers often complain about long waits to process their second-hand offerings, while her staff is overextended because they’re working 20% more than what they would like. The end result: Cash flow and profitability have both taken a hit.

Mani Bhushan, owner of Taco Ocho, a taco restaurant with four locations in the Dallas area, still struggles to hire cooks at his McKinney location, which opened in July 2021. He said many workers can’t afford to live in this upscale suburb and have to travel from elsewhere. Several times a week he’s had to close the location early — something he has never had to do in the 40 years he has worked in the business.

Even when Bhushan is able to keep his normal hours of operation, he still has to cut off online orders earlier in the day and the service is not up to par with his other locations.

“I am a perfectionist,” he said. “I am not happy. But I can’t fix it right now.”

The worker shortages should remain acute into next year even as several big tech companies have reduced staff or have frozen corporate hiring. The economy added 263,000 jobs while the unemployment rate remained at 3.7% in November, still near a 53-year low, according to the Labor Department. And while U.S. job openings dropped in October from September, the number ticked up 3% in retail.

For mall operator Taubman Centers, which manages or leases 24 premier centers in the U.S. and Asia, many stores are opening later than its centers to save on employee costs, according to Bill Taubman, president and chief operating officer. However, he said that causes frustration among customers who go to the mall thinking the store where they want to shop will be open.

Vicky Thai, a 27-year-old studying to be a physician’s assistant in West Hartford, Connecticut, said she’s often frustrated over the waits to get served at restaurants and stores. She recalled a recent restaurant experience where it took a long time just to get some water; at a local clothing store, she spent 30 minutes in line to buy an item because of staffing shortages.

But for every frustrated customer, there is a frustrated worker. Artavia Milliam, 39, of Brooklyn, New York, is a visual merchandiser at H&M in Times Square. She said she spends more of her time helping out on the sales floor than updating the mannequins because of the shortage of staff.

“It can get overwhelming,” she said. “Everyday, I encounter someone who is rude.”

India is trying to become the new factory of the world, but it could take more than a global pandemic to unseat China from its 40-year reign


Huileng Tan
Sun, December 11, 2022 

India's vying for a piece of China's pie in higher end manufacturing.Sajjad Hussain/AFP/Getty Images

China's zero-COVID policies are pushing companies to diversify supply chains away from the country.


They were already moving out due to geopolitical tensions and tariffs from the Trump era.


But it isn't easy to fully replace China's supply chain ecosystem in any country — even one as vast as India.

China's zero-COVID policy may just be doing what Donald Trump didn't manage to fully achieve during his term as president — shifting global supply chains away from China for the first time in 40 years.

In 2018 and 2019, Trump levied stiff tariffs against China to counter what he called unfair trade deals with the US, spurring retaliation from Beijing and kicking off a trade war.

And while many companies started discussing moving supply chains out of China as a way to distance themselves from geopolitical risks, it was really the pandemic — and China's zero-COVID policy — that drove home the importance of not depending on one country for its supply chain.

"The geopolitical tensions in themselves may not have resulted into this level of realignment of supply chains, but COVID certainly provided that extra vision extra fillip, the extra fuel to the fire," Ashutosh Sharma, a research director at market researcher Forrester, told Insider.

Tech giant Apple provides the latest example of being burned by an overreliance on Chinese production lines, with iPhone output hit by China's relentless zero-COVID pursuit. Apple is now speeding up its push to shift its production out of China to other Asian countries. But where to go?

Major Apple supplier Foxconn's top pick is India, and so is that of other chipmakers, after the Biden administration in October imposed export controls on shipping equipment to Chinese-owned factories making advanced logic chips.

"India has a large labor pool, a long history of manufacturing, and government support for boosting industry and exports. Because of this, many are exploring whether Indian manufacturing is a viable alternative to China," Julie Gerdeman, the CEO of supply chain risk management platform Everstream, told Insider.

But the move is easier said than done.
India is the world's largest democracy, and that makes decision-making a lot more complicated

As a large economy with a young population, India has the potential to be a manufacturing powerhouse. But the South Asian country is also infamous for its bureaucracy and hindering red tape.

"It's far from a place where businesses can simply come in and open a shop without having too many company compliances," said Sharma, who is based in India. "I'm sure China has those issues too, but its ability to move fast on those compliance requirements is much higher than in India, because India is much more democratic and there are just too many stakeholders to satisfy here."

India came in at the 63rd position in a World Bank list of 190 countries ranked based on their ease of doing business in 2019. While this was an improvement from its position in the 142th position in 2014 when Prime Minister Narendra Modi took office — it still lagged behind China, which was in the 31st position in 2019 — the last year the index was compiled before the World Bank discontinued it after a data rigging scandal. Data irregularities improved China's position in 2018, according to a World Bank audit published in December 2020.

India also has a history of protectionism, which makes it less competitive in terms of attracting large investments.

"China manufactures at scale, while most factories in India are small and midsize due to federal regulations and protections designed specifically for SMEs," said Gerdeman.
China has built a manufacturing ecosystem over 4 decades

India's Prime Minister Modi has been working on attracting foreign direct investments, or FDI, since he took office in 2014, sending FDI to a record $83.6 billion in the last fiscal year, according to government data.

"India certainly has advantages in terms of demographics, in terms of geography, in terms of the infrastructure that exist, much of which has been built in the last few years," said Sharma. "It can obviously increase the scale, but what it does not have is all the pieces of the puzzle."

What he means is that China has managed to build up a value chain so extensive that almost everything required to make a product can be sourced and acquired in the country, which allows for low-cost manufacturing on a large scale. In contrast, India doesn't have this capability yet, which takes years to build up.

That's because manufacturers always start factory operations with the assembly line before starting to develop local supply lines for the finished products in a "backward integration" of processes, said Sharma.

"That supply chain takes time for it to build because even when you are sourcing it internally, the quality is not that good initially, your scale is not that high, and you run into those issues. So yes, it can be done, but it takes time," he told Insider.
Once burned, twice shy companies aren't going all in on India this time

In any case, companies are unlikely to flock en masse to India like they did to China because it's just been proven too risky, the experts said.

And it's not just Foxconn and Apple that have gone all in on China and are now suffering for it: US sportswear giant Nike, Japanese carmaker Toyota, and South Korean tech titan Samsung all number among the many companies experiencing prolonged supply-chain issues because of their reliance on the manufacturing giant.

"They are looking to diversify their sourcing," said Sharma. "If you look at Foxconn and Apple, they have already moved a significant part of production to India and I'm sure to other countries like Vietnam, and a few other places. That's precisely because they want to diversify, from having dependency on one country, like China, to a couple of locations."

This means more complex supply chains, but they will be diversified all from raw material stages, he said.

"If they can build two or three dependable places where they can source from, they will still have alternative sources even if something happens to one location in the future," said Sharma.

ALL CAPITALI$M IS STATE CAPITALI$M

U.S. finalizes $2.5 billion loan to GM, LG battery joint venture



Mon, December 12, 2022
By David Shepardson

WASHINGTON (Reuters) - The U.S. Energy Department said on Monday it had finalized a $2.5 billion low-cost loan to a joint venture of General Motors Co and LG Energy Solution to help pay for three new lithium-ion battery cell manufacturing facilities.

Reuters first reported in July the planned loan to Ultium Cells LLC from the government's Advanced Technology Vehicles Manufacturing (ATVM) loan program.

The loan will help finance construction of new lithium-ion manufacturing facilities in Ohio, Tennessee and Michigan, supporting 6,000 construction jobs and 5,100 operations jobs at the three plants.

U.S. Energy Secretary Jennifer Granholm plans to tout the closing of the Ultium loan on a visit to Michigan on Monday with Labor Department Deputy Secretary Julie Su, Michigan Governor Gretchen Whitmer, United Auto Workers (UAW) President Ray Curry and other officials, automakers and EV battery companies. They will discuss strategies to recruit and retain a diverse and skilled battery workforce, and the Biden administration's Battery Workforce Initiative.

Last week, workers at the $2.3 billion Ultium plant in Ohio voted to join the UAW, a win for the union, which is seeking to organize the growing EV supply chain.

GM and LG Energy are considering an Indiana site for a fourth U.S. battery plant. They are building a $2.6 billion plant in Michigan, set to open in 2024. This month, Ultium said it would boost its investment in a $2.3 billion Tennessee plant by another $275 million.

President Joe Biden has set a goal for 50% of U.S. auto production by 2030 to be electric or plug-in electric hybrid vehicles. GM plans to build 1 million EVs in North America by 2025 and to stop selling gasoline-powered vehicles by 2035.

The $430 billion Inflation Reduction Act (IRA) approved in August included another $3 billion for ATVM loan costs and expanded uses to larger vehicles, maritime vessels, aviation, and other transportation modes.

The Energy Department said the $3 billion would provide an estimated $40 billion in additional loan authority for a total estimated available authority under ATVM of about $55.1 billion before the Ultium loan.

The ATVM loan program in July closed on a $102.1 million loan to Syrah Technologies LLC for expansion of a facility producing a key component for batteries. It was the first new loan finalized from the ATVM program since 2011.

The program previously supported Ford Motor, Tesla and Nissan Motor projects. GM applied for ATVM loans totaling $14.4 billion in 2009 but withdrew the application in 2011.

(Reporting by David Shepardson. Editing by Gerry Doyle)

To make cheap EVs work, automakers are replacing decades of know-how with a move from Tesla's playbook

Alexa St. John
Thu, December 15, 2022 

Automakers might need to copy Tesla's playbook for battery sourcing. Here, a battery is installed in the Hummer EV.

Mandel Ngan/Getty Images

Auto companies need EV battery supply more than ever, but the costs are adding up.

Prices and a push to use local materials have carmakers investing in in-house battery supply.

This move copies what Tesla has long been doing for years.

With electric car battery costs on the rise, auto companies are doing everything they can to make their EV offerings more affordable for the masses in the coming years.

Making that happen may require forgetting much of what they've learned about supply chains over a century, and replacing it with a few pages from Tesla's playbook.

Automakers have been trying to evade today's EV woes by exploring different kinds of batteries to slash their dependence on the in-demand materials found in traditional lithium-ion setups. They've also been ramping up battery recycling efforts and working to return lithium, nickel, cobalt and more into the supply chain.

These solutions come with challenges in terms of timing and expense, at least in the near term. That means car companies are seeking an alternative and racing to secure their battery supply in the US.

That means making investments in battery material sourcing, battery production, and more, to reduce the global supply disruptions the industry saw from the pandemic.

"Almost all the major companies are investing in that for that very reason: to vertically integrate more and get more control of their supply chain," said Peter Maithel, auto industry principal analyst at Infor.

Volkswagen is building a battery cell factory at its Salzgitter site for its planned large-scale production of the Group's own battery cells.

Julian Stratenschulte/picture alliance via Getty Images

What's the rush?

In the past, car companies have expanded their supply chains across the globe, relying on slews of suppliers for each component of a car. Some of their key parts might come from the US, while others might come from Europe or Asia.

Historically, the breadth of those supply chains has reduced potential bottlenecks. But the pandemic — and other disruptions, like natural disasters — shed a light on just how vulnerable that can also make auto companies. If an auto parts plant across the world sees even a minor disruption, that could bring down a manufacturing line for days or weeks at a time.

The dawn of EVs, and the nuances in sourcing for these cars, brings those concerns and more to the forefront of automaker to-do lists. The US in particular has relied on foreign sources for battery supplies, components, and processing. China, meanwhile, has had a headstart in terms of sitting on the raw materials necessary to power EVs and controlling production of much of the world's battery cells, packs, and more.

But whether it's an unforeseen disruption like COVID-19 or a geopolitical issue, that leaves companies pretty vulnerable — and has encouraged them to bring manufacturing closer to home. There's been a general push to get away from that world-wide supply chain model anyway, driven by this summer's climate law.

"We've just seen an unprecedented amount of announcements, joint development agreements, early supply contracts from the automakers with battery materials providers, with battery manufacturers," said Matt Sculnick, executive director of Nomura GreenTech's advanced transportation team, "in a collaborative way that I don't think we've really seen."

Rivian manufactures its EVs in Illinois. Rivian

Good news for EV adopters — eventually

It's called vertical integration — and it's something Tesla has long been known for.

"Tesla is always the groundbreaker here, going directly to the source, going directly to the mines and negotiating supply contracts with the mines," said Alvarez & Marsal managing director Tony Lynch.

It's given Tesla an advantage in terms of having visibility into production, while GM and Ford and others scramble to get in on US mining deals and manufacturing.

It's complicated and time-consuming, but may ultimately be the best way car companies can get closer to lowering the cost of new EVs. Those sat at about $65,041 in November, according to Kelley Blue Book — when a new gas-powered car averaged $48,681 that same period.

More supply in general, but especially in the US, combined with more EV volumes, will drive that down.

Legacy Automakers Keep Taking Pages From Tesla's Playbook Despite CEO Controversy

Upwallstreet
Thu, December 15, 2022


According to BloombergNEF, battery prices rose for the first time in a decade. However, BloombergNEF experts don’t expect the rising costs for battery ingredients like lithium, cobalt, and nickel to impact vehicle prices anytime soon. Moreover, they expect it to be a temporary bump as BNEF predicts prices will drop in 2024, as more lithium production comes online.

Still, it's not good news for both legacy automakers as well as EV start-ups that desperately need profits from EVs to come as soon as possible to offset intense capital costs.

With rising costs and global pressures, automakers are trying to localize production and secure an in-house battery supply. Therefore, automakers seem to be taking another page from Tesla’s playbook despite the EV pioneer not doing so well in face of its share price dropping 61 percent since the beginning of the year, underperforming Ford and GM.


Forgetting everything they know

Automakers have been trying to evade the electric trend by exploring different kinds of batteries, ramping up battery recycling efforts and working to return lithium, nickel and cobalt into the supply chain. But, the existing knowledge does not help much in this equation as a new electric world comes with a new set of rules that is forcing automakers to vertically integrate and get more control of their supply chain.

Global supply chain is now a weakness

Historically, a global supply chain with a variety of players has reduced the risk pf potential bottlenecks. But natural disasters and most recently, the COVID-19 pandemic, revealed that such constitution makes automakers extremely vulnerable as even minor disruptions ended up halting the manufacturing line for days or even weeks.

Bringing manufacturing closer to home

This year, we’ve witnessed an unprecedented amount of joint development agreements, early supply contracts and similar announcements. These kind of agreements are always complex and significant time is needed for them to bear fruits but they seem to be the best way to make EVs more affordable.

Even the legendary automakers cannot pull it off alone. GM made a multimillion investment into Australia’s Controlled Thermal Resources (CTR) to extract lithium from California. Back in July, Ford Motor revealed it will buy lithium from Ioneer Ltd's (INR.AX) Rhyolite Ridge mining project in Nevada.

Worksport

Worksport Ltd. (NASDAQ: WKSP) is a company commited to changing the rules of the game both in the energy and automotive industry. With solar powered tonneau covers among its many intellectual properties, its subsidiary Terravis Energy Inc is developing a Non-Parasitic Electric Vehicle (NPEVTM) charging platform. Moreover, to minimize geopolitical risks that are very much in the air these days, the company added a manufacturing facility in the U.S. The 222,000-square-foot facility is expected to be up and running at full capacity soon.

Mercedes Benz

Automakers are also investing heavily into battery development in an effort to reduce their dependence on lithium and other highly prices and demanded battery ingredients.

On Wednesday, Mercedes-Benz unveiled its over $1.06 billion plan to adapt its entire global production network for electric powertrain systems from 2024.

With plants in Germany, Beijing and Romania, the premium automaker has set up its lines to produce both traditional combustion engines and EVs, but assembling batteries and motors on the same line is a more challenging task. The automaker stated that many of its component-making plants will continue making parts for internal combustion cars, as long as there is demand. Therefore, the automaker is striving for all-electric sales by the end of the decade but where the market conditions allow for it.

Tesla’s flamboyant CEO is feared to be distracted

Although no one can argue that Tesla is the company who started all this EV frenzy, concerns are in the air as its CEO, Elon Musk, has sold another round of stock valued at $3.6 billion. What is worrying is that Musk stated in April that there would be “no further TSLA sales” to support his acquisition of Twitter acquisition. Since the takeover, thebillionaire has sold $23 billion of Tesla stock and is found by many to be distracted and even absent. Although Musk tried to address concerns on Tuesday, stating that he will make sure that Tesla shareholders benefit from Twitter long-term, this proclamation was overshadowed by the controversy surrounding the management of the never-boring social network. Tesla did an extraordinary job but as we all know too well, future is promised to no one, and therefore, taking pages from its book in this ever changing climate is not necessarily a good idea.

See more from Benzinga

Semiconductors, The Fourth Industrial Revolution and the End of Globalization

Getting EVs To Go Further Does Not Have To Be Entirely About Changing Battery Technology

Elon Musk's former right-hand man is taking the next big step in his plan to make EVs cheaper by recycling old batteries

Alexa St. John
Wed, December 14, 2022 

Redwood Materials employees taking a battery module apart.

Redwood Materials

The EV battery recycling giant just announced a new plant in South Carolina.

The plant will help carmakers get the materials they need to make EV batteries.

The news is also critical as car companies race to respond to this summer's climate law.

Electric vehicle battery recycling giant Redwood Materials is spending $3.5 billion on a new factory, and its location near the heart of the American "battery belt" is crucial to auto companies for a few reasons.

Run by Elon Musk's former right-hand man at Tesla, JB Straubel, Redwood recycles and refines the many precious materials — like lithium, nickel, and cobalt — found in used lithium-ion batteries from electric cars and consumer electronics, then sends them back into the supply chain.


The company's new plant, its second, will sit near Charleston, South Carolina. Redwood says it will break ground in the first quarter of 2023, have it up-and-running by the end of the year, and soon have it supply 1 million EVs annually.

While Redwood's flagship plant is near its Carson City, Nevada headquarters, this one's in the "battery belt": A stretch across the country, particularly in the Southeast, where car companies, battery makers, and more are setting up new EV development shops.

Redwood recycles and refines the many precious materials — like lithium, nickel, and cobalt — found in used lithium-ion batteries from electric cars and consumer electronics

Redwood Materials

Ford established its BlueOval City campus in Tennessee and two battery plants in Kentucky. GM, through its Ultium Cells joint venture with LG Energy Solution, is also investing in battery-making in Tennessee. Panasonic is building a new battery factory in Kansas. Hyundai is investing in EVs and battery production in Georgia.

Redwood's ramp-up is also crucial as the auto industry races to comply with this summer's massive climate law, which requires that car companies source and build certain percentages of their EVs domestically if they want their vehicles to qualify for tax credits.

But even without federal encouragement, the industry has worked to bring the various parts of the all-new EV battery supply chain to the US in order to drive down materials costs, and cut the sticker price for buyers.

With more and more demand for the materials to make these things, taking advantage of recycling can ease a supply crunch and eventually drive down costs. The more materials the industry can put back into the supply chain, the better.

Redwood takes the work a step further than many recyclers by next, remanufacturing the materials.

"The goal is to make the most sustainable battery materials," said Jackson Switzer, Redwood senior director of business development and one of Insider's 100 People Transforming Business. "To make the most sustainable battery materials, we need to get as much recycled nickel, cobalt, and lithium as we can into the front end of the system. You've got to scale the front end of the system, which is effectively, recycling."

CRIMINAL CRYPTO CAPITALI$M

Binance CEO Says There's No Way They'll End Up Like FTX in Leaked Letter to Staff

Kyle Barr
Thu, December 15, 2022 

Chenpeng Zhao in front of a desk with a microphone gives a thumbs up to the camera.


Changpeng Zhao has had to repeatedly reassure investors that everything is fine, and they can definitely handle billions of dollars in withdrawals from the Binance exchange.

The crypto exchange Binance, perhaps the last major crypto exchange standing after the FTX debacle, experienced a wave of withdrawals by spooked investors earlier this week to the tune of nearly $3.7 billion, according to blockchain analytics firm Nansen.

The crypto company now needs to reassure both its customers and its workers that everything will work out in the long run, despite the run on the crypto industry as a whole. In a letter to staff published by Business Insider, Binance CEO Changpeng Zhao, who often goes by CZ, wrote that even though the headlines certainly seemed dire, “we are in a strong financial position.” He later added “Binance will survive any crypto winter.”

He further claimed that the company regularly processes more than $1 billion in deposits or withdrawals day-to-day, and that they have enough in reserves to fulfill withdrawal requests. CZ had said they had seen even more withdrawals during the Terra/Luna fiasco back in May, so $3.7 billion in a week is practically nothing, right?



Of course, this wasn’t the only concern analysts had with Binance. An exchange of Binance’s touted “proof-of-reserves” has been largely criticized for how it didn’t reveal much about the exchange’s internal financial controls. On Tuesday, the exchange temporarily suspended withdrawals of the USDC stablecoin. Crypto users are very jittery right now since there have been plenty of cases this year where an exchange told users it was “temporarily” halting withdrawals before finally closing up shop, leaving users bereft of their crypto.

But Zhao reiterated his company’s earlier messaging that the exchange was simply converting its USDC to its native token BUSD “in order to retain large liquidity pools.” He added that the current processes his company uses to convert tokens is “clunky” since they have to go through a New York-based bank using actual U.S. dollars.

In a Twitter Spaces live chat Wednesday, Zhao said they had already seen the money “flowing back” and that the withdrawals was “very normal market behavior.”

“While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it,” he said in his letter to staff.

With the collapse of FTX and the end to Sam Bankman-Fried’s reign in the crypto sphere, there’s only two big exchanges left that are big enough to really matter, that being Coinbase and—still the number 1 biggest exchange by trading volume—Binance.

Binance was in the thick of things when FTX had finally reached the point of no return. Zhao had originally announced a tentative agreement to buy up Bankman-Fried’s beleaguered exchange once it became clear that FTX’s had built its castle on the loose sand of its own native FTT token. After taking a look at Binance’s internal finances, Zhao and co quickly backed out and worked to distance himself and his exchange from his erstwhile friendly rival and FTX. Bankman-Fried has since been arrested and faces federal charges in the U.S. for lying to both investors and customers about how his company allegedly abused users’ funds.

Though there’s no evidence to point to Binance making some of the same mistakes FTX did, the latest filings have revealed just how deeply Bankman-Fried’s company had been hit by the collapse of the Terra stablecoin earlier this year, according to charges filed by the Securities and Exchange Commission. It took until the exchange was underwater before folks got to take a real look under the exchange’s hood, so to speak. Without clear signs everything’s A-okay, investors still seem to trust Binance with their crypto, but for how long?

Changpeng Zhao Won't Rescue Binance by Selling out Crypto Self-Custody




Daniel Kuhn
Thu, December 15, 2022 

In the aftermath of the collapse of FTX, many are justifiably concerned about the solvency of crypto exchanges. Sam Bankman-Fried’s fraudulent bucket shop may have been an outlier – court documents filed earlier this week by U.S. authorities allege that some $8 billion in FTX customer deposits were transferred to and lost by SBF’s “hedge fund” Alameda Research.

But following a decline in crypto prices, a drawdown of debt between highly interconnected firms and several bankruptcy filings that have locked up billions worth of assets in legal proceedings, it’s reasonable to wonder if there is as much money held on centralized, largely unaudited crypto exchanges as there should be.

This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

This is part of the reason why users are taking possession of their own coins in recent weeks. Binance, the industry leading centralized crypto exchange, in particular has seen a significant drawdown in funds. Some of its largest clients, such as Jump Trading, have taken coins out, and the exchange moved to temporarily halt USDC withdrawals amid the surge (potentially to execute a token swap to its own stablecoin).

See also: And Then There Was One – Changpeng Zhao – CoinDesk's Most Influential 2022

Earlier this week, Binance CEO Changpeng "CZ" Zhao referred to this trend as “business as usual.” He also reportedly told employees to brace for a few “bumpy” months ahead. The exchange had published a so-called “proof-of-reserves” report conducted by auditing firm Mazars showing, depending on which figures you include, it was either over- or under-collateralized in its bitcoin holdings.

Not to draw an unnecessary comparison to FTX, but CZ’s public comments this week are reminiscent of Bankman-Fried’s attempts to quell fears in early November amid a “run” on the exchange before it filed for bankruptcy protection. On Nov. 7, SBF tweeted that client funds were safe and backed by deposits – a message he deleted after it became clear FTX was deeply in the red. It’s a comparison CZ himself is drawing.

“With Sam Bankman-Fried’s arrest, I think people generalize. So if you get hurt by one bank, you're gonna think all the other banks are bad. If one politician is corrupt, you think all politicians are corrupt,” he wrote. “But the fact is that because one bank is bad doesn't mean all the other banks are bad. And just because one politician is bad doesn't mean all the other politicians are bad.”

This is all well and good – except that crypto exchanges are not, in fact, banks. As my colleague David Z. Morris notes, the term “run on the bank” has been misapplied when talking about recent withdrawals on crypto exchanges. The phenomenon is similar: withdrawals beget withdrawals, fears over insolvency can compound and become self-fulfilling. But unlike banks, users simply have to take it as a matter of faith that exchange operators haven’t misused or lost customer funds.

Centralized crypto exchanges reintroduce an element of trust that trustless protocols like Bitcoin and Ethereum remove from finance. Users take on the risks, even if rare, of hacks, frozen withdrawals and other business failures, Casa’s Nick Neuman said recently. And so, amid a period of uncertainty, Zhao’s primary responsibility is to reestablish confidence in his exchange.

Binance has certainly made moves to keep funds on its platform. On Wednesday, crypto critic Bitfinex’ed tweeted a screenshot of a Binance offering to pay 50% APR on staked USDT, seemingly to keep assets on the exchange. Later in the day, Zhao took to Twitter Spaces to criticize self-custodying crypto, alleging that “99% of people … will end up losing” their funds if they have to be responsible for their own keys.

This is no doubt a challenging time for Zhao. On Monday, Reuters reported the U.S. Department of Justice was nearing the end of a multi-year investigation into Binance – one of several ongoing probes into the firm from global law enforcement agencies. Federal prosecutors may ultimately charge CZ and other Binance executives with money-laundering violations, a risk that has accelerated withdrawals.

His comments spreading fears about self-custody are entirely unjustified. Not only is it seemingly in allegiance with U.S. Sen. Elizabeth Warren’s recent Digital Asset Anti-Money Laundering Act that would put unnecessary guardrails around so-called un-hosted wallets but also contradictory to Zhao’s comments just last month calling self-custody a “fundamental human right.”

See also: Self-Custodial Onboarding Will Be the Norm in Web3's 2023 | Crypto 2023

Rebuilding trust in Binance, stymying outflows, should not come at the expense of crypto’s principle innovation – enabling people to “be their own bank.”

FTX’s collapse was a startling turn of fate for what was once one of the most-trusted crypto companies. Bankman-Fried has gone from being the industry’s J.P. Morgan to its Bernie Madoff. It’s an event that has caused irreparable damage to crypto’s public standing. Binance, too, has an outsized role in the industry – and hopefully it is not another FTX.

But if Zhao has to make low blows to a fundamental attribute of crypto to rescue is own exchange’s reputation, then it deserves to fail. To take an old line from Zhao, “some things are better left unsaid. Recommend no more news like these, for the sake of the people, our industry (and your business)."

CRIMINAL CRYPTO CAPITALI$M TOO

Shaq — who starred in an FTX commercial in June — says he 'was just a paid spokesperson' for the exchange and doesn't believe in crypto

Matthew Loh
Thu, December 15, 2022 

Shaquille O'Neal gives a speech during an event at Doolittle Complex basketball courts in Las Vegas, Saturday, Oct. 23, 2021.

Erik Verduzco/Las Vegas Review-Journal/Getty Images

Shaquille O'Neal said he was paid to appear in an FTX ad and was never involved in the firm.


In the ad, he said he was "making crypto accessible to everyone" and that he was "all in."


O'Neal was recently named in a lawsuit accusing FTX of using celebrities to trick investors.

NBA legend Shaquille O'Neal said he doesn't believe in cryptocurrencies and was merely paid to endorse the now-imploded exchange FTX, per a Thursday report by CNBC's Make It.

"A lot of people think I'm involved, but I was just a paid spokesperson for a commercial," O'Neal told the outlet.

The former basketball star, who's now an angel investor and businessman, starred in an FTX commercial released on June 2. In the ad, O'Neal said he was excited to partner with the exchange to "make crypto accessible to everyone."



"I'm all in. Are you?" O'Neal says in the ad.

O'Neal told CNBC that his friendship with fellow NBA great Stephen Curry was one of the reasons he agreed to appear in the FTX ad. Representatives for Curry did not immediately respond to Insider's request for comment.

"People know I'm very, very honest. I have nothing to hide," O'Neal said, per CNBC. "If I was heavily involved, I would be at the forefront, saying, 'Hey.' But I was just a paid spokesperson."

When asked by the outlet if he was bullish on crypto, O'Neal said: "No."

O'Neal is one of several celebrities named in a class-action lawsuit that was filed on November 15 against FTX, its big-name endorsers, and its founder, Sam Bankman-Fried.

The complaint, filed by investor Edwin Garrison, alleges that FTX used celebrities such as O'Neal, Curry, and fashion model Gisele Bündchen to attract investors to a Ponzi scheme, per court documents seen by Insider.

The crypto world was shaken when FTX filed for bankruptcy on November 11, and as its new CEO John Ray reported a litany of gross mismanagement practices at the firm.

The SEC has charged Bankman-Fried with fraud and accused him of funneling billions of dollars of customer funds into his own crypto hedge fund.

O'Neal warmed this year to the idea of endorsing crypto

Before appearing in the FTX commercial in June, O'Neal had publicly expressed skepticism toward cryptocurrencies. He told CNBC in September 2021 that he didn't understand crypto.

"So I will probably stay away from it until I get a full understanding of what it is," he said, per the outlet.

He also told Front Office Sports in June 2021 that he was wary of crypto endorsement offers.

"I always get these companies that say: 'Hey, we'll give you $900,000 in crypto to send out a tweet.' So I have to say: 'OK, if you're going to give me a million dollars worth of crypto, then why do you need me?'" O'Neal told the outlet. "A couple of my friends got caught up in a little scam like that one time."

However, he started teasing the idea of getting involved in crypto-related content in February, musing on Twitter that he could change his handle to SHAQ.SOL — a reference to a cryptocurrency run by blockchain platform Solana.

The NBA hall of fame member did not disclose how much money he received for appearing in the June FTX commercial.

Representatives for O'Neal did not immediately respond to Insider's request for comment.

Shaq appears to not know what being a corporate spokesperson means as he distances himself from crypto


Jakub Porzycki/NurPhoto—Getty Images

Alena Botros
Thu, December 15, 2022

Basketball legend turned businessman Shaquille O’Neal is attempting to distance himself from crypto after being a paid spokesperson for failed exchange FTX and targeted with a lawsuit for it.

“A lot of people think I’m involved, but I was just a paid spokesperson for a commercial,” O’Neal told CNBC Make it this week.

In that commercial, O’Neal said he partnered with FTX to help make crypto “accessible to everyone.” It was an unexpected alliance considering that a year earlier he told CNBC that he was avoiding the crypto craze.

“I don’t understand it,” O’Neal said at the time. “So I will probably stay away from it until I get a full understanding of what it is.”

His reasoning? He was skeptical of all the stories of people making big money quickly.

“Every time somebody tells me one of those great stories, I like it,” he said. “But from my experience, it is too good to be true.”

Last month, clients of FTX withdrew billions of dollars' worth of holdings after the CEO of rival exchange Binance tweeted that Binance would sell its holding of FTX’s FTT token. Soon after, FTX filed for bankruptcy, and its CEO Sam Bankman-Fried resigned after news reports that he had allegedly co-mingled funds of FTX clients with another one of his ventures.

This week, Bankman-Fried was arrested and charged with several counts of conspiracy and fraud. With its collapse, many FTX users have been unable to withdraw their money from the platform—and it's unclear if they’ll ever get that money back.

In his interview with CNBC this week, O’Neal said his friendship with Golden State Warriors player Steph Curry is why appeared in FTX’s ad. A spokesperson for Curry declined CNBC’s request for comment.

Curry, along with several other celebrities like football star Tom Brady and his soon to be ex-wife, supermodel Gisele Bundchen, were named in the same lawsuit as O’Neal over FTX.

The lawsuit, filed in Miami by Edwin Garrison last month, seeks class action status on behalf of himself and FTX users against Bankman-Fried and FTX’s celebrity endorsers. The complaint describes FTX as a “Ponzi scheme,” and claims that its celebrity spokespeople had endorsed unregistered securities.

“People know I’m very, very honest,” O’Neal said. “I have nothing to hide. If I was heavily involved, I would be at the forefront saying, ‘Hey.’ But I was just a paid spokesperson.”

In his FTX commercial, he said he’s just an everyday guy who checks his FTX account—and that he’s “all in.” But when asked this week if he’s bullish on crypto, he just said no.
O’Neal, who is widely known as Shaq, hasn’t shared how much he was paid to be FTX’s spokesperson. But Kevin O’Leary, a regular on ABC’s Shark Tank investor show, who was also among FTX’s celebrity spokespeople, said he was paid around $15 million. O’Leary told CNBC that he put nearly $10 million in crypto, was given $1 million in FTX equity, and $4 million was taken in taxes and other fees— all of it lost when the company collapsed.

FTX's massive $256 million real-estate empire is up for grabs as Bahamian and US lawyers squabble over who should control it

Robert Davis
Thu, December 15, 2022

Cryptocurrency company FTX has had naming rights to the home of the Miami Heat since 2021. Now Miami-Dade County, which owns the arena, wants a bankruptcy judge to terminate the deal after FTX's collapse

Miami Herald / Contributor

Lawyers representing the US and the Bahamas disagree on who should control FTX's massive real estate portfolio.

FTX execs allegedly spent more than $256 million acquiring properties on the island nation.

A lawyer monitoring the case told Insider that the timing of the assets' disposal is more important than venue.

Lawyers representing the US and the Bahamas are at odds with one another over who will control the massive real estate empire of Sam Bankman-Fried, the disgraced former head of the now-bankrupt crypto exchange FTX, according to court filings reviewed by Insider.

Bankman-Fried's real estate holdings — all of which are owned by an FTX subsidiary called FTX Property Holdings, LLC — have become a central part of the bankruptcy case against the crypto exchange as an unspecified number of creditors seek to recover billions of funds from the business. The real estate holdings represent some of the most tangible assets that can be liquidated and redistributed to creditors as lawyers for FTX say that billions of the crypto exchange's assets remain unaccounted for.

According to a court filing from December 12, Bahamian lawyers asserted that Bankman-Fried spent more than $256 million to acquire 35 properties on the island. Reuters first reported in November that Bankman-Fried's purchased tens of millions of real estate in a swank luxury resort community on the island called Albany. FTX had also planned to build a new headquarters on the island, although that project was put on hold in April, according to local reports.

The same lawyers also argued in the December 12 filing that the island nation should have jurisdiction over the liquidation of FTX's real estate assets because Bahamian law does not recognize the legitimacy of a foreign bankruptcy proceeding.

"FTX Property Holdings is a Bahamian corporation that does only one thing, [which is to] own real property located in The Bahamas," the filing reads in part. "All of its known assets and creditors are located in The Bahamas. It has no connection whatsoever to the United States. Respectfully, this court is not the best forum to resolve the issues this case would present."

On the other side, FTX's new CEO, John J. Ray III, who also led the asset recovery efforts when Enron folded in 2001, argued in a hearing before the House Financial Services Committee on December 13 that the case needs to stay in the US in order to maximize the asset recovery for the more than 1,000 creditors who lost billions of dollars because of the company's alleged fraud.

"We are working around the clock to locate and secure the property of the estate, a substantial portion of which may be missing, misappropriated, or not readily traceable due to the lack of proper record keeping," Ray told the committee.

While lawyers working on the case squabble over which jurisdiction will ultimately decide the case, other bankruptcy lawyers like John Pintarelli, a partner at Pillsbury Winthrop, an international real-estate law firm headquartered in New York City, told Insider that venue may not be the most important aspect.

Presumably, Pintarelli said, regulators and judges in both countries would work to secure the biggest payout possible for the creditors who are owed money. But, that total payout could change if regulators in one country or the other wait too long to liquidate the real estate assets, Pintarelli added.

"No one wants to be sitting on 'the melting ice cube,' as we call it," Pintarelli told Insider. "If real estate values are going down, you want to sell the properties as fast as you can to recover as much as possible for the creditors."

According to market data from brokerage BE Luxury Real Estate, the median sales price of Bahamian real estate grew from about $360,000 in 2020 to more than $630,000 through the first six months of 2021.

FTX initially filed for Chapter 11 bankruptcy protections in Delaware on November 11. In the filing, the company speculated there are more than 100,000 creditors seeking restitution, but another filing from November 14 said FTX "may have more than 1 million creditors" and has liabilities of about $6 billion.

SBF’s handcuffs aren't loosening up anytime soon



Jacquelyn Melinek
Thu, December 15, 2022 

Welcome back to Chain Reaction.

If you’re reading this, I’m willing to bet you probably weren’t arrested this week and are now sitting in a Bahamian jail. But, you know who was arrested and is sitting in a Bahamian jail right now? Yep, FTX’s former CEO, Sam Bankman-Fried.

Seems like the majority of the headlines have been on SBF and FTX lately -- and for good reason. This week’s chatter was surrounded by his anticipated testimony at the U.S. House Financial Services Committee’s hearing on FTX’s collapse, which he never spoke at because he was arrested the night before.

After being denied bail, SBF is being held in the Bahamas Department of Correctional Services in the prison’s max security infirmary with five other inmates in a “dorm-style setting,” according to The Nassau Guardian. And don’t worry, Bahamas’ acting commissioner of corrections Doan Cleare said SBF is in “good spirits” and that the prison is no longer infested with rodents.

Now we can all sleep soundly tonight.

Here are some of the biggest crypto stories TechCrunch has covered this week.

SEC, CFTC and SDNY attorney’s office charge FTX’s Sam Bankman-Fried with defrauding investors

The U.S. Securities and Exchange Commission (SEC) has officially charged disgraced FTX founder Sam Bankman-Fried (aka SBF) with defrauding investors, it revealed on Tuesday morning following his arrest in the Bahamas. The SEC said in a press release that in addition to being charged with fraud regarding equity investors in FTX, he’s also being investigated regarding other securities law violations — and noted that there are ongoing investigations pending against others involved as well. The SEC isn’t the only one getting a hand on this ball, however: Both the Southern District of New York’s attorney’s office and the Commodity Futures Trading Commission (CFTC) also filed charges against SBF in “parallel actions.”

US attorney says ‘we are not done’ charging individuals for FTX collapse

Multiple U.S. government agencies held a press conference Tuesday afternoon regarding the indictment of FTX’s former CEO, Sam Bankman-Fried. When asked whether the entities will bring charges against other individuals allegedly involved in the FTX collapse, Damian Williams, the U.S. attorney for the Southern District of New York, said during the event, “I can only say this: Clearly, we are not done.”

FTX’s new CEO, John Ray, details crypto exchange’s downfall in US House testimony (TC+)

As mentioned above, the U.S. House Financial Services Committee held a hearing Tuesday morning focused on FTX’s collapse. John J. Ray III, FTX’s CEO of four weeks, sat as the only witness for the hearing as SBF made an appearance in a Bahamian court for his arraignment. The four-hour hearing covered a lot of ground and left many questions unanswered, but several parts stood out from Ray’s testimony. Given that we presume you couldn’t catch the entire session live, feel free to crib off of our notes.

Sam Bankman-Fried's story keeps getting wilder and weirder as details emerge from his past and more people speak out.

Phil Rosen
Fri, December 16, 2022 

Anddddd it's Friday! Phil Rosen here, writing to you just before boarding my flight from New York to Los Angeles.

I've been keeping close tabs on FTX and its disgraced founder, Sam Bankman-Fried.

The more details that emerge, the more I feel like this is going to make a great Michael Lewis book (and movie) one day.

Today, I'm breaking down the latest on the tee-shirt-and-shorts wearing video-gamer and former billionaire.

sam bankman-fried
WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States."

Alex Wong/Getty Images


1. Bankman-Fried was meant to testify before Congress this week, but for obvious reasons (he was arrested, in case you missed that somehow), the show had to go on without him.

A deep roster of crypto voices sounded off in this week's testimony in Washington DC, as the Senate Banking Committee asked to hear more about the debacle.

We heard from Kevin O'Leary again, who said the market simply needs more (any?) regulation in order to thrive and move on from this fiasco. O'Leary has avoided laying any blame at SBF's feet, and also testified he believes rival exchange Binance intentionally put FTX out of business.

It'd be impressive if you guessed who showed up next — none other than early 2000s heartthrob-turned-crypto critic, Ben McKenzie. The star of "The O.C." has been among the loudest skeptics, and he had a lot to say about the industry, none of it good.

Among the highlights from his testimony include his assertion that the crypto market is "the largest Ponzi scheme in history."

Meanwhile, Congressman Ritchie Torres called Bankman-Fried a "pathological liar" during an interview with CoinDesk. He likened FTX to a college fraternity, with haphazard, reckless bookkeeping.

That aligns with the characterization by new FTX CEO, John Ray III: "I've just never seen an utter lack of record keeping."

Recall that Ray had been brought in to clean up bankrupt energy firm Enron in the early 2000s. He knows a thing or two about accounting scandals.

In his testimony to the House Financial Services Committee on Tuesday, Ray said it could take months to secure all the company's assets, and that his team has secured over $1 billion so far.

According to Ray, under Bankman-Fried's leadership the global conglomerate used QuickBooks to do its accounting.

However, one of the most intriguing anecdotes from this week, as Insider's Morgan Chittum writes, was something from Bankman-Fried's past, long before the fraud allegations.

Long before Bankman-Fried was in the crosshairs of regulators, he attended Crystal Springs Uplands, a top Silicon Valley prep school, and his senior class prank reportedly included making $100 bills with his face on them.

The kicker? The bills were called "Bankmans," Puck reported earlier this week.

His old school had a $56,620 annual tuition, its website shows, and there Bankman-Fried had a reputation as one of the top math students, and also led the "Puzzle Hunt Club," which Puck described as a "particularly nerdy group at an already nerdy high school."