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First Move with Julia Chatterley
The U.S., U.K., and Australia Agree a Nuclear Powered Submarine Deal as Beijing Protests; Japan's Defense Minister Pushes Back in its Islands Dispute with China; Four Civilian Nationals Prepare for their First Full Day in Orbit. Aired 9-10a ET
Aired September 16, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:13]
ISA SOARES, CNN ANCHOR: Live from London, I am Isa Soares in for Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
China tensions. The U.S., U.K., and Australia agree a nuclear powered submarine deal as Beijing protests.
Drawing a red line. Japan's Defense Minister pushes back in its islands dispute with China.
And the X Factor. Four civilian nationals prepare for their first full day in orbit.
It is Thursday. So, let's make a move.
Welcome once again to FIRST MOVE. Great to have you here with us this Thursday, as the United States releases an encouraging new read on the
economy. Let me bring you those numbers. The latest numbers show retail sales rising seven-tenths of a percent in August as you can see there,
unless we're expecting a drop in sales for a second straight month. Excluding auto's August retail sales, they rose almost two percent.
And if we have a look at futures, well, they are bouncing off session lows after the release of that data as you can imagine, but we are still on
track for mostly lower open with tech stocks looking the weakest. That's the futures.
Then of course, we've got 30 minutes or so -- just under 30 minutes for the bell to open. This follows what has been the best day as you can see there
on Wall Street in weeks. The S&P and the NASDAQ rose almost one percent on Wednesday. All the major averages however, are still down for September so
far.
If I show you the markets here in Europe, it has been mostly a positive day. FTSE up almost half percent. Xetra DAX doing a bit better. Paris still
clearly leading the way.
Chinese stocks though, as you can see on your screen, falling more than one percent amid continued nervousness about the property developer Evergrande,
we'll get to that in a minute. Ratings firm Fitch says some kind of default is probable. Hong Kong's Hang Seng suffered its fourth straight drop as you
can see there, of more than one percent, almost one and a half percent, in fact.
Meantime, Hong Kong's listed casino stocks, which we have been monitoring here now on CNN, closed lower again on fears of an imminent gambling
crackdown in Macau. Casino firms with Macau based properties have lost some $18 billion in market value this week. As you can see there, Sands China
down almost eight percent, Wynn Macau four and a half percent, and MGM China just over two percent.
So let's get straight to today's drivers.
China blasting a move by the U.S. and the U.K. to help Australia acquire nuclear powered submarines over the next 18 months. The deal is also
upsetting one of America's top allies in Europe, as well as sparking tensions between Australia and New Zealand.
President Biden said the deal is in response to a changing world. Take a listen.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: This is about investing in our greatest source of strength, our alliances, and updating them to better
meet the threats of today and tomorrow.
It's about connecting America's existing allies and partners in new ways and amplifying our ability to collaborate, recognizing there is no
reasonable divide, separating the interests of our Atlantic and Pacific partners.
(END VIDEO CLIP)
SOARES: Let's get more on this. John Harwood joins me now. And John, it was interesting that in the press conference that we saw, China was never
mentioned directly by the three leaders. But the pact of course, is being seen as an effort to counter China's military might, correct?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: There is no question about it, and this is something that Joe Biden has been involved with for a long
time when he was Barack Obama's Vice President there, the discussion in foreign policy was the strategic pivot to Asia that partially involved
economic relations, the Trans-Pacific Partnership, which was negotiated that the U.S. under Donald Trump pulled out of that deal, but here is a
strategic National Security alliance between the United States, the U.K., and Australia to provide, to enhance the presence of the United States and
its allies militarily as a deterrent against China as China looks for regional dominance.
And it is particularly useful for President Biden to underscore those alliances in the aftermath of the withdrawal from Afghanistan, which
sparked a lot of criticism. A lot of questions were directed at the United States in terms of its reliance as an ally, reliability as an ally.
And now Joe Biden was able to announce this today with those two Prime Ministers, even at the cost of annoying New Zealand and France, as you
mentioned at the top.
[09:05:07]
SOARES: Indeed, yes. So what has been the reaction to this security pact in the U.S.? And are there any concerns that you're hearing of an arms race
with China?
HARWOOD: I don't think so. There hasn't been a lot, of course, public reaction, because it's so new, and the American public doesn't closely
follow events of this kind on a day-to-day basis.
But as a political matter, both Republicans and Democrats have come together in recent years over the need to stand up to China. The ways in
which you do that has sparked conflict between the two parties. But I don't think Joe Biden is going to get much pushback even from Republicans on the
idea of making common cause with the U.K. and Australia to bolster the National Security profile of U.S. allies in that region.
SOARES: John Harwood that for us in Washington, D.C. Thanks very much, John.
Well, China's says the new security pact is evidence of an outdated Cold War mentality -- their words. It is accusing the allies of a zero sum
approach to geopolitics and says that pact will destabilize the region.
Let's get more on this side of the story. Steven Jiang joins me now.
And Steven, as you heard John saying there, this is about countering China's dominance in the region. So, what has been the reaction from China?
STEVEN JIANG, CNN SENIOR BUREAU PRODUCER: Well, Isa, the reaction has been swift and not surprising. A Foreign Ministry official, as you mentioned,
said on Thursday that this pact really undermines -- severely undermines regional peace and stability, and also the international nuclear non-
proliferation efforts, not to mention intensifying a regional arms race.
But you know, these accusations actually paling in comparison to what we have seen in some editorials in state-run media, "The Global Times," for
example, in a scathing editorial published on Thursday, basically warned Australia of deadly consequences if it ever gets into a military conflict
with China.
And you know, this newspaper calling Australia a running dog of the U.S., incidentally, not a first time they have used that term saying that
Australian troops are likely to become the first Western casualties in the South China Sea if the Australian government continues down this path of
its current policies against China. It went on to say that Australian military installations for example, are certainly going to be targeted by
Chinese missiles if Australian troops fight the People's Liberation Army in any part of the region.
So, this is very belligerent language and very explicit warnings. But in a way, proving why Australia feels and needs these submarines in the first
place. But the other thing worth noting, of course, is during the press conference announcing this deal, all the leaders stressed, these submarines
or nuclear powered, not nuclear armed.
But that distinction seemed to make a little difference in the eyes of the Beijing leadership with again state media saying by nature, these subs are
designed to be strategic striking tools, and they will pose a threat to the PLA because they can travel further in deeper waters.
So the arms race concern, I think, is very real in the minds of many experts, especially in this region -- Isa.
SOARES: And you mention, Steven, really this strong word, you know, words against Australia. But the reality is that both the relations hadn't been
great between Australia and China, the country had been locked in a trade war with China for more than a year. I'm guessing this relationship has
just worsened.
JIANG: Yes, sort of in a way, this relationship simply cannot get any worse. As you mentioned, you know China being Australia's biggest partner
have been freezing now Australian exports for more than a year in a range of things from beef, barley, wine to coal, and I think this has caused the
bilateral trade to reduce by $4 billion.
But you know, this deal if -- the bigger issue here is actually -- is reinforcing the notion in the mind of the Chinese leadership that the U.S.
and its close allies are out to get China or their encircling China, containing China not only politically and diplomatically, but now
increasingly, militarily, and that is something they have to deal with. And that of course, is not going to be conducive to improving relationships
between Beijing and Canberra, but probably more important relationship between Beijing and Washington, despite that phone call last week between
Xi Jinping and Biden with both leaders pledging to avoid direct conflict -- Isa.
SOARES: Yes, very important context there from our Steven Jiang. Thanks very much, Steven. Good to see you.
Well, meanwhile, Japan supporting the new partnership between the U.S., U.K. and Australia saying it's crucial for peace and security in the
region. This, as Japan's Defense Minister says China, not North Korea is the biggest security concern for his country in an exclusive interview with
CNN's Blake Essig.
(BEGIN VIDEOTAPE)
BLAKE ESSIG, CNN INTERNATIONAL CORRESPONDENT (voice over): For years, North Korean missiles have posed a serious threat to Japan's national
security. That threat hasn't gone away.
[09:10:01]
ESSIG (voice over): That threat hasn't gone away. Recently, North Korea has test fired several missiles, including long range cruise missiles
capable of striking almost any potential target in Japan.
And even more concerning, ballistic missiles that on Wednesday fell into the waters between Japan and the Korean Peninsula. While Japan's Defense
Minister Nobuo Kishi says the ongoing hostility from North Korea is a big challenge, he says it isn't Japan's biggest security concern.
ESSIG (on camera): As Japan's Minister of Defense, what threat keeps you up at night?
NOBUO KISHI, JAPANESE DEFENSE MINISTER (through translator): China has been regularly challenging Japan's territorial integrity. These actions are
making it a fait accompli. In response to such moves, we have to demonstrate our will to protect the lives of Japanese citizens, as well as
their livelihoods and our territory.
ESSIG (voice over): The inherent part of Japanese territory Minister Kishi is referring to is located here in the East China Sea about 1,900
kilometers from Tokyo. It's this uninhabited island chain known as the Senkakus in Japan, and Diaoyu in China, that is seemingly a red line for
Kishi, and one that could serve as Asia's next military flashpoint.
ESSIG (on camera): What is Japan doing to contain China and stop them from changing the so-called status quo in the East and South China Seas,
specifically in the waters surrounding the Senkaku Islands?
KISHI (through translator): The Senkaku Islands are an integral part of Japanese sovereign territory both according to international law and
looking historically. There is no territorial dispute relating to the Senkaku Islands between Japan and other countries.
With regards to the Chinese Coast Guard vessels approaching our territory, Japanese Coast Guards must respond first and show that the Government of
Japan is determined to defend our territory with a greater number of Japanese Coast Guard vessels than that of China.
ESSIG (voice over): And according to Minister Kishi, that's exactly what Japan is doing in an effort to maintain peace and stability in the region.
To put that into perspective, over the past five years compared to the previous five, a report by Stockholm International Peace Research Institute
shows Japan has increased its major arms imports by 124 percent. And Kishi recently laid out plans to deploy troops and missiles on Ishigaki, as well
as other southern islands, as tensions grow between Beijing and Taipei, along the Taiwan Strait.
KISHI (through translator): Taiwan is located at the nexus of the East and South China Seas and it is geopolitically and strategically important,
that's why Taiwan's peace and stability is not just important for this region, but to the international community as a whole.
With regard to Japan's energy lifeline, more than 90 percent of the energy Japan uses is imported through the sea around Taiwan. So, it's important to
maintain the maritime order and a free and open Indo Pacific.
ESSIG (on camera): How committed is Japan to the defense of Taiwan versus China?
KISHI (through translator): Japan is not directly committed to the defense of Taiwan, however, we think it is very important to have stability in the
Taiwan Strait.
ESSIG: You said that Japan is not directly committed to defending Taiwan. What is the difference between directly and indirectly?
KISHI (through translator): Because we are close geographically, what could happen in Taiwan would likely be an issue for Japan, in which case,
Japan would need to respond accordingly.
ESSIG (voice over): A military situation Kishi admits has been shifting in favor of Beijing in recent years, one that he plans to keep a close eye on
while still hopeful for a peaceful resolution.
Blake Essig, CNN, Tokyo.
(END VIDEOTAPE)
SOARES: Let me bring you up-to-date with the stories making headlines around the world this hour.
France says its forces have killed the leader of a group affiliated to ISIS in Western Africa. Official say Adnan Abu Walid al-Sahrawi died last month
following an airstrike in Mali. France has blamed him for the deaths of civilians and members of security forces including four U.S. soldiers in
2017.
The Taliban's Acting Deputy Prime Minister in Afghanistan is denying rumors of a political infighting. Mullah Abdul Ghani Baradar appeared on camera
Wednesday saying he is fit and well after reports that he was injured in a dispute at the presidential palace.
He says there are no internal rifts between the Taliban factions and the Haqqani Network.
Former U.S. gymnasts Jessica Howard is demanding follow through after Wednesday's Senate hearing on how the F.B.I. mishandled the Larry Nassar
case. In the hearing, top gymnasts described how the F.B.I. failed to take the allegations of abuse seriously, and did nothing to stop Nassar having
access to athletes.
The Justice Department did not appear at the hearing.
Still to come right here on first move, space tourists. We've got the head of NASA talking about life onboard SpaceX's civilian mission.
And charging ahead e-scooter start up Gogoro is going public. The CEO joins me to explain how battery swaps mean big bucks.
Both those stories after a short break.
(COMMERCIAL BREAK)
[09:17:53]
SOARES: Welcome back to FIRST MOVE. We've got about 22 minutes or so until the opening bell rings. Let's have a look at the futures continuing to
point at really a mostly lower open for U.S. stocks. The Dow futures pretty flat, the NASDAQ and the S&P are set to pull back a bit despite
surprisingly strong update on retail sales that we brought you at the top of the show.
Sales rose more than half a percent in August versus expectations for a second straight monthly drop. The numbers show the continued resilience, of
course, of U.S. consumer even as the delta variant continues to pressure economic reopenings in states and their enhanced jobless benefits programs.
Jobless claims, also in focus today. An additional 332,000 Americans filed for new benefits last week, and that is a rise from previous pandemic lows.
Now, ratings agency Fitch downgraded Chinese property giant Evergrande as the risk of default continues to grow. Now according to Fitch, a default
could have broader impacts on numerous sectors in China.
Kristie Lu Stout has the details on Evergrande's debt crisis.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice over): It's the Chinese giant that lives up to its name, Evergrande is one of the biggest real estate
groups in China.
Owner of a football team, it has also built a football academy thought to be the biggest of its kind. It's also building the world's biggest football
stadium, a massive lotus flower that will seat 100,000, and its latest claim to fame --
STOUT (on camera): The Hong Kong listed Evergrande has become China's most indebted developer with liabilities worth more than $300 billion and the
cash strapped property firm is struggling to pay it back.
STOUT (voice over): Sending its stock price plummeting, prompting ratings agencies to downgrade its status and warning it could default, which would
send shockwaves through China's economy.
STOUT (on camera): So how did Evergrande get into this mess?
MATTIE BEKINK, CHINA DIRECTOR, ECONOMIST INTELLIGENCE UNIT: It's built as many as 600,000 homes annually and as a massive debt load 56 times bigger
now than it was a decade ago. It's also strayed far from its core business. It's founded a colossal football academy, a bottled water brand, which had
been later sold, an electric car company.
[09:20:04]
STOUT (voice over): Disgruntled and desperate investors have protested at company headquarters in Shenzhen. "They've cheated me out of all my money.
I have nothing left," says one unidentified investor.
The real estate giant said online speculation about its bankruptcy are quote, "completely untrue." Adding: "The company has indeed encountered
unprecedented difficulties at present, but the company is determined to do everything possible to restore the operation as usual, and protect the
legitimate rights and interests of customers."
That has done little to pacify angry investors in Shenzhen, and elsewhere in China, videos circulating on social media show what is described as an
Evergrande protest in Hainan, in Nanchang, and in Chengdu, CNN could not verify the footage.
In August, China's Central Bank summoned Evergrande execs and warned the company to reduce its debt. Analysts say, it's likely Beijing would
intervene.
STOUT (on camera): Will the Chinese government step in to save it?
BEKINK: Well here at the EIU, we do ultimately expect that the government will intervene in Evergrande's case, as it will not allow the company's
defaults to spread into the banking system.
NIGEL STEVENSON, ANALYST, GMT RESEARCH: The problem is if large numbers of those buyers of properties don't receive the updates, then that's going to
cause contagion into other property developers. People are going to lose confidence.
STOUT (voice over): There's just too much at stake. China's economy is sputtering because of its aggressive response to the delta variant and
supply chain issues. Chinese markets have plunged as regulators target tech, education, and other private enterprises. A major default is the last
thing China needs.
So Evergrande, living up to its name has become too big to fail.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
SOARES: Let's get more on this story, a story we've been monitoring for all week here in on CNN. Patrick Chovanec joins me now. He is an economic
adviser for Silvercrest Asset Management.
Patrick, great to have you on the show. I'm not sure whether you could hear that report we just had there from Kristie Lu Stout.
PATRICK CHOVANEC, ECONOMIC ADVISER, SILVERCREST ASSET MANAGEMENT: I could.
SOARES: Look, it's clear that Evergrande is really in a precarious situation. What's your assessment of what really is unfolding here?
CHOVANEC: So, there are two things you have to understand about the situation. The first is that this is not a new saga. If you had asked me 10
years ago, what was the riskiest real estate developer in China in a very risky sector? I would have said Evergrande.
And they've run into financial difficulties before and they've always been quietly bailed out because of the consequences of a default. The second
important thing to understand here is that Evergrande is not unique.
They have gotten themselves into the notorious for preselling apartments, relying on the income from that as opposed to actually delivering them, and
really building an empire based on that. But there are a lot of empires based on debt throughout China, and particularly in the property sector.
And that's why there's this fear of contagion, because Evergrande is not at all unique. It's just a poster child for a deep endemic problem in China's
economy.
SOARES: And we will go into that in just a moment. But you know, just what you were saying, I mean, you're basically saying that the writing was
pretty much on the wall for Evergrande for some time. I mean, that analyst said they strayed away from its core business. Is that where it's gone
wrong, do you think?
CHOVANEC: No, the core business is the problem. The fact that they have relied on debt to build this real estate empire that generated relatively
little income compared to the amount of debt that was taken out. And like I say, that is a problem that is not unique to Evergrande at all, and that
China has been trying to pay for over for many years now. And that's really where the question is not, you know, is there a loss? The question is, who
bears that loss?
SOARES: And that leads me nicely into really my next question, do you think that Chinese government will have to step in here?
CHOVANEC: Well, you know, the Chinese government doesn't want to because it realizes that every time it does that it only makes the problem worse,
but it's hard to stop. And especially when you see not just a concern about the financial impact on banks or foreign investors, which they probably
don't really care about at this point, but the social unrest in China.
Not only do you have domestic people owning shares in Evergrande, but you have over a million people who have paid for apartments that they are
probably not going to receive unless somehow this is resolved. And those people don't have a lot of money. It may be all the money that they saved
up for many years, and you can see how they feel about that.
So that's one of the main concerns that the Chinese government has, not just the financial ripple effects that this could have which are very real,
but the social ripple effects.
SOARES: Yes, and perhaps, if they see that getting out of hand, they may perhaps get in, but like you clearly said, Patrick, you know it is one of
the world's most indebted companies, but it's not the only indebted Chinese property company.
So when it comes to the financial system, banking system, what's at risk here for China's banking system, if it then you know, if Evergrande goes
the way that many expect it to go?
[09:25:23]
CHOVANEC: Well, nobody really knows, you know, what happens if you pull one of these loose threads, and there are many in China's economy, and
they've been reluctant to do that in the past.
I have a feeling that they'll be reluctant to do it again now, and that there will be some kind of quietly brushing this under the rug and shifting
the losses around. But the problem here is that that just contributes to this ongoing bad debt issue, which quietly erodes the foundation of growth
in China.
It diverts resources from where they really need to be reallocated. It places an ongoing burden on the system and it slows growth. So people ask
you, why is China's growth slowing? There are many reasons, demographics and things like that.
But this overhang of bad debt that is continuing, continuously being papered over doesn't lead to a crisis, doesn't lead to a meltdown, but
leads to an erosion of China's economic momentum at a time when they really need to be keeping that momentum up.
SOARES: And so what about, you know, Evergrande's operations outside Mainland China?
CHOVANEC: Well, you know, they've dabbled outside of Mainland China, just like they've dabbled in soccer and other things. I mean, the big issue
internationally for Evergrande is the fact that they took out U.S. dollar debt, and that there are foreign investors involved here.
But really the bulk of Evergrande's business has always been Mainland China, the property market, and that's where the bulk of the problems are.
SOARES: Okay, give me your final perspective on this. How long do you think the Evergrande can withstand these pressures?
CHOVANEC: Don't expect a Lehman style blow up. I mean, it's possible that they lose control the situation and that's happened, but that's unlikely.
But don't be persuaded that just because it's gone from the headlines that the problem is resolved, because we've seen it appear and disappear from
the headlines over many years, and the problem continues to persist and fester.
SOARES: Yes, we'll stay on top of the story. A story, Patrick, we've been on top of this week, and we've seen how angry and disgruntled those
investors are. We'll keep on top of the story of course.
Patrick Chovanec, economic advisor for Silvercrest Asset Management. Thanks very much, Patrick. Great to have you on the show.
The market open, next.
(COMMERCIAL BREAK)
[09:30:49]
SOARES: Welcome back to FIRST MOVE. U.S. stocks are up and running this Thursday. Let's have a look at the main averages and they are really
struggling a little bit in early trading, trying to find some direction despite of course, a stronger than expected read on U.S. retail sales. Dow
Jones up just really pretty flat, I'm going to say. NASDAQ down three- tenths of a percent, similar picture with the S&P 500.
Now investors also have been following the progress of that massive $3.5 trillion fiscal stimulus bill in the U.S. Congress. We will bring you that
story a bit later in the show.
The House yesterday, if you remember approving the tax hikes that would help pay for the programs if passed. We'll have more on the landmark
legislation and the growing tax the rich battle cry in D.C. later on this hour. Do stay with us for that.
Now to a Taiwanese startup planning an electric debut on the NASDAQ. This future company, Gogoro announcing just this morning that it will go public
in a SPAC deal which values it at $2.3 billion. Much of its value lies in its battery subscription service, which you see on your screen. And this
really allows customers to buy the scooters, but rent the electric batteries, which are the most expensive element.
Joining me is Horace Luke, he is the Chairman and CEO of Gogoro. Horace, great to have you on the show. Congratulations first of all, let's start
with this merger with Poema and your listing on the NASDAQ. Tell our viewers what this means for your business going forward.
HORACE LUKE, CHAIRMAN AND CEO, GOGORO: Thank you, Isa, for having me on the show. It is a really exciting time for electric mobility.
You know, we started our company about 10 years ago with a single focus to makes cities cleaner and better for the future by changing how people use
energy. And you know, through the last 10 years, we've been able to develop technology that really did that. And as you said, in the heart of what we
do every day is this advanced battery swapping infrastructure that lets electric mobility happen within these big cities.
And we just recently announced big partnerships in China, big partnerships in India. You know, we're ready to go big and by going on to the NASDAQ and
listing our company publicly, we get to, you know, get access to the capital, and then also at the same time, provide the transparency and the
credibility that, you know, our partners are looking for and the market is looking for.
SOARES: And like you said, Horace, you know, this, of course, you know, will really give you fresh funds, let's say. As you look to expand, you
mentioned India, you mentioned China, the two most populous nations in the world. Where else have you got your eyes set on?
LUKE: Well, you know, China itself, you know, there is about -- you know, China and India themselves, there's about half a billion vehicles moving
around on the ground today. You know, if people don't know in the West, over 50 percent of all individual commute miles done every day is on two
wheelers.
You know, alone, 63 million vehicles are sold annually across these two countries. That represents about 80 percent of the volume of the regular
four-wheel vehicle. The market is gigantic, especially if you consider the energy, as you said, of renting the battery and renting it as a mean of a
fuel that is cleaner, but paying for those instead of paying for gasoline.
Now of course, you know, the periscope is up for many other nations. There are many places with two wheelers as a main mode of transportation. But our
real focus right now is really just in you know, executing in China in a big way. We're launching in in Q4 in Hangzhou and Wuxi quickly after that,
and five to six cities immediately after that and early part of next year.
And then later part of 2022, we launching in New Delhi with our partner Hero MotoCorp, you know, helping them transform their portfolio from their
traditional ICE vehicle to now you know the cleaner better electric transportation -- electric vehicles.
SOARES: And if we have, you know, if our viewers watching be in India or in China, if they want to do this, give us a sense of cost in terms of
renting these batteries, Horace.
LUKE: The amazing thing is, what we did was we removed the most expensive part as you said from the equation from the purchase. So, you know instead
of buying a very expensive electric vehicle, you no longer buy the battery, which makes up about 30 to 40 percent of the overall cost of material when
you build the vehicle.
[09:35:13]
LUKE: That in turn, we can provide the vehicle at the same cost if not even cheaper than a traditional gasoline vehicle. And because you pay just
as much as you use the battery, you pay over time, and the equivalent of that against gasoline, that's about the same. You know, maybe slightly
higher if you use less of the battery. But if you use a lot, you know, it ends up being more economical.
And in a nation like India and China, people depend on these two-wheel vehicles in a big way to not only get themselves around town, but you know,
just essential part of their everyday living within these big cities.
We see the cost of ownership over a couple years of owning the vehicle to be about awash, you know, from what they used to in the beginning, using
ICE vehicle to now the electric vehicle.
SOARES: And I know you you're starting -- you already have deals with big scooter brands, like you said, Horace in China and India, but give me a
sense of the growth for the subscribers of how well it's been received.
LUKE: Well, in Taiwan, you know, I'll give you an example of what we did in Taiwan. We launched our idea in 2015 in Taiwan. Before we launched, you
know, the electric two-wheeler in Taiwan did not even make up one percent of the market share.
What's amazing is that since we launched, now, it makes up about 10 percent of the overall market share when you count in all the gasoline vehicle.
Now, you know, in comparison, Tesla is about three and a half percent of the U.S. automotive market. So, we've done a really good job building up
the electric two-wheeler, you know, to be now popular.
Now, what's amazing within that is, us and our partner, we count, you know, Yamaha and Suzuki Taiwan, along with a number of other vehicle makers as
part of our partnership to build these vehicles that uses the same infrastructure. And because of the ease, and the fondness of using the
battery swapping system, we're able to capture amongst that, you know, that growth of a thousand percent in market share, we now have 97 percent of the
overall EV market in Taiwan.
Now in China, China as you know, it's the center of electric vehicle today, but they're using these very environmentally damaging lead acid batteries.
You know, through a new regulation that's been in place since 2019, there is about 290 million vehicles over the next five years that has to convert
to the more efficient cleaner lithium ion battery.
But because of the energy density of the lithium ion battery, it really requires a different way of charging these batteries. And that's why you're
seeing, you know, the popularity of you know, at least the talk of -- you know, people talking about battery swapping within China.
SOARES: Let me ask you about battery, now that you've mentioned it, Horace. I mean, where are you -- what else you think your batteries can be
useful here? What's -- you know, give us a sense of ideas, what are you seeing in terms of possibilities here?
LUKE: Well, I keep telling everybody in my company, you know with people I talk with, you know, energy is the center of all human innovation. You
know, just the fact that I'm talking to you today has to do with power. And all we do is you know, put that power into a very portable, you know, smart
and connected way.
Now, mobility, of course, is you know, the largest consumption of energy that you use every day. You know, we can use these portable power to do
things that are you know, very, very different than just mobility itself. We've got projects that are going on that has wheels, that has more than
two wheels, as well as things that actually don't have wheels.
Batteries can power many, many things, especially when it's portable. So you know, there's a lot of skunkworks project within our company that we're
working on that takes these batteries to the next level to really use them for different applications that you think about, you know, the world
changing to cleaner energy.
SOARES: Well, we shall keep an eye on your business. We wish you obviously all the best of luck. Congratulations on your debut on the NASDAQ. Horace
Luke, the Chairman and CEO of Gogoro. Thanks very much. Great to have you on the show.
LUKE: Thank you, Isa.
SOARES: And then after the break, check out the view. SpaceX celebrates the launch of four space tourists into orbit without the help of
astronauts. We have the NASA Administrator next.
(COMMERCIAL BREAK)
[09:41:55]
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Godspeed, Inspiration 4.
UNIDENTIFIED FEMALE: Copy. One alpha.
UNIDENTIFIED MALE: Vehicle is pitching down range.
(END VIDEO CLIP)
SOARES: There they go. For the next three days, the world's first all- civilian space crew will be orbiting the Earth. Imagine that. No professional astronauts on board.
The four-person crew is led by billionaire Jared Isaacman who funded the Inspiration 4 mission. SpaceX hopes this will be the first of many tourist
missions, taking space travel into a whole new era.
CNN's space correspondent Rachel Crane joins me now from Cape Canaveral. And Rachel. I mean, the launch was very successful. What are you hearing in
terms of what they've been doing? How are they feeling?
RACHEL CRANE, CNN BUSINESS INNOVATIONS AND SPACE CORRESPONDENT: Well, Isa, you know, what's interesting here is that this is a private mission. This
is not a NASA sponsored mission. So as a result, we don't actually have quite as much transparency into what they are doing on board Resilience,
which is what their Crew Dragon is named.
So normally we'd be getting a lot more information about what they're doing currently in the spacecraft. But right now, we haven't gotten an update for
several hours now. So we do know, we saw images of them in the capsule as they were making their ascent. They were smiling. We got a few thumbs up
from Dr. Proctor.
We saw once they hit Zero G, their Zero G indicator was a little dog that was in honor of the St. Jude dogs that are in the hospital helping the
children, and actually, you can purchase those at St. Jude and online.
So there's always a lot of interesting to what that Zero G indicator is going to be on these crewed flights. And of course that was a special nod
to St. Jude, and this is a mission where all of the proceeds are going in for charity.
Jared Isaacman, who was the Commander of the mission and bankrolled this whole thing, he actually donated $100 million to St. Jude's. So right now,
we think they are probably sleeping. As you can imagine, it was a long day leading up to this, but I don't know how they could actually sleep in that
cabin because they're probably so excited.
But we should be getting some more information and more images inside the capsule as the day goes on. But we do know that you know, this was six
months in the making for this crew. They've been training. They climbed Mount Rainier to bond. They did fighter jet flights.
They also did Zero G flights to prepare for the weightlessness environment that they are currently in. And we know that they are in a nominal orbit
and their orbit, Isa, is pretty unique. This is the furthest into space that SpaceX has ever gone. They are about a hundred miles above the
International Space Station right now. So, humans haven't been this deep into space since the Apollo era.
And part of the point of this whole mission is to of course, open the gates for more civilians to one day hopefully be able to travel, but also they're
doing research on board. They're setting how the human body acclimates to the space environment.
And Hayley Arceneaux, she is a former cancer survivor. She was treated at St. Jude's. She'll be the medical officer on board and they're doing all
kinds of ultrasound tests and what have you, Isa, to study how the human body acclimates to the unique environment of space.
[09:45:12]
SOARES: Well, like you said, Rachel, I don't think I would be sleeping. In fact, sleeping will be the last thing on my mind for those three days.
Rachel Crane, keep us posted. Thanks very much. Good to see you.
Well, NASA sent a message, congratulations to the SpaceX crew. Senator Bill Nelson is NASA's administrator and a former astronaut.
Senator, great to have you with us. Give us a sense of what you said, what did that message say?
BILL NELSON, NASA ADMINISTRATOR: Well, Isa, it's another great day. It's another successful SpaceX launch. The more reliable that vehicle becomes
whether it's for an entirely tourist event or whether it is a launch to the International Space Station, of which SpaceX has already done three, and
they're getting ready to do the fourth one at the end of October. All of that is indicating that the commercial world is here, it is successful, and
NASA wants to encourage it.
SOARES: And we're all incredibly excited about, at least I am, Senator. I can tell you that much. But as we heard from our correspondent there,
Rachel Crane, she said they are currently a hundred miles above the International Space Station. I mean, and they are actually doing -- they're
doing actual work. Give us a sense of what that involves.
NELSON: Well, they will have a number of experiments, I must say that they are in cramped quarters. Just think if they were attached to the
International Space Station, you have that volume of all those modules all attached to each other, where you also have privacy of a toilet and showers
and those things.
They're all cramped together in that one, spacecraft, Dragon. But it's only for three days. And remember, our Apollo astronauts were in a similar size
capsule four days out to the moon, landing on the moon, returning to the spacecraft and returning to Earth. It is cramped quarters.
SOARES: Yes, but you make the sacrifices, I'm sure, Senator for three days, you know, forget the showers and lying down, I think for three days
to have this experience. And I think many people will put their hands up.
But look, it's like you said, it is cramped quarters that they are spending -- they are going to be spending plenty of time together before the launch.
How important is it for them to have had time together in such a closed environment?
NELSON: Whenever you take a high risk operation and spaceflight is risky, you want to have a close relationship with the people that you are sharing
it with. Because should, Lord forbid, any emergency occur, they need to work together as a team and that's why in our astronauts, we always assign
a crew for some period of time all working together, and they bond together as a crew.
SOARES: Let's talk about the future of commercial travel. How far are we from this becoming a reality, Senator?
NELSON: I think it is a reality already. NASA buys services from SpaceX, and soon hopefully Boeing to take crew to and from the International Space
Station. We buy services from other commercial providers, such as Northrop Grumman to take cargo to and from the International Space Station.
The Space Station is a joint international project. We have modules from other countries that are part of it. And as we venture out to the moon, we
will likewise have an international consortium in our revolving spacecraft about the moon called Gateway.
There will be significant commercial landings on the moon, and these landings are going to occur starting in just a year and a half. A lot of
scientific experiment, a lot of help and preparation for when our astronauts land on the moon.
So the commercial reality is here with us today.
[09:50:10]
SOARES: Yes. And what we have seen is like you said, NASA working with private industry on this space project. Wonderful to get your perspective.
Thank you very much, NASA Administrator, Senator Bill Nelson.
It was a pleasure to have you on the show, sir.
NELSON: Thanks, Isa.
SOARES: And still ahead, taxing the rich to help the middle class. President Biden is set to push for a more level economic playing field in a
speech later today as the battle over trillions in the new stimulus heats up. We'll have that next.
(COMMERCIAL BREAK)
SOARES: Now global investors are monitoring the progress of the $3.5 trillion fiscal stimulus bill making its way through the U.S. Congress. The
House is putting the finishing touches on the landmark legislation that would raise taxes on businesses and wealthy Americans.
President Biden is set to urge passage of the historic plan today.
Matt Egan joins me now. He's been following the story.
Matt, give us a sense of what we can hear from the President today, and whether this bill could potentially pass?
MATT EGAN, CNN REPORTER: Well, Isa, I think we're going to hear a sales pitch from the President of the United States today. He's got to sell to
the public and lawmakers, especially lawmakers on the fence about how exactly his plan would strengthen this recovery and make it fair.
Now the White House has said that President Biden is going to be talking about rising costs and talking about how the middle class can quote,
"finally catch a break."
Now, Republicans have been arguing that this $3.5 trillion Build Back Better plan is going to cause runaway inflation. I think we're going to
hear the exact opposite, though, from the President today.
The President needs to point to how these are long-term investments that would actually put a lot of money towards trying to make childcare more
affordable, boosting education, and worker retraining. And when you think about the fact that we have a record number of job openings in the United
States, all of those things could actually help labor supply, it could ease some pressure on inflation. And that's on top of the trillion dollar or so
bipartisan infrastructure plan that could also help ease some of these bottlenecks that we've seen emerge in the economy.
I think the problem though, is that I don't think the President has the votes for a $3.5 trillion package from Senator Joe Manchin, the moderate
Democrat from West Virginia. And he said he is not going to support anything like $3.5 trillion.
And yesterday, the White House Chief of Staff, Ron Klain, he spoke at the Salt Conference that I was covering and he conceded that some of these
elements of this $3.5 trillion package are probably going to get scaled back in terms of how much they spending and the duration.
Isa, I think the question is whether or not it gets watered down so much that it ends up minimizing the impact on the economy.
[09:55:07]
SOARES: Where do markets stand on this because of course, the spending bill kind of spreads the spending over 10 years.
EGAN: Yes, you know, I don't think that we have seen much evidence that the markets are worried about the inflationary impact here because, to the
point, these are long-term investments. I mean, this is very different than the American Rescue Plan that passed earlier this year. There are no
stimulus checks here. There are no forgivable loans for small businesses. There are bailouts of airlines.
These are long-term investments. But what markets are most concerned about is, how do you pay for it?
Now, the White House and congressional Democrats want to raise revenue by lifting taxes. Now, if the corporate tax rate goes up, that of course is
going to hurt corporate earnings and Goldman Sachs has said that you know, it's not really clear that markets is in yet. I talked to David Rubenstein,
the private equity billionaire this week and he said, he does think corporate taxes are going to go up. The question, Isa, is how much higher.
SOARES: Matt Egan there for us. Thanks very much, Matt.
And that's it for the show. Thanks for watching. "Connect the World" is next, with Max Foster.
(COMMERCIAL BREAK)
[10:00:00]
END
