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First Move with Julia Chatterley
The United States and China to Coordinate on Climate Change; China's President Prepares for a Historic Third Term; Elon Musk Sells Tesla Shares to Pay Taxes. Aired 9-10a ET
Aired November 11, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:16]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to--know.
COP Cooperation. The United States and China to coordinate on climate change.
Xi shifts. China's President prepares for a historic third term.
And Musk's monetization. Elon sells Tesla shares to pay taxes.
It's Thursday. Let's make a move.
A warm welcome once again to FIRST MOVE. Fantastic to have you with us on a boyband edition of our program today.
U.S. and China NSYNC announcing a surprise agreement on climate cooperation.
Elon Musk says, Take That, with a $5 billion Tesla stock sale this week.
Inflation surging in One Direction only with consumer and factory gate prices rising like they're going out of styles.
Also, the New Kid on the Wall Street Block, EV truck maker, Rivian, soaring 29 percent on its first day of trade in the biggest IPO of the year and
revving up for another eight percent gain premarket. We'll hear from the CEO later on in this hour.
For now, here is a look at U.S. stock market futures bouncing after Wednesday's BTS -- that's big time slump -- sorry, I had to do that.
Inflation, fears rule. Disney investors in the meantime feeling Blue, the stock sector pull some five percent after missing earnings estimates and
warning that streaming growth is slowing.
Europe and Asia, in the meantime, they're streaming ahead. The European Commission raising its Eurozone growth forecast for this year, though risks
do remain and we're joined by the Commission's top economist. Investors in the meantime, also giving some Singles Day love to Chinese retail giant
Alibaba, and gains for Chinese property developers, too.
Real estate developer, Evergrande surging six percent on reports that it has dodged default again, by making payments to lenders. You can see that
up some 6.7 percent.
It's a new addition for FIRST MOVE.
Let's get to the drivers and no monkeying around over at COP for the two biggest polluters in the world. The U.S. and China joining forces in the
fight against climate change. The U.S. Special Envoy described it as a deal that put aside politics to save the planet. Take a listen.
(BEGIN VIDEO CLIP)
JOHN KERRY, U.S. SPECIAL PRESIDENTIAL ENVOY FOR CLIMATE: The United States and China have no shortage of differences, but on climate -- on climate,
cooperation is the only way to get this job done. This is not a discretionary thing, frankly, this is science. It is math and physics that
dictate the road that we have to travel.
(END VIDEO CLIP)
CHATTERLEY: Phil Black joins us now. Phil, he is entirely right, though you have to say with the current state of difficulties -- let's call it
that -- between the United States and China in terms of their relations, even without details on this agreement, it does feel like a positive step.
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Indeed, Julia, this will be welcomed because there has been a shadow over this conference, a suspicion
that I've heard from lots of people. The belief that poor geopolitical relations between China and the U.S. is really limiting the possibility of
progress here.
So this is these two parties saying, we are going to put the other stuff aside and that is not going to stop us from doing the work we need to do on
climate. It sends a powerful message to the world that they, the biggest polluters, will be consulting closely, hopefully driving momentum and
ambition.
But the key question is, is this something for the future or can this start to influence events here on the ground in Glasgow right now? Some 200
countries are closely pulling apart the text of a first draft, which includes important things like why according to the science 1.5 degrees
Celsius should be considered the target for average global warming, and why countries should come back next year with new, bigger ambitious targets in
line with doing the necessary cuts by the end of this decade that the science says is absolutely necessary.
Science says 45 percent of emissions must be cut by 2030 for 1.5 to remain viable, if not, it slips away. Now, in a sign of just how fraught these
negotiations can be, we have heard or had some reaction from a group of countries known as the group of likeminded developing countries which
includes India, it includes China, key players, big polluters, what their initial reaction to that language in particular is, is that it should be
stripped out of the text entirely.
They believe that it shifts the responsibility away from developed countries and their responsibility for fixing a problem that is
essentially, historically, of their making.
[09:05:14]
BLACK: Now, it's a dramatic call, it could just be a negotiating move, but it is indicative of the vast difference, but not just in terms of the
numbers and the emissions cuts versus what needs to be done, but also the perspectives that different countries have on what needs to be done to fix
this and what their individual responsibilities should be for fixing this.
But the ultimate success of this conference will come down to whether or not something very close to that language is included in the final text,
because it describes what's at stake and it says, what needs to happen next, in order to for there to be a viable chance of doing what the science
says we need to do, without it, this conference will be deemed by many to be a failure -- Julia.
CHATTERLEY: Yes, and so you're battling there against the wailing sirens in the background and I think that's apartment, given the challenges that
we all face. I think one of the other big criticisms of this statement is going to be if there isn't more concrete support for some of the less
wealthy nations, some of those that have to not only mitigate the impact of climate change, but adapt to it too, and that they need the financial help.
But we know, so far, the promises that were made -- what -- a couple of years ago are coming several years later than planned, any sense that that
might be changing and that those richer nations perhaps could step up and provide that money sooner?
BLACK: No. Well, this does -- this remains an emotive and very important issue. What you're referring to there is $100 billion a year in mobilized
funding from rich countries to developing countries to help them develop a greener future, but also adapt to the realities of climate change. That was
supposed to be delivered in 2020 in full. It has been tens of billions short.
This year is expected to be the same. Next year, there is an indication that that will be delivered by 2023 now. But what the developing countries
are also unhappy about is the balance of funds. They say most of it goes towards mitigation, that is preventing emissions, as opposed to adapting
when they believe their daily reality to a significant extent is now defined by the real impacts of climate change that are already happening
here and now.
The draft text does not contain sufficient detail, sufficient ambition to satisfy developing countries on this point. So this is something that will
also be keenly debated over in the negotiations in these final days and hours -- Julia.
CHATTERLEY: Yes, watch this space. Phil Black, thank you so much for that.
Let's move on. President Xi's power play. China's ruling Communist Party has approved a resolution that paves the way for Xi Jinping to secure an
unprecedented third term, and possibly remain in office for life. David Culver joins us on this.
David, great to have you with us. It's only the third time this has happened since the founding of the party. I think you need to explain to us
how sort of unprecedented, how rare this is. And in the past, it signaled a shift for the party, for the country. What does it mean for the future of
China in this case?
DAVID CULVER, CNN CORRESPONDENT: You're right, Julia. This is a major power play, and the two previous times were done under China's past
paramount leaders, Mao Zedong in 1945, and Deng Xiaoping in 1981.
Now, these resolutions are looking at the past and essentially confirmed the official narrative as the party sees it. So, their version of history,
they confirm that and then they move forward with that in mind. What does that mean under Xi Jinping? Well, I'm going to read you a little bit of
what's coming out from the communique that's coming from state media at Xinhua.
We haven't gotten the full text of the resolution, but this gives you an idea as to the essence of it all. They say that, "This is a major
achievement and historical experience." That's what they look at here. The communique calls President Xi Jinping, really praising him for his great
political courage and a powerful sense of responsibility.
They go on to say that he is a core leader that has solved many tough problems that were long on the agenda, but never resolved and accomplished
many things that were wanted, but never got done. That's the context that they're putting this in and they are certainly praising him and putting him
at this pedestal point. Not only are they saying that he is at the center of the party, but then take the party and that's the center of society
here.
It really elevates him to a place where he is an undisputed supreme ruler, likely to continue on for what will be a third term if that's then
confirmed next year. Of course, all eyes right now are suggesting that's the direction it's heading and it is interesting to go around this 100
years of the Chinese Communist Party around China.
We made some of the visits to the so-called pilgrimage sites, interesting in the country that doesn't really endorse official religion. They do look
at the party as a faith structure in many ways and people who have gone to these sites are seen as going to these revered locations.
And Julia, you go and you look at the timelines of some of these places and they show Mao, they show Deng, and then they skip a few and then they show
Xi Jinping.
[09:10:10]
CULVER: So they kind of forget his more recent predecessors, and they elevate him to a place that he certainly believes himself to be in and that
is at this all-time high.
You also look at what's happened in recent months, say, you and I have talked about it, that the crackdown on businesses and tech really putting
them in their place, showing them Beijing is boss. Also, look at the schools and what they have reformed to do.
Inside school curriculum is now a mandatory element that looks at Xi Jinping Thought. It is required for all students to then study that and
make it part of their education. All of this, as of course, we're now waiting for what will come next week and that is likely to be a Summit
between -- a virtual meeting between President Biden and President Xi -- really, this sets him up with a lot of confidence going into that,
certainly at the domestic level.
And you were talking to Phil there about concerns over China and the U.S. and whether or not on a climate level they were able to come to any sort of
agreement. Well, one criticism was that President Xi wasn't physically at COP 26 or even the G20. Where was he? Preparing for what was a four-day
closed door meeting for senior leaders that would come out with this resolution that we saw today, and that shows you where his priorities are,
Julia. It is securing his power right here, his base.
CHATTERLEY: Yes. As you've said many times now, Beijing's boss and President Xi right at the pinnacle of that and looking to continue to be so
for the foreseeable future.
David, great to have you with us. Thank you for tying all those stories together.
CULVER: Thanks.
CHATTERLEY: Elon Musk selling stocks. Tesla shares bouncing premarket though, despite the CEO selling $5 billion worth over several days.
Paul La Monica joins us now. Bouncing now, Paul, because they have been under some significant pressure. And of course, now we know why. The
vitriol and the commentary surrounding what we've seen here quite fascinating to me after, of course, he put that Twitter poll out at the
weekend saying, "Should I sell or shouldn't I." People saying, he was already going to sell. It does look like Twitter decided the timing,
perhaps, if nothing else.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, maybe. I mean, I think we have to take anything that Elon Musk tweets with several billion grains of salt.
So, let's remember that --
CHATTERLEY: That's a lot of salt.
LA MONICA: That Musk is probably going to do this anyway, but it's a fun little gimmick to put up a Twitter poll and make it seem as if your
followers are the ones that are dictating when you're going to do this, even though clearly, it was something that he had to do to exercise these
options that were going to be expiring in 2022, and he has a big tax bill, of course. When you exercise the option, so about a billion dollars of this
stock sale going to pay taxes.
Tesla shares were falling probably when he was selling, and now they've rebounded. It's a weird case of selling the news and buying the actual fact
that usually doesn't happen that way.
CHATTERLEY: Yes, selling pressure is a result of the sales perhaps. And of course, some of the uncertainty is now lifted as well. He's done what's
been hanging over the market for some significant time and there is more to come. But at least in the short term, there is some greater clarity over
what's happening.
How many grains of salt did you say?
LA MONICA: A billion.
CHATTERLEY: Oh, a billion.
LA MONICA: A lot.
CHATTERLEY: Fun little gimmick and a billion grains of salt. We are talking about the world's richest man and one of the biggest businesses in
the world. Only Elon Musk, there is your answer.
Paul La Monica, thank you so much. He is speechless. Thank you.
Okay, let me bring you up to speed with some of the other stories making headlines around the world.
The last president of South Africa's apartheid era, F.W. de Klerk has died at the age of 85. In the 1990s, he helped dismantle the country's system of
racial segregation and shared a Nobel Peace Prize with Nelson Mandela, but he also took criticism for contentious remarks about apartheid, including
claiming it was not a crime against humanity.
CNNs David McKenzie has more on the life and legacy of F.W. de Klerk.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice over): F.W. de Klerk helped end generations of white minority rule in South Africa.
F.W. DE KLERK, FORMER PRESIDENT OF SOUTH AFRICA: A new democratic dispensation is foreseen with full political rights for all South Africans.
MCKENZIE (voice over): But earlier in his career, there was little hint of anything revolutionary. A deeply conservative de Klerk rose through the
ranks of the National Party during the most draconian periods of racist apartheid rule.
Then as President on February 2, 1990 --
DE KLERK: The government has taken a firm decision to release Mr. Mandela unconditionally.
[09:15:03]
DE KLERK: We landed in a place which was morally unjustifiable and I came to the realization I cannot build the security of my people on the basis of
injustice towards a majority of all the people.
MCKENZIE (voice over): Some of his people, Africana South-Africans called de Klerk a traitor for releasing Nelson Mandela.
But South Africa's painstakingly negotiated democratic transition helped stave what many saw as inevitable Civil War.
DE KLERK: It was only in South Africa when we negotiate and when Mandela sat across me and said, I will try to understand your concerns. You cannot
defuse tension unless the parties to the conflict start talking to each other.
MCKENZIE (voice over): De Klerk would jointly win the Nobel Peace Prize with Mandela, a move criticized by many, and served as Deputy President for
a time.
But the last white President of South Africa, once called apartheid a developmental policy, only truly repudiating it after an outcry.
Some South Africans felt that he had little moral authority to criticize a democratically elected government, as he frequently did.
Over the years, Mandela and de Klerk developed a strong mutual respect, even friendship, a symbol that de Klerk said represented what could be
possible in a country with such a painful past.
(END VIDEOTAPE)
CHATTERLEY: Germany's Acting Foreign Minister says the E.U. will extend sanctions against Belarus next week. Thousands of migrants face grueling
conditions at the Belarusian border trying to get into Poland. The E.U. accuses Belarus of creating the crisis.
Okay, still to come here on FIRST MOVE, Europe warns of a triple threat to the recovery. I speak to the E.U.'s economy chief about risks and rosier
new forecasts.
And Rivian on a roll, the electric trucks startup powers its way to an $86 million valuation after the year's biggest IPO. We speak to the CEO, stay
with us.
(COMMERCIAL BREAK)
[09:20:00]
CHATTERLEY: Welcome back to FIRST MOVE. It's a turnaround Thursday on Wall Street with all the major averages set to bounce after Wednesday's
weakness. Tech was the underperformer in the previous session, dropping 1.6 percent as bond yields spiked on hot U.S. consumer price inflation data.
Wednesday's numbers will make it more difficult for Congress to compromise on President Biden's second big stimulus bill. AXIOS reporting that
holdout, Senator Joe Manchin, wants to delay a vote until next year to see how inflation plays out. Manchin tweeting yesterday that the spike in
inflation is quote, "Not transitory, and is instead getting worse." Too much money chasing too few goods, don't want to be adding more money to it.
I think that's his message.
Beyond Meat, in the meantime, the latest firm to report worsening business pressures due to labor shortages and supply chain issues. Shares of Beyond
Meat set to fall some 16 percent. The company warning on continued weak sales growth for its alternative meat products.
Now to Europe, where officials are raising growth forecasts amid a stronger than expected recovery. The European Commission now predicting five percent
growth this year and 4.3 percent in 2022. But it says risks remain. The main ones, high energy prices, supply chain disruptions, and the ongoing
COVID pandemic.
Joining us now is Paolo Gentiloni. He is the E.U. Commissioner for the Economy. Commissioner, fantastic to have you on the show with us. Plenty of
good news, I think in this report, even if the risks remain potent.
PAOLO GENTILONI, E.U. COMMISSIONER FOR THE ECONOMY: Yes, indeed good news, because we updated our forecast and now, it is five percent this year, and
4.3 next year, and this is quite an achievement for the European economy, of course, it is after a deep recession. But the fact that we are
recovering the pre-pandemic level of output at the end of this year, so sooner than we expected a few months ago, is very positive.
Of course, we have what we call headwinds to face. So, the picture is a very good one. Great achievement for our collective and national response,
but also challenges coming from different problems that are in our economic environment.
CHATTERLEY: I want to pick up on one of those challenges, which is what I think we're talking about globally and that's rising prices, inflation --
energy prices, of course a huge contributor to the inflationary pressures that Europe is facing, and the Eurozone is facing.
But in this report, you're confident enough to say you think, at least in the four months to the end of the year, we're going to see a peak, and then
it's going to lessen into 2022. What gives you that confidence?
GENTILONI: Well, this increase is very much connected to temporary factors. One, of course, is the reopening of the economy. Large
consumption, services activity in the third quarter of this year strongly rebounding, and the other one is connected to gas prices and their impact
in electricity prices.
Well, both these factors are mostly probably known exclusively, but mostly temporary, because we will not have such a rebound forever. The pent up
demand, the savings are progressing in their deployment in our economy and they will slowly go back to normal. And at the same time, what we see in
the energy markets, for example in the gas futures show that after the winter, it is very probable that these prices will go down.
So this is the reason why we are -- our forecast is of an inflation growing, having 2.6 percent on average this year and 2.5 next year.
CHATTERLEY: You made some recent comments and they caught my attention and it is very much tied to what we're seeing in COP 26 and to the price
pressures that we are seeing, as you've mentioned in gas prices in particular.
And you said we have to be very careful not to blame the transition to renewables on the price pressures that we're seeing in the energy markets
today and risks some kind of anti-green backlash. It may be a taste of the future in terms of future prices if we get the investment wrong, but do you
think there are people today that are looking at the price pressures and saying, hey, we've got to be a bit careful here with the green transition
because that's dangerous, too.
[09:25:08]
GENTILONI: Of course, there are people. And I think that, in general, we should take care of the consequences of this rise in energy prices and
electricity prices, especially for vulnerable households because doing nothing is not the solution, but the mistake would be to take actions that
are permanent and that are contradicting the midterm solution to this problem. The midterm solution is investing in renewables, strengthening our
climate transition, not the opposite.
So we need the balance, of course, intervention in the short term in support to vulnerable households. We can't ignore this increase of
electricity prices, but without transforming this in new opportunity for fossil fuels and slowing down the climate transition, not an easy balance,
of course, but a needed one.
CHATTERLEY: Yes. The balance must be found. It very much ties to the state of economies having fought the worst of the pandemic and the report today
shows a peak debt to GDP of a hundred percent in the Eurozone, this year, a deficit north of seven percent, even if both of those things are going to
come down.
And if countries have the room to invest in the future for digitization for renewable energies, they need the capacity to do so. And I know this is
something that you're discussing, this is so far away from the initial metrics of the Growth and Stability Pact -- deficit levels and debt levels.
Are some of the northern nations on board, whereas I'm sure the southern nations are, with allowing people more debt capacity, more deficit room for
this kind of productive spending? Because surely this is crucial.
GENTILONI: Yes, it is. Interesting to note that we have in our forecast a quite high ratio debt to GDP, it is 3.5 percent, which is completely
different from the level of public investment. Investment to GDP is 3.5 percent, quite different from the one we had at the end of the last decade,
where we reach zero level of net investment.
So we need a large amount of investment and we need this in all European countries, not only in those with higher, larger fiscal space.
There is also the new reality of the fact that this large debt that we have to reduce, of course, is less costly than the debt that we had in
Maastricht times when our rules were established. At the time, interest rates were between four and five percent. Now, interest rates are around
zero. So this debt is higher, but the cost of this debt is lower.
What should we do? Reduce the debt in a realistic way, gradual way, not a growth killing way because we need a lot of public effort to support our
strategic transitions, and this is I think, something that all European member states should do.
Is there an agreement on this? Do we have the northern countries on board? Well, I think there is an agreement on the awareness of the problem. We
don't have still the solution in our pocket, to be honest.
CHATTERLEY: Diplomatic, I think we'll read between the lines there -- those big lines. Onto a very serious --
GENTILONI: A big discontent, yes.
CHATTERLEY: Yes, you'll work on it. I want to talk to you about what we're all watching, which is what's taking place now with migrants on the border
between Poland and Belarus.
The President of Belarus threatened to shut down a key pipeline that transfers energy to Europe if Poland closes the border to these migrants.
We have two issues here or three issues, the actions that we're seeing in Belarus, we have the situation with the migrants, and the challenges of how
to respond.
Commissioner, I know it takes you outside of your remit on this case, but are sanctions -- heightened sanctions as the acting German Foreign Minister
has suggested enough? What should the response be?
[09:30:01]
GENTILONI: Well, first, I think it is clear that what is happening there is both a shame and a drama. The shame is the fact that there is a country
weaponizing migrants against a neighbor because this is exactly what Lukashenko is doing, using thousands of people as a weapon against
Lithuania before, and now Poland -- and this is unacceptable for the international community.
Then it's a drama, because in this confrontation we don't have U.N. organization -- a humanitarian organization allowed to be there and look to
what happens with the weather that we have, with the human conditions, non- human condition that we have. So a shame and a drama.
To be honest, we are not scared of Lukashenko threatening the European Union from the economic point of view. I think that we need this kind of
weaponization of migrants to finish. And to finish it, we should use all the means that we have on sanctions and on political isolation for this
kind of behavior. We can't accept this kind of behavior.
CHATTERLEY: Yes. The international community must respond.
Sir, thank you for joining us today. Paolo Gentiloni there, E.U.'s Commissioner for the Economy.
GENTILONI: Thank you.
CHATTERLEY: I look forward to speaking to you soon, sir. Thank you.
The market opens next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE.
U.S. stocks are up and running this Thursday and as expected, a mostly higher open a day after Wall Street's worst performance in weeks. A more
subdued session might be on tap today with the bond market closed of course for Veterans Day, and it is also Remembrance Day in the U.K. and our
thoughts as always are with the families and the brave servicemen and women who have served both nations and others around the world.
In the meantime, a less than enchanted open for Disney, the entertainment giant needing a Prince Charming after suffering weak subscription growth at
its streaming service, Disney+. Tesla though looking less Cruela, shares continuing to improve after Tuesday's 12 percent drop on Elon Musk's stock
selling uncertainty. New filing show Musk exercising options and selling $5 billion in stock. It's his first stock sale in around five years.
Electric truck maker, Rivian, in the meantime, shares revving once again after a whopping 30 percent gain in the first day of trade on Wednesday, it
was the biggest IPO of 2021, and values Rivian at over $85 billion.
I spoke to Rivian's CEO shortly after the mammoth market debut.
(BEGIN VIDEOTAPE)
RJ SCARINGE, CEO, RIVIAN: It's exciting, be honest. It was emotional, it was moving.
We did the bell ringing at the plant and I am standing there looking out at the full team, you know, hundreds of team members cheering, smiling faces,
Tears -- it was moving. It feels -- it feels incredible, and I think what's most exciting is the path ahead and really how the team is so excited about
what we can do to really accelerate and continue to drive impact with the products we're building.
CHATTERLEY: You know, it's not your job to justify a valuation, but it is your job to earn it. Are you daunted in any way? And what is the money
going to help you achieve? Because you and I have discussed in the past, doing this, building these vehicles is hugely expensive. The technology is
hugely expensive.
SCARINGE: Yes, it's -- what makes this so interesting and important is the scale of what has to happen over the next 10 to 15 years. We have more than
a billion vehicles on the planet and the vast majority of those have combustion engines. And we have to convert that entire global fleet over,
really in the next one to two decades, and ideally as fast as possible.
So for us, it is really looking forward at that and making sure we are designing the business, designing our shareholder base, designing the
organization, making sure we have a broad team with diverse perspectives and backgrounds to really come together and execute on an amazing set of
products and a growing portfolio products that help drive that transition.
So it's quite the challenge and I think it's important for not only us, as a company, but I think it's important for our planet to make this
transition as quickly as possible.
CHATTERLEY: Oh, this is so interesting. You sound like someone who shouldn't be there. Actually, you probably should be in Glasgow talking to
some of the big car makers, four out of five, I believe have the biggest who have turned round and said, look, we can't stop selling fossil fuel
cars by 2040. We're not willing to commit.
Is there any justification whether it is not being sure of the right technologies, be it hydrogen, be it fuel cell, to not make a stance today
and say, look, we have to stop selling fossil fuel cars in just under 20 years. It's a long time.
SCARINGE: What we need to have happen here is all the different manufacturers around the world really commit to this level of change and it
is often, I think, wrongly thought of as a space where you're going to have one or two winners.
The reality is, is we need many different companies building a broad range of products and brands and different choices for customers. So, we truly
hope that what we are doing and the speed at which we hope to move will inspire and hopefully drive increased competition.
CHATTERLEY: Do you think they are risking extinction if they don't move quicker?
SCARINGE: I think, it is very clear that this transition must happen, and there is a number of fundamental structural changes that have to happen for
a lot of the legacy businesses to fully get to this future state. And, you know, I really hope that they are all taking these hard decisions to make
that transition.
I think the companies that are more aggressive in making that shift have a much higher likelihood of continuing to thrive for decades to come than the
companies that are holding on to the past.
CHATTERLEY: Let's talk about orders because I believe up to the end of October, you had 55,400 R-1T and R-1S preorders in the U.S. and in Canada.
Are you worried when Ford says hey, we've got 160,000 reservations for the F-150, the lightning electric truck.
SCARINGE: I think the key here to recognize is that when we launched the R-1T and the R-1S, these are our flagship products. These are the tip of
the spear for us as a brand and we really think of them as almost opening a brand umbrella for us and as that brand umbrella opens, we'll add a whole
host of different products underneath that umbrella, different price points, different segments, different form factors, of course, lower price
points.
[09:40:14]
SCARINGE: And key for us as we come out -- it is that these first products, R-1T and R-1S, are really establishing the brand. And for us,
we've got so much backlog that we're just focused right now in making sure we actually get these products.
I get a lot of notes from customers, saying, "Hey, we're super excited, when can we get our car?" And so, we're very focused on that. And of
course, in parallel to that, we also have our commercial ends. And I think often, it is perceived that there is some level of decision one versus the
other portion. We've designed the business to run multiple programs at the same time.
We have two very separate, completely independent production lines for those two products and that's what we've been building, as you and I talked
about a couple years ago, that's what I've been focused on building is, is the organizational discipline and scale to be capable of running multiple
programs in parallel.
CHATTERLEY: Crucial, I think, to the demand story and the orders that you've seen is that fleet order from Amazon, of course, a big investor in
you as well, which is perhaps part of the answer to this. Is that a legal obligation to buy those 100,000 cars? Or is it just, hey, if they're ready,
we'll go with your cars, otherwise, we may decide to go somewhere else. Clearly, that would hurt their own investment, but is it a legal obligation
to buy because there's been some chatter about whether or not it is out there? Can you clarify?
SCARINGE: The relationship with Amazon has been really incredible, and it is something that has been forged over many years in terms of how we work
together. And on one hand, they are a very large shareholder, in fact, our largest shareholder, just around 20 percent. But more than that, it is
really the collaborative partnership that we built.
And that partnership, of course, you see on the surface as a vehicle, it's a friendly looking large van. There are three different sizes and it is a
van that's designed to make it really easy to get in and out of, it is easy to load packages into. It's optimized for last mile. But we did it very
closely with Amazon.
And so that level of integration of the vehicle, and then what you don't see, all the ecosystem around it, what we call our Fleet LS platform,
essentially how we manage those vehicles working in close partnership with Amazon gives us a lot of confidence in the strength of this relationship,
and certainly, has us excited about what comes beyond, what we've talked about so far.
CHATTERLEY: So, yes, they've been so involved in the process, they are definitely going to buy these vehicles.
SCARINGE: I'm very -- I'm very confident in Amazon's excitement for the products.
CHATTERLEY: Okay, but no legal obligation. I'm reading between the lines there.
SCARINGE: Yes. I mean, as you -- I guess, the details of the contract, there are lots of nuances. I think the key thing here is the strength of
the product, the strength of the relationship. We're very confident in those vehicles and the demand for them.
CHATTERLEY: Sounds good to me for now. As you and I discussed and even before the Amazon partnership as well, which is quite fascinating, I do
feel like we've been on this journey with you. It's hugely capital intensive. It is perhaps no surprise over the last 18 months, you've gone
through what -- $200 billion worth of cash.
The question is, do you need and in your conversations to the investors, do you need a path to breakeven? Do you have that in your mind of when you're
going to be selling these vehicles? When the amount of money that you're spending ultimately nets off and we start talking about profits?
SCARINGE: I think as we look at the scale of this change, we talked about it earlier, what it requires is a lot of forward investing. So, we're
investing in multiple products, multiple production facilities. We're doing that stacked really tight, meaning what we are launching here normally as
our first plant, we are planning the second and third plants. And of course, as this ramps up, those plans will start to come online.
And that focus on growth and focus on making sure we're creating products for this very large scale transition will require a lot of capital. And as
you said, we've raised around $12 billion before the IPO and then with the IPO, we're raising a significant amount of capital on top of that to really
make sure we are finance for that to be able to go quickly and to be able to accelerate some of that growth where we stack up a lot of different
activities over the next couple of years.
So the focus right now is building -- really building the business such that we can grab a lot of this market that we see is needing to electrify
and really needing, you know, customers needing -- they have products to choose from.
CHATTERLEY: You're struggling not to smile. I think your face actually says it all. This is a huge achievement and an awesome day. Yes, I think
you're allowed to just breathe in and breathe out again on a day like today. Huge congratulations and we look forward to continuing the
conversation and well done to you and your team. Great to chat with you.
SCARINGE: Yes, thanks so much, Julia.
(END VIDEOTAPE)
CHATTERLEY: Great debut. The CEO there of Rivian.
[09:45:08]
CHATTERLEY: Okay, Siemens say size and scale matters, especially when dealing with global supply chain challenges. The CEO, up next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Investors applauding the latest results from German industrial giant, Siemens, despite some of the global
supply chain challenges that the company hopes will ease next year. I asked CEO Roland Busch how they're managing it.
(BEGIN VIDEOTAPE)
ROLAND BUSCH, CEO, SIEMENS AG: There are basically three elements coming together. Number one is, it is a great team. We have very, very good
people. They know the ropes in the supply chain and the management and the logistics, this is one element.
The second element is the power of Siemens. So, we are working with our suppliers, but not only in getting the price down and buying cheap. We work
with them also in a strategic way in terms of driving innovations, and we are standing together in good and bad times. So, I think we can really
leverage that.
Also, on a Siemens scale, so with a lot of businesses, which we can bundle and we can bring together, which is an advantage for the suppliers, so they
stick with us. And the third element, equally important though, is they're using our technology, our digitalization automation technologies on our
sites.
And I'll give an example. When manufacturing our PLC or industrial PCs, we have three main manufacturing sites, two in Germany and one in China. They
are already fully digitalized. So, we have a digital twin of the manufacturing of the products. So, what we can do is now, we can literally
real time, allocate manufacturing tasks among these three sites and manufacture all these products where we have components and stock.
And in doing that -- which is a challenge for the people as well. You can imagine, you go at the morning and the plant and you don't know what to
manufacture at the end of the day. But we can do that in deploying our own technologies.
So these three elements helped us to really make a very, very strong performance through all these quarters. The last one in particular.
CHATTERLEY: Yes, and there is not many businesses around the world that have the capabilities of doing that whether it's adopting their own
technology or shifting globally, in order to meet demand. What do you think about the outlook for pricing pressures looks like in light of what you're
seeing in terms of future demand, your order book? Whether it's for you specifically or for the globe. Are we going to see some relief on some of
the particularly price pressures that we've seen over the last year?
[09:50:09]
BUSCH: So let me talk about the order book. First, you saw for the full fiscal year, 21 percent of increase in order intake, 11.5 percent revenue.
And if you look a little bit deeper, also digital industries, they have a higher order intake than revenue. So that means this indeed building up,
building up an order backlog, which we then have to deliver. So it comes with a little bit of a delay compared to what would be normal, too. So
return rate for more intake to revenue is a little bit extended. This is one thing.
Next thing is about how does it look going forward? Regarding supply chain, we do believe the next half year will still be challenging as the quarters
before, and we hope that in the second half of the year, we see a little bit of a relief. It is a relief in commodity prices, but also in supply
chain constraints. We cannot say it yet, but this is our planning assumption.
We see -- and the reason why do we plan that way is we see that this is really an over swing. Everybody lost for the crisis reason, they were also
pushing a break. They said the market will be back not before 2023, 2024, 2025, depending on the market. It came back much, much faster. So as a
surprise, the markets are really coming back so quickly and this has an impact on the supply chain.
So once this is sorted out, we get into this swinging in, so to speak, and therefore we hope that in the second half, we have an ease.
CHATTERLEY: Yes, and undershoot and then an overshoot. And at some point, we're going to find our equilibrium again. Let us hope it is the six months
that you're talking about there.
We had a fascinating sort of final, final decision from GE to streamline its business and I think a lot of people looked at Siemens at that moment
and said, look, it is work that you've been doing to divest of assets now for a long time. But you do still own significant stakes in the healthcare
business, for example, and the energy business.
Again, you said earlier today that we're not going to look at rush selling off or reducing our stakes. What's the benefit of holding on to such
significant stakes and strategic interests in these businesses, both for your clients and I guess, importantly, too, for your investors?
BUSCH: So, I mean, obviously we made these steps years before, years with that out of a position of strength. So it was our choice to do that and
what to do and why, which brings us now to the situation where we are in and let me start with Siemens Energy.
For Siemens Energy, I mean, the fundamentals is the market growth, is the risk profile, it is the earnings potential, which we have in this business
is something really drifting apart. So this was one reason why we said, let's spin it off. Let's go below 50 percent with a clear target to dilute
our share going forward.
Why do we still hold something like 45 percent? We still have a lot of parent company guarantees sitting out there, which we hold. Siemens Energy
is working on them. They go down faster than expected.
As long as we have that exposure, we like to have two seats in the Supervisory Board there, but again, this is not a long-term thing. We said
that we're going to dilute and we're going to sell these shares as we go forward.
(END VIDEOTAPE)
CHATTERLEY: Thank you to Roland Busch there, the Siemens CEO.
You're watching FIRST MOVE. More to come.
(COMMERCIAL BREAK)
[09:55:30]
CHATTERLEY: Welcome back to the -- finally on FIRST MOVE" -- four astronauts are now on their way to the International Space Station in a
SpaceX capsule.
(BEGIN VIDEO CLIP)
ANNOUNCER: Three, two, one, zero. Ignition and liftoff.
(END VIDEO CLIP)
CHATTERLEY: Blast off. They're expected to reach their home for the next six months in a few hours' time. It is the fifth time SpaceX is sending a
crew into orbit, and I know exactly what you are thinking and I do believe the toilet facilities are working, at least, I hope they are.
That's it for the show. If you've missed our interviews today, they will be on my Twitter and Instagram pages. You can search @jchatterleyCNN.
In the meantime, enough from me. Stay safe.
"Connect the World" with Max Foster is next.
I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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