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Quest Means Business
EU Parliament Votes to Punish Hungary; Hurricane Florence Could Pound Carolina Coasts for Days; A Driver in China Plows into Crowd, Killing Nine People; China's Electric Automaker Makes NYSE Debut; Nio's Stock Swings on First Day of Trading; NASA's Spinoffs Continue to Play a Key Role in Our Daily Lives; Gene Simmons Adds to His Portfolio with New Soda Business. Aired 3-4p ET
Aired September 12, 2018 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's an hour to the closing bell on Wall Street. An hour to do the final trade on a day where the Dow
couldn't really decide which direction to go -- it's heading lower, but only just for the part of the Dow, you look at Boeing, which went from
bottom to top, and Apple which is down quite sharply. These are the markets and these are the drivers of the day.
Trade talks with China are back on the agenda. Its stocks got a short- lived boost, but Boeing is the beneficiary. Apple's unveiling has left the markets cold, tech has been down and a major IPO at the New York Stock
Exchange. Fancy cars outside, you'll hear from the Neo's Chief Financial Officer about taking on Tesla. Live from the world's financial capital,
New York City on a rainy miserable sort of day. it is Wednesday, it's September the 12th. I'm Richard Quest. I mean business.
Good evening. Tonight, Apple's biggest event for its biggest moneymakers, a new Apple watch with new health features like the ability to take EKGs,
echocardiograms. Apple's announcement pushed shares of Fitbit lower. It just shows the power of the company. There are also going to be new high
end iPhones, the iPhone XS and iPhone XS max with Apple's biggest phone screen.
Now, according to what they say, a bit faster, will last longer and have up to 512 gigabytes of storage. And then you have more reasonably XR; like
the XS -- a lot of tens here, it's dropped the home button and it starts at a mere $749.00. But some might arguably say, Brian Stelter, in Cupertino
that what we have here, it's a little bit of this and a little bit of that, but what that shouldn't detract from the fact that these were the
incremental improvements necessary to the iPhone range?
BRIAN STELTER, MEDIA CORRESPONDENT, CNN: That's right, nothing revolutionary today, but lots of evolutionary announcements, Richard, lots
of improvements from the camera to the processor, to augmented reality applications and you mentioned those interesting new health features on the
watch app. Let talk about that in a moment, but first the iPhone as you said, three new phones, now once again Apple is pushing the limits for how
much people are willing to pay for a phone -- $1,100.00 for that top of the line biggest screen size ever for an iPhone.
I think it's going to be interesting to see how that performs in the marketplace compared to the lightly lower end models. I think the reality
is that people have become so addicted to these devices they would be willing to give up anything else in their budgets to be able to buy a new
version of the iPhone and so Apple is pushing, they are testing that proposition with a $1,100.00 model.
QUEST: And those devices, the watch, the Apple watch and its new various fitness features. We're seeing Fitbit down because once Apple moves in,
one question is, what happens next?
STELTER: Yes, two really interesting developments with the watch is one, if you fall down, if you slip and fall out of a tub, if you fall down off a
ladder and you're not moving or -- the Apple watch will sense there's a problem, it will actually automatically dial 911 in some cases, that's a
really interesting development for senior citizens and frankly, people of all ages are going to appreciate.
The other feature, really interesting, heart rate monitoring. They are going to be doing electrocardiograms within the watch and then it will send
that data to your doctor. The Apple watch will be able to tell if you have atrial fibrillation. In a world where these devices stress us out,
Richard, the least they can do is keep our hearts healthy and that's what we're seeing Apple try to do.
QUEST: All right, so the mood -- the feeling, the way it was all presented, the -- what did you come away from this, because it's as much a
confidence building, it's as much an effort, the whole event to sort of show front foot, back foot, middle foot.
STELTER: Yes, and this is my first time in one of these, so I have seen the cult of Apple in action. I think what these events are about now,
Richard, is saying to the public, don't take these features for granted. This is incredible technology in your hand and on your wrist. Technology
that we could have never dreamed about a decade ago.
It is true, the cameras are getting better, the technology is getting a lot faster, and features like facial recognition, which seem kind of weird even
just a year ago are now accepted and embraced. So I think what Apple is trying to do, every time this year, this time of year for years is to
remind us how impressive this is.
QUEST: Brian, how long have you had your phone?
[15:05:14]
QUEST: I don't mind whether it's iOS, android, whatever it might be -- how long have you had your existing phone?
STELTER: I bought the iPhone X this time last year. My phone doesn't like it because it is too small, so I am sure she'll want the bigger version of
the iPhone XS max, and honestly, Richard, I would give up pretty much everything. I would skimp on my meals, I would skimp on taxis so that I
can pay for the new phone, I'm addicted.
QUEST: Brian Stelter, thank you. Apple's new iPhone XR, look, although I have to say I like the way Brian calls it the iPhone X, I've been calling
it that as well, but everybody keeps telling me I'm wrong. It started just under $750.00, setting that price was Apple's choice. Investors are
worried iPhone prices could increase due to factors outside of Apple's control.
For example, you've got introducing the i-tariff, which was designed by the Trump administration in Washington. Apple warns its features are just for
the US market, with lower economic growth and a hit to profit and higher prices as well. The i-tariff integrates all these accessories. Apple's
profits on these would be cut between 10% and 20%. Apple didn't mention the iPhone, sources told the "New York Times" that the Trump administration
has promised to exclude it.
White Donald Trump calls on Apple to make more of its products in the United States, there is one more thing. Apple has committed to investing
$350 billion in the United States over the next five years. Now, we need to put all of this into some form of perspective. Good to see you.
SHELLY PALMER, CEO, THE PALMER GROUP: Hello, Richard. How are you?
QUEST: Good to see you. And Rana ...
RANA FOROOHAR, GLOBAL ECONOMIC ANALYST, CNN: Hey, Richard.
QUEST: We're going to put it into the board room of discussion. All right, you're doing the politics and the big picture. Shelly, you're doing
the technology and exactly what we heard today. So from what we heard today, what did you make of it?
PALMER: Well, it was very expected, this was the worst kept secret ever for these guys, no surprises at all, the iPhone XS max, the big phone with
the 6.5-inch display is amazing, it's the best iPhone they have ever made blah-blah-blah, except it's not blah-blah-blah. These guys have put an
incredible amount of technology behind this phone. They've also done a lot aesthetically. It's surgical steel and it's coming in with some plated
finishes. Everything about this phone screams awesome.
The augmented reality capabilities are exceptional in iOS 12 and the new chip that they put in this phone, the new A series chip, what they're
calling the A12 bionic chip -- it is just a marvel of modern science. So this thing is powerful and it will be an awesome device ...
QUEST: But the pricing of it?
PALMER: I think the pricing is what you'd expect that it's $749.00 for the cheesy one, $999.00 for the small one and $1,099.00 for the big one
starting, but they all usually go up around a hundred bucks each for the amount of storage that you have.
QUEST: Rana...
FOROOHAR: Yes, so I am most fascinated by t he way in which they are going into health and health apps using FDA approval to collect data. I mean,
this is going to be a way that Apple can actually keep margins up because as you pointed out, they are going to come under pressure with this
potential next round of tariffs.
This is where the rubber is really going to hit the road for tech because they are so much of a broader range of things that are going to be falling
under these tariffs. It's going to raise prices for US consumers. They are going to need to add value in order to keep margins up.
QUEST: Okay, but on this question of tariffs, and the ability of Apple. Now, they've already warned what's going to happen. They've already warned
that it will hit their numbers, they've already asked the administration not to do this, but Apple is only a symptom or Apple is mainly large, but
merely one of this deteriorating situation on the trade front for tech.
FOROOHAR: For sure, and I actually think we're headed to sort of a tri- polar world on tech. I mean, I really do think the Chinese have made it very clear, they want to go their own direction. They've got their own,
the Xiaomi, they've got their own consumer brands that they would like to see competing against Apple and in fact, Xiaomi has taken market share, a
lot of market share from Apple in China.
PALMER: So what's going to happen, Richard, is that that business war is going to sort itself out because you're talking about a company that's got
the best supply chain of any company in the world. Tim Cook has built a supply chain to build iPhones and i-devices that is unlike any and he can
actually control the market in a way that a lot of people can't.
So the tariffs are going to be one thing. If you want to talk tariffs, get some guy from Apple on here to tell you how they're sourcing because the
sourcing at Apple is a wonder of the world. One thing I didn't mention that is really important, Tim Cook got up there and talked privacy and he
shot a huge digger at everybody in the whole world by saying, "At apple, your data belongs to you, we believe it, that's what we do." And it got a
round of applause.
QUEST: Do you believe him?
[15:10:08]
FOROOHAR: I believe him more than I believe any other thing. Let me put it that way. I think the fact that they're making this a competitive
advantage is very, very interesting. Apple and IBM are actually out on the lead on making privacy a business venture.
QUEST: All right, let's move from Apple to Snap. Sorry, did I say something amusing?
PALMER: No, you did actually, yes. You did actually.
QUEST: Snap dropped the best part of 10% today, because one broker downgraded, there you see it. It was of -- the price is $9.00, it's down
7% and after trading at $9.17.
PALMER: Are you on Facebook, Richard? I mean, real -- do you use Facebook stories? The problem that Snap has is that it's a business model, not a
business. And all Facebook needs to do is breathe in and out and kill them; and the redesign of Snap was so incredibly bad that people who loved
it, stopped loving it.
So they did two things, they got people out of love with their product, which actually was hard to do because they had a good product.
FOROOHAR: You know, there's a bigger market story here, too, which is that we've already seen a little bit of a shakeout in tech stocks. You're going
to see more of that. I think that this is the beginning of separating out the real winners from the losers.
QUEST: Right, so on markets now, one of you guys suggested this, if you look at the FANG ...
FOROOHAR: Yes.
QUEST: The FANGs could be become the ANG, because although Facebook is very powerful, Facebook has fundamental problems of -- you and I see it,
don't you?
FOROOHAR: Well, it's a regulatory issue. I mean a lot of these companies, Facebook and Google I would argue in particular are really predicated on
are they going to be able to allow to run their businesses the way they have been? Are they going to be able to use data in the ways that they
have been? I think that there's real regulatory pressures in Europe and the US that may challenge that model.
PALMER: In practice, Richard, if you think that about regulation, the way it may play out as that the legislator will -- they will legislate some
kind of privacy regulation in the United States, but that will be a level playing field. Who is it going to hurt more and who is it going to hurt
less? That's an interesting question because these models for Facebook, Google, even inside of Google -- Google YouTube and Google First -- they
are all different models.
QUEST: Finally, how long have you had your phone? I suppose it's not really fair for you because you sort of changed -- you changed your stocks.
PALMER: I'm stunned that I was going to mention that. That was a Blackberry, until magically now, now it's an iPhone. When did that happen?
QUEST: I've always had an iPhone for a long time, but I've used Blackberry as well and I will go back to Blackberry if they made one that was ...
FOROOHAR: I love the Blackberry. I mean, I'm so glad you admitted it, I want to come clean.
PALMER: No, you always admitted. Let's give her ...
QUEST: All right, so how long have you had your phone for?
PALMER: This is a one-year-old and the new one will come in whenever the new ones come in.
FOROOHAR: A couple of years.
QUEST: Good to see you, man. Thank you.
FOROOHAR: Good to see you.
PALMER: Good to see you, Richard.
QUEST: A stormy day on Wall Street, midmorning, there was a boost after "The Wall Street Journal" reported that the US is proposing fresh China
trade talks. Now, the gains for the market evaporated, we're down 28 towards the close. Boeing of course has held on to those gains as being up
nearly 2.5% and they are amongst the leaders on the Dow. I spoke to Ray Dalio, the founder of the world's largest hedge fund, Bridge Water
Associates and Ray told me the dangers are very real. A trade war can escalate into something much worse.
(BEGIN VIDEO CLIP)
RAY DALIO, FOUNDER, BRIDGE WATER ASSOCIATES: Economic wars lead to other kinds of wars. I mean, if you look at the history of Japan and the United
States in the 1931 period; 1931, we have tariffs and then we also have populism in Japan and you have competition for economic resources in Asia.
This is somewhat similar to Japan, China and the United States, and so those tensions and how they create embargoes and economic sanctions, that
economic warfare is something that not only undermines the effectiveness of the economies, but it also creates those kinds of tensions so that when you
have the next down turn, when you have the next down turn, that's the risky time, right?
Imagine now, we have populations that are -- our populations that are at odds with each other. politically and also economically. Now, imagine what
the next downturn is going to be like. In terms of our own, our own effectiveness and how we'll be do each other? That type of conflict also
exists between countries and I think that that's a dangerous set of circumstances.
(END VIDEO CLIP)
QUEST: Ray Dalio talking to me. Jamie Dimon has had to clarify that he's not running for president, after claiming he could beat Donald Trump in an
election. The JP Morgan boss said he was smarter than Mr. Trump. But then he said, this wealthy New Yorker actually earned his money, it wasn't a
gift from daddy, quickly walking back those comments, Cristina Alesci joins me now. What did he now say because "The Post" statement was what?
CRISTINA ALESCI, CORRESPONDENT, CNN: He said, this is why he shouldn't be a politician, that he shouldn't have said those things publicly.
[15:15:07]
ALESCI: But what is shocking about this is that he was literally sounding like he was picking a fight with Donald Trump. I mean, saying that he is
smarter than Trump, saying -- taunting Trump for starting out with money from his father. I mean, these are all hot button things to say to the
President, right? And we know this President likes to attack.
Look, I've covered Jamie for years. I've interviewed him. I know him really well. I could totally see him saying this off the record, right, or
to any reporter on the side of a conference, totally off the record. But to say it out loud, a whole other level.
Especially because I know that Jamie has regretted some of the public criticisms that he has lobbied against investors, regulators, other
politicians and he has learned from those mistakes and he's actually been a lot more reserved in his public comments lately.
QUEST: He said he is committed to staying as the head for at least five years, so it would take him out of 2020 consideration, but the question is
not going to go away, so is it generally felt that he would like to if he could?
ALESCI: You only get to the core of the issue. I think he's thought about it and I have been told that he has thought about it theoretically, do I
think that Jamie Dimon is actually going to run? No, I don't think he's going to run. I think that Wall Street banker in this environment where the
Democratic Party has a very strong base undercurrent that is rejecting the 1%, that is rejecting New York and Wall Street, I think it would be very
hard for Jamie to overcome that, and he has said as much.
QUEST: He said exactly. Great to have you, thank you.
ALESCI: Thank you.
QUEST: ... to have you at an earlier time, thank you.
ALESCI: Thank you.
QUEST: When we come back, the storm of the century, the mother of all storms, like being hit by a fist from Mike Tyson. The adjectives and the
superlatives about Florence are quite extraordinary in their own right, and for good reason. As you can see from these space photographs, this is a
monster.
The bulls-eye is getting bigger, Hurricane Florence is making its final moves before it slams into the southern eastern coast of the United States.
Now, look at the latest models and they all potentially inflict the worst possible damage.
[15:20:04]
QUEST: FEMA is likening it to a Mike Tyson punch.
(BEGIN VIDEO CLIP)
JEFFREY BYARD, ASSOCIATE ADMINISTRATOR, OFFICE OF RESPONSE AND RECOVERY, FEDERAL EMERGENCY MANAGEMENT AGENCY: I want to hammer that important --
so, this is not going to be stress, this is not going to be a glancing blow. This is not going to be a tropical storm, this is not going to be
one of those storms that hit and moved out to sea. This is going to be, you know, a Mike Tyson punch to the Carolina coast.
(END VIDEO CLIP)
QUEST: Major hubs for multinational companies are getting ready as the hurricane approaches. The Daimler plant in Charleston is shut, that plant
only opened last week. Boeing which makes dram liners in Charleston has flown those planes that could be -- they've flown them away and Pfizer,
which has two North Carolina drug factories already has product shortages and now is suspending operations.
So we need to know what, where, when and how. Tom Sater is tracking it. Let's take this bit by bit if we may Tom and point by point. Firstly, are
you, are the experts now settled in the path the hurricane will take when it makes landfall.
TOM SATER, METEOROLOGIST, CNN: No, not exactly. The models continue to play a little game, will it move inland? Will it stall offshore? This is
going to be interesting? Will it dive down to the south, models yesterday started to change the scenario a little bit. Richard, we underwent what's
called an eye wall replacement cycle. Notice the little wobble here in the eye, it's like spinning a top on a table. It can only sustain it like a
top on a table, it can only sustain that centrifugal force for so long, so its dropped drown to Category 3.
It could get back to Category 4, but it doesn't matter. The water underneath the storm has bubbled to a height that I never seen in my
career. This morning, that northeastern quadrant, how about 26 meters, 85 feet. This is like Katrina when it was a 5, when it was in the Gulf and it
hit New Orleans as a Category 2.
QUEST: Tom, let me just -- because this is something I have never really understood. When you say the water underneath this storm ...
SATER: Yes.
QUEST: Are you referring to the sea water there or the water that's being held in the clouds?
SATER: Great question. When a storm of this size is out in these open waters, there's this upwelling underneath the eye, Richard, it's like a
vacuum, and that's actually a funnel. And those water is coming out and fanning out the top. So the more the strength this has, the intensity far
offshore, it's bringing with it that upwelling of water, this is much different than if a storm just develops off the coast and moves in.
QUEST: All right, Tom, when is best guess for landfall.
SATER: Well, we're still looking at Friday, it looked like it was going to be Thursday night, the warnings are in place, this may have to shift now.
Richard, let me show you this European model and you get a better idea on the timing here. This system moves in toward Wilmington. That was always
going to be our ground zero here, and that's Friday at 1:00 p.m. local time. But now, they want to drift, is it going to be onshore? Is it going
to be offshore?
If this is offshore, we're looking at just wall and wall, hour after hour of surge and we're looking at rainfall in three days that will be greater
than all of the rain that Washington DC picks up in a year. So this is tremendous.
QUEST: Tom Sater, keep watching and reporting back to us when you can. Tobacco farmers in the Carolinas are racing to harvest this year's crop
before Florence makes landfall.
At the same time, the US Food and Drug Administration is bringing the industry some good news. Tobacco shares are very sharply up after the
agency announced a crackdown on e-cigarettes. The FDA -- just look at that, Philip Morris is up 2%, BAT is up 2.8%, Imperial is up 1%. The FDA
announced historic action to beat what it has been calling a teen vaping epidemic.
So, more on the industry's rows, just of course the tobacco but also the cannabis industry as well. I am joined by the man best known as the Kiss
front man, Gene Simmons who is also known as The Gene, as the chief evangelist officer for the Canadian cannabis company, Invictus.
Good to see you, sir.
GENE SIMMONS, KISS FRONT MAN: Nice to see you, sir.
QUEST: Now, we're going to be talking more about your projects later, but I do need to get your take because you do represent in a sense a cannabis
company. When the FDA warns against vaping and tobacco stocks go back up, where does that leave you?
SIMMONS: Look, let's call it for what it is. As a citizen of this United States, it's clear that this is a political action, the tobacco industry
are made up of fine American workers and so on and so forth. They have been here forever, but let's call it for what it is. The government forced
the tobacco industry to actually put on the tobacco sales, this may give you cancer and all sorts of other problems. This is not a healthy product.
e-cigarettes and vaping is even worse, so the idea of pointing out that vaping is bad for you and putting a legislation to prevent it, of course,
makes tobacco go up, but the real answer is in the interest of full disclosure is neither is a healthy product for people.
QUEST: Right, that's what I was pointing. Neither is a healthy product, and your represent a Canadian company which can't sell into the United
States.
SIMMONS: Well, I am a -- in the financial sense, I am a shareholder, stockholder, I have got $10 million to $12 million in stock.
[15:25:14]
SIMMONS: And they did pay me $2.5 million in the interest of full disclosure, rules dictated that I announce that publicly at all times. I
am not their celebrity spokesman. There are rules against that.
QUEST: So why did you get into it?
SIMMONS: I have never used cannabis in my life. I don't use heavy drugs. I do take aspirin every once in a while, but I believe ...
QUEST: Smoke a joint?
SIMMONS: I've never have, not close. I don't get -- I don't like the smell of it and all of that, but it should be on the menu of life. If
cigarettes are legal and if mass consumption of alcohol is legal, surely, cannabis isn't bad for you.
QUEST: How do you answer the point well, the gateway drug argument, which I actually find holds some water, but might actually not if you make it
more available. It's because you're dealing with unsavory people to get the cannabis that often you end up sort of going further down the road than
one should.
SIMMONS: Of the people for the people by the people. Let the people decide, cigarettes may give you cancer, the people have decided it should
be legal. Is that a gateway to other activities? There are bar fights and DUIs and people are getting killed and even wife (inaudible) clothing that
describe what happens when you drink too much.
It was prohibited once. Alcohol became legal. Cannabis -- researchers are telling us is good for epilepsy, people with depression and more.
QUEST: And Elon Musk.
SIMMONS: And the other thing is most importantly, and Elon Musk, it's good for him, too. He should be rehired and given a big wind fall even more,
but the final note is, even if you use cannabis recreationally, you may get the munchies and you may watch Richard Quest again and again and again.
QUEST: There is nothing wrong with that, of course, Musk still holds his job at the top.
SIMMONS: Well, he's got another president in there in the interim, but America can use many more Elon Musks -- individual entrepreneurs.
QUEST: I suppose. Hold it, hold it, sir. Hold it. I knew this was going to be tough. We'll be talking more about it with you later in the program.
As we continue, we're going to turn to electric car, the electric company Neo is being hyped as a Tesla killer. Their Wall Street performance was
today, after the break, how it performed and you'll hear from the Chief Financial Officer in the race against Elon Musk. He keeps coming back,
Musk, that man won't go away. We'll be right back.
(COMMERCIAL BREAK)
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment, when Gene
Simmons will be back, the ads, a soda line and a new book to his portfolio. What is Gene Simmons' inc.? What does it look like and what does the CEO
make of it all? We'll have both the CEO, the Chairman, the chief financial officer, we'll have all, in other words, Gene is faithful to come.
And we'll crack open the champagne in space. The latest innovation that lets you celebrate space tourism in style. As we continue, this is Cnn and
on this network, the facts always come first. European Union is taking steps to punish Hungary, the two-thirds vote quarterly to penalties for
violating European law and human rights.
The sanctions could even revoke Hungary's voting rights in the bloc. Officials fear Hurricane Florence could be one of the worst storms in U.S.
history. Is its forecast has soared just as it approaches the coast of North and South Carolina, moving slower than a walking pace.
As a result, it could pounce the coastline with 20-per hours with hurricane force winds along with days of torrential rain. China's officials now say
nine people were killed when a driver ran his car into a crowded public square in the city of Pingyang. Dozens of others were injured and
authorities say it wasn't about to live with that.
The motive is still unknown and the driver is in custody. A company that promises to sell you electric car for half the price of a Tesla made his
debut on the New York Stock market today. It is Nio and the shares are up more than 6 percent in the final hour of trade, 7 percent just under.
We'll talk about that with the chief financial officer in a moment. Matt Rivers though -- if you're not familiar with Nio and you want to know about
their cars, Matt Rivers went to a dealership.
(BEGIN VIDEO CLIP)
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Welcome to the Nio showroom here in Beijing, China. You know, this is a very young company, started in
2014, and for now, it's pinning its hopes on that SUV right there. That's the ESA, and that's the car that has a lot of people in China saying that
this electric vehicle brand, more than others here in China can really compete with Tesla in the long run.
So let's jump inside and talk about it a little bit. Really, what it comes down to, the company's argument is that they give you style and performance
that matches a similar model in Tesla's line up, except that about half the price. So this car costs about $65,000 or so.
The other thing is that they have a different consumer experience is what they say. So for example, if you use your app when you're at work, let's
say you drive this car to work, you put it in a parking lot, use your app, you can get the company to come to the parking lot and actually charge the
vehicle's battery for you.
So that's one of the things they say they offer, all total, they called it a competitive advantage. Now, are they Tesla yet? Absolutely not. I mean,
very few companies are or could be at that level. For a number of reasons, one, they've only delivered about 1,600 of these cars to customers so far
as at the end of August.
They're still operating at a major loss, they lost about $500 million in the first two quarters of 2018. And when it comes to revenue, they only
reported revenues of about $7 million or so by the end of June compared to hundreds of millions and if not billions of dollars for revenues for Tesla
over the years.
So that is in large part because Nio is still a young company. And there are still a lot of reasons for investors to feel bullish about investing in
this company. Starting with the fact that they're backed by internet giant Badoo and Tencent here in China among others.
And the Chinese government also really wants to see more electric vehicles on the road and they're providing subsidies and financial incentives, not
only to people making these cars, but also the people buying them. And so if this IPO really is about anything, it's about potential, turn this
company, eventually get to the point where it can manufacture enough quality cars to compete with Tesla in the long run.
There are many people here in China who say, yes, that is possible. The question is, will investors in the U.S. and around the world begin to feel
the same? Matt Rivers, Cnn, Beijing.
(END VIDEO CLIP)
QUEST: At the New York Stock Exchange earlier in the day. Well, the share price of Nio after the IPO fell by as much as 5 percent. Which led me to
wonder whether or not of course, they had mispriced the actual offering.
[15:35:00] However, as you can see at the close, it's now up 7 percent. So you beg the question, when it comes to pricing, did they get it right?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Our timing was the worst market since when you guys are claiming the ten-year anniversary of the financial crisis. The timing was
not excellent. During the road show, Tesla's stock moved from 363 to 263 and the Hong Kong and China's stock market hit their market territory.
So our timing wasn't good, I think our pricing was correct, now it's actually trading up a little bit above --
QUEST: Right, so what you're suggesting of course is that, what we're seeing is --
UNIDENTIFIED MALE: Yes --
QUEST: You are having to buck a market --
UNIDENTIFIED MALE: Yes --
QUEST: Trend that is yanking you down.
UNIDENTIFIED MALE: Yes, it's correct, our --
QUEST: Let's talk about the actual business that you're in.
UNIDENTIFIED MALE: OK.
QUEST: We -- everybody knows that ECs are the future.
UNIDENTIFIED MALE: Yes --
QUEST: China is vast --
UNIDENTIFIED MALE: Yes --
QUEST: How big do you want to be in the market? What's the potential for Nio in the market?
UNIDENTIFIED MALE: The potential is huge, right? China is 65 percent of the global EC market. And with the policies the government has, you can't
buy IC car in the big cities in the future. So seven going -- 20 -- seven -- 25 cities that restrict other ICs. You can only buy electric vehicle.
So it's going to be huge.
China is the largest EC market in the world, going from about 800,000 to 2.6 million in just three years.
QUEST: And your share of that.
UNIDENTIFIED MALE: For the premium sector, all we need is 10 percent, we'll be very happy, that's about -- that's about 300,000 vehicles a year
for now --
QUEST: But --
UNIDENTIFIED MALE: That's the first call.
QUEST: Can you -- can you ramp up production? Allow me, we always invariably end up talking about Tesla.
UNIDENTIFIED MALE: Yes --
QUEST: You've seen the issues of Tesla --
UNIDENTIFIED MALE: Yes --
QUEST: Ramping up with the three.
UNIDENTIFIED MALE: Yes --
QUEST: Can you ramp up production?
UNIDENTIFIED MALE: I think our first quarter of the box will be September 30th, so we've been shipping cars for only two months, but by September, we
would have shipped 3,000 vehicles, our first quarter, and 7,000 for the second quarter is the target.
Tesla did its 7,000 vehicles until over three years after their IPO, so we're off to a good start, it's a matter of execution and quality of their
manufacturing.
QUEST: Well, what number do you have to hit to be volume?
UNIDENTIFIED MALE: I think we need to get to about 150,000 --
QUEST: A year?
UNIDENTIFIED MALE: A year, well, we're really --
QUEST: That's 10,000 a month?
UNIDENTIFIED MALE: Yes, and our current plan can do that.
(END VIDEO CLIP)
QUEST: Current plan can do it. I suppose after that you'll bring out the bubbles(ph) and celebrate, well, after the break, bubbles in zero gravity.
Now, you might be able to neck the bottle, but getting the champagne cork out while stuck there -- you've got to see this. This is -- this is
classic.
[15:40:00] (COMMERCIAL BREAK)
QUEST: All right, beautiful view of space. Now, we're all aware of how to open a bottle of champagne, it's really very straightforward. Remember,
you take the (INAUDIBLE), one, two, and a half and three. And then hopefully, the cage comes off, and when the cage comes off, well, you get -
- you get an idea of the sort of trickiness of this operation.
You simply remove the cork and prepare to pour without getting a glass of foam. Here we go, three, two, one -- we bought the cheap stuff -- oh, all
right, sorry, and then you pour and hopefully, you don't end up with that. Now, you saw how difficult it was here in the studio even with you
watching.
But imagine doing this in space as the market of space tourism opens up. Melissa Bell has tried some space champagne in zero gravity, cheers.
(BEGIN VIDEOTAPE)
MELISSA BELL, CNN CORRESPONDENT (voice-over): Weightless lift is the most extraordinary feeling. I like being a kid again, of course, until now,
astronauts were the only ones who got to experience it, but that could be about to change.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We must have American dominance in space, so important.
BELL: A new space race is on, not only for super powers aiming for control, but for businessmen looking for profits.
ELON MUSK, CHIEF EXECUTIVE OFFICER, TESLA & SPACEX: Really, the key is making this affordable to almost anyone who wants to go.
BELL: It is that new breed of space consumer that MOM(ph) has decided to target with its cordon(ph) stellar champagne and its designer believes
there's much to celebrate.
UNIDENTIFIED MALE: We are at the dawn of this new era of space, and there're so many competitors trying to send men into space. You could say
that the next big challenge is how to live in space, not only to bring our -- what we need just to survive, but what we need to deploy cultural
rituals, and that is also the purpose of this bottle.
You know, it's to bring a bit of what makes us human.
BELL: For nearly 50 years on, from the first moon landing.
UNIDENTIFIED MALE: A climb far from men, but (INAUDIBLE) for mankind.
BELL (on camera): It is mankind that will soon be able to celebrate with bubbles(ph). Up here, you have no sense of what's up and what's down. So
the design of the bottle was crucial to getting the champagne to pour. If you can catch it, the champagne actually tastes different up here.
Its texture, its taste, such fill your mouth quite differently than they do on earth.
(voice-over): The champagne took three years to develop and how much that it cost, you might ask, well, Momes(ph) is keeping MOM(ph) on that. So was
it worth it? Or will it all fall flat? Jean-Francois Clervoy is a French astronaut who helped with the project.
JEAN-FRANCOIS CLERVOY, ESA ASTRONAUT: So the best way to move forward is like getting set(ph) to explore strange new worlds, seek a new life, boldly
go where no one has gone before.
BELL (on camera): This experiment certainly has provided that. Whether or not, it will translate into champagne anytime soon is unclear. But it's
out of the very least provides a sparkling vision of the future. Melissa Bell, Cnn, somewhere above France's temperate region.
(END VIDEOTAPE)
QUEST: And that idea of the future. Well, space champagne isn't the only space spinoff out there. NASA has a huge list of accomplishments which
I've held on everyday like here on earth. For example, baby formula, well, space tech is in baby formula when working on a mission to Mars, they
funded and found natural source for the fatty acids found in baby formula today.
What about these on planes? The winglets, it's in every plane, NASA aerodynamics led to the development of upturned tips, the winglets on
aircrafts. But don't think about big things like planes, something pretty basic, the smartphone. Here we have a collection of them.
NASA technology is behind digital censors in your smartphone and the precision GPS that makes it work. Finally, perhaps, one of the most useful
is in the bedroom, memory foam which is frankly one of the most widely NASA spinoffs. It was developed to keep pilots cushioned during test flight.
Wherever you look, there's some form of NASA technology. Daniel Lockney is NASA's technology transfer program executive. Sir, it's a very impressive
list and space champagne is the latest.
[15:45:00] But I wonder, you know, do you realize when you're designing or when you're designing for space -- or hang on, this will go rather nicely
into the private sector.
DANIEL LOCKNEY, TECHNOLOGY TRANSFER PROGRAM EXECUTIVE, NASA: In some instances, of course, we do. Technology is like a power generation in
storage, new medical procedures and devices give the astronauts crews healthy and safe. We know that these will have terrestrial commercial
benefits.
But some of the fun ones are the ones we don't expect. One that you left off your list I think is not the big one in the cell phone. Is the camera
in the cell phone was actually a NASA technology, we designed it for satellite, it's a lightweight, high resolution camera, doesn't draw a lot
of power and we developed that, we invented it, we have patents around it.
So the cell phone camera in your pocket, that's a NASA technology.
QUEST: With NASA still having a very wide brief at the moment, but it doesn't have the big projects like the moon shuttle or sending man to the
moon or to Mars, it has them in the future. Is there still the same impetus to innovate in NASA?
LOCKNEY: Oh, absolutely, all the more so actually. The technologies we need to get us to the moon and then eventually on to Mars, that's the
projects we're working on right now. So we're in a constant state of innovation, new technology development.
We have a large technology development organization in NASA focus on building the technologies we're going to need to get humans into space,
getting your spacecraft into deep space, orbiting the moon, landing on the moon, living in space.
QUEST: And within -- with that in mind, what sort of range can you see in the pipeline because obviously many of the things are not consumer facing,
they will be going into other industries and they'll be highly technical, what turbo-thrust a backdrop or whatever it might be.
So how much is out there that you know about the moment that you're looking to move into the technology transfer?
LOCKNEY: So we look at absolutely everything developed. And NASA develops about 2,000 new technologies every year, and we'll look at everyone to see
if they have a secondary, commercial application. We're finding, especially nowadays that there's new commercial space companies coming
online that could benefit from them, that didn't exist 10 years ago or 15 years ago.
But we're also expecting as I mentioned new advances in healthcare and new materials that could extend into a variety of industries. But that is also
the fun stuff that we don't know to expect. Like we developed a vibration- dampening system for the new SOS rocket.
We're building the world's largest rocket. That vibration-dampening system that keeps us --
QUEST: Right --
LOCKNEY: The small skinny rocket from shaking is now preventing the high rises from shaking.
QUEST: Good to see you, sir, thank you for joining us, we much appreciate it.
LOCKNEY: Yes --
QUEST: The developments from NASA. Now, time for us to continue, well, Gene Simmons has many strings to his boast, sir -- when we come back after
the break, join me in the C-suit as we discuss your latest ventures.
[15:50:00] (COMMERCIAL BREAK)
QUEST: You can make as much noise as you can, from Rock and Roll all night, "Detroit Rock City". Gene Simmons has no shortage of musical hits
to his career. Now, he is churning out the hits as an entrepreneur. So for example, just look at that.
Does many of adverts with a new soda company, "Twenty Seven"; his new book about famous artists who have died in or around the age of 27. Invictus;
his cannabis investment in which he is the chief officer, evangelist, thank you officer. And Rock and Brews; his restaurant chain, the man is a serial
entrepreneur, so it's appropriate he's in the C-suit. Good to have you back sir.
GENE SIMMONS, MUSICIAN & ENTREPRENEUR: Thank you sir, we discussed what we're doing here, right?
QUEST: Go on --
SIMMONS: Yes, the punching, which is the kind way of making sure your germs don't go to -- because I care about you, and your doctor said the
same thing. Stop shaking hands, it looks cooler and you won't pass your germs to strangers.
QUEST: What for you is a good business idea besides obviously one that makes money.
SIMMONS: Number one, the more you know, the more informed the decision is going to be, keep your snout close to the ground, I don't have the systems,
I don't have anything. The second point for me is it has to have an emotional connection.
I don't personally have to use it, I have to care about it enough to do the work because everything demands work. You've got to put in the time.
QUEST: But when you did the book, for example "27", I mean, it's somewhat controversial a book in the sense that you -- it's a book about those who
died at 27 or aged 27. And the reason is why or behind.
SIMMONS: This spans all the famous people that you know of, and it's got, you know, good pop, culture stuff, Amy Winehouse and you'll buy it because
of that. I have an inferred fiduciary duty, Richard, to hold this up to get some more additional time on television.
But in all seriousness, it's very sad. There are people who are depressed, Janis Joplin, Jimi Hendrix, you can name them all. They were all the way
up to Kurt Cobain, and even this year, people who are getting -- you know, some serious medical help with help.
But here's what I hope this book will do --
QUEST: Go on --
SIMMONS: From Simmons books, and it's just coming out this week. I really hope that we will engage in the conversation. One in five people have
problems, either depressed or know of people. And if the only thing you do is reach out and just have a conversation, you're going to be saving lives.
QUEST: So how does Gene Simmons, from music to a book about those who died at age 27 to this, to money bags soda, I don't see any strategy here.
SIMMONS: Well, there isn't. Life isn't just a straight line, we'd like to think it is, but when you think that the president of the United States was
on a TV reality show that I was on, I know the man well enough. But if you go to Reagan and everything else, this sort of ping-pong effect, you didn't
start working as a broadcaster and a superstar in your own right, what was your background?
QUEST: Don't turn the tables, very arrogantly he tried to do, I don't think I'm one of his followers. The money bags cola.
SIMMONS: Yes, if you go to genesimmonsmoneybag.com --
QUEST: Oh, you really got it, beastie, no, not just at opening the bottle, you're really good promoting yourself and your products.
SIMMONS: OK, so --
QUEST: You're out --
SIMMONS: Let's avoid Richard, what he's doing, he's trying to protect Cnn. There you go, nice screen time, genesimmonsmoneybag.com, I own the money
bag logo. This is the finest soda you'll have, no -- yes, no fake sugar, no con-served, this is cane sugar and it does not -- it has all natural
stuff.
If this is the best soda you've ever had --
QUEST: It's very good --
SIMMONS: It is a mess, but all right, yes, I work my fingers to the bone - -
QUEST: But why would you want to get into sodas when --
SIMMONS: I love it --
QUEST: When Coke and Pepsi and all the big drink companies are moving away from sodas.
SIMMONS: It's time, Richard, the stage advice from our forefathers was, get in -- you know, the Oklahoma land rush, when things are cheaper, get
in, buy low, sell high. We intend to take over the marketplace, we're already in 7-Elevens and Wegmans in America.
It will spread across the world, and then Pepsi and Coke will buy us for a billion-plus.
QUEST: In your dreams?
SIMMONS: Oh, I've done very well, Richard.
QUEST: That's what I find heartily, I'm glad you told us, because you're the CEO, the chairman, the chief financial official officer, the chief
marketing officer of everything to do with Gene Simmons.
[15:55:00] SIMMONS: That's right, and tomorrow, I'm flying either first class or second class, I don't care about that stuff, I don't have
assistance, I like my own butt, I get on my own plane, I'm going to be in Buffalo, New York, tomorrow at a 7-Eleven and press the flesh and meet my
bosses and your bosses, the people.
QUEST: How do you manage your lot with your other commitments, music and - -
SIMMONS: Prioritize, make a list, check it twice, find out who is naughty -- and now, Santa Claus does it, we can all do it. Make a list, the
important stuff. I have no idea how the engine in my truck works but I can drive it.
QUEST: How many people come up to you with an idea, want you to invest, want you to give them some money and you think this is really dreadful.
SIMMONS: Well, they know Gene Simmons because my extra T is sweat, equity. Which is a big way of saying you can't have my money, but I'm going to make
you money. If I can't make you money, ladies and gentlemen watching the Richard Quest program around the world and on Mars, don't hire me.
If you want to make more money, you hire me and then I take my time, find out what's wrong with it -- look, everybody needs to find out how they can
make more money, and you need people like me. There are few others, maybe Richard Quest, I know you want to get going, but I'm very important, folks.
You need to do your due diligence and fire that, because you can always make more money and I'm the money man, I own the money bag logo.
QUEST: Not two --
SIMMONS: It's a beautiful ride, yes.
QUEST: We'll have a profitable moment after the break. Can I have a free drink? Of course, free drink.
SIMMONS: I'll put it on the bill.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment was an experience with Gene Simmons. The man is said to be worth -- oh, I don't know, the best part of $300
million, and yes, whiles a large part of it came from KISS and the various royalties, his other industries and ventures with which he's involved also
most telling.
Whether it would be the drinks, the books or indeed the cannabis investment. What I heard though and what I hope you also got from that was
this idea of you've got to be passionate about what you do. You have to have an enthusiasm for the way you're going to do it.
You have to want to do it if it's going to be successful. Put all that together and maybe you and I can't beat Gene Simmons, but we can get pretty
close with a good eye, with a good idea, a bit of hard work and a bit of luck on the way.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable.
(BELL RINGING)
The closing bell is ringing, trading is over.
END
