It’s Valentine’s Day and my daughter asked me this morning why she didn’t get the day off of school to celebrate. I should point out this was the morning after a snow day. Kids think every day is special and I didn’t want to rob her of the notion since, as we all know, life eventually does that job for a parent. In my head, I was like “we don’t even get a day off for elections.”

Ah yes, the P-Word is going to show up today. Actually, it’s V-Day, so I should clarify it’s not the fun P-Word. Or the funny P-Word. I’m talking about politics, and that starts with P, which rhymes with “B,” and that stands for President Biden’s attempt to enforce stricter emissions regulations on automakers. The automakers don’t love it, but even more so America’s refiners don’t love it, so they’re running some anti-Biden, anti-EV ads in key places.

While we’re on the topic of emissions I might as well point out that China’s BYD is going to build a plant in Mexico to go with their plant in Hungary. Oh, and VW’s ex-boss Martin Winterkorn is going to be testifying in a lawsuit over Dieselgate and the question will be: What did he know and when did he know it?

And, finally, math is hard. So hard, in fact, that the CFO of Lyft seems to have accidentally inflated the company’s perspective margin rise by 10x. Oops!

Anti-EV Ad: ‘They Want To Force You Into An Electric Vehicle.’

I’ve got the ad embedded above, but if you can’t see it you can click here. There hasn’t been much political advertising on this site, thankfully, but come election season I expect our programmatic advertising (which we don’t control) to light up with ads for people who live in certain places. Apologies in advance.

Our view on politics around here is that we see cars as something that should unite us, instead of dividing us. Cars are not liberal or conservative unless we choose to place those labels on them. In our deeply fractured polity, a shared love of 9th-generation F-150s might just get us through.

At the same time, it’s impossible to ignore that politics sometimes impacts our lives as car enthusiasts or just regular people. Also, some people make cars explicitly political even if that’s not what we want. [Editor’s Note: I’d argue that politics is the single biggest shaper of car culture in the world. Gas crises change what we drive. Emissions regulations change what we drive. Safety inspections change what we drive. Traffic laws change how we drive, and I could go on and on. One fun example I’ll give is from one of my trips to Belgium, where there are absurdly high taxes based on engine displacement. These taxes don’t apply to commercial vehicles, which are defined as having separate rear compartments without seats. So what many enthusiasts in Belgium do is remove their Range Rover’s rear seats, put in a partition, and save loads of money! In Belgium, you’ll see van-ified versions of SUVs running around all over the place. And it’s all because of politics. Of course, then there are the German TUV inspection requirements; the absurd fuel prices throughout Europe that have led that place to be filled with small-displacement hatchbacks; Kei-car rules in Japan; and on and on. Politics changes car culture more than anything else in our world. –DT]. 

Electric cars are clearly a modern political football. While they’re becoming more popular, they’re still less than 10% of total car registrations in the United States and are generally concentrated in states like California and New York, which are unlikely to be swing states in 2024’s Presidential election.

Thus, we end up with the ad above that makes an interesting suggestion: Don’t Ban Our Cars.

The idea here is that the Biden administration’s stricter emissions regulations for automakers will cause people to have to buy electric cars. That is factually incorrect as there is no specific ban in place or suggested for gas-powered cars. Some states are trying to do that individually, but it’s not a part of this administration’s plans (though there is a plan to make about half of all new cars zero emissions by 2030, but this includes PHEVs).

These ads come from the American Fuel & Petrochemical Manufacturers, or AFPM, which is made of companies like Marathon Petroleum, Occidental, LyondellBasell, Chevron, Valero, and other major refiners or refinery-associated businesses. I’m extremely familiar with all these companies because I grew up in Houston and these are the places where everyone’s parents worked.

Here’s what AFPM President and CEO Chet Thompson had to say about why his group is running these ads, which leans heavily on the idea that this is about consumer protection and national security:

The Biden administration is overseeing a whole-of-government campaign to eliminate new gas, diesel, flex fuel and traditional hybrid vehicles. This forced electrification agenda is bad for American families, bad for our economy and indefensible in terms of U.S. national security.

Americans are solidly against any government efforts aimed at banning gas cars and imposing electric vehicle mandates. Unfortunately, most Americans have no idea that the Biden administration is fast-tracking such efforts. The public deserves to know now while there’s still a chance to push for better regulations that respect consumer freedom.

This is an interesting exaggeration from the AFPM because, in many ways, the government is subsidizing the production of hybrid vehicles. I wonder if the term “traditional hybrid vehicles” is trying to exclude PHEVs like the Jeep Wrangler, Grand Cherokee, and Pacifica, all of which have benefited from Biden administration policies.

I call this an exaggeration because it’s not entirely wrong. While there is no specific ban on gas-powered cars, there is a goal of reaching net-zero emissions by 2050 and halving emissions as fast as we can, with more than half of cars sold probably needing to be electric by the end of the decade for automakers to reach the expected goals (automakers are generally unhappy about this). How realistic this is entirely debatable, but EV purchases aren’t currently growing at a fast enough rate to reach these targets.

The AFPM’s goals here are pretty obvious. If people buy electric cars the companies that make up the AFPM don’t make as much money. It’s as simple as that. The timing of this is also key as the organization is spending seven figures in seven states: Pennsylvania, Wisconsin, Michigan, Nevada, Arizona, Ohio and Montana. I’m guessing the Montana bit is because of the upcoming Senate race and not the Presidential competition.

What we see here is a classic case of working the refs. While the Biden Administration outlined some fairly specific goals, the actual details aren’t going to be announced until April. Many organizations want Biden to soften the blow a bit by, potentially, changing the trajectory of CO2 targets, et cetera.

The next presidential election is key here because it’s difficult to see a Trump Administration enforcing these regulations in 2027, when they’re supposed to go into effect.

We have a quote from President Biden’s campaign, via The Detroit News:

“While (former President Donald) Trump had the United States losing the EV race to China, President Biden is keeping Michigan at the forefront of car manufacturing by investing in the future to ensure good-paying union jobs end up in America, not halfway around the world,” said Alyssa Bradley, communications director for Biden’s Michigan campaign.

Well, maybe not quite halfway around the world. Let me explain below:

BYD Might Build A Plant In Mexico

There’s another video above, this time with our pal Kristen Lee at MotorTrend, talking about the EV takeover of Mexico by Chinese automakers.

That’s timely, because BYD, which is the largest maker of electric cars right now, is reportedly going to build a plant there.

From financial outlet Nikkei:

Top Chinese electric vehicle maker BYD is considering setting up a plant in Mexico, the head of the company’s local subsidiary has told Nikkei, as the automaker seeks to establish an export hub to the U.S.

Overseas production is indispensable for an international brand, said Zhou Zou, country manager of BYD Mexico. Mexico is a key market with vast potential, Zou added, expressing eagerness for a plant in the country.

Not only is Mexico a key plant for the Mexican market, it’s also right next to the United States. Tariffs and vibes have made Chinese brands stay away lately, but at some point, the huge cost savings of Chinese vehicles means that a company like BYD might just swallow the cost.

Of course, if former President Trump is reelected then he may put into place 60% tariffs on Chinese cars, although it’s not clear if a Mexican-built car would have the same restrictions.

Ex-VW CEO Winterkorn Will Take The Stand

In the aftermath of the Dieselgate emissions cheating scandal, then head of all of Volkswagen Martin Winterkorn has mostly vanished. He’s also cited health concerns as a reason for delaying his criminal trial in Germany, but that’s reportedly back on later this year.

So it’s therefore interesting that Winterkorn plans to testify in a lawsuit brought up by investors, as Automotive News points out:

The lingering question is what Winterkorn knew at the time about VW’s diesel-engine software. In his last public appearance at a parliamentary inquiry into the scam, he denied any responsibility.

The former CEO is expected to make a statement along those lines this week, when he becomes the latest of the 86 witnesses testifying in the class action-style lawsuit.

This will be one I’m keeping an eye on this week.

Lyft’s CFO Makes A Big Ol’ Mistake

Thoughts and prayers with the Lyft CFO. If you make us talk in nothing but bps for 90 minutes every quarter, one of us was going to fuck it up eventually. Humbled and honored it wasn’t me. pic.twitter.com/r1AfMwgCOO

— The Secret CFO (@SecretCFO) February 14, 2024

Percentages are tough, and explaining the differences in the movement of percentages comes with its own interesting quirks. Just ask Lyft!

Per Reuters:

Shares were up 17% in late afterhours trade, despite a major gaffe: Lyft’s said incorrectly in a statement that a key margin metric was expected to rise by 500 basis points this year. On a conference call later, Chief Financial Officer Erin Brewer corrected the forecast to an increase of 50 basis points.

That’s a big oopsie.

Here’s a nice explainer of how basis points work from Investopedia:

Basis points, otherwise known as bps or “bips,” are a unit of measure used in finance to describe the percentage change in the value of financial instruments or the rate change in an index or other benchmark. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form. Likewise, a fractional basis point such as 1.5 basis points is equivalent to 0.015% or 0.00015 in decimal form.

Usually, this is something used when talking about financial instruments, like bonds, that only change very slightly so people don’t have to say “We expect the credit yield spread to narrow 0.05% over the next month” or whatever.

By mixing up 50 and 500 what the Lyft forecast said was the company was expecting a 5% improvement versus a 0.5% improvement.  Oops.

What I’m Listening To While Writing TMD

Kind of a bleak one for V-Day, but I love Rilo Kiley’s “Under the Blacklight.” Some people might complain that it’s slightly overproduced, but I think in retrospect it finds the sweet spot between highlighting a stellar vocal performance by Jenny Lewis and that denser late-aughts Indie Rock sound. Also: “I never felt so wicked. As when I willed our love to die…” just murders me every time.

The Big Question

I know you’re all going to talk about the emissions thing, but I am curious: What was your biggest screwup with numbers at work?