Sep 27, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Happy Friday! Today's Smart Brevity count: 1,002 words, < 4 minutes.

And today marks 25 years since R.E.M. released the album "Monster," which takes us into the weekend...

1 big thing: Tesla's next moment under the microscope

Photo: Karol Serewis/SOPA Images/LightRocket via Getty Images

Tesla's stock jumped 6% yesterday after publication of an email from CEO Elon Musk to staff stating that the electric automaker could hit 100,000 deliveries this quarter.

Why it matters: That would be the highest for any 3-month period, surpassing Q2's 95,200 tally.

  • Bloomberg points out that this would put Tesla on track to meet Musk's full-year deliveries target.
  • "If Tesla were to hand over 100,000 vehicles each of the last two quarters of the year, deliveries would roughly reach the low end of the 360,000 to 400,000 range the company has forecast for 2019," they report.
  • Tesla typically reports the final tally very shortly after the quarter ends.

What they're saying: Per the site Electrek, which first reported on Musk's latest end-of-quarter effort to rally his troops, he said in the email...

"The challenge is making sure that we have the right car variants in the right locations and rallying as much as our company resources as possible to help with the end of the quarter deliveries."

But, but, but: Tesla's stock is still down significantly this year.

  • Delivering more cars and making money are 2 different things, so a much more important moment will come when Tesla reports its Q3 earnings in a few weeks.
  • The company reported a net loss of $408 million in Q2. Musk said at the time that he expects to be "around breakeven" in Q3 and profitable in Q4.
2. U.S. could hit crude export milestone

One spillover from the aerial attacks against Saudi facilities: It could help propel U.S. crude exports to fresh highs and maybe even lift them to the 4 million barrels per day mark, S&P Global Platts reports.

Why it matters: U.S. crude exports have gone well over 3 mbd at times over the last year, but hitting 4 mbd — while just a number (deep, I know) — would reinforce how the U.S. has become a major player in export markets.

  • Per Platts, U.S. crude exports averaged 2.9 mbd in the first half of 2019, compared to 1.8 mbd in the first half of 2018.

What they're saying: Sandy Fielden, oil research director at Morningstar, tells Platts that the time needed to fully restore Saudi shipments means "the market call on the U.S. will increase because the U.S. is effectively the marginal supplier."

3. Banks' minimalist climate commitment

Illustration: Aïda Amer/Axios

Axios' Felix Salmon isn't especially impressed with the banking sectors' pledges on climate change. Via his latest Axios Edge newsletter...

It shouldn't be hard for a big bank to sign onto the Principles for Responsible Banking.

Between the lines: Much like the Business Roundtable's new Statement on the Purpose of a Corporation, it's a grand-sounding but ultimately toothless list of high-minded ideals surrounding things like "shared prosperity," "relevant stakeholders," and "effective governance."

  • Signatories commit to very little. They have 4 years to come up with a list of targets to meet, after which any given bank "can revise its targets at its own pace."
  • Even so, only 3 of the world's 10 biggest banks, and only 131 overall, signed the document.

The marginally more stringent Collective Commitment to Climate Action attracted a mere 30 signatories.

What they're saying: Not very much. Pressure group BankTrack has asked every signatory to provide specifics about what exactly they're committing to doing.

  • Here are the results. So far the vast majority of signatories either haven't responded at all, or have responded only with boilerplate.
4. Big Retail's climate moment

Illustration: Aïda Amer/Axios

As world leaders waffle on policies to head off the extraordinary climate change threat, the retail sector — America’s largest private employer — is taking new environmental steps on its own, Axios' Erica Pandey reports.

Why it matters: E-commerce and retail giants pump out emissions and pollution through mass manufacturing, incessant speedy shipping and uncurbed waste.

  • Per one estimate, the fashion industry alone will burn up a quarter of the world's carbon budget by 2050.

Threat level: Apparel and footwear industries contribute to 8% of global environmental impact, mostly due to manufacturing in Asian countries where factories rely on coal and natural gas, according to a 2018 report from sustainability research firm Quantis.

  • The combined annual emissions of FedEx, UPS and the U.S. Postal Service is roughly equivalent to the annual greenhouse gas emissions of 7 million cars.
  • And to feed the demand for e-commerce, retailers are building more energy-guzzling warehouses.

What's new: Amazon — the planet's biggest retailer on the planet that delivers more than 10 billion packages a year — announced plans last week to hit carbon neutrality by 2040.

  • Jeff Bezos also committed to lobby other big CEOs as well as companies in his supply chain to cut emissions.
  • And other big retailers like Nike, Burberry, H&M and Hugo Boss have made emissions-cutting pledges too.

Go deeper

5. Catch up fast: EVs, Aramco, LNG

Electric vehicles: Per WSJ, EV sales are slowing in China, the world's biggest auto market, as the government scales back support.

  • "[S]ales of the vehicles declined 5% and 11% year over year in July and August, respectively, raising concerns that even in tech-hungry China EVs could be a hard sell for years to come," they report.

Natural gas: Via Reuters, "Japan and its private sector firms will invest $10 billion on liquefied natural gas (LNG) projects worldwide, the country’s industry minister said on Thursday, in a strategy to boost the global LNG market and reinforce the security of energy supply."

Aramco IPO: Bloomberg reports that Saudi plans for a listing on the country's domestic exchange this year (caveat: this is a moving target) has bankers cramming.

  • They report that investment banks' research teams had 2 "packed" days of briefings from Aramco officials in the city of Dhahran this week.
  • "They will then have barely three weeks to prepare their pre-IPO reports on Aramco, according to an internal schedule seen by Bloomberg. That compares to six to eight weeks they’re normally given for some of the biggest global listings," they report.
  • Quick take: I'm sure it's tiring and stressful, but I'm confident they're being well paid for their time.
6. Quote of the day
"I shudder to think about buying 25,000 electric vehicles you have not seen yet each year for four years."

Who said it: Jim Bruce, chief energy policy officer with UPS, per E&E News' reporting on a panel discussion in Washington, D.C., this week.

Context: Bruce is referring to Amazon's plan announced last week to buy 100,000 electric delivery vans from Rivian by 2030 and perhaps sooner.

Why it matters: It underscores the surprise at Amazon's decision to place a big order from an automaker that has not begun commercial production of any vehicles.

Go deeper: Amazon's big bet on EV startup Rivian (Axios Generate, Sept. 20)

Ben GemanAmy Harder