Imagine this headline for a moment: “Tesla Lost $1.9 Billion.” Now replace it with this one: “Daimler Lost Only $1.9 Billion Nothing To See Here.” Yes, that second one is an actual headline. It concerned Daimler’s financials last quarter. I’m sorry, what? Who loses only $1.9 billion??? And why is it not that big of a deal? I mean, I get mad when that $5 I had in my pocket comes up missing. They lost $1.9 billion and it’s okay?! Initial freakout aside, I wanted to dive into the bias that some in the media have against Tesla as well as why Daimler lost $1.9 billion and why it is not okay.
Tesla lost $1.9 billion. $tsla
Actually they didn’t but I wanted to demonstrate something.
It was Daimler who lost the the $1.9 billion.
“Nothing to see here”—Jalopnik’s headline on Daimler losing $1.9 b
— Johnna (@JohnnaCrider0) July 18, 2020
In the tweet above, I wanted to point out the striking differences between the idea of Tesla or Daimler losing any type of money.
Tesla is doing very well and is the world’s most valuable automaker today — something that took a lot of hard work, persistence, and faith to achieve. A hard emphasis should be put on persistence, especially during 2018 when everyone — except for those us who believed in Elon Musk and his team at Tesla — believed the company was going to die. Back then, Tesla’s potential (or “probable”/”definite”) collapse was the norm in mainstream reporting on Tesla.
Jalopnik reported that, despite the second quarter loss, Daimler did better than expected and the second-quarter results were not as bad as anticipated. It expected to lose $2.1 billion due to the coronavirus pandemic but instead only lost $1.9 billion. Jalopnik also said that Daimler is searching for its soul since it’s trying to decide whether or not it wants to sell a plant in Brazil and cut back on making some of its cars, such as the variants of its C-Class or E-Class, but that Daimler hasn’t really specified anything on this yet.
CEO Ola Kallenius said during Daimler’s annual general meeting that the automaker needs to sharpen its cost-cutting efforts to shore up returns. It could sell a factory in France, and already halted plans to expand a site in Hungary. It may let go of an assembly facility in Brazil, and Handelsblatt reported that it’s discussing options for plants in South Africa and Mexico. Daimler also plans to cut more jobs — more than 15,000, which is a bit more than announced in November.
Last year, I wrote about Daimler’s crisis and that the large German newspaper Spiegel wrote that it “needed something more Musk,” as a nod toward Elon Musk’s innovative leadership of Tesla. Back then there were four points that were causing the company to struggle, including new competitors such as Tesla and Waymo putting pressure on Daimler. In fact, Tesla announced its Berlin Gigafactory in November of 2019, right around the time that article by Spiegel was published.
Additionally, in 2019, Daimler’s truck sales fell 8%, and in the U.S., Mercedes-Benz’s unit sales fell 7% during the first three quarters of the year. Also, in the first 9 months of 2019, Daimler’s profitability took a major hit. Its EBIT fell 53% and for Mercedes, it fell to losses. When you add in a global pandemic in 2020, one can see just how intense this crisis has gotten for Daimler.
Other reasons that are causing Daimler’s worries are pressure from shareholders, fleeing suppliers, and employees. In regards to the shareholders, falling profit margins and a stagnating stock price are not pretty. And cutting more jobs adds to the devastation.
Nothing To See Here
If there was truly nothing to see here, as the headline suggests, then that would be awesome. It would mean that Daimler is not struggling, and if it wasn’t struggling, it would be doing something right. For it to be doing something right in a market that is demanding clean vehicles such as EVs, then we would be writing about how Daimler is succeeding in a market led by Tesla. Or, we’d be writing about how Daimler has proven to be a great competitor for Tesla. But we’re not.
My overall point, though, is just that there’s a big double standard in the industry regarding Tesla.
Additionally, I don’t want to see Daimler or the others fail, but if they don’t wake up and see what consumers are demanding, their customers will choose other options. This goes for all other automakers that aren’t really interested in making EVs. They think EVs are niche — and they are for now — but it’s clear that EVs are what’s hot and, as with hip-hop, EVs are not a passing fad.