Latest / Kvetch & Release / 610 CKTB: Is Stellantis’ $100 Fire Sale of $3.5B in Assets & Billion Dollar Investment a Sound Strategy or Hasty Retreat?

Transcript

610 CKTB: Is Stellantis’ $100 Fire Sale of $3.5B in Assets & Billion Dollar Investment a Sound Strategy or Hasty Retreat? · Kvetch & Release

• 0:00
  Speaker 1: But first, our good friend John Litkey joins us once
• 0:03
  Speaker 1: again today.
• 0:04
  Speaker 2: Good morning, Good morning, Geene. How you doing.
• 0:07
  Speaker 1: I'm doing very well. You contacted me yesterday. I was
• 0:11
  Speaker 1: unaware of this, and it's another blow to our car industry,
• 0:15
  Speaker 1: which stretches from Windsor to Oshawa, Ontario, including Saint Catharine's
• 0:20
  Speaker 1: as well. Now Stilantis is selling at steak in a
• 0:25
  Speaker 1: six billion dollar battery plant, and they're saying they're trying
• 0:30
  Speaker 1: to make out like this is a good thing. I
• 0:33
  Speaker 1: don't understand this at all, like I always say to people,
• 0:36
  Speaker 1: explain it to me like I'm twelve.
• 0:39
  Speaker 2: Well, you know it's our local ECTAV outfit down here.
• 0:41
  Speaker 2: Invest Windsor Essex is trying to spin this and tell
• 0:44
  Speaker 2: us that, you know, the lead partner liquidating a forty
• 0:46
  Speaker 2: nine percent stake of a brand new six billion dollar
• 0:48
  Speaker 2: joint venture for one hundred dollars that they invested a
• 0:53
  Speaker 2: billion dollars of cold hard cash into is actually good
• 0:56
  Speaker 2: news for operational certainty. But give me a break, let's
• 0:59
  Speaker 2: talk about math that they don't want to mention. Stillantist
• 1:02
  Speaker 2: isn't just restructuring their stake. They're cutting and running because
• 1:06
  Speaker 2: of future liabilities here, and reportedly they're going to be
• 1:09
  Speaker 2: doing the same thing in Indiana with their joint venture
• 1:12
  Speaker 2: with Samsung Star Plus, which is valued at roughly the
• 1:15
  Speaker 2: same amount, only that one's an American dollars, so it's
• 1:18
  Speaker 2: you know, far more. But think about this, gene. If
• 1:20
  Speaker 2: you bought a house for a million dollars and you
• 1:22
  Speaker 2: sold it to a friend for one hundred dollars a
• 1:24
  Speaker 2: year later, the bank wouldn't be calling that a strategic pivot.
• 1:28
  Speaker 2: They'd be calling the frog department.
• 1:29
  Speaker 1: They'd be calling you stupid.
• 1:31
  Speaker 2: That too. We've spent billions of dollars here in taxpayer
• 1:35
  Speaker 2: promises to act as the lender of last resort for
• 1:37
  Speaker 2: these companies that are now fleeing the scene due to
• 1:40
  Speaker 2: the lack of government stimulus a changing market. And this
• 1:43
  Speaker 2: just proves the opponents of stimulus right again. I don't
• 1:47
  Speaker 2: see this as a corporate or a strategic pivot whatsoever.
• 1:51
  Speaker 2: I see this as a corporate withdrawal, no matter what
• 1:54
  Speaker 2: the spin is that's being told.
• 1:56
  Speaker 1: And it's when Katy Perry's boyfriend was the was the
• 2:00
  Speaker 1: Prime minister, he said Ontario would lead the world in
• 2:05
  Speaker 1: the production of electric vehicles. You know, we'd be making
• 2:09
  Speaker 1: like a half a million a year. I mean, everybody's
• 2:12
  Speaker 1: running away. The battery plants are closing, you know, you know,
• 2:16
  Speaker 1: just conventional cars here in Ontario, we used to make
• 2:20
  Speaker 1: three point five million. You know, last year we made
• 2:23
  Speaker 1: one point five million. This industry is falling apart and
• 2:27
  Speaker 1: it is affecting Ontarians. Like I said, from Windsor to Oshwa,
• 2:31
  Speaker 1: Well look at all those people got laid off in
• 2:33
  Speaker 1: Ashwa two weeks ago. One of the shifts close closing down.
• 2:37
  Speaker 1: I mean, we have to do something to preserve this industry.
• 2:41
  Speaker 1: It's the core of the Ontario economy. But nobody seems
• 2:45
  Speaker 1: to be doing anything.
• 2:46
  Speaker 2: You know, the eat transition made sense when the subsidies
• 2:49
  Speaker 2: were there. It was pushing the market demand, the companies,
• 2:52
  Speaker 2: the producers were on board with it. But we tied
• 2:55
  Speaker 2: our subsidies here to America, and once Biden loss are
• 2:59
  Speaker 2: Kamala Harris loss, the Biden subsidies disappeared under Trump. So
• 3:03
  Speaker 2: you know, we've changed our strategy here. We've got a
• 3:05
  Speaker 2: new prime minister and we're looking at an industry that
• 3:09
  Speaker 2: wants to continue to use oil right now. So we've
• 3:12
  Speaker 2: got a lot of oil, but we also have a
• 3:14
  Speaker 2: lot of resources for that EV transition. I think it
• 3:16
  Speaker 2: made sense at the time, but right now things have changed.
• 3:19
  Speaker 2: I don't know what it looks like how to keep
• 3:21
  Speaker 2: supporting it because throwing money continually doesn't seem to be
• 3:24
  Speaker 2: the answer to it. But I agree with you something
• 3:27
  Speaker 2: here needs to be done. But look from Stillanthus's sake,
• 3:30
  Speaker 2: it makes sense. It's a smart escape for them. They're
• 3:33
  Speaker 2: paying one hundred dollars to get out of this future
• 3:36
  Speaker 2: debt and other liabilities that they have. There will remain
• 3:39
  Speaker 2: a customer of the plant without the headache of having
• 3:41
  Speaker 2: to own it. So it's a surgical strike just to
• 3:43
  Speaker 2: save their balance sheet. But we have to be real
• 3:46
  Speaker 2: about this what it is. I mean, they're walking away
• 3:49
  Speaker 2: from a billion dollar of investment and roughly three billion
• 3:52
  Speaker 2: dollars of assets. You don't do that if things are
• 3:54
  Speaker 2: going well for you.
• 3:56
  Speaker 1: Well, you know, the whole thing about EV started to
• 4:00
  Speaker 1: know with the climate change bedwetters under Katie Perry's boyfriend's government,
• 4:05
  Speaker 1: and you know, everybody got into hysterics. We had to
• 4:07
  Speaker 1: do this now away from broadcasting, you know, I try
• 4:11
  Speaker 1: to be entrepreneurial. I believe in having multiple sources of income,
• 4:14
  Speaker 1: and if somebody shows me a product or an opportunity,
• 4:18
  Speaker 1: the first thing I say is is there a market
• 4:22
  Speaker 1: for this product? I mean, it's a simple question. But
• 4:25
  Speaker 1: if somebody says, Gene, you want to sell these new widgets,
• 4:27
  Speaker 1: they're great, I'll say, is there a market for the product?
• 4:30
  Speaker 1: And then I'll do some market research. It appears to
• 4:33
  Speaker 1: me the way this entire industry has collapsed and the
• 4:36
  Speaker 1: fact that people don't buy evs and have it, nobody
• 4:40
  Speaker 1: asked that simple question, is there a market for the product?
• 4:45
  Speaker 2: I think the market's there. I just think that it's
• 4:47
  Speaker 2: unattainable for many people.
• 4:48
  Speaker 1: Right now.
• 4:49
  Speaker 2: You have the average person that's having a hard time
• 4:51
  Speaker 2: putting gasoline in their car, you know, pulling out a
• 4:54
  Speaker 2: twenty dollars bill and going, just geez, how many leaders
• 4:56
  Speaker 2: am I actually going to get out of this twenty
• 4:58
  Speaker 2: Right now? It seems like it's less and less every day,
• 5:01
  Speaker 2: and electric vehicles are far more expensive than your internal
• 5:05
  Speaker 2: combustion engine vehicles, so they're just they're out of reach
• 5:07
  Speaker 2: right now. You know, the Chinese ones that are looking
• 5:10
  Speaker 2: to enter the market. Here, we've agreed for twenty five
• 5:12
  Speaker 2: thousand to come in it's a small amount, but it's
• 5:14
  Speaker 2: opening the door. They're really cheap. And even if they
• 5:18
  Speaker 2: are tariff, let's say at one hundred percent doubling the
• 5:20
  Speaker 2: price of them, some of them right now are coming
• 5:22
  Speaker 2: off the line at like seven to ten thousand dollars
• 5:25
  Speaker 2: US Twenty thousand dollars for a brand new what could
• 5:28
  Speaker 2: be considered luxury car. Is theyr cheap. So, I mean,
• 5:31
  Speaker 2: our auto industry has to figure out automation. But then
• 5:34
  Speaker 2: the flip side of that means that while the price
• 5:36
  Speaker 2: comes down, you're going to be getting rid of jobs,
• 5:39
  Speaker 2: and that's, you know, the opposite of what we want
• 5:41
  Speaker 2: to achieve. So I don't know. I'm a big proponent
• 5:43
  Speaker 2: of letting the market do what the market's going to do,
• 5:46
  Speaker 2: but I also don't want to see massive job losses here.
• 5:49
  Speaker 2: So there is a need for some intervention. But again
• 5:51
  Speaker 2: I don't know what that looks like, because throwing buckets
• 5:53
  Speaker 2: of cash doesn't seem to be working.
• 5:55
  Speaker 1: No. And in the middle of all of this mess,
• 5:57
  Speaker 1: you know, the government announced three days ago that it's
• 6:00
  Speaker 1: going to spend eighty million dollars on eight thousand recharging
• 6:04
  Speaker 1: stations across Canada because people have that range anxiety thing.
• 6:09
  Speaker 1: And then just the other day the Industry Minister Joe
• 6:12
  Speaker 1: Lee said that she can see the Chinese building evs
• 6:16
  Speaker 1: in Ontario. Well, hello, minister, we have unions here and
• 6:20
  Speaker 1: they have slave labor in China. That's why their cars
• 6:24
  Speaker 1: are so inexpensive. Some you know what, something's wrought. The
• 6:28
  Speaker 1: water is bad in Autuwa. You know what I'm saying.
• 6:32
  Speaker 2: Yeah, I saw that story about building Chinese EV's in
• 6:35
  Speaker 2: Canada and I just I laughed to myself. Now, I
• 6:37
  Speaker 2: spoke with one industry expert in the energy sector, Markmslap,
• 6:41
  Speaker 2: who said, you know, they're actually there is some precedent
• 6:43
  Speaker 2: for it. Of course, there are Asian brands that build here.
• 6:46
  Speaker 2: There are opportunities. But I do tend to agree with
• 6:50
  Speaker 2: you on this one of you know, I don't see
• 6:53
  Speaker 2: them wanting to increase the price of their evs because
• 6:57
  Speaker 2: they've got such cheap labor or full automation. And to
• 7:00
  Speaker 2: be honest, our unions aren't going to be quite happy
• 7:02
  Speaker 2: with the idea of fully automated plants being built here
• 7:05
  Speaker 2: that are taking future jobs away.
• 7:07
  Speaker 1: Yeah, now here is one thing that does worry me.
• 7:10
  Speaker 1: I know. Doug Ford calls the cars coming in spy vehicles,
• 7:14
  Speaker 1: and they may, but then so is TikTok. But I
• 7:17
  Speaker 1: have seen two presentation videos of two different models of
• 7:21
  Speaker 1: these Chinese evs that are coming into Canada, John, I
• 7:25
  Speaker 1: gotta tell you they are way cool. I mean they're hot. Yeah.
• 7:31
  Speaker 2: Oh, they're gorgeous vehicles, and they're fully tech. First, your
• 7:34
  Speaker 2: phone is integrated. The car becomes a part of your
• 7:37
  Speaker 2: social environment online as well. The features are there. I've
• 7:43
  Speaker 2: seen vehicles that have built in PlayStations and big screen TVs.
• 7:48
  Speaker 2: I saw one that actually had on the roof panel
• 7:52
  Speaker 2: it opened up and retracted and a drone came out
• 7:54
  Speaker 2: of it, and the drone followed the car as you drove,
• 7:58
  Speaker 2: and you could fly the drone. It'll keep within a
• 8:02
  Speaker 2: range of the car. So you can have your kids
• 8:03
  Speaker 2: in the backseat flying a drone while you're driving the
• 8:07
  Speaker 2: car and it'll follow you. But then the flip side
• 8:09
  Speaker 2: of that is the national security point of view of
• 8:12
  Speaker 2: oh wow, we're putting drones in the car. Do you
• 8:13
  Speaker 2: even know if the drone goes up on its own
• 8:16
  Speaker 2: and starts to fly off and take pictures or videos. So,
• 8:18
  Speaker 2: I mean there's lots of concerns that we need to
• 8:21
  Speaker 2: be looking at here before we just flood the market
• 8:24
  Speaker 2: with these things because they're not just cars.
• 8:26
  Speaker 1: No, you're right, hey, listen, thanks for pointing this out
• 8:28
  Speaker 1: to me, and thanks for jumping on this morning. I
• 8:31
  Speaker 1: appreciate it always, Gene.
• 8:32
  Speaker 2: Look forward to chatting with you next week.
• 8:34
  Speaker 1: Sure, well on Tuesday. There you go is John Litkey.
• 8:36
  Speaker 1: He called me yesterday afternoon. He goes, you're not going
• 8:38
  Speaker 1: to believe what's happening. And I didn't. And it is
• 8:41
  Speaker 1: our car industry. It's going down the drain.