Tesla's Terrible Q1 Prompts Musk Return? & Companies Face RFK Jr.'s Food Dye Ban
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, RFK tells food companies to get rid of artificial dyes and Mountain Dew will never be the same. Then Elon Musk is promising to spend less time on Doge and more time on Tesla because, boy, does it need it. It's Wednesday, April 23rd. Let's ride. Let's ride.

Are you the kind of person who is super polite to chat GPT? Like you say please and thank you when asking a question so the bots will spare you after the uprising? You could be costing OpenAI millions of dollars. Recently, the company's CEO Sam Altman suggested that people simply saying please and thank you to their chatbots

costs OpenAI tens of millions of dollars because of the extra computing power required. However, Altman says that money is well spent because in his words, you never know, wink, wink. Toby, are you overly nice to a chatbot? Yeah, I definitely fall into that wink, wink category because, you know, as we approach this mythical threshold of AGI, artificial general intelligence, where these models think at human or beyond human level intelligence, you

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Tesla reported earnings yesterday, and it looks like Elon Musk's absence is becoming more of an issue than Ferris Bueller on his day off. The struggling EV maker did nothing to dispel fears that it's facing some serious headwinds. Global deliveries fell 13%, while net income sank 71%, as the company contends with falling demand, increased competition, and its CEO's political side projects.

Q1 2025 was the first quarter with under $1 billion in net income for Tesla in four years, and it wasn't even close, coming in at just over $400 million. Since Elon Musk started working on Doge in earnest, the company's stock has fallen by about 40%, and shareholders are increasingly getting frustrated by his divided attention.

Eight state treasurers, including those from California and Illinois, sent a letter to Tesla's board yesterday raising concerns about the company's slipping performance and Elon's bifurcated focus. And it's clear Elon is feeling the pressure. He said yesterday that the time he spends on Doge will drop, quote, significantly in the next month, which is likely the reason the stock rose in after-hours trading. Still, even if Elon was giving Tesla his 100% attention, it's not going to be the same for Tesla.

It's not guaranteed that the company can magically turn things around. European deliveries have fallen by double digits per cents in the first two months of the year, and the company's eye-catching Cybertrucks have sold just 50,000 units so far, prompting a quiet reposition of the futuristic vehicle's brand to cater to more of a working man F-150 crowd. Neil, analysts knew that yesterday's earnings

We're going to paint a rosy picture, but this was a really rough quarter. Still, investors heard exactly what they wanted to hear, those magic words. I will be working less on Doge and I will be working more on Tesla. That is exactly what they needed to hear because Tesla stock was in a free fall. Its business is booming.

hurting mightily. The fact that Elon Musk will devote more attention to this particular company in its time of need was very much music to their ears. Yeah. And if you want to put some numbers to it of the parallels between working on Doge and working on Tesla, Doge's website claims to have cut about $160 billion from the US government, $160 billion in savings.

Over that same stretch, Tesla has lost roughly $600 billion in market cap. So again, it's not an apples to apples comparison, but it kind of just goes to show you the value creation and then the value destruction that has been happening due to this divided focus. So where does Tesla go from here now that Elon Musk is supposedly going to be working on it more? They have two big initiatives coming down the pipeline this summer.

One is this robo taxi service that they're going to launch in June in Austin, Texas. Elon Musk says we are on track for that. They're going to compete with Waymo and other autonomous taxi companies that have already been giving customers rides all around the country in certain cities. They're also expected to release an affordable EV model, which has been anticipated for years because there's

increasing amount of competition, not just from legacy carmakers in the United States like General Motors, but also BYD in China has now overtaken Tesla as the world's largest seller of EV. So that traditional business where Tesla gets 90% of its revenue, Tesla has fallen behind

global deliveries down 13%. They think that an affordable model, well, investors have been pushing for this forever. So now it looks like potentially that will come, but we still don't have any details on what that affordable model, about $25,000 will look like. And then finally, I just want to talk about the Cybertruck for a little bit, because a lot of resources went into developing this hulking futuristic vehicle. And it's looking increasing, like maybe that vehicle is a flop. Sales of the Cybertruck in the first quarter were

were down about 50%. They sold just over 6,400, which is not a lot considering they have the capacity to produce 31,000 vehicles. And so internally, there's sort of this rebrand, this repositioning happening where words like cyberpunk are no longer being applied to it. And instead, you're seeing things like

utility and working mans. And if you look at the marketing materials, you're showing them not next to AI and strobe lights and robots and whatnot. They want to attract outdoorsy types, tradespeople, salt of the earth-esque 150. So positioning it more in line with the traditional pickup market rather than some futuristic Mars roving vehicle that it initially debuted as.

Flamin' Hot Cheetos could soon look a little less neon. Yesterday afternoon, Health and Human Services Secretary Robert F. Kennedy Jr. announced a plan to phase out eight artificial food dyes and colorings from the U.S.'s food supply by the end of next year in his first major effort to overhaul America's diet. His wingman, FDA Commissioner Dr. Marty McCary, said that regulators would aim to revoke two synthetic food colorings and, as for the other six,

He told food giants to eliminate them from their ingredient list or else. Artificial dyes are used by major food companies to make food colors pop, and they can be found everywhere in the grocery store, from cereal to ice cream, yogurts, candy, and more. A limited body of research has found links between petroleum-based synthetic dyes and certain neurobehavioral problems in children, such as hyperactivity. Though previous U.S. regulators have found the health concern's

aren't something to worry about. The Trump administration has seen enough evidence of harm. Dr. McCary asked, why are we taking a gamble for food companies like General Mills, PepsiCo and Kellogg? They'll have to go back to the drawing board, revamping some of the most popular products to comply with the government's recommendations. There's no rule banning the food dyes on the books yet, but it's like your older brother telling you to take the fall when your parents are angry. You just do it.

Yeah, this has been a major pillar of the Maha Make America Healthy Again movement. And this is a major wake-up call for a lot of these snacking and food companies because there's a reason they put these dyes in food. Studies have shown that brightness and saturation of food does increase

increase consumer perceptions and purchase behavior. If you're seeing these bright things, like neon lights that you can't help but look at and can't help but gravitate towards. And if you go the opposite direction, less saturated, less colorful, that's perceived as less attractive and less tasty as well. So if you cut down on the vibrancy of these colors,

You're going to sell less of your tasty treats because people are looking at them and they are perceived as less tasty and less, you know, treats in general. So definitely a major kind of crossing the Rubicon moment for a lot of these companies. You're right. This happened 10 years ago. General Mills took out artificially colored artificial colors from Trixx.

that year and there was a huge consumer back us saying we don't wanna see tricks that are like completely a you know so colorful so saturated and the kinda needed colors so there was a consumer uprising and they added artificially colored tricks back

into grocery stores the next year. On the other hand, there is a success story with a company removing artificial dyes. Kraft in 2015 changed its recipe, replaced yellow number five and yellow number six artificial dyes with paprika, annatto, and turmeric in its, you know,

Neon mac and cheese. You think about that yellow and it was fine. They still do that to this day. So, I mean, at this point, looks like companies don't have a choice. Like I said, there's not a rule on the books, but they're based. The Trump administration is basically saying you guys have to do this. We're asking you to volunteer to do it now to give you some leeway. If not, we will make a rule forcing you to.

And I do think you're seeing some brands creatively get around it as well. One brand that we've talked about in this show before actually is Ruffles. They are introducing this brand called Simply Ruffles Hot and Spicy that aren't that flaming hot red that you associate with spicy stuff. They're actually just orangish and actually give off this aura of being healthier because of that. So I do think we're trending towards that.

healthier snacks in general. So maybe toning down the neon won't have the outsized effect that a lot of people think it might have.

Let's move on. We may not be screwing iPhones together, but check the bottom of your yogurt and prescription drugs for some Made in America stickers in the coming months because Chobani and Roche announced plans to set up factories in the good old U.S. of A. yesterday. Chobani is opening a massive million-square-foot factory in New York State that will cost at least $1.2 billion as it looks to increase its capacity to meet growing demand.

Chobani actually started in New York back in 2005, so Governor Kathy Hochul threw a bevy of tax incentives its way in order to ensure it set up shop in its hometown. Also yesterday, the Swiss drugmaker Roche announced it will plow $50 billion into manufacturing in the U.S. over the next five years, creating 12,000 jobs in the process.

Switzerland is only looking at a 10% tariff right now, but that is set to jump to 31% once Trump's 90-day pause expires. The pharmaceutical industry at large is also on edge as Trump gears up for sector-specific import tariffs, hence the game planning from Roche to beef up its U.S.-based production centers. So, Neil, for all the economic chaos the tariff rollout and pauses have caused, there has been a steady stream of announcements today

coming from companies who, one, want to dodge Trump's tariff hammer, and two, we're already planning on investing in these factories in the first place. Let's talk Chobani. I mean, this company is a rocket ship. They're building the biggest dairy factory in the United States in the middle of New York, Rome, New York, uh,

They're going to try to make one billion pounds of dairy products a year, which my stomach is hurting just thinking about that. This company is one of the fastest growing food companies in the entire United States. Net sales last year rose 17 percent. Earnings are over 500 million dollars. It says it now controls about one fifth of the entire American yogurt market. They're also on this expansion spree to get into new areas. They bought La Coloma, a massive company, Cleopatra.

a coffee company for $900 million. They are in growth mode. The next stop for them after this factory is potentially an IPO. Then shifting from dairy to pharmaceuticals, Roche is not the only one who has been lining up to invest in America either. Novartis, another Swiss drug maker, announced a $23 billion investment earlier this month. Johnson & Johnson pledged $55 billion back in March.

Eli Lilly also unveiled this $27 billion plan in February. A lot of it is because Trump has one signal that he wants drug makers to reshore manufacturing in the US, but also these sector-specific tariffs that we've talked about when it comes to semiconductors are also likely going to apply to pharmaceuticals as well. So that is why you're seeing kind of this parade of announcements of R&D centers, of manufacturing all across the country.

in order to dodge those tariffs coming down the pipeline. Up next, there is a major rice shortage in Japan.

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Japan is engulfed in a rice crisis, and to combat the shortage, it's done the unthinkable. Import the grain from South Korea, something it hasn't done in more than 25 years. Last month, South Korean rice hit Japanese shores for the first time since 1999, an emergency stash Japan hopes will help alleviate soaring prices that has shaken society.

because eating non-Japanese rice in Japan is like drinking a Heineken at a 4th of July barbecue. You just don't do it when Budweiser exists. Japanese consumers eat rice at pretty much every meal, but they've long been skeptical of foreign-grown rice, so much so that Thai rice imported during another crisis in 1993 mostly went untouched.

But they may not have a choice this time around. The price of Japan-grown rice has more than doubled over the past year, leading to outrage from restaurant owners, sake brewers, and customers alike. A few months ago, Japan was even forced to take the unprecedented step of selling hundreds of thousands of tons of rice, 2 million bowls worth, from its strategic rice reserve, a stockpile of rice only used after natural disasters occurred.

But even that didn't move the needle. Toby, what is going on? Where did all the Japanese rice go? Yeah, there's definitely been some logistical issues with getting the rice, you know, from suppliers out to people in grocery stores as well. But also there was these record-breaking temperatures in 2023 that really affected that crop. There's also been a rise in tourists. I feel like we've talked about this so much on the show. So many tourists rushed to Japan recently.

putting increased demand on their dwindling supply. And then also there was a variety of natural disaster warnings that caused people to stockpile things. So it was just a combination of a lot of factors that led to these unprecedented headlines of importing foreign rice. Those headlines are maybe a little overblown because when you put the amount into perspective, it's not a lot. Two tons of rice that is currently in this

coming in from South Korea, not even close to the 142,000 tons that they release from the stockpile. But still, it is just showing that this is a moment of crisis for Japan right now because they are very, very particular about their rice. And they're very particular and they consume so much rice. The average Japanese person consumes about 110 pounds of rice per year. Compare that with 27 pounds of year per year.

consumption of rice for the average American. So this is a big deal for the Japanese government to get a handle on this. And you have people there being like, where is all this rice? You mentioned the high temperatures in 2023 that dwindled the crop, but there was a much bigger crop in 2024. So somewhere along this very complex situation,

supply chain that gets the rice from the farm to the retailer. Someone, it appears, some groups of people are hoarding rice and speculating on it because the prices have surged so much. So maybe there is a separate black market stockpile somewhere. And that's what people are speculating because they're like, where the heck

is the rice. We're growing it. It's fine. Although I do just want to give one shout out to American rice because this is just one data point, but the Guardian talked to a restaurant owner who has said, listen, Japanese rice is too expensive for me. I switched to California rice to import. And they talked to some diners that frequent in the restaurant and they were like, honestly, no qualms about eating it. Prices have gone up, so I'm looking for cheaper ones. And this was actually pretty good. So maybe don't knock it until you try it.

especially when it comes to California made rice. All right, let's sprint to the finish with some final headlines. Stocks ripped higher yesterday and kept on soaring in futures trading after the Trump administration gave a series of signals they would ratchet down the trade war with China and play nicer with investors. Last night, President Trump said he was not planning to fire Fed Chair Jerome Powell and that 145% tariffs on China are

are very high and would come down substantially. Those remarks came after Treasury Secretary Scott Bassett told investors at a conference that the current trade war with China was, quote, unsustainable and that he expected a resolution to come at some point. In trading, the S&P 500 and Nasdaq both jumped more than 2%, reversing their losses from a brutal Monday. Yeah, we did see a little bit of a greener Monday, but unfortunately,

Also, there are still some figures coming in, especially from the International Monetary Fund, saying that, hey, we do think this trade war is going to weigh on the global forecast, both for the U.S. and the entire world. It called for its U.S. growth outlook to drop 1%.

or to only be 1.8% in 2025. That's down 0.9 percentage points from its January forecast. And then meanwhile, cut its global forecast down by 0.5 percentage points as well. So it's not calling for a recession in the U.S. It's not calling for anything crazy, but it is downgrading those forecasts.

And then just one final, I feel like I'm being Debbie Downer here, but Bessette did express optimism that a deal with China would be reached, but also went on to clarify that there were no current diplomatic negotiations going on between the two countries to end the trade war. So even though we got a little bit of that optimism, it's nothing super concrete at this point. But it's enough for investors, and that's why we're seeing stocks ripping. They're looking for literally any shred of evidence that

Those 145% tariffs will come down, and they're sending stocks soaring again this morning. Bill Owens, the executive producer of CBS's News 60 Minutes, resigned yesterday, citing a loss of journalistic independence in the recent month. Owens stated in a memo that he could no longer make independent decisions in the best interest of the show and its audience.

The backstory here is that the network is currently in the middle of a $20 billion lawsuit filed by President Trump against CBS's parent company, alleging deceptive editing of an interview with then-Vice President Kamala Harris. Neil Owens is just the third person to lead 60 Minutes in its 57-year history, so this was not a spur-of-the-moment decision, but clearly he felt that this was

the right thing to do for 60 Minutes and its audience. Yeah, that's why this is so shocking, because this position doesn't get turned over that much. But you're right, there are a lot of political headwinds facing CBS News. They have this $20 billion lawsuit that they're facing. And then at the same time, Paramount Global, which is its parent, is trying to merge with Skydance Media. For that, it needs approval from the FCC. So you take those both

together and Sherry Redstone, who controls that company, is being accused by rank and file employees like Owens. You know, he didn't explicitly say of maybe cozying up to the Trump administration to, you know, settle that lawsuit and get approval for the sale. So 60 Minutes is looking for a new leader.

Heads up to freeloading fans of Last of Us, your days of mooching off your ex's family's account could soon be coming to an end. The streaming service Max is following the Netflix playbook by cracking down on password sharing. Users will soon start seeing a prompt telling you to add an extra member to your plan for an extra $8 a month, which is a passive-aggressive way of saying, we know someone outside your house is using this account also, time to give them the boo.

When Netflix rolled this out a few years ago, it juiced subscriber numbers. Then Disney Plus and Hulu followed with similar crackdowns. So it was only a matter of time before Max fell in line. But Toby, I miss the good old days. I miss the good old days too. Although I think I'm mooching off of your brother's account right now. So this is definitely going to come and hurt.

me, but this is the playbook, as you mentioned. Get a lot of people using the streaming platform. Get them hooked on stuff like The Last of Us, and then boom, here comes the crackdown. It did work wonders for Netflix, and I think that they led the charge with it, and so it's even easier for other streamers to come along and do the same thing like we have seen. So Max gets all of the benefits without getting kind of the same vitriol that Netflix originally did when it rolled out this plan, so definitely a win for Max.

Finally, you know that judgy friend who never really sees popular movies but always has something to say about them anyways? Well, that's basically how the Academy has been handing out Oscars. Anonymous voters have admitted to not watching certain nominees over the years, with some openly skipping movies with runtime or genres they don't like, which could explain some snubs.

So the Academy finally implemented a new rule yesterday requiring voters to actually watch all the nominated films in a category before casting a ballot. If you want to scream, wait, they weren't doing that already, you have every right to do so now.

One other aspect of this is enforcement. Can't exactly force a voter's eyelids open to watch Dune 2 like they're in a clockwork orange, but the Academy thought of this and will monitor viewing activity through its members-only Academy screening room streaming platform, according to Variety. For films viewed outside the platform, you have to submit a form indicating when and where you watched. Neil, I for one think they should have to take a little test

too. They might. I mean, this is truly shocking. And we know now why Dune two didn't get best picture because at a two hour and 46 runtime, maybe voters were like, eh, I already saw, you know, a Nora and that was pretty good. So maybe I'll just vote for that. So I think, you know, this is what the BAFTA did, uh,

this rule in the UK last year, and it's just truly surprising. I stand with everyone, including you, who are like, what the heck? You didn't need to watch all of the movies before casting your vote? What are we doing here? And then finally...

this is slightly rated, but just since everyone's been talking about Conclave recently, I remember during this last Oscar cycle, a lot of people kind of anonymously quoted themselves as saying, I didn't give Ralph Fiennes the lead in Conclave in Oscar because he's already won one for his role in Schindler's List. So they didn't vote for him, even though he never won for Schindler's List. People just assumed that. And so I'll look,

Those headlines combined with the fact that some people weren't watching movies were like, what is the Academy even doing here? If you were already skeptical of the Oscars, I mean, there's even reason to not take it even more seriously now. Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Wednesday. For any questions, comments, or feedback, send an email to morningbrewdaily at morningbrew.com.

Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Uchenoa Ogu is our technical director. Scoop Stardaris is on audio. Hair and Makeup watched all of the Oscar nominees. Devin Emery is our president. And our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.