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Hello and welcome to World Business Report on the BBC World Service. I'm Will Bain. Great as always to have your company on the programme and it's going to be a busy programme today because how did something that was meant to be big and beautiful created...
or how has it created so much bad blood between the world's richest man and the president of the world's richest economy. With the US stock markets just opening the last hour or so, we'll look at the continuing fallout from President Trump's explosive social media bust up with Elon Musk and
and what it means for some of Mr. Musk's most important companies like the electric car firm Tesla and his rocket firm SpaceX. Also today, why one of Germany's biggest investment funds is pulling its investment in one of the world's biggest energy firms. Exxon failed the first test. Their climate targets are incomplete. They don't want to become climate neutral, and therefore they're not ambitioned enough.
Yeah, more from Union Investments on why they're putting oil and gas companies, they hold shares in on notice. And given they've got $500 billion in
euros worth of investments around the world, it's a serious notice and they want them to take their climate goals more seriously. So all that to come on World Business Report before we leave you in about half an hour's time. But we're going to kick off with this extraordinary row between the two of the world's most powerful men. That spilling out should create stock market and business consequences as well. President Trump described
Elon Musk, as the man who has lost his mind after the pair, who had been, of course, close collaborators recently on everything about government efficiency to business strategy, traded social media slurs, some of them more personal and lurid than others. It was all over the president's tax bill that's currently making its way through Congress, having passed the House of Representatives. The bill, which includes huge tax breaks and more defence spending, for example, was termed a disgusting abomination by the tech
billionaire, with Mr. Musk trying to rally Republican lawmakers in the Senate where the bill now lies to try and kill the bill, as he put it. Elon Musk warned the bill would add to the US budget deficit and saddle Americans with what he called crushing debt.
In response, Mr Trump accused the Tesla boss of changing his tune on the bill when some of the rules around electric vehicles were changed and cut out of the bill. And as the row mounted, Mr Trump threatened to cut off federal government contracts with many of Mr Musk's companies, including his rocket firm SpaceX. Quite the journey then. Let's get back on it.
Kind of amazing that all of that has happened in the last six or seven months, isn't it? Well, now our U.S. partner CBS News in the United States are reporting that President Trump's thinking about selling his Tesla car that you heard him buying there in that montage following this row. And shares, of course, in Tesla have been falling pretty significantly yesterday, as much as 14 percent Thursday, that is. The company lost around $150 billion in market valuation. So all eyes were on today's opening, pal.
And there it was, Shanti Kellerman, I'm sure with much of the rest of the investment world, was watching that open with interest. Shanti, of course, the Chief Investment Officer at M&G Wealth here in London, back with us as always on a Friday. Shanti, great to have you back on the program. Hi, Will. What an extraordinary row. What's the Tesla share price doing on the kind of open? What are we, an hour into trading or so?
So Tesla shares are actually up about 4% today. And I think that's from Elon made some comments about kind of taking a breath and trying to, you know, smooth things over. So that's had a positive impact. But if you look at kind of a bit bigger picture year to date, Tesla shares are still down about 26%.
And a lot of that's related to, you know, just how many cars the company's selling, competitors from other industries, other countries like BYD from China, that, you know, they need to do something to get sales revved up and also to be able to offer cheaper products to customers. Yeah, I was going to ask you exactly that, actually. How much of the kind of volatility, because different shareholders think different things as well, don't they? We've had Ross Gerber, one of the most vocal shareholders,
Only investors in Tesla very certain about what he thinks is going on with the Tesla share price. He says it's all about Elon Musk losing focus, focusing on politics too much, wants him to kind of focus back down on the business again. And others who are saying exactly as you do, well, Tesla's in lots of other places.
lots of other spaces now. It's a robotics firm. It's trying to be an AI firm, all that kind of stuff. We're still kind of long Tesla. What do you think is causing the biggest amount of the eruptions, I suppose, from an investment perspective?
I think in a way the past six months or so is probably kind of an anomaly because we had this huge run-up in Tesla shares when Trump was helping, when Musk was helping Trump with his presidency. And I think the shares kind of went up a lot thinking Trump might do things to help Musk. And then we've had them just kind of come right back down. And so I think you kind of have that aberration where the election impact, and then maybe hopefully now we'll go back to it being, you know, just more driven by the fundamentals of,
Who's buying the cars? Can they make better cars than their competitors? And they probably do need a bit more time and focus. The market reacted really positively when he said he was going to come back and plan to be Tesla CEO. I think it was until 2030, a few weeks ago. Because broadly, and those pension funds, for example, big investors, institutional investors in Tesla made this point in their letter they'd written to the Wall Street Journal newspaper in the U.S.,
I think that when he's focused on it, everybody still believes in the vision he's kind of got for the company and where he's taking it. It's actually the sort of noises off is the only thing they sort of don't like about the company. Even the sort of car sales numbers, they ride them out, right? Because they think that this person's got a vision for kind of going beyond just cars. Yeah. And you look, there is that track record of innovation and innovative products going
And I think in a way, you know, Tesla created a lot of that industry and then all these other competitors have come in. It's kind of similar maybe to Netflix in a way where they had that huge run where they were kind of the best and then other people catch up. And so, you know, they're probably at a place where they need new things, new innovation, whether it's robotics or whatever it's going to be to have that next leg of growth. Well, we'll do a bit more on the bill itself as well, Shanti. I want to get your thoughts around kind of the cost of US borrowing stuff, which is sort of flip of it, the Trump side of this.
Ralph, we like in a minute, we've got Michelle Fleury standing by in New York as well to talk us through a bit of that as well. But for a bit more on Tesla, Peter Barden-Fleth-Hansen is joining us live from Copenhagen. Peter knows both Elon Musk and Tesla inside out, worked for them for a long time, almost a decade. Peter was at one time director of business development for Europe, Middle East and Africa, now runs the electric drive systems firm DG Innovate. So still knows the space really well. And he's joining us live, as I say, from Copenhagen.
is home in Copenhagen. Peter, great to have you back on World Business Report. Thanks for being with us.
Thank you. Was this all inevitable eventually that President Trump and Elon Musk would fall out like this? I would say as much as the as much as one month follows the next. Yes, is the answer. And why so? Because the chemistry between them wasn't going to work or because Elon, as someone you know well, has a very specific way of doing things?
Specifically for the last part, but also for all intents and purposes, what you've seen Donald Trump been doing for the last 10 years as well. So both of those people have a tendency of changing their nearest very quickly and often not very neatly. And putting those two together, I guess this was very inevitable.
Right. How alarming was it, though, to see with what Shanti's just told us in mind that the share price is recovering some of those losses already in the early hour of opening, the scale of those losses yesterday on the stock market?
Well, it is scary to watch, but if we just look over the last six months of the up and down that the Tesla, very speculative stock, which it's become, takes, I guess this is not...
Neither surprising nor I do expect that it will come back up again. But it's already gone up by a good 20, 30 percent over the last month or so. So this is sort of recouping a little, going back a bit. And I guess already we're seeing that some of this is coming back again as perhaps the arguments continue.
between the two settle a bit but there'll probably be another rant coming and in which case you may see another turn to the negative on the stock. Yeah, neither man seems to be able to keep their phone in their pocket, does it? Need to do what me and my wife have started doing, leave the phone upstairs and go and watch TV downstairs or something, don't they both, to keep away from the social media but given that, there are now proper questions, aren't there, from big investors. I referenced Ross Gerber earlier, he's been outspoken in the past but there are
Others like him who've been big investors in Tesla are now saying this is a fork in the road and I pick the company over the man going forward.
Yeah. And again, this is something that I've been talking about and flying for a number of months, at least back to November, because, of course, this is an issue because you have Elon who all of a sudden decides to take a different cap on and decides to go into politics in one way or another. And of course, that meant that the
company was going to take second place in this uh in one one reason for another you'd have shareholders out there who would be questioning and answering and questioning whether or not their ceo who's the highest-paced person on the planet was actually doing his daily job um and it's a fair question well what's your sense then now how does that story end
Well, I think all dependent on whether or not he will now give Tesla and his other companies more than 100%, which he has been lacking on. I think that we're going to see a much more engaged Elon in what he used to do. So you still have him? If you were still there, you still want him to be your leader at Tesla if you're back in your old job?
Well, there is the question. Therein lies the question as whether or not he's burnt too many bridges now. I think he's burnt some, but I think he does have an ability to bounce back. Peter Thiel has a comment that says never bet against Elon Musk. The big US investor. I do agree with that. I do agree with that.
Also a Trump investor, yes. And I believe that. I think be careful betting against Elon because he does have an enormous tenacity, an enormous compromise list of going into something. He will continue even...
even in the worst of adversary, whereas Trump has a tendency of backing down. We've seen that in all different kinds of respects. Peter, always great to get your insight. Thanks so much for your time. Peter Bard and Fleth Hansen there. As I say, long-term Tesla exec now runs the electric drive firm DG Innovate. Well, Peter mentioned some of those other ventures. Ken Kramer, former research scientist and space journalist and blogger on the site,
Up space up close is someone who knows about a lot about another one of those SpaceX. And he's joining us live from Florida. Ken, great to have you on World Business Report. Thanks for being with us.
Thanks for having me. Gosh, we talked about the pressure that Tesla was under. That's one thing, isn't it? That's a private company. That's people's money. And as Peter was saying and Shanti was saying, you can get some of that back again by winning them round to believing in you longer term and the project. SpaceX has got a lot of government money, a lot of government contracts, and the president, bluntly, gets a pretty big say over some of that.
The president does and the federal government does to start first on Tesla. He's destroyed his brand, in my opinion. He changed his political views 180 degrees.
Tesla was there to save the environment and prevent climate change. And what did he do? He denied climate change and lied about it. And so now he wants to try and go back. I heard your previous gentleman. I don't see it happening. Tesla sales are falling everywhere. And now he's threatening the ISS, the International Space Station, with decommissioning
the dragon, that would cause it to fall out of the sky uncontrolled the way it is right now. You've got to have astronauts on board and you've got to have a de-orbit vehicle which is under contract
to NASA from SpaceX. And none of that would happen. Just back it up a tiny bit, Ken, for us. For people who don't know that as well as you do, just explain what Dragon is for our listeners and why it's so significant. And I should probably say as well that if Elon Musk was here, he would say, I'm sure, that he still believes in the kind of electric vehicle revolution wholeheartedly. But tell us about Dragon and why it's so important and what you think...
all of this of the last kind of week has done to that project? Yeah, well, he can believe in Tesla as much as he wants until he changes his attitude about the purpose of it's not going to change. So the dragon to get to that
is the spacecraft, the human spacecraft that launches NASA astronauts and international astronauts, including from Britain and Europe, to the International Space Station on a regular basis every six months. This way, the U.S. is not dependent on the Russian Soyuz anymore, and it's been very successful. In fact, the next Dragon spacecraft is launching in four days with Peggy Whitson on a commercial mission. All right? And this happens every couple of months.
They also launch cargo dragons that are unmanned to carry science and supplies and hardware to maintain the station, which is there to do science. That's what I am. And it's doing breakthrough science, and it's at the peak of its performance right now.
So that's why we need the dragon. And at the end, we need the dragon to maintain it so it doesn't go out of control. That's very important. Yeah. And what's your sense here? Does this put all of that at risk, I suppose, then? It puts it all at risk. And, you know, it's completely irresponsible. What he has done, he has betrayed NASA and he has betrayed science and
All of these inventions come from science. I mean, again, he cut that across. He would say that President Trump is doing that. I mean, Elon Musk hasn't made the decision to change. He's going to be the head of head of NASA just because they've fallen out. It's President Trump who's changing the relationship potentially with SpaceX.
But Doge is the one, he's in charge of Doge, who cut all the contracts to NASA and the science agencies all across the government. Musk could have saved NASA, and he chose not to. That is the point. It's not just Trump. It's Trump and Musk.
working together against science and technology. And that's the basis for economic growth for all of us. Ken, can hear your passion. Thanks so much for sharing it with us. Ken Kramer, former research scientist and space journalist and blogger at the site Space Up Close. You're listening to World Business Report.
on the BBC World Service. Well, you've heard some of the passion, haven't you? Not just from the two men involved, but from people like Ken and Peter Bond and Fleth Hansen as well. Of course, all of it, seemingly remarkably, given the passions at stake, is all about a tax bill. And as I say, North America correspondent, business correspondent, Michelle Fleury is with us. Michelle, welcome to World Business Report. Have you ever seen people get quite as cross about a tax bill? It's had some ramifications. Yes.
I know. It's the big, beautiful bill that's stirring big emotions. I mean, you know, the exchange on just if you go back a couple of days ago, the way Elon Musk was kind of tweeting or kind of posting about this on social media, clearly he felt strongly, but
The reason this is so important is that it may be the biggest piece of legislation we see from the Trump administration during this congressional session. And so that's why you're seeing the party kind of come together behind Donald Trump, even though there are still divisions about what exactly is in this bill. I was going to say, just remind us what the kind of key planks are and which ones are the lightning rods for that division.
It is a big bill, and so there are many things that people like in it. One, it would fulfill Donald Trump's campaign promise, which is to extend the signature 2017 tax cuts that he first enacted during his first term.
It would also boost border security spending. It would impose work requirements for those receiving money from Medicaid. It would also roll back a lot of Biden's efforts on energy. So, for example, clean energy tax credits. There are lots of lightning rods. One of them is those clean energy tax credits.
In particular, for Elon Musk, one of the things that certainly the Republicans say he's upset about really is the fact that the legislation would cut electric vehicle tax credits. And that really has helped Musk's Tesla make a lot of money in recent years. Shanti Kellerman still with us from M&G Wealth. Shanti, why is it that the market and in particular those investors, your colleagues,
who buy and sell government debt, particularly American debt, obviously, in this case, so worried about this bill? So if the US government needs to borrow a lot of money, someone's got to lend it to them. And the worry is that you get to a point where maybe people aren't willing to lend it or they'll only lend it at a very high rate. And then you get into a situation almost kind of spirals out of control where the deficit keeps going up because the rate at which people are willing to lend is even higher.
I think that's still a fairly low probability event, but it would be quite catastrophic and scary if it did happen. And that cost has been creeping up already, hasn't it?
Yeah. And since, you know, since 2021, we've had interest rates rise, you know, not just in the US, but globally. And we don't really know where that breaking point is, you know, so we could go on for another few years, five years, 10 years, or it could be next year. It's hard to predict what exactly that point is where there won't be enough funding or the funding rate will be very high.
And Michelle, that is one of the divisions, isn't it, that politicians have, as you say, almost by design, this bill is absolutely stuffed with stuff to try and get people to support it. I mean, that's been one of Elon Musk's points, hasn't it? He's been calling it pork to try and get this over the line. Is the heat around this bill even more intense now, though, as it goes into the Senate?
I mean, I think the heat was already there in part because you've got the Congressional Budget Office forecasting that it could add between $2.3 and $5 trillion to the deficit over the next 10 years. And against that backdrop, there's pressure in the Senate. But at the same time, when it goes back to the House, there will be more pressure still. It's just...
The agenda of Donald Trump is such that I think, you know, they will use that as the reason to come together because they know that come the midterms, they don't know what will happen after that and whether or not they will still control Congress in the way they currently do. So this is their chance. It's going to be fiery between now and then. Michelle, Shanti, thanks both for so much of your time this afternoon as well. You're with Wellbeing.
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Business report. Let's turn away from that Musk and Trump story now and look at one of Germany's largest asset managers. It's decided it's going to divest all of its holdings in the U.S. oil major ExxonMobil, accusing the company of insufficient commitment to climate targets. This is union investment. It's a giant of the industry. And they say they're making that move because...
Well, they want to put others on notice that if you don't take climate seriously, climate goals seriously, then they won't be investing in it. Henrik Ponsen, their head of sustainability, told us more from Frankfurt. We are a long term investor, so we need to take into account how the future looks like, not only tomorrow and the day after tomorrow, but also in decades, because this is the time frame we invest money for our clients.
And we see oil demand will have its peak lately in 2030, which will make it hard, at least, for oil majors to become more profitable in the future than in the past. And therefore, it's our fundamental conviction that only oil majors have a light future if they really transform their business.
And to transform their business, they have first to define ambition goals. And second, they need to deliver in a very reliable manner on them. And Exxon failed the first test. Their climate targets are incomplete because...
They don't have scope three targets in the long term. So to make it very easy, they don't want to become climate neutral. And therefore, they're not ambitious enough. This is the reason why we can't be invested into Exxon anymore. And so this isn't just a moral issue for you. It's not just because you as a company believe climate change is real and having net zero goals is important. You think this is bad for your customers, for your investors? Exactly. We're paid to...
to earn our clients' trust and to gain their wealth. So it's not a moral issue at all. It's a very fundamental one. And you didn't come to that realisation overnight, did you? You'd been discussing this with these companies for some time as well. We developed our climate strategy in the course of the last five years. And it's an engagement strategy. So we are in close contact with all the companies where, you know, this topic is very key.
We made an analysis and realized that 75% of our financed emissions, and we have a portfolio of 500 billion, these 75% of all financed emissions is concentrated by 50 companies. So we engaged these 50 companies in detail and very intensively.
Exxon and EOG were two of them and are two of the oil companies which don't have comprehensive long-term climate goals. The targets they set were not ambitioned enough because they don't have a scope three target and scope three emissions yet.
is standing for 90% of their overall emissions. So their climate strategy is just focusing on 10% on the overall emissions. And this is by far not enough. You're invested in other oil and gas majors as well.
as well, Total, the French firm, Shell. There are investors, we've had them on the program before, activist investors, people like Follow This, the Dutch activist investor, who don't think companies like Shell are going far enough, quickly enough. Is that something that you're monitoring? Of course. Of course.
So TOTA, Shell, Equinor, also BP, they have long-term targets on scope one, two, and three. They are not fully comprehensive, but for the time being, it's good enough. And we don't have any interest in selling our shares because...
This is just shifting the problem to somebody else. So a disinvestment is actually not a solution. It's only the last option you have after all other options didn't work. But you believe you're still being listened to, I guess, in those boardrooms because we've heard
haven't we? Big shifts, BP very clear, for example, that it is backing away, basically, as part of its strategy to boost its profits, and will focus more on oil and gas. You're fully right. If it comes to the next target they have to meet, which is in five years, also comprehensive mid-term targets, then all of those companies will face issues. Therefore, we will are
continue our intensive engagement. But for the time being, the expectation is only to have comprehensive long-term targets, which those companies have at least have enough. And the backshifts we saw were more on the midterm and short-term actions,
And there our plan requires those companies first to have in 2030 comprehensive midterm targets and then 2035 to have their capex in line with a climate neutral strategy and then from 2040 on to be on their path to climate neutrality.
Therefore, you know, our approach is to give those companies really a long-term perspective on our expectations to make the move together.
Do you feel that it's an argument that's starting to be lost? There was a period, wasn't there, where investors like yourself seem to be really shaping decision-making in some of these energy majors and in their boardrooms and that we were seeing action. And in the last two or three years, a lot of that work seems to be coming undone or it feels like that from the outside.
Transformation is a task we can't solve in short timeframes. So it's a task of at least an entire generation. So it's in the end not important if it's easy for two or three years and then very hard for another two or three years.
It's something where we need to stay on course. As a long-term investor, there's no doubt that climate strategy remains a major and important part of our investment strategy. Because, I mean, there's a science, you know, it can't be changed by any president or by the richest man in the world or whatever. Climate change will reshape the world we live in.
And we have to invest in this future world. And that means we need to take into account how this future will be and how oil majors play a role in this future. That's Henrik Ponsen there, the head of sustainability at Union Investments in Frankfurt, Germany.
Well, we approached ExxonMobil for a comment. We asked them if they wanted to come on the program as well. We haven't heard back from them yet, but they did tell the Financial Times they didn't agree with how union investments measured their climate goals. Just about it from us today then on the program. Big thanks to our team today. It's been Victoria, Hannah and James. Alex has been driving the program for you. Thanks so much for listening to World Business Report.