California Governor Gavin Newsom has unveiled a controversial plan to provide state rebates to electric vehicle (EV) buyers, effectively excluding Tesla Inc. from the program.

The decision pits Newsom, a potential Democratic presidential contender, against Tesla CEO Elon Musk, a prominent Republican ally and key figure in President-elect Donald Trump’s transition team.

Newsom’s initiative, announced Monday, seeks to reboot a rebate program that California phased out in 2023 if Trump repeals the federal $7,500 EV tax credit.

But Newsom’s proposal would also “include changes to promote innovation and competition in the ZEV market,” a line that suggests the state would try to limit the credits to smaller market shares than Tesla.

“It’s about creating the market conditions for more of these car makers to take root,” Newsom’s office told Bloomberg News, adding that the details are subject to legislative negotiations.

Musk reacted to the news on X.

“Even though Tesla is the only company who manufactures their EVs in California! This is insane,” he said.

Tesla’s stock fell 2.9% in New York trading following the news.

Exclusion of Tesla stirs political and market tensions

The exclusion of Tesla from the proposed rebates signals a deeper political rift between Newsom and Musk.

Tesla’s dominance in the California EV market has waned, with its share of EV registrations dropping to 54.5% during the first three quarters of 2024, down from 63% in the same period the previous year.

In the Bloomberg report, Gene Munster, managing partner of Deepwater Asset Management, criticized the proposal, stating, “This is a slap in Tesla’s face.”

Musk’s relationship with California has been fraught with conflict.

In 2021, Tesla moved its headquarters to Texas, citing frustration with California’s regulatory environment.

The decision followed disputes over COVID-19 lockdowns, which Musk derided as “fascist.”

Despite these tensions, California remains Tesla’s largest domestic market, with the company accounting for more than half of all EVs sold in the state.

EV policy at the crossroads under Trump

Newsom’s rebate plan also underscores California’s broader struggle to shield its progressive climate policies from Trump’s deregulatory agenda.

Trump has vowed to roll back federal EV subsidies and fuel-efficiency standards, calling them an “EV mandate.”

During his first term, Trump targeted California’s ability to set tougher emissions standards under the Clean Air Act, and his incoming administration is expected to renew those efforts.

California and several other states, including Oregon and Colorado, currently set their own vehicle emissions standards, which more than a dozen states follow.

By excluding Tesla, Newsom appears to be signaling his intention to foster competition among EV manufacturers, even as he positions himself as a climate leader willing to confront Musk, a Trump ally.

‘Animal spirits’, not fundamentals driving Tesla’s gains: UBS

Analysts at UBS Group AG have cautioned investors that Tesla’s recent stock rally was driven more by market sentiment than by improvements in its fundamentals.

The company has added more than $350 billion in market capitalization since election day.

“The rise in Tesla stock is mostly driven by animal spirits/momentum,” Joseph Spak, an analyst at UBS, wrote in a report.

“Removing consumer tax credits for electric-vehicle purchases could force Tesla to have to cut prices,” Spak added.

Investors anticipate that the Trump-Musk alliance could benefit Tesla, potentially introducing a national standard for self-driving cars, which would simplify the launch of autonomous taxi services.

Spak however noted that while Trump’s policies may favor AI and autonomous vehicle ventures, Tesla lacks a ready-to-market robotaxi to benefit from these regulatory changes.

He maintained a sell rating on the shares while raising his price target to $226 from $197.

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Google, the world’s leading search engine, has unveiled additional modifications to its search results in Europe as it faces mounting pressure from smaller competitors and EU regulators.

The changes come in response to complaints from price-comparison websites, hotels, airlines, and retailers, who argue that recent updates have diminished their online visibility and reduced direct booking traffic.

These moves aim to comply with the European Union’s Digital Markets Act (DMA), which was implemented last year to curb the dominance of Big Tech companies.

DMA: Digital Markets Act

The DMA, a landmark regulation targeting major tech firms, prohibits companies like Google from favoring their own products and services on their platforms.

The law’s implementation has forced Google to navigate conflicting demands from various stakeholders while avoiding steep penalties.

Violations of the DMA can lead to fines of up to 10% of a company’s global annual revenue.

Since the act came into effect, Google has made several attempts to address concerns raised by price-comparison platforms and other industries.

Recent changes, however, have reportedly caused a 30% drop in direct booking clicks for hotels, airlines, and small retailers, prompting additional revisions to Google’s practices.

New search result features and tests in Europe

In a bid to balance the interests of all parties, Google announced several new features for its European search results. These include:

• Expanded comparison options: Google is introducing equally formatted units that allow users to compare offerings from different websites. This move aims to create a level playing field for rival platforms.

• Visual enhancements: Rivals can now display prices and images directly on Google’s search results through new formats, making their offerings more competitive.

• Dedicated ad units for comparison sites: To support smaller players, Google is offering new advertising options tailored to their needs.

Along with these updates, Google is experimenting with significant changes in Germany, Belgium, and Estonia.

The search giant plans to temporarily remove its signature map feature for hotels, reverting to a simpler “ten blue links” format that was popular in earlier versions of its search results. This short-term test seeks to gauge user interest and satisfaction with a stripped-down interface.

Balancing innovation and compliance

While Google emphasizes its commitment to meeting the DMA’s goals, the company expressed concerns about removing key features. Oliver Bethell, Google’s legal director, stated,

We’re very reluctant to take this step, as removing helpful features does not benefit consumers or businesses in Europe.

Google also highlighted the challenges of implementing changes that satisfy both regulatory requirements and consumer expectations. In a blog post, the company described the latest proposals as an effort to balance the “difficult trade-offs” posed by the DMA.

EU antitrust scrutiny intensifies

The European Commission has been closely monitoring Google since March, focusing on the tech giant’s compliance with the DMA.

The current changes reflect Google’s ongoing efforts to avoid further regulatory action, which could result in substantial fines.

For Google, maintaining compliance with the DMA while retaining its competitive edge remains a delicate balancing act.

As EU regulators assess whether these updates address industry complaints adequately, the stakes are high for Google and its European operations.

If the Commission deems these measures insufficient, further investigations and penalties could follow.

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The UK government’s recent budget announcement has sent ripples across the business community, with Chancellor Rachel Reeves revealing a £40 billion tax hike aimed at stabilizing public finances.

Key measures include significant increases in employers’ national insurance contributions and the minimum wage, leaving firms grappling with how to absorb these costs.

This comes at a critical time when the UK economy is already contending with stagnant growth and fierce global competition.

Many business leaders warn that the new policies risk undermining investment and job creation, raising concerns about the broader economic implications.

Business leaders fear tax hikes will stunt UK growth

The Confederation of British Industry (CBI), the UK’s leading business lobby group, has voiced strong concerns over the tax increases.

CEO Rain Newton-Smith stated that the measures have forced businesses into “damage control” mode, hindering their ability to plan for growth.

In a survey conducted by the CBI, nearly half of the 266 respondent firms revealed plans to cut jobs, while 65% indicated a freeze on hiring.

The sentiment among executives reflects growing unease, with many considering relocating operations to countries with more business-friendly tax regimes.

Retailers warn of inflationary risks from rising wages

The budget’s increase in the minimum wage has added another layer of strain for UK businesses, particularly retailers.

Sainsbury’s CEO Simon Roberts cautioned that higher employer costs could reverse recent progress in stabilizing inflation.

This sentiment is echoed across the retail sector, where rising operational costs are expected to squeeze already thin margins.

Meanwhile, Salman Amin, CEO of McVitie’s parent company Pladis, highlighted concerns over the diminishing case for investment in the UK.

At the CBI conference, he described Britain as the group’s “greatest investment globally” but noted that the new fiscal environment is making it increasingly challenging to justify further capital allocation.

Academic criticism of uniform tax policies

Economists have criticized the government’s approach of applying blanket taxes on employers.

Many argue that targeting excess profits through sector-specific levies would be a fairer and less disruptive solution.

By taxing all employers equally, regardless of size or sector, the government risks hampering competitiveness, investment, and growth across the board.

This one-size-fits-all approach could have lasting effects on the UK’s economic dynamism, at a time when the nation’s growth prospects are already under scrutiny.

Despite the backlash, Chancellor Reeves maintains that the measures are essential for funding public services and correcting past economic mismanagement.

She argues that the additional revenue will help rebuild the UK’s fiscal health while addressing critical needs in healthcare, education, and infrastructure.

Critics argue that these measures will not only dent profitability for businesses but could also exacerbate unemployment and stifle investment, hindering the economy’s ability to recover and thrive.

CBI’s blueprint for improving the UK business climate

In response to the challenges posed by the budget, the CBI has announced plans to release a “Blueprint for Competitiveness.”

The initiative aims to provide actionable recommendations for fostering a more supportive business environment.

These include enhancing capital spending, simplifying the tax code, and prioritizing policies that attract investment and talent to the UK.

Newton-Smith expressed cautious optimism about the government’s increased capital spending but emphasized the need for a more balanced fiscal approach to prevent long-term damage to the UK’s economic prospects.

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Lego and Formula One (F1) are joining forces in a landmark partnership aimed at bringing motorsport closer to a younger, family-oriented audience.

Announced in September 2024, this collaboration has already made waves with the unveiling of F1-themed Lego sets at the Las Vegas Grand Prix.

Spanning various difficulty levels, the sets cater to fans of all ages and promise to deepen engagement with the sport.

This multi-year collaboration signals a bold step for F1 as it seeks to broaden its appeal and solidify its growing global fan base.

F1-themed Lego sets to launch in 2024

The partnership between Lego and F1 will see the launch of exclusive sets capturing the essence of the motorsport.

These will range from beginner-level builds for younger children to intricate recreations of F1 pitstops, race cars, and collectibles for avid fans.

One standout feature is the Lego Speed Champions series, which meticulously replicates the 2024 F1 season’s cars from each of the ten teams.

The sets aim to bring F1’s high-octane drama into living rooms worldwide, offering enthusiasts a hands-on way to connect with the sport.

Beyond retail, Lego will have a presence at F1 events, hosting pop-ups at Grands Prix across the globe.

These interactive spaces will allow fans to build, play, and engage with the sport in innovative ways, creating a bridge between F1 and its younger audience.

F1’s surging popularity drives collaboration

Formula One’s appeal has seen a dramatic rise in recent years, partly driven by Netflix’s hit series Drive to Survive.

Offering a behind-the-scenes glimpse into the lives of drivers and teams, the show has attracted millions of new fans, particularly younger viewers.

F1’s viewership figures reflect this shift, with over four million fans aged 8-12 residing in Europe and the US alone.

On social media, 40% of the sport’s Instagram followers are under 25, highlighting its increasing relevance among younger demographics.

This collaboration with Lego is part of F1’s broader strategy to tap into this expanding fan base.

Since Liberty Media acquired the sport in 2017, F1 has focused on creating year-round engagement opportunities, moving beyond race weekends to maintain an “always-on” connection with its audience.

Lego’s expertise in family engagement

Lego, with its 92-year history of creating timeless toys, is perfectly positioned to support F1’s ambitions.

Known for its ability to resonate with children and adults alike, the Danish toy company brings invaluable expertise in fostering family engagement.

Lego’s past collaborations with F1 teams, such as McLaren Racing, provided valuable insights into what fans desire.

The success of these one-off products laid the groundwork for this more expansive partnership, which represents Lego’s first collaboration with the entire F1 franchise.

What does the future hold for Lego and F1’s partnership?

For F1, the Lego partnership represents an opportunity to secure the next generation of fans.

By offering entry-level sets that simplify the sport’s complex strategies, F1 aims to cultivate lifelong enthusiasts.

Emily Prazer, F1’s Chief Commercial Officer, emphasized that this collaboration aligns with the sport’s goal of engaging fans beyond race day.

The interactive and educational nature of Lego sets allows young fans to develop a deeper understanding of F1, fostering long-term loyalty.

Meanwhile, Lego gains access to a rapidly expanding global fan base, further solidifying its position as a leader in the toy industry.

With the partnership set to officially kick off in 2024, both brands are poised to benefit significantly from this synergy.

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US President-elect Donald Trump’s fondness for tariffs may lead to American consumers bearing the brunt of high costs once again. 

Trump’s victory in the 2024 US presidential election has made it clear that the Republican is likely to increase tariffs on all imported goods to the country. 

Trump has already promised sweeping tariffs to bolster the US economy, protect American industries, promote manufacturing, and reduce reliance on foreign shipments. 

The President-elect has also said that he intended to implement 60% tariffs on Chinese goods and 10-20% on products from other countries. 

He argued that this is expected to create more factory jobs, shrink the federal deficit, and lower prices for American-made products by making foreign goods more expensive. 

However, tariffs imposed during the first Trump term – and continued and extended under Biden –  did not achieve all of the promised outcomes. 

“Furthermore, our research shows that if the new tariffs are fully passed on, they could increase inflation and cost American consumers up to $2,400 per capita annually,” ING Group’s analysts said. 

This potential increase in consumer costs and inflation could have widespread economic implications, particularly in an economy where consumer spending accounts for 70% of all activity.

Washing machine prices soared under Trump’s policies

In February 2018, a 20% tariff was imposed on all imported large residential washing machines. 

According to the Consumer Price Inflation report, there was no immediate impact for the first four months as retailers sold off their existing inventory that wasn’t subject to the tariff. 

However, consumer prices increased by 12% in the following months, according to ING Group.

“Since US manufacturers produce washing machines that are not subject to these tariffs, it appears that consumers bore more than 60% of the tariff cost on foreign-made appliances,” according to ING. 

“The remaining costs were absorbed by retailers’ profit margins or through price reductions by foreign producers,” the analysts said. 

Over time, prices gradually decreased again as consumers began substituting domestically made washing machines and foreign manufacturers likely agreed to further price cuts.

Tariffs on Chinese goods boosted US customs revenue but led to higher prices

The trade war between the US and China under Trump’s previous presidency led to both sides imposing additional tariffs on hundreds of billions of dollars worth of goods. 

The Tax Foundation recently estimated that the Trump-Biden tariffs that we have seen so far – as President Biden kept most of the Trump administration’s tariffs in place – are equal to an average annual tax increase on US households of $200 to $300 per year based on actual revenue collections data. 

Customs duties revenues have risen sharply since the implementation of additional tariffs. 

This significant rise in revenue is largely due to the tariffs imposed on Chinese goods, which boosted customs duties by around 0.2% of GDP from 2020 through 2022, according to the Congressional Budget Office. 

Analysts at ING Group said despite a rise in customs revenues, this revenue is actually paid for by the importing country or the consumer. 

This means a lower profit margin for the importing country and higher prices for the consumers. 

The analysts said:

Although customs duties contribute to the federal budget and are thus transferred back to households via public services or infrastructure developments, they do work as a tax, increase consumer prices overall and can lead to higher inequality and less consumer choice.

The White House, however, pointed out recently that even with Trump’s new tariff proposals, it is mathematically unlikely that these would replace revenue raised by other sources. 

“Shifts in consumer behavior are indeed one of the reasons why increasing tariffs cannot become a primary source of government revenue,” the analysts added. 

Tariffs act as taxes on consumers

With increased tariffs on imported goods imminent when Trump takes office at the White House again, disposable income may shrink. 

Last year, the US imported goods worth $3.1 trillion, with $427 billion coming from China. 

“Applying a 60% tariff on these Chinese imports, and a 10-20% tariff rate on the rest of the world, would mean custom duty revenues in the range of $523bn to $790bn – assuming no change in consumer behavior,” ING analysts said. 

The disposable personal income in the US in 2023 was $20.547 trillion, which would mean the proposed tariff increase could represent 2.5%-3.9% of the income if fully passed on to the consumers, according to ING Group.  

The agency’s calculations showed that this would represent $1,500-$2,400 per capita income. 

“This is significant in an economy where consumer spending accounts for 70% of all activity,” ING Group said. 

The analysts noted:

The increase in the cost of goods, coupled with potential supply-side constraints in the labour market as a result of Trump’s proposed immigration policies, could also lead to a one percentage point increase in inflation, in our view.

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