Morning Brew Daily
Apple Unveils Budget-Friendly iPhone & Congestion Pricing Gets Axed?
Thu, 20 Feb 2025
Episode 523: Neal and Toby discuss President Trump’s order to shut down NYC’s congestion pricing program, proclaiming himself as the savior of the working class in Manhattan. Then, Apple announces its newest budget-friendly iPhone 16e, powered by a homegrown chip. Also, EV maker Nikola files Chapter 11 bankruptcy, marking a continuous downfall of a once-favored Wall Street startup. Plus, Neal shares his favorite numbers from DOGE, fire truck companies, and a Chinese box office smash. Lastly, a run through of headlines you need to know. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Go to LinkedIn.com/MBD Terms and conditions apply. Only on LinkedIn ads. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Check out https://linkedin.com/MBD for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is President Trump's stance on NYC's congestion pricing?
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Long live the king. That's what President Trump declared when he announced that he was killing congestion pricing in New York City. Yesterday, his transportation department rescinded its approval of the city's new tolling system, which would bar New York's Metropolitan Transportation Authority from collecting tolls.
Transportation Secretary Sean Duffy called the plan a slap in the face to working class Americans and small business owners, echoing critics who called it a tax on drivers. It's been about a month and a half since New York's first of its kind congestion pricing plan went into effect, which charges most vehicles $9 to enter the core of Manhattan at peak times.
The goal was to clean up the air, reduce car traffic in busy areas and fund $15 billion worth of transit projects. And so far it seemed to have been working. Drivers are saving about 20 to 30 minutes traveling into central Manhattan, while about 1.2 million fewer vehicles entered the area in January compared to a year earlier.
But unlike the newsies, Trump may have been too quick to declare himself king of New York. In a lawsuit against the Transportation Department, the MTA argued that the federal government does not have the authority to unilaterally kill congestion pricing and pledged to continue collecting tolls until a judge told it not to.
In a statement, New York Kathy Hochul said, We are a nation of laws, not ruled by a king. We'll see you in court.
This has a long way to go before we have an outcome on either side, but let's dive deeper into the numbers on if it was working or not. In the first week of February, traffic inside the toll zone dropped about 10% compared to the same time last year. There was, on average, about 50,000 less vehicles entering, according to the MTA, so that is a big check in its corner. Also, foot traffic, which is
is a good measure that businesses want to see to make sure that they're still getting enough people to come frequent their shops. That has improved since the tolls took effect as well. Through the end of January, 35.8 million pedestrians entered that major business district in the tolling zone. That's about 5% more than the same period last year.
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Chapter 2: How is NYC's congestion pricing affecting traffic and businesses?
A lot of powerful people in New Jersey were not happy with this, which is why Trump kind of made it a campaign promise. This is him trying to execute on that campaign promise.
And This may be the stiffest legal challenge that congestion pricing has had, but it is certainly not the first. It was hit with lawsuit after lawsuit by New Jersey and others. It survived all of those legal challenges, and it went into effect on January 5th. After years and years and years of planning, the chair and chief executive of the MTA said, look, we've been sued— Everywhere.
We've been sued in every federal court and state court east of the Mississippi and we're batting 1000. We've won every single time. So we'll see how this this court fight plays out against perhaps the most powerful opponent of all the White House.
One real issue with this, though, is that this plan was supposed to, if congestion pricing goes away, it will really hurt the MTA because they were expecting $1 billion in extra revenue. They were going to use it to fund all these improvements to the subway system. And they've already started borrowing against future toll revenue. So if that gets taken away, it really throws the MTA into limbo.
It really puts their plans on, you know, giving a facelift to one of the most extensive transportation systems in a U.S. city, but also an aging transportation system. So I do think that they are watching nervously and saying, oh, no, we've already started cashing checks from this program. What happens if that income stream is taken away?
This is history, what we're witnessing, because first of all, this is the first congestion pricing plan that has been implemented by any United States city. It exists in London and Stockholm and Singapore and other places around the globe. But this was the first experiment that happened in the United States. So that was unprecedented.
And then what is also unprecedented is the reversal of such a large scale transportation project by the federal government. This hasn't happened before. If it sounds like a lot of whiplash, that's because you've never experienced something like this in U.S. history.
So the magnitude of what is going on is a really big deal because many other cities are watching New York to see whether they want to implement their own congestion pricing plans around the country. Now it moves to court for another drawn out legal battle.
Apple rolled out a budget-friendly new face to its lineup yesterday, the $599 iPhone 16E. It clocks in at $600 cheaper than Apple's most souped-up iPhone, but will run you $170 more than the iPhone SE it is replacing. What's the extra cash getting you? say goodbye to the old home button that somehow your mom's phone still has, and say hello to Face ID.
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Chapter 3: What are the legal challenges faced by NYC's congestion pricing plan?
Inside the 16E is Apple's first ever in-house cellular chip, which represents the culmination of a years-long effort by Apple to make more of its technology itself to save having to pay billions of dollars to suppliers like Qualcomm. This launch also signals Apple's intention to push into the lower end of the smartphone market, typically dominated by rivals like Google and Samsung.
So Neil, one little phone here, but a lot of implications.
Sure. I mean, Apple's iPhones are in a bit of a slump right now. Sales fell about one percent in the holiday quarter volume. The amount of actual phones that they're shipping is pretty stagnant. Everyone kind of has a phone. They're just upgrading. So at this point, it's selling about 230 million iPhones a year. And it's just that is a number that has not
that is not going to budge in the near future. So what they need to do is raise prices to get more revenue. So this is $170 more than the last iPhone SE version. It's still cheaper than its other models. But you're right, this is, I guess, the entry-level model to get people hooked on the... Apple ecosystem.
And then maybe once they're fed up with their SE, they'll upgrade to a Pro or a Max or whatever they call it these days. That is the hope to get people, especially in international markets, into the Apple world. And then they'll continue to pay for upgrades later on.
But let's talk about this in-house modem. This is sort of a test run for these chips that allow your phone to connect to cellular providers around the world. What they're doing is trying it out in this cheaper iPhone to see if they can roll it out to their entire suite. And the reason why they've been trying to do this is that
Apple's been very reliant on Qualcomm for most of its history, but Qualcomm charges them, one, money to make the chips, but then also, two, they have to pay a royalty of like $6 to $7 on every single iPhone that contains the chip. So over 230 million iPhones, that is billions of dollars we're talking about.
So Apple has been slowly chipping away at figuring out how to make this one critical component It's been a very long process. They hired a bunch of people from Intel's modem division. They hired some people from Qualcomm as well. It's a little contentious because they've been trying to keep Qualcomm happy while also trying to derive or take away a major source of revenue from it.
So this has been a project that's been ongoing. We've seen them do it with their actual chips that power the phone. Now they're trying to do it with their cellular chips as well.
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Chapter 4: What features does Apple's budget-friendly iPhone 16E offer?
This was a mess of a company. They were on their fourth CEO in as many years. They were losing hundreds of thousands of dollars on every truck they sold, which they weren't selling many trucks at all, even despite ramping up production. It was a symbol of the excesses of the SPAC boom that we had in 2021 and the EV boom that has faltered from both macro
conditions because higher interest rates, less demand for EVs than what was expected, but also missteps on the part of these individual companies that thinking that they could be the next Tesla and not realizing the capital that was required. And many EV companies have been accused of fraud and accounting shenanigans.
And clearly, this was a business model that didn't work for Nikola, but also many other EV startups in the space.
Yeah, there was almost two factors that sunk Nikola. One was Trevor Milton was literally defrauding investors by... I remember when this happened, when their video of this truck steaming down the highway, Hindenburg kind of said, we found out that they can't actually drive these trucks. These trucks don't work. They are literally using gravity and passing it off as self-powered trucks. So that...
was this whole separate issue. But then there's also just normal startup problems. They are saying its current CEO cited the fact that it's really hard to find hydrogen fuel cell parts because it's just not a big market. And they should have thought about that. I know, but I think these are things that they thought they could just build or the industry would grow alongside.
So yeah, some of it was just a miscalculation of that. All told, though, this was a money lighting on fire machine. It's lost $3.6 billion. billion in capital. It's just been literally setting money on fire, and it joins that graveyard.
I mean, the Fisker Motors of the world, the Lordstown Motors of the world, these companies that thought they were going to be Tesla and instead are just a cautionary tale.
There are a few walking dead EV startups. One of them is Rivian. Their share price is about a tenth of where it was in late 2021, but they produce Pretty well-regarded electric pickups and SUVs, so they're still kicking. And then Lucid Motors is another EV startup that is still around. It makes luxury electric cars and SUVs at the top end of the market.
If you look at their share price this morning, it's down 95% from their peak.
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Chapter 5: Why is Apple developing its own in-house cellular chip?
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Download the CFO's Guide to AI and Machine Learning for free at netsuite.com slash brew. That's netsuite.com slash brew. netsuite.com slash brew. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will turn you into the most insufferable know-it-all. For my first number, how much has Doge, the Department of Government Efficiency, saved American taxpayers?
It depends on who you ask. About a month into its effort to slash fraud and waste, Elon Musk's cost-cutting outfit says it saved $55 billion in federal spending. But look closer and things get a little more suspect. The Doge website itself only accounts for $16.6 billion of the $55 billion claimed to have been saved. And that $16 billion also comes with an asterisk because there is a major error.
Doge mislabeled a contract as costing $8 billion when in reality that contract cost $8 million. So when you do all the math, the total savings generated by Doge amount to about $8.6 billion, a fraction of what had been broadcast. So how'd the M and the B get screwed up?
In September 2022, D&G Support Services was awarded a contract to provide services for the Office of Diversity and Civil Rights within U.S. Immigration and Customs Enforcement, or ICE. The original value was listed at $8 billion, and it stayed that way for years. until last month when it was adjusted to the correct amount of $8 million.
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Chapter 6: What led to Nikola's bankruptcy and what does it signify?
They are, one, improving in quality, and two, showing that It reflects wider societal issues as well. This is a movie that is based on a 16th century story from a Chinese culture. And so audiences, domestic audiences are showing out in droves. One, just showing their national support for stories like this.
And then two, just showing that these movies are good movies and they do draw in audiences in droves at this point. It's coming to America, too. You looked at the Showtime to see it. It's pretty widely distributed within New York City, so we should give that a try.
Let's sprint to the finish with some final headlines. U.S. support for Ukraine in their war against Russia has never been more precarious. One day after President Trump blamed Ukraine for starting the war, when in fact Russia invaded Ukraine unprovoked, he laced into Ukraine's President Volodymyr Zelensky, calling him a dictator without elections and claimed he misused U.S. aid.
The anti-Zelensky rant on social media comes as the Trump administration is rapidly improving relations with Russia, holding high-level talks this week about resolving the war that sidelined Ukraine and European leaders. Critics blasted Trump for repeating what is essentially Russian propaganda.
Senate Minority Leader Chuck Schumer said it is disgusting to see an American president turn against one of our friends and openly side with a thug like Vladimir Putin.
You are seeing a widening gap between the U.S. and Ukraine. Obviously, the U.S. has been a huge backer of Ukraine's efforts against Russia, but Trump has said on the campaign trail and since he's taken office that he quickly wants to settle this war, but he's taken a turn to increasingly blaming Ukraine Ukraine and Zelensky personally, and spoken with Putin about ways to end it.
So we've entered into this balancing act where Zelensky does want to push back against these claims thrown his way without bad-mouthing its biggest backer while also trying to end the war. So it's a very precarious situation. While Apple was busy announcing a cheaper iPhone, Microsoft was cooking up an entirely new state of matter.
It unveiled a quantum computing chip yesterday that it says is powered by eight topological qubits, an exotic form of matter that is not based on a solid liquid or gas. The idea is for this new phase of physical existence to be harnessed to solve mathematical and scientific problems, eventually bringing quantum computing into the mainstream.
This marks two big quantum breakthroughs in just a few months. In December, Google unveiled its own quantum computer that needed just a few minutes to solve a calculation that would take most supercomputers 10 septillion years to finish. And many believe that Microsoft's new technology could leapfrog that chip. Neil, now many believe that instead of Decades.
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