Episode 544: Neal and Kyle discuss 2 EV makers going in opposite directions as BYD claims it can charge as fast as 5mins while Tesla continues to struggle. Then, Trump’s executive order to dismantle the Department of Education leaves student loans in the air. Plus, the Boston Celtics sold for $6.1B, making it the biggest sale of a team in US history. Meanwhile, Disney’s remake of ‘Snow White’ comes to theaters, but not without a ton of baggage. Finally, this year’s list of the world’s happiest countries…and no surprise that No. 1 is a Nordic country. 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. Learn more at sophos.com Get your MBD mug here: https://shop.morningbrew.com/products/morning-brew-daily-mug 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 record-breaking sale did the Boston Celtics achieve?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Kyle Hagee. Today, an NBA franchise set the record for the most expensive sale in pro sports history.
And the U.S. hits its lowest ranking ever in the World Happiness Report. It's Friday, March 21st. Let's ride. Let's ride.
Kyle's here. Manu Ginobili, sixth man of the year, is back to fill in for Toby today. Kyle, how are you feeling this Friday?
I'm feeling great. It's good to be back in the Manu Ginobili spot.
So ever since buy now, pay later, giant Klarna filed for an IPO last week. It's been inking partnerships left and right. And its latest move yesterday raised a lot of eyebrows and led to a lot of jokes. It made a deal with DoorDash to put its payments tech into the delivery app.
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Chapter 2: How is Klarna changing the way we pay for food delivery?
So now you will be able to pay for your DoorDash burrito or Pad Thai in four equal interest-free installments or even defer payments until what Klarna calls a more convenient time. Kyle, are you on board with eat now, pay later?
I think I'm on board. I feel like I'm doing something wrong. My Grubhub orders, my DoorDash orders, they've never been that big. Like, should I be ordering more stuff? And I need to be hitting like triple digits here.
no that's not i don't think that's the wild here it's just to establish clarna as the go i mean yes this is the business strategy behind it to establish clarna as sort of the go-to payments portal that you go to whenever you buy anything doesn't matter the size but obviously the size of uh the order of what you typically do on doordash is not that big which led to you know a huge social media uh joke fest around this news yesterday
I'm going for over $100 on Taco Bell later today.
All right. Before we jump into the show, a quick word from our sponsor, Sophos. Kyle, I have a question for you. Do you ever feel stretched a little too thin?
The days where I wake up early with the Morning Brew Daily crew are certainly longer than others.
I hear that. Well, whenever you need a little extra backup, Sophos is there. They make sure your cybersecurity is locked up tight.
Now that you mention it, I do remember you and Toby talking about the importance of defense and offense yesterday.
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Chapter 3: Why is BYD outpacing Tesla in the EV market?
market as long as the IRA, the Inflation Reduction Act, is maintained, referring to Biden-era legislation, which excluded electrical vehicle tax credits to Chinese car companies. And so you don't see a lot of BYDs in the U.S. because of the trade. Any. Yeah. Any because of the trade regulations. However, they are taking over the world.
And so that will be really interesting to see how it plays out with tariffs and trade uncertainty only increasing.
Right. So last year, the Biden administration, when he was president, implemented 100 percent tariffs on Chinese electric vehicles to protect Americans. The Detroit automakers, Canada also has 100 percent tariffs. The EU has about 18, 19 percent tariffs on BYD and other Chinese electric vehicle makers to protect the domestic industries. But still, BYD is becoming an export powerhouse.
It already has 15 percent market share in China, which is the world's largest market for EVs. but it has absolutely expanded its reach to developing markets, and it's going toe-to-toe with these other automakers in places like South Africa, Turkey, Chile, South America. In South Africa, China made vehicles accounted for nearly 10% of sales last year, which is five times the volume sold in 2019.
Go to Turkey, Chinese brands claimed an 8% share in the first six months of 2024. That's up from basically zero in 2022. So you're seeing a global turf war being fought between really cheap and high quality Chinese cars, which it was crazy because they could not they were not an export powerhouse at all. This is Germany and the United States domain and South Korea and Japan.
But they are running that playbook and we'll see whether they come to the United States shores. But it is unlikely, given that there are 100 percent tariffs on BYD and other Chinese EVs to protect the local industry.
Yeah, you're spot on. I mean, those stats you read a lot. China sends more vehicles abroad than any other country. Its passenger car exports surged nearly 20% to 4.9 million in 2024 alone. And so I think we're seeing global influence of China. through car exportation only increase. And it'll be really interesting to see how that plays out.
The other thing is, going back to the technology, the self-driving technology that BYD has and is enabling everyone who buys a BYD car to get is also putting pressure on Tesla, where you actually have to pay for that feature.
Right, so in China where Tesla and BYD are going at it on the roads, Tesla charges you $8,800 to buy driver assistance features. BYD offers that for free. A number of other Chinese EV makers also offer driver assistance. for free.
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Chapter 4: What challenges is Tesla currently facing?
Taking a look at the stuff that's adjacent to the loans, like a public service loan forgiveness. So once you have a loan, how does the government help you pay that back? It gives people that work in public service and nurse a firefighter the opportunity for their loans to go away after they've made payments for 10 years. It's like unclear what is going to happen to that program. There's a lot of
questions still here on the kind of domino effects that this decision will have.
Conservatives have been criticizing the education department since 1980 and think that states and local governments should oversee education and student loans more broadly. But when we're talking student loans specifically, if you want to move the the portfolio of $1.6 trillion somewhere from the education department.
The question is, which new department oversees it and what expertise or skills do they have as banking managers to disperse loans and collect that revenue and all that stuff? Well, Uh, one, uh, one place where they could go ultimately is the treasury department. Some advocates of this move say that the treasury department is, you know, has the banking expertise.
It has the know how to be able to administer such a cumbersome and massive program. Trump has also floated the small business administration and some even on the more extreme level would say we should privatize everything about the student loan process. That would be a sea change. Ninety-two percent of student loans are from the public sphere currently.
So the main thrust might be that it moves to the Treasury Department if the education department is totally wound down. Critics of moving into the Treasury Department say like this will be messy and we have a lot of things tied up in student loans right now. We should not be able to we should not be moving this huge chunk of loans from one department to the next.
We don't know what could get caught in the middle. They acknowledge that maybe this process, the student loan, the student loan apparatus as managed by the education department isn't the best. You know, they acknowledge there are certain mistakes, but moving it wholesale from one agency to the next would be a mistake.
You mentioned that it would likely take an act of Congress to officially wind this down. The House actually considered an amendment to close the agency in 2023. Sixty Republicans joined with Democrats in opposing it. So it's even unclear if Congress has the appetite for this. However, there's been agencies in the past that were phased out.
The Interstate Commerce Commission and the Civil Aeronautics Board were two of them. And then additionally, no cabinet level department has been abolished outright since the U.S. Postal Service replaced the post office department nearly a half century ago. Some precedent, but not a whole lot of precedent for doing something like this.
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Chapter 5: What are the implications of Trump's executive order on the Department of Education?
He grew up on the North Shore of Massachusetts as he's Huge Celtics fan, went to Dartmouth, so he's a New England guy. He went to the West Coast to make his fortune and is coming back to buy the Celtics and is paying a lot to do so. But there's a lot to like about buying a sports franchise now because of what you said. Valuations are booming. There's huge TV rights deals coming.
And this also sets the stage for NBA expansion.
Yes, that is a really interesting angle. And because of these increased valuations, the fee that would be dispersed to all the teams for allowing another team to enter the league would increase. And just the competition for buying a franchise is really, really heating up. Steve Pegliacua, who's a minority owner of the Celtics or was. actually put together a group to try to buy it.
He was like, we got the best people. We have the best technology. We would not have any debt financing. And he was rejected for another offer. So people really want to buy franchises. They're the things that even sometimes a billionaire can't buy outright. There's also a sports angle here, which is the team is quite good.
And their roster is very expensive, and so they're getting into luxury tax bill territory. And so it's still unclear just how much this new ownership group will be willing to put money into it or pay these luxury taxes. Although he did say, quote, I bleed green, I love the Celtics, and it's all about winning. So we'll see if Bill is ready to foot the bill.
We'll see whether he's ready to foot the bill because this team is going to cost $400 million in payroll and taxes coming up. Yeah. Jason Tatum, Jalen Brown, they're probably staying, but who knows about the rest of this team?
Yeah. Something to watch going forward. Let's move on to our next story. The new Disney remake of Snow White comes out today and it's, So here's the details, Neil. First, just some bad luck. COVID cases flare up in London just as production gets underway, forcing Disney to increase safety protocols, which starts to bloat the budget. Then one of the sets catches fire and has to be redone.
and the 2023 actor strike and complication from Gal Gadot, who plays the evil queen. Her pregnancy forced Disney to halt reshoots, do visual effects over again. Then, just on top of bad luck, people think Disney made a lot of unforced errors during the production of this movie. The star of the movie, Rachel Zegler, made some comments that
People implied throwing shade at the OG Snow White movie, so some fans were put off by those. In addition, many thought Disney flubbed this response to some leaked images that came out from the movie, which had people concerned that they actually just scrubbed the dwarves entirely from the movie.
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Chapter 6: How might student loans be impacted by the dismantling of the Department of Education?
We'll find out this weekend. I mean, Disney has done this series of live action remakes, Little Mermaid, Lion King, Mufasa, Aladdin, Beauty and the Beast. They have Lilo and Stitch and Moana coming up where they take their old animated movies. And in terms of and make them into live-action, very weird-looking remakes, but I guess people watch them.
But Snow White is very interesting IP because it came out in 1937, a long, long time ago, a lot longer than some of these other live-action remakes. So if you are trying to get kids excited about certain princesses and getting them to come to your theme parks and just be involved with this particular IP,
Snow White might not be on their radar, so this is a big deal for Disney to get Snow White back on the forefront of people's minds so they can get that Disney flywheel going. You see the movie, then you go to the parks, then you buy the toys, etc., etc., then you watch the show on Disney+. So this is very important for Disney to get Snow White back on the forefront of kids' radars.
Yeah, I think you hit the nail on the head, and there was actually these rumors that they might kick it to streaming, like, oh, this is not going to perform well, let's just put it on Disney+. The budget had risen to $270 million, and Disney would have had to absorb those costs, and Disney has made this whole point of making their streaming much more profitable.
So to the big screen, it's going to go, based on ticket pre-sales and some surveys of moviegoers, Snow White, it's expected to collect between $45 million and $50 million at domestic theaters over the weekend, again, according to box office analysts. And so that's a decent number.
But in the 15 years that the company has been producing them, none of these like big budget entries have exclusively arrived in theaters to less than $58 million. So this would actually be kind of a down round for Disney if it does hit those numbers as projected.
These live-action remakes do generally really well at the box office. Last year, Mufasa, the Lion King film, which you didn't even know existed, made over $713 million globally. Beauty and the Beast back in 2017 opened to $175 million domestically. So these are huge potentials. potentially huge movies. And, you know, we'll be back on Monday with an update on how this did at the box office.
Despite all of the controversies, reviewers said this was one of the better remakes of them all.
Yeah, and David A. Gross, a box office analyst, actually said, never doubt the babysitter effect, which is if you're babysitting kids and you need to entertain a six-year-old, you take him to the movies. Probably why I'd never heard of Mufasa, yet it did 700 million. So the babysitter effect might save Disney here.
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