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Toyota CEO doubles down on EV strategy amid criticism it’s not moving fast enough

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A Toyota bZ4X on display at the New York Auto Show, April 13, 2022.

Scott Mlyn | CNBC

LAS VEGAS – Toyota Motor is standing by its electric vehicle strategy, including hybrids like the Prius, following criticism by some investors and environmentalist groups that the company is transitioning too slowly to EVs.

Toyota CEO Akio Toyoda, who has built a corporate strategy around the idea that EVs aren’t the only solution for automakers to reach carbon neutrality, said Thursday the company will move forward with plans to offer an array of so-called electrified vehicles for the foreseeable future – ranging from hybrids and plug-ins to all-electric and hydrogen electric vehicles.

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“Everything is going to be up to the customers to decide,” he said through a translator during a small media roundtable, a day after addressing the company’s Toyota dealers at their annual conference in Las Vegas.

Toyoda addressed the need to convince skeptics of the company’s strategy, including government officials focusing regulations on all-electric battery vehicles, saying the automaker will “present the hard facts” about consumer adoption and the entire environmental impact of producing EVs compared with hybrid electrified vehicles.

Since the Prius launched in 1997, Toyota says it has sold more than 20 million electrified vehicles worldwide. The company says those sales have avoided 160 million tons of CO2 emissions, which is the equivalent to the impact of 5.5 million all-electric battery vehicles.

Toyoda’s remarks echoed comments he made to thousands of Toyota dealers and employees on Wednesday, saying the company will play “with all the cards in the deck” and offer a wide-array of vehicles for all customers.

Read more about electric vehicles from CNBC Pro

“That’s our strategy and we’re sticking to it,” Toyoda, who has described himself as a “car guy or car nerd,” said in a recording of the remarks shown to reporters.

Toyoda doubled down on company expectations that all-electric vehicle adoption will “take longer to become mainstream” than many think. He said it will be “difficult” to fulfill recent regulations that call for banning traditional vehicles with internal combustion engines by 2035, like California and New York have said they will adopt.

Toyota executives, while increasing investments in all-electric vehicles, have argued such cars and trucks are one solution, not the solution, to meet tightening global emissions standards and achieve carbon neutrality. Toyota continues to invest in alternative solutions as well as hybrid vehicles such as the Prius, which combine EV technology with traditional internal combustion engines.

Toyota is in the best position to catch up with Tesla, says analyst

The company has said its strategy is justified, as not all areas of the world will adopt EVs at the same pace due to the high cost of the vehicles as well as a lack of infrastructure.

Toyota’s strategy has been criticized by environmental groups such as the Sierra Club and Greenpeace, which has ranked the Japanese automaker at the bottom of its auto-industry decarbonization ranking the past two years.

Toyota plans to invest roughly $70 billion in electrified vehicles, including $35 billion in all-electric battery technologies over the nine years. It plans to offer about 70 electrified models globally by 2025.

Toyota plans to sell about 3.5 million all-electric vehicles annually by 2030, which would only be around a third of its current annual sales.

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House approves tentative labor deal to avoid rail strike, sends to Senate

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A rail employee works a Union Pacific Intermodal Terminal rail yard on November 21, 2022 in Los Angeles, California.

Mario Tama | Getty Images

The House passed legislation Wednesday that would force a tentative rail labor agreement and thwart a national strike. The bill now goes to the Senate, where Majority Leader Chuck Schumer, D-N.Y., has promised swift passage.

The House voted 290 to 137 — with 79 Republicans joining 211 Democrats — to pass the legislation, which approves new contracts providing railroad workers with 24% pay increases over five years from 2020 through 2024, immediate payouts averaging $11,000 upon ratification, and an extra paid day off.

Eight Democrats and 129 Republicans voted against the legislation. 

In a separate 221 to 207 vote, the House also approved a resolution to provide seven days of paid sick leave in the contract instead of one, which is rail workers’ main disagreement with the current deal. As it stands rail workers don’t have guaranteed paid sick leave.

The vote comes after President Joe Biden called on Congress to intervene in the stalled talks between railroads and some of the industry’s major unions. He met with the four House and Senate leaders Tuesday in an effort to avoid the economic impacts of a rail strike, which the industry forecasts could cost the U.S. economy $2 billion per day.

How a rail strike could interrupt parcel delivery services

Biden has said he’s reluctant to override the vote against the contract by some unions but that a rail shutdown would “devastate” the economy.

“This overwhelming bipartisan vote in the House of Representatives makes clear that Democrats and Republicans agree that a rail shutdown would be devastating to our economy and families across the country. The Senate must now act urgently,” Biden said in a statement.

Railways and their labor unions had until Dec. 9 to reach an agreement before workers promised to strike.

In a statement Tuesday, the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters said passing legislation to enforce an agreement denies them the right to strike and will not fix the problems or concerns of railroad workers.

The union said it was calling on Biden and any member of Congress who “truly supports the working class to act swiftly by passing any sort of reforms and regulations that will provide paid sick leave for all Railroad Workers.”

According to the Association of American Railroads, an industry group, a presidential board created to help resolve contract talks reviewed the union’s request for additional paid sick days and instead offered additional salary.

“If the unions are interested in a holistic discussion for structural changes as it relates to their sick time, I think absolutely the railroad carriers would be up for a holistic discussion, but [they] have not done it in the zero hour,” AAR President and CEO Ian Jefferies said at a press conference on rail preparations.

Each union has its own sick day policy, according to National Railway Labor Conference, or NRLC. If an employee is sick, they need to be out of work between four and seven days before they collect their version of sick pay.

The tentative labor deal grants workers one additional personal day, for a total of three personal days for railroad workers. A worker must provide 48 hours notice to request a personal day. The measure approved by the House Wednesday would add paid sick leave to the agreement.

Sen. Bernie Sanders, I-Vt., said on social media before the vote that the tentative agreement did not go far enough.

Strike prep curtails trade

Even the threat of a strike can have impacts on rail movement.

According to federal safety measures, railroad carriers begin prepping for a strike seven days before the strike date. The carriers start to prioritize the securing and movement of sensitive materials such as chlorine for drinking water and hazardous materials.

Ninety-six hours before a strike date, chemicals are no longer transported. According to the American Chemistry Council, railroad industry data shows a drop of 1,975 carloads of chemical shipments during the week of Sept. 10 when the railroads stopped accepting shipments due to the previous threat of a rail strike.

Corey Rosenbusch, president and CEO of The Fertilizer Institute, said railroad carriers have told their members that ammonia shipments, a critical component for fertilizer companies, would not be allowed on the rail starting Dec. 4 if a labor agreement isn’t reached.

“It traditionally takes five to seven days for the supply chain to catch up when you have a shutdown,” said Rosenbusch. “Fertilizer manufacturing would have to be curtailed.”

The four major railroads typically move more than 80% of the agricultural freight traffic, according to the National Grain and Feed Association.

“We are looking for alternatives now to position our product,” said Mike Seyfert, the association’s president and CEO. “We have zero elasticity right now. There are zero drivers, and the barge situation with the low water levels has only added to this challenge.”

Collective bargaining’s future

Brendan Branon, NRLC chair, told CNBC that Congress, in voting on the labor deal, is also weighing in on the future of collective bargaining. He urged Congress to follow the recommendations of the Presidential Emergency Board, which Biden created in July to resolve the ongoing dispute between major freight rail carriers and unions.

The board crafts its recommendations under a principle known as pattern bargaining, which is the process used by trade unions and employers where demands and entitlements are made.

“Pattern bargaining promotes stability in collective bargaining, and it encourages settlement,” Branon said. “There’s any number of arbitrators and PEBs who have recognized that this is not only acceptable, this is the most appropriate form to settle complex negotiations, especially multi-employer, multi-craft agreements.”

Branon said a number of industries including the railroads have developed a set of clear practices in bargaining, and the additional negotiating by the unions after the tentative agreement departs from the framework recommended by the PEB.

“Departing from a pattern would establish a precedent that there’s still a better outcome achievable, and I think it would pose significant stress and risk for collective bargaining in the future for the railroad industry,” he said.

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Airbnb launches platform allowing renters to host apartments, partnering with major landlords

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Airbnb introduces Airbnb-friendly apartments

Airbnb is partnering with several major landlords and management companies to list designated apartment buildings where renters are allowed to offer short-term sublets on the site.

The company said Wednesday that a new page on its website will list so-called Airbnb-friendly buildings, which will give tenants the option to host their apartments just as homeowners can.

Typically, rental buildings prohibit tenants from subletting for short stays.

To start, Airbnb is showcasing 175 apartment buildings in more than 25 major markets, including Los Angeles, San Francisco, Atlanta, Dallas, Houston, Denver, Seattle and Phoenix. Some cities, such as New York City and Washington, D.C., are not available due to local restrictions on short-term rentals.

The platform will help tenants host their rentals, and help the buildings attract tenants who may want to host. How much tenants could earn will vary.

“It depends on the building, depends on the location, there are a lot of different assumptions,” Nathan Blecharczyk, co-founder of Airbnb.

Given how much apartment rents have climbed over the past few years, along with home prices and other rising prices, tenants are increasingly looking for ways to supplement their incomes to make their monthly payments. Rents are starting to ease, but are still up 10% from a year ago, according to Apartment List.

Last year, rents rose more than 15% from the year before.

The new page on Airbnb’s website will also offer a calculator to show how much money the tenant can potentially make per month. The calculation changes depending on the number of bedrooms and the number of nights each building allows, as well as the potential asking rents, given the building’s amenities.

Apartment buildings can also charge the primary tenant a fee of up to 20% of the price of each Airbnb use. For those buildings that have been in test mode so far, Airbnb said tenants have hosted an average of nine nights per month with an average income of $900 per month.

All hosts in the participating buildings must be the primary resident, and the buildings can restrict how many nights per month the apartment can be sublet. That’s generally between 80 and 120 nights per year. The restrictions, which can be enforced since the transactions all take place on the portal, are intended to prevent investors from taking part and subletting the apartments full-time.

The apartment building owner or management company also have the right to review the listings before they go live and deactivate a listing if it does not comply with the building’s standards. They can also mandate a government ID from all potential subletters.

Equity Residential and UDR, which are apartment real estate investment trusts, or REITs, and Greystar, the largest apartment management company in the U.S.,  are among the major names offering apartments with hosting privileges on the new Airbnb platform.

“We believe this platform will provide the right tools for both owners and residents to effectively manage short-term rental activity without impacting overall housing supply,” a Greystar representative said.  “We are collaborating with Airbnb on this innovative approach to participate in the 21st century sharing economy in a thoughtful way.”  

CNBC producer Lisa Rizzolo contributed to this story.

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Disney is the biggest winner — and loser — at the Thanksgiving box office

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Geber86 | Getty Images

This year’s Thanksgiving box office was both feast and famine for Walt Disney.

While “Black Panther: Wakanda Forever” added $64 million to its domestic tally during the five-day time frame, Disney’s latest animated feature “Strange World” failed to lure in moviegoers, generating just $18.6 million between Wednesday and Sunday and a dismal $11.9 million for the traditional three-day opening.

That is the worst three-day opening for a Disney animated feature since 2000’s “The Emperor’s New Groove,” which brought in just under $10 million during its debut, according to data from Comscore.

The dichotomous weekend comes as CEO Bob Iger returns to the helm of the company, promising to restructure Disney in a way that puts creativity at the forefront. Iger is expected to expand on these plans during a company town hall on Monday.

The week of Thanksgiving is typically a robust time at the box office. In the last decade, not counting 2020 and 2021, the five-day Thanksgiving spread — consisting of the Wednesday before Thanksgiving through Sunday — has resulted in more than $250 million in ticket sales each year. 

This year, the domestic Thanksgiving box office tallied around $121 million. “Black Panther: Wakanda Forever” led the pack, with “Strange World” taking second place. All other films, including Sony’s “Devotion,” Disney and Searchlight’s “The Menu,” Warner Bros.‘ “Black Adam” and Universal’s “The Fabelmans” tallied less than $10 million each.

Not in the mix is Netflix’s “Glass Onion.” The streamer declined to share box office receipts for the latest Rian Johnson film, although it is believed to have tallied between $13 million and $15 million during the five-day stretch.

While “Strange World” outperformed a number of other films this weekend, its muted opening raises concerns about Disney’s animation strategy and if Iger can right the ship.

Disney’s previous CEO Bob Chapek, who took over for Iger just as the pandemic was starting in early 2020, made a series of decisions that alienated the company’s creative leaders in the wake of movie theater closures.

To start, he reorganized the company to funnel creative decisions through a single executive, rather than with each studio, taking power away from the people who were responsible for Disney’s biggest blockbusters.

Chapek then opted to have a number of Pixar and Disney Animation films released directly on the company’s streaming service instead of in theaters. This was in part because, at the time, children weren’t vaccinated and families were avoiding theaters, but also to try and bolster Disney+’s library with new content.

These decisions have led to a lot of confusion for audiences when animated Disney films have been released theatrically. Either these moviegoers are unaware the film is being put into the market or they think it is coming to Disney’s streaming platform.

This happened when Disney released “Lightyear” in cinemas in June. While the two previous Toy Story franchise films each opened to more than $100 million domestically, “Lightyear” snared just $50 million in ticket sales during its debut.

Disney Animation’s “Strange World” follows the Clades, a family of explorers whose differences threaten to topple their latest — and by far — most crucial mission.
Disney

Compounding this strategic decision is the fact that family films have been sparse at the box office in the wake of the pandemic. This means there are fewer opportunities for studios to market film trailers to their designated audience in cinemas and must rely more heavily on television and digital ads.

“No question a slow overall marketplace and a lack of awareness building horsepower for ‘Strange World’ hurt its potential to follow in the tradition of the long line of Disney animated hits over this very important holiday weekend in theaters,” said Paul Dergarabedian, senior media analyst at Comscore.

The Thanksgiving box office crown has long been held by Disney and its animated features, with films like “Frozen II,” “Coco,” “Moana,” and “Ralph Breaks the Internet” leading the pack in the last decade.

Even “Encanto,” which was released during the Thanksgiving frame last year, managed to generate more than $27 million during its three-day opening and more than $40 million across the full five-day holiday weekend.

Perhaps, “Strange World” will follow a similar path as “Encanto” and gain more attention from families once it is added to Disney+.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “The Fabelmans.”

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