All posts by Amelia Jacobs

About Amelia Jacobs

Amelia Jacobs began her career in business following a surprisingly successful trip to China. Having visited the region as a tourist, she returned to America as an import-exporter. Today, Jacobs runs a thriving import-export company, splitting her time between Chicago and Shanghai. Contact Amelia at amelia[at]businessdistrict.com

Tesla CEO Wants Direct Sales Model to Help His Electric Car Company Grow

CEO Elon Musk of Tesla Motors
CEO Elon Musk of Tesla Motors

Saying that the traditional model for car sales and distribution in America is hindering his company’s ability to grow, Elon Musk, chief executive of the electric car manufacturer Tesla Motors Inc, addressed his firm’s annual meeting this week.

“The auto dealers association is definitely creating some problems for us, making it harder to get things done,” Musk said.

Tesla was launched ten years ago and has been steadily gaining momentum as they posted a quarterly profit for the first time in their history last month. Other good news came when their Model S electric sedan received an almost perfect rating from the popular and influential Consumer Reports magazine.

These pieces of good tidings helped Tesla’s shares to triple in value during the past year. At the meeting, which took place in Mountain View, California, Musk said that he expected the company’s gross margins to come close to those of the famous sports-car maker Porsche AG, “over time.”

But Musk insists that Tesla needs to break away from the independent car dealer model in order to boost sales. He would like to see his company conducting direct sales to consumers, eliminating the middleman dealerships. Tesla is hoping to see 50 stores selling his cars this coming year, up from 34 which existed at the end of last quarter.

Musk pointed to the fact that consumers have shown support for the direct-to-consumer sales model as a reason to push for such a practice. He also said that the dealer model for selling cars, which has been practiced in the US for almost 100 years, has been a failure for other start-ups in the car industry, such as Fisker Automotive and Coda Holdings. Coda was forced to file for bankruptcy protection last month.

“It didn’t work for Fisker, didn’t work for Coda. In the last 90 years, when did it work?”

Musk said at the meeting, which was also broadcast online. “We have to do this directly.”

IRS Apologizes for Singling Out Right-Wing Groups

Caught Picking on Right-Wing Groups
Caught Picking on Right-Wing Groups

Proving once again that even paranoids can have enemies, the Internal Revenue Service of the United States was caught, and has already apologized for, singling out right-wing groups for extra scrutiny of their tax-exempt status during the 2012 election.

Lois Lerner, the head of the IRS section that overseas tax-exempt organizations, admitted that groups using the words “tea party” or “patriot” on their applications for tax-exempt status were flagged for extra careful checking. In a few instances the groups were asked for their list of financial supporters which is an actual violation of IRS policy most of the time.

“That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review,” Lerner said at a conference sponsored by the American Bar Association. “The IRS would like to apologize for that,” she added.

No Plans for New Hyundai Plant in US Says Chairman

Chairman of Hyundai Chung Mong-koo
Chairman of Hyundai Chung Mong-koo

Dousing speculation that Hyundai Motor Group was planning on opening a new production plant in the US, Chairman of the world’s fifth largest car manufacturer, Chung Mong-koo announced that Hyundai had no such plans.

“We have no plan (for a new U.S. factory) for now,” the 75-year-old told reporters at Seoul’s Gimpo airport before leaving for the United States.

It is believed that Chung will be visiting already existing production facilities for Hyundai in Alabama and Georgia while he is in the US. Chung has decided not to embark on any major expansion, but he did say last week that Hyundai “will look into whether there are opportunities” to expand production overseas. This statement spurred the  talk among industry experts that Chung was considering building a new factory in the US.

A second senior executive at Hyundai Motor Group, which is the parent company of Hyundai Motor Company and Kia Motors, Kim Yong-hwan, also stated that the company is not seriously considering new plant construction in the US at this time.

“We are closely watching the U.S. market situation … but we are not having an in-depth consideration of a new plant there,” he told Reuters.

Sammy Kayello Named New Chief of MENA for Morgan Stanley

Investment banking company Morgan Stanley has appointed Sammy Kayello to be the new chairman and chief executive of the Middle East and North Africa division of their business. Kayello replaces Kamal Jabre, who will be moving to the London branch of Morgan Stanley as a senior investment banker.

Kayello is a 25-year Morgan Stanley veteran. He led the investment bank’s sales and trading operations in MENA and has made his headquarters in Dubai since 2006.

Jabre’s immediate boss in London will be Franck Petitgas, who is the global co-head of investment banking. The other head of the investment banking team for Morgan Stanley’s London office is Mark Eichorn.

“He (Jabre) is inheriting a bigger business and a wider region in the new role, so this is effectively a promotion for him,” said an unnamed source.

European Markets Respond to Good News and Rising Dow Jones Index

Stock markets in Europe soared to the highest they have been since the infamous financial crisis of 2008 on Wednesday. Pushing up the trading was good news from the US economy and the anticipation of additional support for growth and expansion from key central banks.

The outcome of the meetings scheduled this week is for the European Central Bank, the Bank of England, and the Bank of Japan to all agree to adhere to the simple-to-follow monetary policies. This was decided when the US Federal Reserve assured the banks that the US stimulus policy will remain in place.

This situation combined with optimistic economic statistics sent the New York market’s Dow Jones Industrial Index to an historic high on Tuesday. In response the European markets joined in an upward direction the next day.

"It's panic buying," said Nick Xanders, who heads up European equity strategy at BTIG. "At this stage everyone wants to buy it, everyone wants to get involved, and everyone is scared of underperforming."