One’s Built Ford Tough, the other’s a Volvo. And they’re both selling like hotcakes.

On Thursday, the US automaker said it will spend $3 billion to expand production of its popular combustion engine large trucks at a plant originally intended to be an all-electric vehicle hub. Volvo Cars, meanwhile, reported a record core operating profit thanks to rising sales of hybrid and electric cars (EVs). It’s like they say: You are what your brand says you are. America is as divided in cars as it is in politics, but at least both sides are thriving for now.

Reporting for Super Duty

Ford can’t make enough of its Super Duty trucks — a line of heavy-duty pickups that outsize the consumer-oriented F-150 and bring in big profits — at its Ohio and Kentucky plants. Hence the move to add the capacity to make 100,000 more per year at a suburban Toronto facility, at the expense of planned EV production. Ford CEO Jim Farley has bragged that the Super Duty line, which had 26,000 to 27,000 units produced per month from January to November in 2022, makes more revenue than some Fortune 500 companies, claiming its 2021 sales beat Southwest Airlines’ $15 billion. (Ford made $176 billion last year; Super Duty sales are not reported out in their own category.)

Sweden’s Volvo Cars, known for reliability and safety, are going for a different vibe than the muscle truck-making counterpart, but they’re side by side in the fast lane. The company reported a 28% year-over-year increase in core operating profit, for a record $776 million, as its global retail sales jumped 15% on the strength of its burgeoning electric vehicle business. Electric and hybrid models accounted for 48% of sales. Both companies, however, face their own unique electric dilemma:

• Farley recently said electric Super Duty trucks are “never going to make money,” unlike the F-150, which already has a battery electric model. The company remains focused on a promised $30,000 all-electric vehicle, though where it will be produced is up in the air.
• Volvo Cars is majority-owned by China’s Zhejiang Geely Holding, and warned that, if the European Union enacts proposed tariffs on Chinese EVs, sales of its China-made EX30 SUV could suffer. With the looming threat of sanctions, the company cut its 2024 retail sales growth target to 12% from at least 15%.

Chief Influencer: When Ford does reveal its $30,000 EV, no doubt Farley will have another totally chance encounter with a leading car-focused TikTok influencer to show it off.

Diamonds can withstand just about anything… except consumer apathy.

China has seen a long-lasting depression in its luxury spending, and this is piling yet another straw on the back of the beleaguered diamond market. Anglo American, parent company to diamond giant De Beers, announced on Thursday that it’s cutting back diamond production to try to hedge against China’s continued ambivalence toward the gemstones.

Diamonds in the Rough

The diamond market is already in a really rough patch, so much so that Anglo American is actually trying to sell De Beers (while simultaneously dodging an acquisition from rival mining company BHP). Market pressures already squeezing the industry include a post-pandemic consumer backlash: Lockdowns saw a spike in diamond sales, but once you’ve got a diamond, you rarely need to replace it, so production overtook demand as consumers emerged back into the sunlight. Plus, lab-grown diamonds have been steadily chomping away at natural gems’ market share.

Now to top it all off, an overall downturn in China’s luxury shopping seems to be lasting longer than expected:

• A range of luxury brands including Hugo Boss, Burberry, and Swatch have all cited a weaker-than-expected market in China in their earnings this week, Business Insider reported. Swatch said it expects the drought to last through the end of the year.
• The Financial Times reported on Monday that big-name luxury brands including Versace and Burberry are offering discounts of as much as 50% to Chinese shoppers in a bid to win them back.

Ty Wilson, COO and cofounder at online jeweler CustomMade, told The Daily Upside that even though China’s cooling has lasted uncomfortably long, it’s still ultimately a short-term squeeze on the diamond market. “If demand pressure is coming from consumers switching from natural to lab diamonds, that’s more of a long-term concern for natural diamond mining and cutting,” he said.

Semiconductor-precious stones: If diamonds are losing their sheen as a consumer good, their industrial uses in the tech industry may give them a new lease on life. A New Scientist article published Tuesday says diamond semiconductor parts could help lessen the enormous energy load generative AI is due to put on the power grid. Unfortunately, and perhaps unsurprisingly, it’s not super commercially viable to manufacture the diamond parts at the moment. “I am hopeful that we will see diamond semiconductor solutions in the grid around 2035 with increased effort, and at the latest by 2050,” one researcher told New Scientist.

So much for marriage.

Just two years after the mega-merger that brought Warner Bros. and Discovery together, it’s discussing dramatic plans to break the flailing empire up into different pieces, according to a Financial Times report. It may just be a tacit admission that bigger isn’t always better in today’s media landscape, despite company leaders long arguing otherwise.

Maxed Out

Oh how time flies. Just last week, CEO David Zaslav publicly pushed for deregulation so that media companies can “consolidate” in order “to be even better.” Now, it seems, the firm has flipped from buyer to seller. A note earlier this week from Bank of America analyst Jessica Reif Ehrlich arguing WBD’s “current composition as a consolidated public company is not working” may have been the kick in the pants it needed. Reif Ehrlich cut WBD’s price target from $14 per share to $12. WBD’s market cap has fallen by about one-third in the past year.

In a bid to boost its share price, the FT reports that company leaders have outlined a plan that would split the company in two — and create a game of debt-load hot potato:

• The plan would effectively silo WBD’s streaming service, Max, and its film studio in one company, while placing its lucrative but declining linear TV into another.
• The linear TV company would then assume most of the company’s $39 billion debt load.

Such a move would give Max a lifeboat from the twin Titanics of linear TV and massive debt. It could, however, spark a creditor revolt similar to what Lionsgate experienced when it mulled a spin-out of Starz saddled with much of the company’s debt. It could also complicate how content rights between the two companies would be shared. (If WBD is looking for more cash, Bloomberg reported Thursday that Apple is open to licensing content from Hollywood competitors to bolster its streamer’s comparatively barren library; WBD continues to license content to Netflix.)

Tudum: Speaking of Netflix, the global streaming giant beat expectations in its second-quarter earnings on Thursday, with subscribers on the suddenly all-important ad-supported tier increasing by 34% as the company continues to coast into a new era of profitability. While most of the industry has suffered content droughts this year in the wake of last year’s dual talent strikes, Netflix has relied on an international content pipeline to keep viewers hooked. If you’re in first place, at least, bigger is still better.