The incoming Trump administration plans to axe the $7,500 consumer tax credit for electric-vehicle purchases, sources told Reuters earlier this month. But California isn’t dreaming of toeing the line. 

On Monday, Gov. Gavin Newsom said the Golden State “will intervene” and provide rebates to residents on its own if the tax credit goes the way of the Fisker.

Point of No Return on Investment

That will certainly ease the sting given the size of the California market, but eliminating the tax credit will be a blow to all EV makers including America’s largest EV manufacturer, Tesla, whose founder has been the life of Mar-a-Lago. But Tesla, Reuters reported, has been supportive behind the scenes in its conversations with the Trump transition team. That may sound surprising, except that CEO Elon Musk, who claims to be against all government subsidies, thinks it’ll hurt his rivals much more than it’ll hurt him: “It would be devastating for our competitors, and it would hurt Tesla slightly, but long term it probably actually helps Tesla.”

The math to support his thinking is pretty straightforward:

• US automakers — including Detroit’s Big Three of Ford, GM and Stellantis — invested $146 billion to develop electric vehicles in the three years leading to 2024, according to the Center for Automotive Research. To recoup those investments, some are selling EVs at a loss for the time being, whereas Tesla is in moneymaking mode.
• Ford’s EV segment is on track to lose $5 billion this year, up from $4.7 billion last year. GM forecasts it will shrink its EV losses by at least $2 billion next year — but both Detroit giants take advantage of EV tax credits to boost demand. Late Monday, the Biden administration approved a $6 billion loan to an all-electric Tesla competitor, Amazon-backed Rivian, to build a factory in Georgia.

California leads the US in EVs, accounting for 37% of registered light duty EVs according to the US Energy Information Administration. If a national tax credit fell through, an offsetting rebate in the Golden State would be a major cushion for automakers.

Lucky Lobbyists: Trump can’t eliminate the EV tax credit without Congress amending the Inflation Reduction Act of 2022 and passing a new law to eliminate the credits. With the GOP poised for control of the House and Senate, that makes the move likely but not imminent, meaning there’s plenty of time for industry lobbyists on K Street to feast.

Sony wants to throw a banana skin in front of Nintendo’s business plans.

Bloomberg reported on Monday that Sony is working on a hand-held gaming console for its PlayStation brand that, if released, would put it in more direct competition with Nintendo, maker of the Nintendo Switch. It’s an expansion of the console wars, which have historically been between Sony’s PlayStation and Microsoft’s Xbox, with Nintendo managing to remain neutral, the Switzerland of the games world. But these reported plans for a hand-held PlayStation device show the game isn’t really about selling units anymore, it’s about hoarding consumers’ attention.

Console Party

Some of our more games-minded readers may remember the heyday of handheld gaming devices in the late 1990s-slash early 2000s (the Gameboy Color in particular holds a special place in many a millennial’s heart) but for the past seven years the handheld gaming console market has been dominated by Nintendo’s Switch console. Now however, it looks like both Sony and Microsoft are exploring ways to break into that market.

“A handheld from PlayStation and Xbox would increase competition for Nintendo on the portable front,” Rhys Elliott, gaming industry analyst at MIDiA Research, told The Daily Upside. But making portable gaming consoles might have less to do with the console wars and more to do with the attention economy, Elliott said: 

• The gaming industry has been moving deeper and deeper into the attention economy, with companies trying to keep gamers on their platforms as much as possible. According to Bloomberg, the new device would let gamers play current PlayStation 5 games, so it wouldn’t be selling more games but rather keeping them plugged into PlayStation beyond their living rooms. “A new PlayStation portable would be aiming at increasing current PlayStation player engagement,” Elliott said.
• Elliott also thinks Nintendo’s IP, its home-grown iconic franchises like Mario and Legend of Zelda, insulates it against invasion by Sony and Microsoft. “Nintendo focuses on family-friendly IP, and that is the core of its brand. While PlayStation is looking to expand into this area […] Nintendo’s 40 years of building family-friendly IP is unmistakable.” 

It’s-a Me, IP: Nintendo is growing less and less reliant on actual gamers these days, as its own ecosystem is looking more like a media empire than a gaming one. “Nintendo is aiming to be the next Disney,” Elliott added, “With its theme parks, cross-entertainment (including the billion-dollar-grossing Super Mario movie), mobile, toys, merch, and even alarm clocks – with the family-friendly gaming brand being at the core.” Mario versus Mickey… a chilling thought.

When the Macy’s Thanksgiving Day Parade kicks off in Manhattan on Thursday, one former employee of the department store chain will be taking more than a holiday.

Macy’s shocked markets Monday when it announced that, as it was preparing its third-quarter earnings report, it discovered a single worker hid up to $154 million in delivery expenses over the last three years. Those earnings, originally set to drop today, were delayed to December 11. The worker is — in classic HR-speak — “no longer employed by the company.”

Christmas Bonus

The obvious question: Why would someone hide $154 million in delivery expenses? One credible theory being, er, floated is the state of the retail industry. Let’s explain. Macy’s announced a turnaround plan in February that involved closing 150 stores over the next three years. In preliminary financials rushed out Monday to make up for the delay, the company said it gained $66 million in asset sales involving closed stores. But sales in stores, not of them, and online dipped 2.4% to $4.7 billion, missing analyst projections.

Competition from online retailers and diminishing sales have squeezed margins, putting pressure on retailers to lower costs. And so, as Ron Friedman, an accounting expert at CBIZ, explained to The Wall Street Journal, it’s possible the employee was trying to secretly make their department look more profitable in the hope of getting better compensation. If that was their goal, it didn’t help others looking for better compensation:

• Macy’s shares were down 2.2% by market close Monday, wiping roughly $99 million off its now $4.42 billion market cap, so not quite as much as the hidden expenses.
• An independent investigation into the expense-cloaking found irregularities from the fourth quarter of 2021 to the quarter that ended November 2 this year. During that period, the employee hid between $132 million and $154 million of Macy’s overall $4.36 billion in delivery expenses.

Full of Hot Air: Macy’s keeps the cost of its Thanksgiving Day parade a closely guarded secret, though analysts at GoBankingRates calculated the total price tag likely exceeds $13 million. Most surprising is how much it costs to inflate the giant balloon characters, which this year will include returning Spider-Man and Minnie Mouse: $510,000 a pop. And you wonder why marketing budgets are inflated.