Welcome to the Daily 5 report for Wednesday, Jan. 15.
When it comes to news about Elon Musk, it's always a good exercise for folks in the auto industry to ask themselves how much we would care if General Motors CEO Mary Barra or Ford CEO Jim Farley did the same thing.
So if Barra or Farley personally acquired Twitter (now X) and then had a chance to combine it with TikTok's U.S. business, it would no doubt emerge as the biggest automotive story of the year by a wide margin. Thus, it's no surprise that reports on Tuesday about TikTok considering selling its U.S. unit to Musk were rampant.
The prospect of the world's richest person, a close ally of incoming President Donald Trump, controlling both X and TikTok is a compelling scenario to contemplate. It is still a long shot, but just the idea of such a combination was unthinkable just a few months ago.
As far as the auto industry goes, can you imagine the marketing implications for one automaker to control these two platforms in the U.S.? Even now, it's hard to quantify how much Musk and Tesla benefit from X, but their ability to influence public opinion is unmistakable.
The reality is that it would likely take years for such a transaction — possibly worth $40 billion to $50 billion, according to Bloomberg — to be completed because of geopolitical questions between the U.S. and Chinese governments. The sheer technical complexity of TikTok separating its U.S. unit would also be a substantial hurdle, according to previous coverage of TikTok's U.S. litigation that went all the way to the U.S. Supreme Court.
Furthermore, it's too early to tell how much Musk will be able to influence federal agencies such as the U.S. Securities and Exchange Commission, which on Tuesday filed a lawsuit accusing Musk of cheating Twitter investors more than $150 million in potential gains when he began acquiring the platform in 2022.
In other news, C.J. Moore reports that Vroom Inc., the former used-vehicle retailer that shut down its e-commerce sales and shifted focus to auto financing last year, completed Chapter 11 bankruptcy proceedings in just a few months.
Vroom, of Houston, finalized its capital restructuring without any long-term debt, the company said in a Jan. 14 news release. Vroom's troubles underscored how making a profit in online used-car retailing isn't easy, even with Carvana's success. Sort of like how most electric vehicle startups continue to hemorrhage cash while Tesla is the world's most valuable automaker.
Meanwhile, we published this comprehensive recap of the biggest stories in automotive retail technology in 2024 by Mark Hollmer. A lot of major stories broke in this space last year beyond the CDK cyberattacks that essentially shut down half of U.S. auto dealerships for two weeks.
Finally, another shoe dropped in the long-running Hino Motors diesel emissions cheating scandal, which emerged in 2022. Three years later, the U.S. charged Hino with fraud for unlawfully selling 105,000 heavy-duty diesel engines in the U.S. that did not meet emissions standards, Reuters reported. The charges were filed in U.S. District Court in Detroit.
That's it for now. Have a great rest of your day.
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— Philip Nussel, online editor
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