The Escape of Carlos Ghosn with Sean McLain of WSJ

MotorTrend

MotorTrend's Ed Loh & Jonny Lieberman sit down with Wall Street Journal's Sean McLain! The group discusses Sean's Book (Boundless: The Rise

Transcript

00:00:00Hi there, and welcome to The Inevitable.

00:00:18This is our podcast, our vodcast about the future of the car, the future of transportation.

00:00:23And on this episode, someone besides us who reports on all this stuff, a friend of mine,

00:00:28this guy named Sean McClain.

00:00:30Real journalist.

00:00:31Yeah.

00:00:32Real, capital J, automotive journalist from a tiny newspaper, who reads those, no one's

00:00:38ever heard of, called the Wall Street Journal.

00:00:41Wherever that is.

00:00:43Super smart guy, been wanting to talk to him forever.

00:00:46We talk about a lot of stuff.

00:00:48We talk about the book he and his colleague Nick Kostov wrote about a certain Nissan CEO

00:00:55named Carlos Ghosn.

00:00:56We talk about the subsequent documentary that came out about him that's on Apple TV.

00:01:00It's called Wanted.

00:01:01Yeah.

00:01:02But we also go deep on his background, how we got into the business, the different beats

00:01:09he covered, how we ended up in Japan.

00:01:12And we go pretty hard on different car manufacturers.

00:01:16It's one of those funny episodes where we went 30 minutes over and I feel like we didn't

00:01:20even scratch the surface.

00:01:21Yeah.

00:01:22So it's a good one.

00:01:23Let's get Sean McClain on from the Wall Street Journal.

00:01:26Let's talk to him and then we'll have him back sometime soon to hear from him again.

00:01:30So Sean McClain.

00:01:31Automotive reporter.

00:01:33No.

00:01:34Thank you for coming.

00:01:35My first question is, how many diehard jokes do you get?

00:01:42Oh my God.

00:01:44Are you the cousin of the guy who killed Hans Gruber and saved the Nakatomi building?

00:01:50Usually men about your age.

00:01:51Yeah.

00:01:52I've got a huge fan base of men of a certain age.

00:01:55Is he Sean McClain?

00:01:56You know it's Sean McClain.

00:01:57I know it's Sean McClain.

00:01:58That's the joke.

00:01:59Just making sure.

00:02:00It's a joke.

00:02:01Yes.

00:02:02This dates me terribly.

00:02:03But hey, it's also, we're recording this pre-Christmas time and is Die Hard a Christmas

00:02:07movie?

00:02:08Yes.

00:02:09Die Hard is a Christmas movie.

00:02:10Absolutely.

00:02:11Absolutely.

00:02:12100%.

00:02:13One of the greatest Christmas movies.

00:02:14Yeah.

00:02:15The greatest.

00:02:16I'm waiting for my son to be just old enough to introduce him.

00:02:17What age is that?

00:02:18I was surely 12 or 13.

00:02:20Yeah.

00:02:21Okay.

00:02:22Yeah.

00:02:23Well, there's no nudity in this one, right?

00:02:24Just lots of shooting.

00:02:25Lots of shooting.

00:02:26Shooting and blow, right?

00:02:27Oh, there's a little ...

00:02:28There are some female breasts exposed.

00:02:31Okay.

00:02:32Yeah.

00:02:33Because it's that and Lethal Weapon.

00:02:34I want to show my son.

00:02:35Right.

00:02:36Lethal Weapon's great.

00:02:37I mean, my son's only 10, so you've got to sort of get to the, this is how you handle

00:02:41a dispute before you start showing the walking on glass and like ...

00:02:45I mean, except that this Halloween, we showed my kid the, it's the great pumpkin, Charlie

00:02:51Brown.

00:02:52Which is like, okay, totally age appropriate.

00:02:54Now he's running around telling everybody, you're a stupid blockhead.

00:02:56Thanks to Lucy calling everybody a blockhead.

00:03:00And I was like ...

00:03:01My kid runs around calling everyone a stupid git, because that's what they, Ron and Harry

00:03:04Potter calls everyone a stupid git.

00:03:06Okay.

00:03:07Yeah.

00:03:08Anyways.

00:03:09Yeah.

00:03:10Thank you so much for coming.

00:03:11Automotive Reporter, Wall Street Journal.

00:03:12We've been meaning to do this for a long time.

00:03:14Thanks to Johnny and some guy named Paul Beckett for connecting everybody.

00:03:17Hi, Paul.

00:03:18Former editor of the Wall Street Journal.

00:03:21Yes.

00:03:22Yeah.

00:03:23We've got a lot to talk about.

00:03:24Yeah.

00:03:25Super spicy.

00:03:26But do you want to go someplace?

00:03:27Well, I was going to say, let's do three reasons why he's here, and then we'll start with one

00:03:34of them.

00:03:35But so, we first spoke in your backyard at a dinner party.

00:03:41And they're like, yeah, Johnny, Sean wrote this book about Carlos Ghosn.

00:03:44And I was just like ... And if you don't know, Carlos Ghosn is the former CEO of both Nissan

00:03:51and Renault, who famously was thrown in prison and then escaped Japan in a musical instrument

00:03:57box.

00:03:58That's right.

00:03:59And fled.

00:04:00And you wrote a really great book called Boundless about it.

00:04:03But did you guys break that story?

00:04:05Was that-

00:04:06We were the first to report the details of how he escaped.

00:04:09Okay.

00:04:10In the Wall Street Journal.

00:04:11It's still up, and it's oddly not behind a paywall, so you can go read it.

00:04:14I just Googled it this morning.

00:04:15Yeah.

00:04:16And you and your colleague-

00:04:18Nick Kostov.

00:04:19Nick Kostov.

00:04:20He's the author of the book with you.

00:04:21Yes, that's correct.

00:04:22Okay.

00:04:23So, he is based in France, covering Renault.

00:04:24I was based in Japan, covering the Japanese automakers.

00:04:26Perfect.

00:04:27So, we were able to tag team that across time zones, a little bit like the Renault-Nissan

00:04:31alliance itself.

00:04:32Look at that.

00:04:33And pull it together.

00:04:34All right.

00:04:35So, we'll come back to that, obviously.

00:04:36Sure.

00:04:37But then you also spent a lot of time overseas in various countries covering automotive?

00:04:42Yeah.

00:04:43So, I moved abroad to Abu Dhabi, of all places, in 2008.

00:04:48Spent about three and a half years there.

00:04:49Then I moved to India.

00:04:52Spent five years there, where I covered many things, including the auto industry, including

00:04:56the demise of the Tata Nano.

00:04:59And then I moved to Japan, where they asked me to cover the Japanese automakers.

00:05:03And fortunately, or unfortunately, I was the man at the post when Carlos Ghosn was arrested.

00:05:07Sure.

00:05:08And so, that became my job.

00:05:09It's like Dan Rather, you know?

00:05:10Just happened to be in Dallas.

00:05:12So, Middle East, when you say you went to Abu Dhabi, with the journal?

00:05:18No.

00:05:19So, Abu Dhabi, oddly enough, the job came at a point in my life where I didn't really

00:05:25know what I wanted to do.

00:05:27I was studying Arabic, of all things.

00:05:30And a startup newspaper from a former Daily Telegraph editor popped up there.

00:05:36And I said, well-

00:05:37Called Al Jazeera?

00:05:38No, I'm just kidding.

00:05:39Called The National Newspaper.

00:05:40Just a different country.

00:05:41Still exists.

00:05:42A little bit different than it was, I guess, originally.

00:05:44But they brought over like 250 reporters from the US, Canada, Europe, and Australia,

00:05:49and sort of parachuted us into this strange place.

00:05:52And so, it was a little like being in college, except we all had money at this time.

00:05:55So, I made a lot of good friends at that time.

00:05:59But three years in Abu Dhabi was a long time.

00:06:03Wait, so were you a journalist by education?

00:06:06No.

00:06:07Whoa.

00:06:08I fell into this career by accident, and it stuck.

00:06:12But I was good at it, and kept doing it, and now it's been 15 years.

00:06:18What's your degree in?

00:06:19So, I went to a small liberal arts college, where they only have one major for everybody,

00:06:25in Annapolis, Maryland, called St. John's College.

00:06:27And so, officially, it's a double major in the history of science and mathematics, and

00:06:35philosophy.

00:06:36Have you read, what's that book I love, Sleepwalkers?

00:06:40That was probably too modern for us.

00:06:42We stopped at probably the latest piece of scholarly work we read was probably Einstein's

00:06:49Theory of Relativity.

00:06:50Yeah, I mean, Sleepwalkers kind of went up through Einstein.

00:06:53So then, yeah.

00:06:54But yeah, we started with the pre-Socratics, and then went all the way up to like Heidegger.

00:06:58So, you got a degree in history in science and mathematics, but for some reason you were

00:07:02studying Arabic?

00:07:03Yeah.

00:07:04So, I studied, I don't know, I like languages, so I speak Japanese.

00:07:11When I was in India, I studied Hindi.

00:07:12I studied a bit of Arabic when I was, again, remember this was the Iraq War time.

00:07:18And then, in college, I studied ancient Greek and French.

00:07:21Wow.

00:07:22The ancient Greek part.

00:07:24So, how do you go from Abu Dhabi to India without having the Wall Street Journal job?

00:07:29Well, part of the, it's college again.

00:07:32I met my wife in Abu Dhabi.

00:07:35So, she's Indian by birth, and the paper sent her to India as a foreign correspondent.

00:07:42I hated Abu Dhabi by that point, so I was ready to get out.

00:07:45There's not much there.

00:07:46No, it's like-

00:07:47Especially back then.

00:07:48It's like an airport terminal.

00:07:49You know, nobody's from there, and you can do everything in a weekend, you know?

00:07:52Right.

00:07:53Right.

00:07:54So-

00:07:55I was in Abu Dhabi in 2011, and it sounds like that's when you left.

00:07:57Yes, that's exactly when I left.

00:07:59Yes.

00:08:00So, she was also there with that national paper.

00:08:03And so, she's much more of a professional journalist before that than I was.

00:08:09And so, we got married.

00:08:10I followed her to India.

00:08:11I freelanced for about a year and a half, where I got hired by the Wall Street Journal

00:08:15by Johnny and I's mutual friend, Paul Beckett.

00:08:18Who's now retired, and he's a pointillist painter.

00:08:24Yes.

00:08:25Quite great.

00:08:26Wait, does he do the little headshots?

00:08:27He taught himself how to do the head cut type style.

00:08:30Okay.

00:08:32He's got a great Instagram account.

00:08:35If he sold them, I would buy them.

00:08:36They're amazing.

00:08:37No, they're amazing.

00:08:38Yeah.

00:08:39He's really weirdly talented.

00:08:40And now, we've established that the Wall Street Journal just hire anybody off the truck.

00:08:43Yeah.

00:08:44The weirdos.

00:08:45But seriously, you didn't have a journalism education, but you had this core overseas

00:08:55experience.

00:08:56Yeah.

00:08:57So, I moved a lot growing up.

00:08:58My dad was in the Marine Corps.

00:09:00Oh, wow.

00:09:01Until I lived in India, I'd never spent more than four years in one spot.

00:09:06So, India was the longest time I'd been in one spot, and then I moved to Japan, spent

00:09:10six years there.

00:09:11And so, Japan became the longest place I've ever lived consecutively.

00:09:14I've just got itchy feet and sort of a love of travel.

00:09:17Okay.

00:09:18All right.

00:09:19How long have you been in California?

00:09:20Just two years.

00:09:21Just over two years.

00:09:22Oh, so you're getting ready to go.

00:09:23Get to LA.

00:09:24One eye on the end.

00:09:25Culver City.

00:09:26Yuck.

00:09:27Okay.

00:09:28So, your day-to-day job now for the Wall Street Journal.

00:09:32Yeah.

00:09:33So, my main job for the Wall Street Journal is covering the EV industry.

00:09:36Okay.

00:09:37So, I cover all the startups, mostly Rivian and Lucid, and increasingly Tesla, obviously.

00:09:45And then I also cover Fisker's demise, but I still keep an eye on everything that the

00:09:51Japanese and the Korean automakers do in the US.

00:09:53Got it.

00:09:54So, I cover Hyundai and Kia.

00:09:55I cover all the Japanese automakers.

00:09:59Not Korean?

00:10:00No, I do.

00:10:01Oh, Korean.

00:10:02Oh, sorry.

00:10:03I'm sorry.

00:10:04What about DOID?

00:10:05You know-

00:10:06Electric Bus.

00:10:07No.

00:10:08We have an eye on them, and certainly, that, I feel, is frankly a huge hole in my automotive

00:10:15knowledge is what's going on in China.

00:10:17We do have a China Bureau and Chinese automotive reporters that cover all that for the Wall

00:10:22Street Journal.

00:10:23I'll just put it this way.

00:10:25I've got an eye on them.

00:10:26I did watch your excellent documentary-

00:10:27Oh, thank you.

00:10:28... about the Chinese automakers in Mexico, and I thought it was real eye-opening and

00:10:33sort of a wake-up call for me as a reporter to pay more attention.

00:10:37And I can...

00:10:38Yeah.

00:10:39Well, we'll chat offline.

00:10:40You've got some resources for if you just want to get your feet wet in the cars, because

00:10:44there's some cars in country that are fascinating.

00:10:45I think I saw an Instagram post about that.

00:10:48Yeah, yeah, yeah.

00:10:49So, we'll talk.

00:10:50If you want to go to China in two weeks, I'll...

00:10:51Yeah, he's going.

00:10:52He's sending me.

00:10:53Had I the free time.

00:10:54Right, right.

00:10:55Yeah, let me see.

00:10:56Let's start with...

00:10:57Well, hang on.

00:10:58Let's start with...

00:10:59It's important.

00:11:00E.V., you got an auto speed.

00:11:01You're covering auto industry.

00:11:02Are you a car guy?

00:11:03Not in the sense that I think people at Motor Trend would respect.

00:11:06I don't...

00:11:07I'm not a fan of, and I've never had an interest in exciting fast cars.

00:11:14I'm a fan of the auto industry, what it means culturally, what it means economically, and

00:11:20what it means at a personal level, on the consumer side.

00:11:25I drive a Toyota RAV4 Hybrid, which I think says everything about my taste in cars.

00:11:30Yep.

00:11:31Perfectly fine vehicle.

00:11:32I mean, 10, 15 years ago, I probably would have bought a Camry, but it's funny, moving

00:11:41back to the US and living in the US with my wife for the first time, who's not American,

00:11:45I have belatedly discovered that she has redneck taste in cars, where she really wanted a Challenger

00:11:51or like a Ford Mustang Convertible when we moved back.

00:11:53This is great.

00:11:54I was like, I...

00:11:55This is...

00:11:56Johnny, you've met her.

00:11:57Yeah.

00:11:58She doesn't strike you as a Challenger person, but this is...

00:11:59Nothing wrong with a Challenger.

00:12:00They're great.

00:12:01They're great.

00:12:02They're very comfy, you know?

00:12:03Yeah.

00:12:04They really are.

00:12:05They're really comfortable.

00:12:06They're really comfortable.

00:12:07Yeah.

00:12:08Highly impractical.

00:12:09I'm like a tool-for-the-job type car person.

00:12:10I mean, they got a big trunk, you know, your kid's only 10, backseat's fine, they're great.

00:12:15I love it.

00:12:16Okay.

00:12:17So you're the exactly the kind of guy who can provide a sober take on the auto industry

00:12:23without being dazzled by all the silly...

00:12:26Johnny and I have exchanged texts.

00:12:28Yes.

00:12:29All right.

00:12:30Well, I want to do this.

00:12:31Let's start with the demises.

00:12:32I want to let...

00:12:33We're going to talk about Tata Nanos, it's very interesting that you brought that up,

00:12:37and also Fisker.

00:12:38Like, because I know like sort of what happened to Fisker, but you obviously, you're more

00:12:43detailed.

00:12:44Let's start with Fisker.

00:12:45Sure.

00:12:46So Fisker, by the way, headquarters...

00:12:50Down the street.

00:12:51Down the street from Motor Trend.

00:12:52Like, we saw them come in, it used to be the True Religion headquarters, and then one day

00:12:56the big Fisker sign was up there, and then we had Heinrich on this podcast telling us

00:13:01all how amazing it's going to be in the ocean.

00:13:03Full disclosure, we also helped them launch the ocean.

00:13:06We were the...

00:13:07Heard about that.

00:13:08We did the event for them in Manhattan Beach at the pier.

00:13:11It was the first time the Manhattan Beach pier allowed a car to be out there because

00:13:15they made some big donation, and...

00:13:16Wasn't Simon Spruill the guy doing that all the time?

00:13:17Simon was there, yes.

00:13:18Yeah.

00:13:19You know Simon?

00:13:20Oh, yeah.

00:13:21Everyone knows Simon.

00:13:22Of course I know Simon.

00:13:23Who doesn't know Simon?

00:13:24Right.

00:13:25Exactly.

00:13:26Nissan.

00:13:27Oh, Nissan.

00:13:28Ford, Nissan.

00:13:29Right, right, right.

00:13:30Hot Minute at Tesla.

00:13:31He's at Red Bull now.

00:13:32He was...

00:13:33He was at Aston Martin.

00:13:34He's at Tello Trucks now, like you guys had on the other day.

00:13:35Oh, he is?

00:13:36Tello, yeah.

00:13:37He's a marketing advisor for them.

00:13:38Oh, okay.

00:13:39He's got...

00:13:40That's why I saw him.

00:13:41Is that Andy Palmer, Simon Spruill?

00:13:42Yeah, yeah.

00:13:43Yeah, yeah.

00:13:4417, hyper car thing.

00:13:45How many fingers does Simon have?

00:13:46How many pies are they eating?

00:13:48Yes, exactly.

00:13:49That's their...

00:13:50The man to emulate.

00:13:51Yes.

00:13:52Yeah, that's true.

00:13:53Okay, so we have this interesting relationship with Fisker, but tell us, like, when did

00:13:56you get into their story?

00:13:58I'm trying to think about how it first came about.

00:14:01I think I started getting reach outs from sources that things weren't quite right.

00:14:13That the business model wasn't quite what it seemed.

00:14:16I mean, look, I think if you had quiet conversations with anybody in the auto industry, they would

00:14:21all slightly roll their eyes when they talk about a contract manufacturing business model

00:14:26that involved Magna Steyr, right?

00:14:27But why?

00:14:28And why is that?

00:14:29Because Mercedes has a very successful relationship.

00:14:32What should they build there?

00:14:33G-Wagen.

00:14:34G-Wagen, exactly.

00:14:35Yeah.

00:14:36And lately, Supra, right?

00:14:37They were building Supra.

00:14:38And again.

00:14:39BMW...

00:14:40What's it called?

00:14:41High-margin vehicles.

00:14:42Oh, right.

00:14:43High-margin.

00:14:44Right?

00:14:45So the Fisker Ocean was premised on this idea of mass market, fixed margin, but a healthy

00:14:50fixed margin throughout the gate, right?

00:14:52And so what a lot of people were telling me is like, look, the pitch, and look, I respect

00:14:59Henrik to death.

00:15:00I've had multiple conversations with him.

00:15:01He's a smart man.

00:15:02He knows the auto industry.

00:15:04What a lot of people were telling me is he doesn't really know about the dollars and

00:15:06cents side of things.

00:15:09And so there's a lot of things about Fisker.

00:15:11And I think in a lot of cases, what we see with these stories where companies just suddenly

00:15:14disappear and everybody gets question marks, a lot of things, when you really start poking

00:15:18at it, if you really start questioning, like we're obviously not a good idea in hindsight.

00:15:23Give us an example.

00:15:24Well, just for the audience, can we just briefly explain contract manufacturing?

00:15:29Because I looked at that and said, well, this seems at the top level, very face of it, yes.

00:15:37The big problem with a lot of these EV startups is that they can't get through the manufacturing

00:15:41phase.

00:15:42So why not hire a long established company who knows how to do this, build a car, makes

00:15:48great products.

00:15:49Surely this is a path no one's really tried before, or I don't know how true that is,

00:15:54but it would, there was some point to it or no.

00:15:58Right.

00:15:59So I guess to sort of explain contract manufacturing, MagnaStar is probably the best example of

00:16:04a company that specializes in assembling vehicles at high volume with sort of be able

00:16:09to guarantee a certain margin to a carmaker, right?

00:16:11So the central challenge of making it in the car industry is you have to have a certain

00:16:16amount of volume to cover the cost of running that factory, right?

00:16:19So you have your bill of materials, all your parts coming in, you have the labor, and then

00:16:22you just have the cost of running that factory.

00:16:25So most car factories have to run two, sometimes depending on the car, three shifts to be able

00:16:32to make a profit on those vehicles.

00:16:34The margin's fairly thin.

00:16:36The way that Fisker was gonna get around it is sign a contract with MagnaStar, try to

00:16:41get them to assume the risk of making money on those cars, and they have a sort of fixed

00:16:45margin.

00:16:46They buy it at X thousands of dollars above the wholesale price, and then they flip it

00:16:50on and they become like a middleman.

00:16:54That was never Fisker's long-term goal, because Fisker also, when they ran the math, realized

00:16:59that this is not a long-term solution.

00:17:01It's a solution right out of the gate.

00:17:02And look, they're not the only ones that try it.

00:17:04The car industry does this all the time, whether they're rebadging each other's cars, whether

00:17:10they're building in different locales, but it is never the long-term solution to success

00:17:15for a car industry.

00:17:17If a car company, say, let's take Renault and Nissan.

00:17:20If Renault and Nissan, if Nissan wants to come into France, they might use Renault plants,

00:17:25but if they actually wanna sell 300,000 cars, they build their own factory, because that's

00:17:29where the money is.

00:17:30So I think Fisker's challenge was multiple.

00:17:35That was the first one that was raised to me, that the business model isn't quite what

00:17:39it seemed.

00:17:41And the second was that they just had not planned at all...

00:17:45Are you guys South Park fans?

00:17:48Yeah.

00:17:49Yeah.

00:17:50Yeah.

00:17:51From the original episode.

00:17:52Do you remember the underpants gnomes?

00:17:53No.

00:17:54Right?

00:17:55So the underpants gnomes, famously, they had this business plan that they put up, like

00:17:57step one, steal underpants.

00:18:00Step two, question mark.

00:18:01Step three, profit.

00:18:02Right?

00:18:03Right.

00:18:04Right.

00:18:05Right.

00:18:06So Fisker had this plan to sort of contract out the cars, have that set profit margin.

00:18:12They would have gross margin profit out the gate, and then they had all of these orders.

00:18:17They had no logistics network.

00:18:19The assumption was that they'd roll off the boat, customers would come pick it up.

00:18:23Magically.

00:18:24Well, it was COVID, right?

00:18:26So customers would come get it or have it delivered to them, and they didn't have to

00:18:29worry about it, right?

00:18:31That would be a negligible cost.

00:18:32It turned out to be a huge cost.

00:18:35And they ended up having these things stack up, and people didn't wanna come get it because

00:18:39they were using...

00:18:40I can't remember what company.

00:18:41It was like some auction house out in the valley.

00:18:44So people would have to come out and get their cars there.

00:18:49And it just...

00:18:50They turned out not being able to get the cars there.

00:18:51Then there were all these software issues, there were quality issues.

00:18:55And I think all of those little things stacked up where a good idea sort of fell apart because

00:19:02of poor logistics, poor management, poor operations.

00:19:06Just kind of like the boring basic stuff, but it gets exciting in the details.

00:19:11Does the blame lie with...

00:19:13All the stories seem to point to Heinrich's wife, who was the controller, the CFO, COO.

00:19:18So I wrote a couple things about this.

00:19:23And I guess what I can say is that she'd never been CFO before.

00:19:29And she worked in investing, never on the finance side of business.

00:19:34So there's a difference knowing how to structure complex sort of loans and deals.

00:19:41And another thing, making sure the income's coming in, the revenue's going out, the costs

00:19:45are covered.

00:19:46But he...

00:19:47What I don't get is he had Fisker before this, which did the same thing.

00:19:51It did not work.

00:19:53You would think he'd be like, all right, I know all the pain points.

00:19:56Maybe I don't know the contract manufacturing, but he did because there was never a Fisker

00:20:00factory, was there?

00:20:01There was initially.

00:20:02In fact, they were...

00:20:04Part of the first time when they got in trouble, they got the DOE loan and everything like

00:20:10that.

00:20:11Part of that was they had to take over a former GM factory.

00:20:13Okay.

00:20:14So there was a lot of shifts in business model over Fisker 1.

00:20:17But still, why would you put your wife in charge of something?

00:20:20So why would you want anybody who has no experience?

00:20:22So the reason why is it's his wife.

00:20:24Right.

00:20:25I mean, it wasn't just his daughter was involved and brother-in-law and sister-in-law, I think.

00:20:30Sister was involved too.

00:20:31Sounds like the government we're about to get into.

00:20:34Sorry.

00:20:35You can go.

00:20:36No comment.

00:20:39But if you talk to Henrik, and I think he said this publicly, not just to me, one of

00:20:47the reasons why Fisker 1 ended is they lost control.

00:20:51He was forced out by the board.

00:20:54And I think Fisker being in charge and his wife being number two-

00:21:00No one's forcing him out.

00:21:01No one's forcing him.

00:21:02And they also had a controlling interest through a two-tier share structure.

00:21:07Just look, the other thing that was pointed out to me that people said doesn't look good

00:21:12is he also bought that house on the Bird Streets almost as soon as he could right after the

00:21:16IPO.

00:21:17Right.

00:21:18You don't want to knock a man for spending his well-earned cash.

00:21:21It's like Goodfellas, don't buy the pink Cadillac in the middle.

00:21:24Yeah.

00:21:25Don't build a pink mansion in the middle of Beirut getting back to Carlos Ghosn.

00:21:28It's just like, it doesn't look good.

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00:22:07Well, real quick, I heard a lot of like, you know, they were getting checks and there was

00:22:12no one at the company who knew how to cash checks.

00:22:15There was a lot of turnover.

00:22:16Is that true?

00:22:17There was a lot of chaos.

00:22:23They had trouble tracking where the payments were coming from and which cars they were

00:22:27being tied to.

00:22:28Yeah.

00:22:29It was just general disorganization, like, you know, sort of the operations of like,

00:22:33the boring stuff.

00:22:34Right.

00:22:35Like, Henrik was really good at the exciting stuff.

00:22:37Right.

00:22:38It was just true.

00:22:39In the product, like, we actually still see Ocean's Drive around.

00:22:40Yeah.

00:22:42They're really great.

00:22:43They're really nice.

00:22:44They look, they did all this weird, really expensive details, like, that little window.

00:22:47Like, the quarter window that slides down.

00:22:48The quarter window that goes down.

00:22:49You're like, ooh, on earth.

00:22:50It also, but it was kind of like, weirdly deep, right?

00:22:53Like, when you get in that car and like, my wife is like, 5'2", and she could look, she

00:22:56looked like a toddler, you know, sitting in there, like, barely seeing anything.

00:22:59But people like, they like that bunker, love driving a tank, you know, that is appealing

00:23:03to a lot of people.

00:23:04It was spacious.

00:23:05Yeah.

00:23:06And you, for the audience listening, like, I think this, this happens a lot in this podcast

00:23:12where people just poop all over, like, Tesla and Elon and manufacturing in a tent for a

00:23:19while, and then look at, oh, look at Rivian, their stock's plummeting, and they're getting

00:23:22a bailout from the government for this much money, and can we just say, building cars

00:23:28is really hard.

00:23:29It's really hard.

00:23:30It's the fixed cost, all the stuff you gotta go through, like, these are not, these are

00:23:33smart people.

00:23:34They're passionate people.

00:23:35Yeah.

00:23:36They don't need other smart people to invest money into these things.

00:23:39But the amount of cash you have, you are lighting on fire to get these things off the ground

00:23:43is insane.

00:23:44That's why the legacy manufacturers are entrenched and have these huge advantages.

00:23:48Too big to fail.

00:23:49Yeah.

00:23:50Too big to fail.

00:23:51Well, look, I'll put it this way, like, launching a new car can cost, you know, depending if

00:23:57you do new factory and you just product line new tooling, it can be a $5 billion, like,

00:24:03expenditure.

00:24:04Yeah.

00:24:05But they don't make that up right away.

00:24:07And in fact, they may be, if they need an all new engine, trans, all that other stuff,

00:24:12they might make it over a 10 year period.

00:24:14Yeah.

00:24:15Like, so.

00:24:16It's a big, long term investment.

00:24:17So, I mean, I think a lot of people, when you talk to them from back then, like, when

00:24:21Tesla was still coming on the, they were like, there's no way this company makes it.

00:24:24Why would they even want to do this?

00:24:25This is dumb.

00:24:26Right.

00:24:27Like, this is a dumb industry.

00:24:28Yeah.

00:24:29Yeah.

00:24:30No, that was, before Tesla, it was like, hey, remember DeLorean?

00:24:32Like, remember Tucker?

00:24:33Yeah.

00:24:34Who was the last guy that was with us?

00:24:35Was the last-

00:24:36AMC.

00:24:37Yeah.

00:24:38Like, you know.

00:24:39Well, no, but like, DeLorean.

00:24:40I mean, you know, it, like, these things never work.

00:24:41Yeah.

00:24:42Yeah.

00:24:43So, I think, look, clearly Tesla is, is a business success today.

00:24:49Sure.

00:24:50And I think you look at Rivia and you give them a decent-ish shot at making it, right?

00:24:58Lucid, we can have a conversation about-

00:25:01We should.

00:25:02We should talk about what the market is for $100,000 four-door sedans.

00:25:05They got a little, they got a SUV coming.

00:25:08Gravity, I was supposed to drive it right now and I had to cancel it because-

00:25:11Okay, well, then we can talk about, we can talk about the total addressable market for

00:25:14SUVs that start at $80,000.

00:25:17Sure.

00:25:18But don't you, but they'll, I was arguing with somebody on the, in a comment section

00:25:22on the internet.

00:25:23They'll never, the, the Saudi, what, what fund do they invest?

00:25:26What's the-

00:25:27Saudi sovereign wealth fund.

00:25:28Yeah.

00:25:29Those guys will never pull, right?

00:25:30I mean, this is-

00:25:32I don't, look, I, yes, maybe.

00:25:34I mean, I, I, Peter Rowlandson says he doesn't take advantage, doesn't take their support

00:25:39for advantage and he's very grateful for it.

00:25:42And I'm sure that is a hundred percent, absolutely true.

00:25:46I, it's, but at the same time, he's scrambling to build more cars and turn a profit.

00:25:52Why?

00:25:53Yeah.

00:25:54Well, yeah.

00:25:55Share price.

00:25:56No, it's free cashflow.

00:25:57So if you're burning your cash pile, you're on a fuse that's going to go off in X number

00:26:05of months.

00:26:06Right.

00:26:07Right.

00:26:08You need your, you need a positive cash generating business to survive.

00:26:12And they, Rivian's cashflow negative, Lucid is cashflow negative.

00:26:17The stock price, the only risk is if you get delisted, if you go under a dollar, right?

00:26:21Right.

00:26:22The stock price goes to-

00:26:23I mean, Lucid's like $2, 12 cents or something.

00:26:27Yeah.

00:26:28So it's above a dollar, which means they're not at risk of getting delisted.

00:26:30The only thing that's a risk for them is an executive incentive, right?

00:26:33Because those executives are paid, you know, or incentivized by their stocks.

00:26:36And if their stocks are in the toilet, maybe they go somewhere else.

00:26:39That's the risk.

00:26:40But can I look at it from the other side, which is the public investment fund?

00:26:43Like these guys are never, isn't Lucid like a hedge for these traditionally oil manufacturing

00:26:51regions?

00:26:52Well, look, I think, look a little bit at the history of why they care and how deeply

00:26:57they care.

00:26:58So Saudi Arabia has been trying to get factories in that country since at least 2008.

00:27:03Because it bolsters the middle class, right?

00:27:06Well, they get some jobs.

00:27:07Yeah, that's what I mean.

00:27:08Yeah, yeah.

00:27:09Creates a middle class.

00:27:10Yeah.

00:27:11So they were trying to get Nissan there forever until they built in Morocco.

00:27:14I think Hyundai's there now, but they've been trying to build like an industrial, like an

00:27:20automotive industrial base.

00:27:21Right.

00:27:22In Saudi Arabia for over a decade.

00:27:27But you know, in terms of their attention span, like, I don't know.

00:27:30But I mean, their money isn't infinite.

00:27:34Look what happened with Neom with that city in the desert, right?

00:27:36They're already saying maybe $5 trillion or whatever number it is, is too much.

00:27:40Like it's not infinite amounts of cash.

00:27:42But it is, but maybe it's not definitely too much.

00:27:46But these are, again, these guys out there with all the oil money are looking long term

00:27:52at a future where oil is not the primary-

00:27:54Sure.

00:27:55But we should also not presume that they're dumb, right?

00:27:57Like-

00:27:58No, not at all.

00:27:59Right.

00:28:00They're not going to just light bonfires of cash forever.

00:28:03No, but they did.

00:28:04But there is a Lucid factory in Saudi Arabia today that employs a lot of people.

00:28:08I don't know how many of them actually employs.

00:28:10I knew they're doing CKD, the knockdown kits right now.

00:28:16I think the plan is for it to be a big factory.

00:28:18Oh, okay.

00:28:19But they need the sales.

00:28:20They need the sales.

00:28:22They need the demand.

00:28:23They need the vehicles.

00:28:24Okay.

00:28:25They need...

00:28:26I mean, look, they're coming out with the midsize eventually.

00:28:27Yep.

00:28:28Sooner than later, apparently.

00:28:29Yeah.

00:28:30Well, I mean, look, I've been asking Peter every time I meet him, like, don't you feel

00:28:33under a little pressure to bring out the midsize?

00:28:35And he's like, yeah.

00:28:36And then suddenly he's in a hurry.

00:28:37But yeah.

00:28:38Okay.

00:28:39Let's...

00:28:40So I think we got Fisker.

00:28:41Let's go from a startup to an established player.

00:28:45Sure.

00:28:46And let's talk a little bit about, or a lot about Nissan.

00:28:48Okay.

00:28:50You...

00:28:51I literally had this conversation at a basketball game the other night with a former very high-ranked

00:28:55person at...

00:28:56Who was at Nissan.

00:28:57Oh, boy.

00:28:58So did I at the same basketball game.

00:28:59And the thing I told him about Nissan was, I feel like they did the Nissan 180 way back

00:29:10in like early 2000, what was it, 2001, 2000, where they...

00:29:15This is when Goen came in.

00:29:16Okay.

00:29:18So the recovery plan, which ended after three years, and the Nissan 180 became the second

00:29:21plan, right?

00:29:22I guess it was three, whatever the first product, it was 360.

00:29:25It was like, holy crap.

00:29:26Oh, it was not 360.

00:29:27They would be bankrupt again.

00:29:28No.

00:29:29That's their event.

00:29:30Their event is Nissan 360.

00:29:31Oh, right.

00:29:32No.

00:29:33It was the...

00:29:34Here's our all new lineup of vehicles.

00:29:35Sure.

00:29:36And this is when the 350Z came out, the new Frontier, some of these vehicles.

00:29:41And that kind of put them on this path where everyone's like, wow, look at this stuff.

00:29:44This is great.

00:29:45They went dark on new product lines.

00:29:47They were basically rehashed, re-warmed over vehicles.

00:29:50You're talking like what, like 2016 to 2018-ish?

00:29:54Before that, but until they had this, they were like, guys, I mean, we're looking at

00:29:59the new, this latest, they don't call it the 400Z, but the latest Z.

00:30:02Oh, today?

00:30:03Yeah.

00:30:04Today.

00:30:05It's like the third.

00:30:06It's the same car.

00:30:07It doesn't actually have a distinct chassis code because there's not enough new parts

00:30:11on it.

00:30:12Right.

00:30:13That's my understanding.

00:30:14It's the first version of the car that came out in 2004 or five.

00:30:17They've been stuck in the cycle.

00:30:18Yet in that early stage, Ghosn had been lauded as the turnaround king.

00:30:22He's a guy who brought them back from the brink.

00:30:24Right.

00:30:25And where did you, so when did you jump into this story?

00:30:28So I landed, I landed in Japan in 2016.

00:30:33So two years before he stepped back.

00:30:35Okay.

00:30:36But before that, obviously I'd been covering the Nissan and Renault's vehicle launches

00:30:41in India.

00:30:42So you got it.

00:30:43That was back when the entire auto industry, and this sort of explains how Nissan ended

00:30:49up where it did.

00:30:50It was back when bricks were a thing, Brazil, Russia, India, China, South Africa.

00:30:56And every time Carlos would come through or any of his deputies would come through, they'd

00:31:01talk about frugal engineering.

00:31:02I don't know if you guys remember that term where they were sort of going to rely on sort

00:31:08of engineering principles and design language from emerging economies to sell vehicles to

00:31:16the next billion customers in the middle class.

00:31:18This is how Nissan relaunched Datsun.

00:31:20I was going to say, Datsun launched in like 16-

00:31:21And we were like losing our minds.

00:31:22Like, this is going to be great.

00:31:23And they're like, these are like second world-

00:31:24These are not going to be great.

00:31:25Yeah.

00:31:26Did you ever sit in one where they had the shifter and the dashboard?

00:31:29No.

00:31:30Oh God.

00:31:31It was like, it was like really like, not just 1970s, but like 1940s automotive design.

00:31:38But, so that's where a lot of the money went, right?

00:31:41So they built out factories in the Southeast Asia, in South Asia, and in South America.

00:31:47And it wasn't just Nissan, but Nissan was very aggressive at this time trying to capture

00:31:52that market share because there's all this greenfield potential consumers out there.

00:31:57And so you saw from Toyota, from Honda, from Ford, Suzuki, like sort of a lot of sub $6,000

00:32:09vehicles suddenly pop up.

00:32:11That costs money.

00:32:12I mean, even if you're sort of this massive automotive OEM, you're building new factories,

00:32:17you're hiring people, you're building a supply chain.

00:32:19The bill of materials is small, but the infrastructure costs are way very low.

00:32:23Well, you had model bloat, right?

00:32:24So you had your sort of emerging market models, and then you had your global models and you

00:32:28can't really sell both and both, unless you're Ford with the EcoSport and you try to bring

00:32:32it here.

00:32:33Right?

00:32:34Oh boy.

00:32:35Well, that's a sign of how it didn't work.

00:32:36Right?

00:32:37Right.

00:32:38Right.

00:32:39Right.

00:32:40There was a period of that.

00:32:41I've just driven one.

00:32:42That was the oh boy.

00:32:43Yeah.

00:32:44Like from 2011 to, I don't know when I put an end to it, maybe 2015-ish, it's 2016-ish

00:32:48where they sort of made big bets on that.

00:32:50And that sucked up a lot of R&D and like, not even just the money, just the attention

00:32:55of your R&D and engineering team.

00:32:57And so at Nissan, a lot of model development for the US and for Europe, I think kind of

00:33:04got put on the back burner and delayed just because they didn't have time to work on it.

00:33:08So I think that's what happened is you started to see like a lot of black holes and sort

00:33:13of models became longer in the tooth, and they might just get a fresh, you know, refresh.

00:33:20I mean, it's a new-ish transmission engine, but it's the same old Frontier.

00:33:25Good truck though.

00:33:26Yeah.

00:33:27And I think that's like the Z, the Frontier, like stuff like, I mean, the Tacoma, like

00:33:31if it ain't broke, don't fix it, you know, sort of they paid attention to that.

00:33:34And I, you know, I think you're still only just now seeing most car makers who competed

00:33:41in those emerging markets sort of have their product cycles and their R&D budgets sort

00:33:45of recover from that cycle.

00:33:48I mean, like the car industry famously works in five, 10 year cycles, but really like you

00:33:55should be looking like it's multi-decade, like, because you've got these broad plans

00:34:00that require you to march in a certain direction and moving that ship like requires you to

00:34:05develop new things where it take time to get into that.

00:34:07Like it's-

00:34:08And this is why even with the Trump victory, like all the OEMs are like, can we keep making

00:34:13EVs or keep our plans?

00:34:15Because we don't want to like go away from that.

00:34:18Everything.

00:34:19I mean, Honda said they were going to stop making engines, right?

00:34:22Yeah.

00:34:23Like, you know.

00:34:24Yeah.

00:34:25World's largest engine manufacturer.

00:34:26Right.

00:34:27Well, let me tell you that rippled through Japan and the engineering core.

00:34:31So, and they still make engines because it takes time to shift and they don't really

00:34:36would rather not shift back.

00:34:37Totally.

00:34:38Right.

00:34:39Okay.

00:34:40So we should, we should just get to your book and movie.

00:34:45But let's also set it up that we are probably not going to go all the way into it because

00:34:51this fine young man wrote a great book that's sitting on my Kindle as yet unread, but you

00:34:56read it.

00:34:57Oh, I read it.

00:34:58Yeah.

00:34:59And there's a documentary.

00:35:00Thank you to you two and my mom.

00:35:01Yes.

00:35:02How, how long is the documentary?

00:35:03It's a four part mini series on Apple TV.

00:35:05Okay.

00:35:06It's done by the folks who did the Netflix drive to survive series.

00:35:10No kidding.

00:35:11Okay.

00:35:12And then there's the Ayrton Senna documentary and the Amy Winehouse documentary.

00:35:15Those are great.

00:35:16Little people you've never heard of.

00:35:18Lots of great talent that make me look good on screen, which is, those of you watching

00:35:23on YouTube will realize what a job that is.

00:35:26Our producer is smiling to himself over there.

00:35:28Uncaringly.

00:35:29What's it called?

00:35:30Is it also boundless?

00:35:31No, it's called Wanted, the escape of Carlos Ghosn.

00:35:34Okay.

00:35:35Tell us, let's go do the Ghosn story.

00:35:37It's so fun.

00:35:38Sure.

00:35:39I've only just sold three years of my life.

00:35:40So yes.

00:35:42I have to say, when I met you, I think the first real thing I said to you when I wrote

00:35:45this book, I said, so guilty or innocent, I remember you're very Buddha-like.

00:35:51You asked me, did he do it or was it all a setup?

00:35:57And you said, you were very calm, you said, two things can be true at once.

00:36:00Yeah.

00:36:01Both things can be true at the same time.

00:36:03So I think that was the most fascinating part of the story is as we sort of peeled back

00:36:09and just to sort of set the stage of how little we knew at the time, the night he was arrested

00:36:14and possibly for the next 24 hours, it was a scoop if anybody was able to figure out

00:36:20if Ghosn thought he was guilty or innocent.

00:36:22That's how little information was getting out.

00:36:25So that was a starting point.

00:36:27And as we sort of dug in and peel back the layers of the onion and got people to talk

00:36:33and share information and documents, just the sort of breadth and the length of the

00:36:40things that were out there that, I mean, it was everything from accusations that he was

00:36:45using company money to buy Cartier watches for Russian oligarchs to like petty stuff

00:36:50where people were complaining that Nissan bought all his suits and his iPhone cables.

00:36:55He didn't spend his own money to basically Carlos Ghosn living rent-free in four or five

00:37:02different houses around the world and using the private jet for personal stuff.

00:37:09And then the big one was an accusation that he was funneling Nissan and Renault incentive

00:37:17money through a distributor in Oman back into his own pockets with which he bought a $12

00:37:23million yacht and among other things.

00:37:27So, but where, can you set up where Nissan was at this time and where he was?

00:37:33Because he was kind of, he was already announced that he was going to be leaving Nissan, Renault.

00:37:41The public facing statement was like, we love each other.

00:37:43Things are going great.

00:37:44Sure.

00:37:45But internally it's like, uh-uh.

00:37:46So Nissan and Renault had been in a marriage of convenience, what, for 20 years since 1999?

00:37:57And Carlos Ghosn had been CEO of both Renault and Nissan since 2006.

00:38:03That might be off by a misremembering.

00:38:05It's about right.

00:38:06It's about right.

00:38:07Yeah.

00:38:08And throughout that entire time, Carlos Ghosn was always seen as the great defender of Nissan's

00:38:13independence.

00:38:14Yeah.

00:38:15Right?

00:38:16Renault had always wanted a merger or an eventual merger and saw themselves as the senior partner

00:38:22in the relationship by virtue of providing all the cash that brought them together and

00:38:27saved Nissan.

00:38:30Right around the time that Carlos Ghosn stepped back as CEO and became just chairman at Nissan,

00:38:38his tone started to change where people started asking him, and you can go back and go watch

00:38:43Bloomberg TV, watch CNBC.

00:38:46People started asking him, is it true there's going to be a merger?

00:38:48Is a merger the right answer?

00:38:49And he's like, well, you can never know what happens in the future, right?

00:38:52So the tone started to change and people within Nissan started becoming nervous.

00:38:57And the ... I'm trying to translate what this person is, but there's kind of like a quasi

00:39:08board director role that's kind of an audit or ombudsman role, and they started poking

00:39:14around a little bit and started uncovering what they thought were suspicious things.

00:39:20And it snowballed into a secret investigation into Carlos Ghosn that uncovered large amounts

00:39:29of things of which a small proportion of which turned into the criminal charges against him.

00:39:36And the criminal charge, if I remember from your book, stemmed from ... he had a big for

00:39:41Japan salary.

00:39:42It was not big compared to like Rick Wagner.

00:39:45Yeah.

00:39:46So that was the first charge.

00:39:48And I think that was what confused everybody at first, right?

00:39:51So there were three criminal charges against Carlos Ghosn.

00:39:54The first ... well, I'll explain the first two that I think are fairly easy to understand.

00:39:58One was the funneling of money through an Omani distributor.

00:40:02The second were fees paid to a Saudi businessman for consulting services.

00:40:09Who was his like buddy or something?

00:40:11Well, the explanation was always came back to Carlos Ghosn's pocket somehow.

00:40:15And then the big one, which was the first one, which was the only one he was about to

00:40:22go on trial for when he went and left the country, was an accusation of not reporting

00:40:28his full income.

00:40:31So it was a paperwork violation.

00:40:32What had happened, it turned out, was that Carlos Ghosn, let's say, was making roughly

00:40:37$20 million.

00:40:40And the Japanese government changed the rules about disclosure of individual salaries.

00:40:46So before, you just presented the gross compensation for all of your board directors.

00:40:51And in Japan, board directors are company executives.

00:40:54So you would provide, say, you had 12 people on the board, everybody together made X.

00:40:59They changed the rule that anybody who made more than, say, roughly a million dollars

00:41:03had to report their individual salary.

00:41:05Now, Carlos Ghosn had always been pestered by the French press about how much he was

00:41:12making at Nissan versus how much he was making at Renault.

00:41:15And if anybody knows anything about the French, the idea of somebody making, let's call it

00:41:20$20 million, would have been just as big an outrage in France as it would be in Japan.

00:41:25So Carlos Ghosn, I think for good reasons, was worried about the public perception of

00:41:31that.

00:41:32So he decided to, after unsuccessfully lobbying against the rule in Japan, decided to take

00:41:38a 50% pay cut.

00:41:41And even after the 50% pay cut, he was the most highly compensated Japanese auto executive.

00:41:46But even at 20, he wasn't making as much as, I think, Mary Barra or-

00:41:52No.

00:41:53And I think that's one thing that rubbed him the wrong way.

00:41:54And I think one thing he often said, I will say one point of rebuttal, is that Mary Barra's

00:42:00salary and Rick Wagoner and all those other guys, 80% of the compensation is in stock

00:42:04incentives.

00:42:05Carlos Ghosn was pure cash.

00:42:07Yeah.

00:42:08And-

00:42:09And grossed up.

00:42:10And-

00:42:11For income tax.

00:42:12And when he took the pay cut, he didn't actually take the pay cut.

00:42:15They slush funded the money in a retirement account, right?

00:42:19That was the whole foundation of the criminal charges.

00:42:22And look, the only person who stood trial was a guy named Greg Kelly.

00:42:28Yes, Greg Kelly.

00:42:29Head of HR.

00:42:30Head of HR.

00:42:31He had a bunch of things.

00:42:32And I will say-

00:42:33A fixer.

00:42:34He's kind of a fixer.

00:42:35I will say that Greg Kelly was found not guilty on all charges except for one count in 2018,

00:42:40where for the filing that year, he was found guilty.

00:42:46Now, for me, the most interesting question is not whether or not Carlos Ghosn or anybody

00:42:50around him committed a crime, right?

00:42:54Just take the compensation question for a second.

00:42:56If Carlos Ghosn had stood up, and remember what point in time, it was like 2010, 2011,

00:43:00right?

00:43:01If he had stood up in front of the shareholders and said, I make $20 million a year, either

00:43:06pay me that money or I'll go find a job at GM.

00:43:09What would have happened?

00:43:10They would have paid him.

00:43:11They would have paid him the money.

00:43:12Right.

00:43:13Right.

00:43:14So-

00:43:15Because it's important to point out, part of the reason why he wrote the book and part

00:43:17of the reason this whole thing was such a huge scandal is that for a lot of years, he was

00:43:21like a god in Japan.

00:43:23He had manga books written about him, miniseries.

00:43:27He was on par with Sergio Marchionnello.

00:43:28He also was a non-Japanese person who got the big job, which is-

00:43:33That's what was ... Look, any good story gets me excited, but the big question, what really

00:43:40drove me to report out this story was that essential thing.

00:43:43He was a titan in the industry.

00:43:45He was a shoo-in for the Automotive Hall of Fame, right?

00:43:47He had a 40-year career, and he risked it all for essentially $100 million.

00:43:54Like all told.

00:43:55Right.

00:43:56Which is a significant amount of cash, but we've seen his net worth, and it's not that

00:43:59big a deal.

00:44:00I was going to say, that's not even ... That's like 12% of his net worth.

00:44:03Yes.

00:44:04Like he's even getting a billion dollars.

00:44:05Yeah.

00:44:06Yeah.

00:44:07So that-

00:44:08I'm in the wrong job.

00:44:09You're in the wrong position.

00:44:10Why somebody would do that, I think is a more interesting question.

00:44:12Right.

00:44:13Right?

00:44:14So look, you could have told everybody you made $20 million a year, taken the flak.

00:44:18Lots of executives, especially in other industries, make 10 times more than that, and they get

00:44:24lambasted, but they deal with it.

00:44:25They go to Davos, and they sort of hang out with their friends.

00:44:27Right.

00:44:28Right.

00:44:29Right.

00:44:30They go skiing.

00:44:31I've talked to those guys.

00:44:32Our parent company CEO gets lit up all the time for how much they make, and it's a lot

00:44:33more than he goes.

00:44:34It makes a lot more than anybody.

00:44:35Well, that's just what I'm saying, but they take that flak, and they own it, right?

00:44:40They say, I'm worth that money.

00:44:41The fact that the two-fold part of Carlos Ghosn that felt he deserved that money, but

00:44:47also wanted to maintain this physical persona, that he wasn't the type of guy that wanted

00:44:52that money.

00:44:53Right.

00:44:54I think it was a really interesting dichotomy to explore in the book.

00:44:55Yeah.

00:44:56Again, I'll just plug your book, but what I was fascinated by was this wasn't the first

00:45:00time he went through this, like when he was at Michelin.

00:45:02Right.

00:45:03So he goes to Michelin, Brazil, and does a great job, and then they put him in the US,

00:45:09and they merged with, what was it, Uniroyal?

00:45:11Yes.

00:45:12And so he's got a fight.

00:45:13Suddenly, all these guys working for him that are making a million dollars a year, he's

00:45:17making $100,000 a year, and he's talking to the Michelin president, owner, who's like,

00:45:21you know, hey, you should pay me more, and the guy's like, no, $100,000 is enough.

00:45:25Yeah.

00:45:26I mean, Francois Michelin, famously, very French, drove a Deux Chevaux, like a two-seater.

00:45:33So yeah, I mean, so that's why he left.

00:45:36He found a new job.

00:45:37But he just never felt he made enough money, right?

00:45:40So this is one of the most fascinating aspects into his personality.

00:45:44He refers to this as his scorecard, right?

00:45:47How much you make is your scorecard versus others.

00:45:49It's not about the money.

00:45:50It's about the fact that you're as good as that other guy, and if you're being paid less

00:45:54to him than him, that's an insult, right?

00:45:57So money is an enabler of a lifestyle that he wants to live, but most of all, it's sort

00:46:00of a recognition of your accomplishments.

00:46:03How was the mood on the street in Japan, like the average person when Gon, this hero, a

00:46:10titan of industry, gets arrested?

00:46:12What was the mood?

00:46:16I mean, I would say, so there's a certain sort of statistical size where stereotypes

00:46:25become accurate, right?

00:46:28And I will say, generally speaking, in Japan, if you're accused of a crime, people usually

00:46:32assume you did it.

00:46:35And I think what was so egregious about Carlos Gon's crime is that it wasn't just like fraud.

00:46:43It was selfish fraud.

00:46:45Like hurting the company for his own personal gain.

00:46:50But again, the slush fund, take the Saudi and the Oman part out of it, like the slush

00:46:55fund, the big piece of it, the $70 million that he was going to get when he retired.

00:47:01Didn't Nissan think that up?

00:47:02Wasn't that Nissan's plan?

00:47:04I mean, look, I think there was a circle of folks that knew about it at Nissan, and certainly

00:47:10at trial, various levels of knowledge were expressed.

00:47:16But I don't think that so much matters, right?

00:47:21Like ultimately, the buck stopped with him.

00:47:23And I don't think anybody who's being honest would characterize his authority at Nissan

00:47:31as anything but absolute.

00:47:32I mean, the guy was a rock star at the company.

00:47:35And in the country.

00:47:36Did you ever interview him directly?

00:47:38Yes.

00:47:39Many times?

00:47:41I honestly showed up 15 minutes late to an interview with him.

00:47:43And if you've ever met him, you know how punctual he is.

00:47:46Did he roast you?

00:47:47Yeah, a little bit.

00:47:48He was very lucky to get a second interview.

00:47:49Was that at an auto show?

00:47:50No, it was at the headquarters, right around the time where he was stepping down.

00:47:51Oh, wow.

00:47:52Yokohama?

00:47:53Yeah.

00:47:54Yeah, okay.

00:47:55Yeah, big building.

00:47:56I couldn't imagine being late to a meeting.

00:47:57Why were you late?

00:47:58What's your story?

00:47:59Come on, man.

00:48:00And the thing is, in Japan, you don't even have an excuse.

00:48:01You can't even blame public transit.

00:48:02Right, right, right.

00:48:03It's like a miscalculated how long it would take me to get from like central Tokyo to

00:48:12like Yokohama.

00:48:13Ooh, you must've been sweating bullets.

00:48:14I sprinted.

00:48:15Wow.

00:48:16I've met him.

00:48:17He's an intense dude.

00:48:18Oh, yeah.

00:48:19Yeah.

00:48:20He's just that look he has.

00:48:21He's got the eyebrows.

00:48:22It's the eyebrows.

00:48:23He's the ultimate communicator.

00:48:24One of the best things, well, most annoying things, I will say, but like best personality

00:48:30things is he can speak in three consecutive sentences.

00:48:33So you'll be interviewing him and you're like, you're taking notes, you're taking recordings,

00:48:37whatever.

00:48:38You're like, this is fantastic.

00:48:39This salt and gold is exactly what I need.

00:48:40You play it back.

00:48:41You're like, none of this is quotable.

00:48:43What's his name?

00:48:44The hair.

00:48:45Mark Fields was like that.

00:48:46Oh, yeah, yeah, yeah.

00:48:47I record Mark Fields.

00:48:48I'd be like, wow, this guy's awesome.

00:48:49I'm looking at him.

00:48:50There you go.

00:48:51Right, right.

00:48:52Dude said nothing.

00:48:53He said nothing.

00:48:54He said absolutely nothing.

00:48:55Like, oh my God.

00:48:56I mean, we could get into that.

00:48:57All right.

00:48:58But let's, again, we're running out of time.

00:49:00Let's talk about the most exciting part about this.

00:49:01Yes.

00:49:02But let's not go into all the gory details because, again, you've got a documentary and

00:49:05you've got a book that you can go into.

00:49:06Yeah, but make sure to listen to our podcast, too.

00:49:07I know.

00:49:08Piano box?

00:49:09Musical instruments?

00:49:10No.

00:49:11Musical instruments.

00:49:12That's a roadie case.

00:49:13XCO team, whatever something.

00:49:14What's this?

00:49:15Oh, yeah.

00:49:16X Green Beret.

00:49:17X Green Beret.

00:49:18Well, okay.

00:49:19Look, like all the gory details are in multiple New Wall Street Journal news stories and in

00:49:24the documentary.

00:49:25In fact, we got both Mike Taylor and Carlos Ghosn for the documentary.

00:49:28Oh, did you?

00:49:30Yeah, I got them out.

00:49:31Nice.

00:49:32Okay.

00:49:33So when you woke up to discover that a CEO had fled via private jet, what was the mood

00:49:38like then?

00:49:39It was a 3 a.m. phone call from my colleague in France, Nick, that woke me up and said,

00:49:44Carlos Ghosn has escaped Japan.

00:49:45I said, what?

00:49:46And then there were probably some other words after that.

00:49:51Right, right, right.

00:49:52And then it was just basically like manning the phones.

00:49:55And I really got to, like Nick and I get a lot of credit for, and I try to give myself

00:50:03the sort of appropriate amount of credit for the work we did on the story.

00:50:07But we had a global operation of people that were calling people in Brazil, calling people

00:50:12in France.

00:50:13We got the first photo of the actual box because our Turkey reporter at the time is a badass.

00:50:18Right, right.

00:50:19That's right.

00:50:20He didn't fly to Lebanon.

00:50:21They flew to Turkey.

00:50:22He flew through Turkey.

00:50:24Because their great plan was by flying to Turkey, they would somehow lose the investigators

00:50:30by jumping on another plane.

00:50:31Right.

00:50:32Nobody would think he was in Lebanon.

00:50:33Right.

00:50:34Because he gets off one plane and walks across a tarmac into a second one.

00:50:37Right.

00:50:38And so, but like, what was the, like, was it, I imagine it was very big news in Japan.

00:50:44It was all the news.

00:50:45I mean, all of this was, but it was funny because after he escaped, there was outrage.

00:50:54There were some choice words said by ministers who don't usually use these words.

00:50:59And then I think the whole country just kind of like moved on and started ignoring him.

00:51:05And you started, like, they started referring to him like as yesterday's man.

00:51:09Like when you sort of have meetings with like Japanese reporters and Japanese editors, they're

00:51:14like, they were ready to move on and like-

00:51:16Is it an embarrassment or they're just like-

00:51:18It's an embarrassment and also like outrage, but also he's gone.

00:51:21Gone is gone.

00:51:22But isn't that kind of what Nissan really wanted was just for him to disappear?

00:51:29They were kind of hoping.

00:51:30And I think that was part of-

00:51:31Right.

00:51:32Because, real quick, because the worry in Nissan, if I remember your book correctly,

00:51:37was that Renault was really going to take over and that Nissan would lose their autonomy

00:51:42and that Japan would be subservient to a French company or a foreign company.

00:51:45That's certainly like the sort of the very core concern.

00:51:49I think in the structure of what they were considering, the bigger concern is that Carlos

00:51:53Ghosn would basically enthrone himself at the parent company in Amsterdam and just be

00:52:00there forever.

00:52:01Right.

00:52:02Like a run start.

00:52:03Right.

00:52:04So certain aspects of the operations would be left in Japan, but all of the strategic

00:52:09decisions would be made at some separate organization.

00:52:14And I think that fear of not becoming a Japanese automaker anymore, coupled with what a small

00:52:21group of people were finding about what Carlos Ghosn was doing with the money at the company,

00:52:27just sort of really lit a fire under them to sort of try to throw a whole monkey wrench

00:52:31in the works.

00:52:32So for those who won't indulge us and go actually read the book or watch the doc, can you just

00:52:38quickly outline, he escapes from a, he's been kind of locked up in a hotel room.

00:52:44Just go from there.

00:52:45Well, okay.

00:52:46House arrest, right?

00:52:47House arrest.

00:52:48Well, he was living in the former residence of the Sri Lankan ambassador to Tokyo in a

00:52:53very tony part of the city.

00:52:55Relatable.

00:52:56Down the street from where Masayoshi Son from SoftBank lives actually.

00:53:00And he leaves, I believe, right about 1.30 PM during the New Year's holiday.

00:53:07Anybody who's been to Japan during that time knows that's the one time when the entire

00:53:10country shuts down.

00:53:14He heads to the-

00:53:17He's under house arrest.

00:53:18No.

00:53:19He's not.

00:53:20He can leave and move around the country.

00:53:21Right?

00:53:22There's cameras everywhere.

00:53:23But they have his passport.

00:53:24They have his passport.

00:53:25And so he meets up with Michael Taylor, the former American Green Beret, Michael Taylor's

00:53:31son and a former Lebanese militia man.

00:53:35Pause real quick.

00:53:37My favorite part of the whole everything is that, what's the guy's name?

00:53:41Michael Taylor?

00:53:42Taylor.

00:53:43And the Lebanese guy, they just look straight at a central caster.

00:53:46If you're making a Call of Duty movie.

00:53:48The neck is thicker than the ear, but goes around the ears.

00:53:50Just scars.

00:53:51And then they're like, they show up and they're like, hi, we're musicians.

00:53:54Yeah.

00:53:55They're supposed to be violinists.

00:53:56And the Lebanese militia man, he limps, he's blind in one eye and deaf in another and he's

00:54:02supposed to be a musician.

00:54:03It's just like the least believable cover story ever.

00:54:07Yeah, but it's like Dolph Lundgren saying like, I cut hair, you know, as a master's

00:54:13in biology.

00:54:14He's actually.

00:54:15No, but like these.

00:54:16Yeah.

00:54:17I think it was a photo in your book.

00:54:19Like it was like, it was like the passport control.

00:54:21And I mean, it's literally like a geo joke character.

00:54:25Yeah.

00:54:26Yeah.

00:54:27So anyways, this merry band of fellows gets on the bullet train down to Osaka where they'd

00:54:32flown in on the private jet.

00:54:34They pack them in the case in the hotel room and just wheel it into a van.

00:54:38This is a, this is a roadie case that would be for like a drum kit.

00:54:42It's big.

00:54:43It's not to put a person in.

00:54:44Large speakers.

00:54:45You know, like.

00:54:46Okay.

00:54:47And Dylan was not a big dude.

00:54:48Yeah, he was a small guy.

00:54:49He was fairly small.

00:54:50But also like they drilled holes in the bottom so he could breathe.

00:54:51But there was one funny moment that came out in some police testimony from the people who

00:54:57handled the boxes.

00:54:58And obviously they brought the boxes off the plane and they left the same day.

00:55:02So it's not like they'd shifted over and there was different people.

00:55:05Yeah.

00:55:06So they were commenting how when they were taking the, the, the cases out of the van

00:55:11at the airport terminal, at the private jet terminal, they're like, it was much heavier

00:55:16this time.

00:55:17And they're all joking.

00:55:18Well, maybe there's a pretty girl stash in here or something like that.

00:55:20That's what, okay.

00:55:21That was what was so insane to me.

00:55:22These guys were such knuckleheads.

00:55:24They didn't think to put 150 pounds in the box, take it off the plane.

00:55:29Like.

00:55:30Yeah.

00:55:31I think there was a lot of.

00:55:32Like, I don't know how this stuff actually works in the world of like international espionage.

00:55:35Hey Johnny, it worked.

00:55:36Like.

00:55:37Well, it almost didn't.

00:55:38No, no.

00:55:39Literally the people that are, that like, cause they have to have Japanese people move

00:55:42the crates.

00:55:43And they literally joked there's a, there's a, I mean, there's a girl, but there's a person

00:55:47in the box.

00:55:48Well, so I think, I think one of the big things that came out of it is, is how, you know,

00:55:52you and I travel.

00:55:53I am presumably, neither of you traveled private, but.

00:55:56No.

00:55:57Once in a while.

00:55:58But.

00:55:59Not on our own dive.

00:56:00Not on our own dive.

00:56:01Yeah.

00:56:02But, you know, all the checks we've gone through, especially post 9-11, like that doesn't exist

00:56:06for the private jet set.

00:56:07Oh yeah.

00:56:08No.

00:56:09Yeah.

00:56:10Like they don't scan the luggage.

00:56:11You walk on.

00:56:12You just put it in there.

00:56:13Yeah.

00:56:14And it was really funny because they had the whole, again, their cover story.

00:56:15This is supposed to be very sensitive musical equipment and everybody had to treat it with

00:56:19care, no scanning, et cetera.

00:56:22And then there was just like this funny moment where, where one, the box would go and goes

00:56:26in the back, but the other box is just going through the front main passenger entrance.

00:56:30And so I forget, maybe it was one of the managers at the terminal was helping and it

00:56:34was like getting stuck.

00:56:35And so this guy who had just five minutes ago told him the sensitive equipment starts

00:56:39like rolling at end over end.

00:56:40So it was just like all these moments that are like, you know.

00:56:43Or the bribe.

00:56:44That, that to me was like.

00:56:45Oh, trying to bribe the guys.

00:56:46These guys knew nothing.

00:56:47They know nothing.

00:56:48Nothing about Japan.

00:56:49Trying to.

00:56:50But like, didn't they, they handed a, like a woman, like a envelope with $10,000 cash.

00:56:51Yeah.

00:56:52Yeah.

00:56:53Yeah.

00:56:54And like, it was just like, we just want every, just everything to go well, you know,

00:56:57like we.

00:56:58She was like, this is Japan.

00:56:59We want everything to go well.

00:57:00Yeah.

00:57:01Yeah.

00:57:02Yeah.

00:57:03Exactly.

00:57:04I mean, there's a Coen brothers movie in here somewhere.

00:57:05Yeah.

00:57:06So what's the aftermath?

00:57:07He's, he's still stuck.

00:57:08He's in Lebanon.

00:57:09He's in Lebanon.

00:57:10He can't leave.

00:57:11So his yacht, which he named Shacho, which means company president, is still in Lebanon.

00:57:18Top boss.

00:57:19Has been, I think last I heard had been renamed to Twig, which is also a subtle Ghone connection

00:57:25because Ghone means branch in Arabic.

00:57:28So that's last I checked, still in Lebanon.

00:57:30His house is still in Lebanon.

00:57:32I don't think I haven't actually asked him or his people lately, but I don't think he

00:57:38lives in the $19 million pink mansion in Beirut that Nissan built for him that he went to

00:57:43live in.

00:57:44I think they fought over that and Nissan won, but Ghone has a lot of properties now.

00:57:49So did you talk to, do you talk to him after the book came out?

00:57:51Did he read it?

00:57:52Does he, does he, is he upset?

00:57:53Is he mad?

00:57:54Does he send you an email, a text?

00:57:57I never, and let's be honest, after three years of dealing with all this, I've never

00:58:02asked him what he thinks.

00:58:05I've asked other people connected to him and that know him what they think.

00:58:09I don't want to know.

00:58:11Well, why not?

00:58:14Well, I, as a journalist, try to be objective, but also treat everybody fairly and I think

00:58:23I did a good job.

00:58:25But when something like this happens where he clearly has like a strong opinion about

00:58:29how he feels about it, like, I don't want to feel bad about that.

00:58:34Because he made a competing documentary, essentially, I don't know if he made it, but he starred

00:58:38in.

00:58:39He had a couple, there were a couple of projects in which he sort of had a more direct hand

00:58:45in than the project we did.

00:58:47Because I watched one before I read your book.

00:58:49The Netflix one, right?

00:58:50The Netflix one.

00:58:51And I was like, man, this poor guy, he did nothing wrong and these meanies in Japan just,

00:58:55and you can't get a fair trial.

00:58:57Well, to pat myself on the back a little bit, like, nobody, still nobody, except Nick and

00:59:03I have gone as deep on the whole kickback side of the thing.

00:59:08Nobody has managed to dig in as much as we did.

00:59:10So they didn't have the information, right?

00:59:12Like a lot of-

00:59:13You guys had a lot of information.

00:59:14Yeah.

00:59:15I don't know if I can disclose what you told me you have of his, but I was like, whoa.

00:59:19Well, I mean, I think like, I think, yeah, like we, for example, we, we, we had like

00:59:26a lot of his, we know for a fact that like when he was working on the, the, the merger

00:59:34between Renault and Nissan, that he had sort of calculated his net worth and had worked

00:59:39out that the, the, the merger would have made him a billionaire.

00:59:43Right.

00:59:44And so, you know, I mean, there's a, we got more than I've ever thought we could get and

00:59:50more than I probably will ever again, because the, just the level of reporting we were able

00:59:54to dig in at a moment of crisis was, I think like unparalleled at the time and also kind

00:59:59of extraordinary.

01:00:00Yeah.

01:00:01It was, made the book, it was already a great story, but it made it extra fascinating just

01:00:05to have like, there's so many angles and so many ways into the story.

01:00:08Right.

01:00:10With, real quick, with almost the billion dollars that he had, does he still have that

01:00:15or was it, was his account frozen?

01:00:18I think that is a bit of a question mark.

01:00:22I know that they froze several accounts of his, but he had money all over the world.

01:00:29Now the, the difficulty for him is, Lebanon has pretty strict capital controls and what

01:00:36that means is you can bring money in, it's really hard to bring money out.

01:00:41And there are in the Middle East, something called Hawala Networks, which is sort of a

01:00:46network of money traders where, you know, a guy in Lebanon who owes some guy like, I

01:00:50don't know, $2 million and you sort of work it out with money exchange and he gets the

01:00:54money in wherever Dubai and you take out the money in Lebanon.

01:00:57So there's ways to, I don't think he's hard up for cash.

01:01:00Okay.

01:01:01But he can't leave Lebanon, right?

01:01:02He can't leave Lebanon.

01:01:03But I think worse than that, like this is not the retirement he had set up for himself

01:01:08in retirement.

01:01:09Yeah.

01:01:10He was going to be, you know, the greatest Titan of the automotive industry since Sergio

01:01:15or Lee Iacocca, right?

01:01:16Right.

01:01:17He was going to go to Cannes every year as he'd been, he was sort of, he would go up

01:01:23and down the Turkish Riviera in his yacht, like his kids had all these businesses and

01:01:28you know, he was vacationing, you know, his mother was getting older in Brazil and I don't

01:01:34know if she's passed away, but she was very old.

01:01:37And so I think the fact that his legacy has been destroyed the way it is, I think that

01:01:43hurts most.

01:01:44But it's also the most compelling question is like, you knew that beforehand and you

01:01:48wagered it all on this.

01:01:50Hubris.

01:01:51It's ultimately hubris.

01:01:52Hubris and greed.

01:01:53Yeah.

01:01:54Yeah.

01:01:55All right.

01:01:56So it's the book, it's on my reading list for the holidays.

01:01:57Boundless.

01:01:58Boundless.

01:01:59The Rise.

01:02:00It's a weekend read.

01:02:01And what's the documentary called?

01:02:02It's called The Rise of Carlos Ghosn.

01:02:03It's on Apple TV.

01:02:04Apple TV.

01:02:05Boundless.

01:02:06The Rise, Fall, and Escape of Carlos Ghosn by Nick Kostov and Sean McClain.

01:02:10We got a little time left.

01:02:11Just a little bit.

01:02:12I'd like to go lightning round on a couple of questions.

01:02:14Let's do it.

01:02:15Because you are, again, Sean McClain, no relation to John McClain, automotive reporter of Wall

01:02:21Street Journal, covers a lot of the startups in the US, long history covering Japanese

01:02:26auto industry in Japan, and of course a lot of the other Asian manufacturers.

01:02:31First question, who is not going to make it in the auto industry?

01:02:36Don't say Fisker.

01:02:37Don't say Fisker.

01:02:38Who are you worried?

01:02:39Who are you worried?

01:02:40I'm speaking, I'm talking first from legacy car manufacturers, the ones you know really

01:02:43well and then some of these startups.

01:02:45So I'm going to describe a type of car maker, right?

01:02:48So the type of car maker that's not going to make it is one who can't make money on

01:02:52their cars and two, hasn't found the niche, right?

01:02:55There's a lot of established car makers today that are indistinguishable from one another,

01:03:00but have had issues keeping their product fresh, making money on their cars, and that

01:03:06describes quite a few car makers today, including European car makers and European car brands.

01:03:12And it also describes startups.

01:03:14Startups are a bit more pressured because, like I said, negative cash flow.

01:03:18More money is going out than is coming in and they're burning through their bank balances.

01:03:21So the average car loan today is 7% interest rates, which means people who could afford

01:03:28a $40,000 car during COVID can afford $28,000, $29,000 today.

01:03:34That equation is going to continue and if you can't hit that mark and you can't make

01:03:38money doing it, you're dead.

01:03:41You want to call him out by name?

01:03:42No.

01:03:43Okay.

01:03:44All right.

01:03:45What did Maz ever do to you?

01:03:46Sorry.

01:03:47Go ahead.

01:03:48Specifically, I just had one question and I would assume you spent a lot of time covering

01:03:52Toyota and Accio.

01:03:54Yeah.

01:03:55Is it fair to say, holy crap, what are they doing?

01:03:59They've really seemed to focus on performance and styling and bringing all these weird Gazoo

01:04:05Racing, GRMN, collapsing all of TRD under this new GRM and things, which all seems to

01:04:12lead back up to Accio, who's no longer leading.

01:04:15It's Koga, right?

01:04:16Yeah.

01:04:17Is that a fair ... And their whole, oh, we can build nine hybrids for every one battery

01:04:24electric.

01:04:25You other guys can do it.

01:04:26Okay.

01:04:27Does any of this make sense?

01:04:28You have to think of Toyota over the long term.

01:04:32Back in 2016, 2015, 2016, Accio Toyota basically said to his people, no more boring cars.

01:04:40That's why you ended up with the weird looking Camrys and the weird shark face on the Lexus

01:04:45and these-

01:04:46Siennas that look like Supras.

01:04:48Siennas that look like Supras.

01:04:49Yeah.

01:04:50What is that, the tiny little Toyota SUV that has a weird door handle up on it?

01:04:56Oh, a CHR.

01:04:57The CHR.

01:04:58Coupe High Rider, baby.

01:04:59Coupe High Rider, which I remember going to that product reveal and they said the design

01:05:03theme was sexy diamond.

01:05:04Yeah.

01:05:05It was very on Toyota.

01:05:06Very sexy.

01:05:07And there's a Lexus version, the UX, which is the worst Lexus ever.

01:05:10Oh, come on.

01:05:11But I think we've gone from that where they're lowering Camrys down to make them sportier

01:05:16to obviously the design has shifted and the intent of the vehicles has shifted again.

01:05:24The hybrid thing, I think they're serious about.

01:05:26Going full hybrid, I think is a very serious-

01:05:28Oh, yeah.

01:05:29They're getting rid of Prime, the designation, because I think everything's-

01:05:35The Camry is hybrid.

01:05:36They're all hybrid.

01:05:37They're all hybrid.

01:05:38Siennas hybrid only.

01:05:39But they are working on EVs.

01:05:40I mean, you-

01:05:41Yeah.

01:05:42Look, like-

01:05:43Not for tomorrow, but-

01:05:44Well, look, like I think the EVs will come, but for Toyota, like Toyota's a deeply rational

01:05:51business-minded, like they are not swayed by trends at all, which is why Akio had to

01:05:56say to them bluntly, stop making our cars so freaking boring.

01:05:59Right.

01:06:00Right.

01:06:01Right.

01:06:02So-

01:06:03So, wait, so-

01:06:04So they'll come up with EVs and they're going to be slower than everybody and they don't

01:06:06care.

01:06:07Right.

01:06:08Okay.

01:06:09So you're saying it isn't, because my full thing is, wow, Toyota really got caught with

01:06:10their pants down on EV-

01:06:12No, that's purposeful.

01:06:13Yeah.

01:06:14So they, so Tesla's a trend to them?

01:06:17Look, I think what they did, so one of the most eye-opening conversations I ever had

01:06:23was in Toyota City with a battery engineer.

01:06:25And this was when the first generation RAV4 Prius Prime came out, right, where it had

01:06:30like 15 miles of all electric range, something ridiculous.

01:06:33Yeah, it was that.

01:06:34It was 15 kilometers, seven miles.

01:06:35Yeah.

01:06:36So it was really low.

01:06:37Yeah.

01:06:38And he presented me with a massive spreadsheet and charts that said, if we made this battery

01:06:41any bigger, we would be adding battery just to carry the battery.

01:06:45This is the optimal size for the fuel efficiency emissions to be able to travel.

01:06:51Like this is the biggest we can make it with today's.

01:06:54So as a Rivian driver, you're aware that there are diminishing returns to range, the bigger

01:07:01the vehicle gets and the bigger the battery pack gets, right?

01:07:04So that's how Toyota thinks about things, right?

01:07:06Like what is the most efficient, most cost-effective thing for our customers that sort of has returned

01:07:14to us?

01:07:15And that's how, that's the starting point, right?

01:07:17They're not going to come, but saying that they also make forerunners.

01:07:21So I'm a little confused, but, but, but yeah, I think that shapes their strategy.

01:07:29So okay.

01:07:30I got two, I got two then bigger picture questions.

01:07:34Is it, cause part of the, part of my thesis on why Japan Inc on the car side has been

01:07:41slow to adopt battery electrics is that battery electric vehicles represent in a, a way simpler

01:07:49from a manufacturing perspective, from a cost, from a bill of materials way to manufacture,

01:07:53especially if you, if you're only be Bev, you know, you're not doing P has, you're not

01:07:57doing ice, right?

01:07:58As lithium prices drop.

01:08:00You don't need, you don't need an engine plant and you don't need to test these engines.

01:08:03You can sell all of the, you know, the whole thing, right?

01:08:05And Japan Inc is not going to go that way.

01:08:07In fact, they want to hit, you know, we want two systems.

01:08:09We want every car to have both a battery system and a complex engine system because overall,

01:08:14like in Germany, it's, it is the auto manufacturing is, is it's a jobs program.

01:08:21It's a fundamental pillar of the economy.

01:08:23IG Mattel is freaking out that all of these guys need to learn how to build EVs and an

01:08:29entire categories of jobs are going away.

01:08:31No more piston plants, no more camshafts, no more o-rings, the, the, the cafeteria that

01:08:37supports those guys that goes away too, you know what, because we're just building batteries

01:08:39and motors.

01:08:40There it is.

01:08:41Is it any truth to like why Japan or Germany would want to slow walk that look?

01:08:47I wouldn't say it's a why it definitely informs their decision making.

01:08:50Like it is true that, that Toyota has famously said, we're going to maintain X million jobs

01:08:55in Japan.

01:08:56Yes.

01:08:57And to do that, you need a certain amount of production base.

01:08:58The reason why Nissan and Honda are talking to each other, two dramatically different

01:09:03companies would be talking to each other right now is because they need a certain percentage

01:09:08of volume to justify having a supplier base and a manufacturing base in Japan.

01:09:13Right?

01:09:14So they are conscious about not losing those jobs.

01:09:17That is a big decision.

01:09:18However, if Toyota thought that they could build and sell 5 million EVs, they would do

01:09:24it tomorrow.

01:09:25Yeah.

01:09:26Yeah.

01:09:27Yeah.

01:09:28And, and their Denso and Aishin and all those other companies would adjust as necessary.

01:09:31You were telling me that you went, um, with Toyota and they were tearing apart a bunch

01:09:35of EVs.

01:09:36Oh yeah.

01:09:37Yeah.

01:09:38I went to, it's outside Michigan.

01:09:39Um, well not outside Michigan, in Michigan, outside Detroit.

01:09:41Yeah.

01:09:42They have this whole, and look, a lot of car makers have it, but it's really fun.

01:09:44Yeah.

01:09:45We went, we sent, we sent, uh, Frank, um, Marcus went, yeah, yeah, yeah.

01:09:49But it's where they sort of do the crash testing of their cars, do the crash testing of the,

01:09:52of the, uh, competitor's cars where they tear them all apart.

01:09:55Right.

01:09:56And it's like going to like a grocery store where every single competitor's vehicles was

01:10:02sort of laid out, like vivisected on racks.

01:10:05Yeah, yeah.

01:10:06Sure.

01:10:07And it was really cool.

01:10:08I don't know what grocery stores you were going to.

01:10:09It's like a butcher shop.

01:10:10Yeah.

01:10:11What'd you say?

01:10:12You got the side of beef.

01:10:13You guys are different in Japan.

01:10:14You got the, you got the chicharron.

01:10:15It's the, it's the wet market of cars, right?

01:10:17Okay.

01:10:18I got you.

01:10:19Um, but yeah, they had Lucid Airs, they had Rivians, they had Teslas.

01:10:22They had all the Koreans laid out there, like on racks, just sort of like looking at it.

01:10:26And what was their take?

01:10:27Yeah.

01:10:28Yeah.

01:10:29What was it?

01:10:30What were they impressed by?

01:10:31What were they?

01:10:32They were actually, they were really impressed.

01:10:33And this, I think, look, the guy was an American guy and I don't know how, like how long he'd

01:10:38been in that role, but you know, early days Tesla, when Tesla was building RAV4 EVs, like

01:10:44the reason why they got out of that investment was they weren't really impressed with the

01:10:48engineering they were seeing.

01:10:49I think that's changed.

01:10:50I mean, they look at it and they see a lot of good ideas.

01:10:52Um, what kind of shocked me is how impressed they were by a Lucid Air and the fact that

01:10:58they even had a Lucid Air.

01:10:59I mean, what does Toyota sell that competes with the Lucid?

01:11:02Like basically nothing.

01:11:03Yeah.

01:11:04Maybe the, maybe the LS.

01:11:05Yeah.

01:11:06The Lexus at the high end.

01:11:07There's nobody buying an S class, you know, Lexus that's switching over to a Lucid Air.

01:11:13Right.

01:11:14No, no.

01:11:15Maybe the Lexus LS.

01:11:16I mean, you might've like.

01:11:17There's Mercedes S owners.

01:11:18There's like, I know a couple like Lucid owners that have switched and gotten to Ionic

01:11:23sixes, which is a, which is one of the big problems for Lucid.

01:11:26That's a big problem for Lucid.

01:11:27Yeah.

01:11:28Um, but that they're seen as competitive, but they were impressed by the Lucid engineering,

01:11:33the Lucid engineering, the door construction, um, some of the light weighting, um, sort

01:11:38of innovations.

01:11:39And I think that's the same thing with Tesla.

01:11:40Like the sort of the thinking outside the box and how, how you design and manufacturing

01:11:46engineer like products, um, for weight and ease of construction.

01:11:51I don't think comes, you know, it's, it's not somebody who's been doing this at Toyota

01:11:56for 30 years, who's working with Denso and Aishin and like Toyota body, like all these

01:12:01other companies and collaborating, like there's an established way to do this.

01:12:04And so, you know, there's a lot of out of the box thinking that they're sort of trying

01:12:07to take from that.

01:12:08Right.

01:12:09But, um.

01:12:10So mega casting wasn't like the woohoo.

01:12:11They're like, Ooh, look at that.

01:12:13No.

01:12:14Right.

01:12:15So a lot of them are talking about giga casting, um, as something that's very interesting and

01:12:19an idea because you do take a lot of small parts out and I think there's, there was a

01:12:27bit of a sort of academics, not quite the right way, but like sort of old engineers

01:12:32yelling at clouds, like about whether or not this is a good thing for repairability and

01:12:36stuff like that.

01:12:37But it's not good for repairability, but you're replacing a big part.

01:12:40But I think the point, broadly speaking, is that like, if you sort of crush that point

01:12:44of your frame, you're going to replace a car.

01:12:46You replace a car.

01:12:47Yeah.

01:12:48Well, I have, I got one.

01:12:49Yes.

01:12:50Go, go, go, go, go.

01:12:51Okay.

01:12:52Name.

01:12:53That's the name of the podcast.

01:12:54No, no, no.

01:12:55Yes.

01:12:56Yes.

01:12:57He said it.

01:12:58Great.

01:12:59So are they, you're, you are the Wall Street Journal's automotive reporter.

01:13:05Yeah.

01:13:06Are EVs inevitable for all?

01:13:10For all people.

01:13:11I think it depends on what timeline, right?

01:13:13So I've lived in India.

01:13:16I've traveled across Southeast Asia.

01:13:18I've been in a lot of places where people are still buying their first car in places

01:13:23where electricity for 24 hours is not something that exists even in the capital of the country.

01:13:28Like I think these things will roll out in stages and it will very much depend on what

01:13:35kind of cars people, how much they can afford and whether or not there's demand in that

01:13:41market.

01:13:42And look, I think America is going to move more slowly than it could for the foreseeable

01:13:46future for a number of reasons, including your latest documentary that you addressed

01:13:50and certainly I've written extensively about.

01:13:54I don't think that we're going all EV in the next decade or the next two decades.

01:14:00I think that I would be surprised.

01:14:02In America.

01:14:03In America.

01:14:04I would be surprised if that's the case.

01:14:05I think what I will say is we're going to see a lot more hybrids and I think we're going

01:14:08to start seeing a lot more extended range EVs because all those battery factories that

01:14:13they built, they're not going to be producing hybrid batteries packs because they're different.

01:14:17What they can produce is smaller EV packs, which could go into E revs.

01:14:21So I think we're going to see a lot of automakers shift that direction.

01:14:25Okay.

01:14:26Can I ask you the inverse of this question and maybe look directly at that camera when

01:14:29you answer, which is there's a lot of people who comment on our Instagram and our YouTube

01:14:35and we'll probably comment on this like, you guys are high.

01:14:38It's crazy.

01:14:39EVs are dead, which means to me like, oh, so you think in like five, 10 years, we're

01:14:44just going to go all the way back to driving into only internal combustion engines or like

01:14:48a few hybrids.

01:14:49There's like no way, right?

01:14:50The cat is out of the bag.

01:14:51The genie is out of the bottle on EVs and it's just a matter of time.

01:14:54Is that, there's no way we're going back to all ice or majority ice.

01:14:59Right.

01:15:00Well, we still are majority ice technically.

01:15:02We are now.

01:15:03Yeah.

01:15:04Sorry.

01:15:05No, but like 2035.

01:15:06By 2035.

01:15:07Here's what I was first of all surprised to hear that the base of motor trend in the Wall

01:15:11Street Journal has a lot of overlap.

01:15:12It was not a binary diagram I expected.

01:15:13Right?

01:15:14Isn't that funny?

01:15:15Yes.

01:15:16Strange bedfellows.

01:15:17It's a circle.

01:15:18Different editorial boards.

01:15:21I will say that very clearly we're headed to at least 30% EVs of new car sales for the

01:15:31foreseeable future.

01:15:34How much farther it gets, I don't know.

01:15:36And the reason why I say that is because car makers have already locked in these product

01:15:38plans.

01:15:39Right.

01:15:40Right.

01:15:41They're coming.

01:15:42They're going to get better.

01:15:43They're going to get more appealing.

01:15:44The prices will come down and they'll get more affordable.

01:15:46And frankly, I would probably have an EV as a second car because they make sense short

01:15:50trips around town.

01:15:51It's like almost a no brainer, but I'm not going to spend $50,000 on one.

01:15:56Right.

01:15:57Right.

01:15:58Right.

01:15:59So I don't think we're ever going completely back to ice.

01:16:01I don't think we're going to be a single power train industry ever again for the foreseeable

01:16:09future.

01:16:10Right?

01:16:11Diesel may go away, but I think we're going to see increasing hybridization.

01:16:14It's going to be increasing diversity in power trains.

01:16:16There's going to be a lot of innovation.

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