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Tesla reaches milestone with first $1B quarterly profit

Tesla reaches milestone with first $1B quarterly profit

Tesla’s quarterly profit has surpassed $1 billion for the first timeBy MICHAEL LIEDTKE AP Business WriterJuly 26, 2021, 9:43 PM• 3 min readShare to FacebookShare to TwitterEmail this articleSAN RAMON, Calif. — Tesla’s quarterly profit has surpassed $1 billion for the first time thanks to the electric car pioneer’s ability to navigate through a pandemic-driven computer chip shortage that has caused major headaches for other automakers.The financial milestone announced Monday extended a two-year run of prosperity that has erased questions about Tesla’s long-term viability raised during its early years of losses and production problems.Tesla now has cemented its position as the leader in the shift away from gas-combustion that is expected to make it even more profitable than during its most recent quarter.The Palo Alto, California, company earned $1.1 billion, or $1.02 per share, in the April-June period. That was more than 10 times its profit at the same time last year. Revenue nearly doubled from last year to about $12 billion.Adjusted to exclude one-time times items, Tesla earned $1.45 a share in the latest quarter, easily topping the 94 cents expected by Wall Street analysts, according to FactSet.Tesla now boasts a market value of roughly $630 billion, far more than any other automaker and 14 times more than what the company was worth just two years ago. Its mercurial CEO, Elon Musk, is now sitting on the world’s third largest fortune at an estimated $163 billion, according to Forbes magazine’s calculations.For all its recent success, Tesla’s momentum could still be slowed by a persisting shortage of chips that have become vital parts in modern cars. While other major automakers had to dramatically curtail production during the first half, Tesla so far has been able to secure an adequate supply of chips to churn out vehicles at the fastest rate in its history.In the most recent quarter, Tesla delivered more than 206,000 vehicles within a three-month span for the first time in its history. It is also gearing up to add another sports utility vehicle, the Model Y, to its lineup later this year.But in a sign that Tesla isn’t immune to the shortage of chips and other components that is hurting its rivals, the company disclosed that it will delay the introduction of a highly anticipated semi truck to some time next year. Its original plan was to introduce it this year.Tesla also warned that the availability of parts will determine whether it will be able to maintain the first-half production pace that raised hopes the company will be able to manufacture more than 800,000 vehicles this year. That would be a significant increase from nearly 510,000 last year, when government restrictions during the early stages of the pandemic forced the company to temporarily shut down its California factory.The uncertainty may have somewhat dampened the investor response to Tesla’s surprisingly strong quarterly results. The company’s stock gained more than 2% in extended trading Monday after the second-quarter numbers came out. The stock has fallen about 25% from its peak price reached six months ago.

PG&E will spend at least $15 billion burying power lines

PG&E will spend at least $15 billion burying power lines

Pacific Gas & Electric plans to bury 10,000 miles of its power lines in an effort to prevent its fraying grid from sparking wildfires when electrical equipment collides with millions of trees and other vegetationBy MICHAEL LIEDTKE AP Business WriterJuly 22, 2021, 1:41 AM• 5 min readShare to FacebookShare to TwitterEmail this articleSAN RAMON, Calif. — Pacific Gas & Electric plans to bury 10,000 miles (16,000 kilometers) of its power lines in an effort to prevent its fraying grid from sparking wildfires when electrical equipment collides with millions of trees and other vegetation across drought-stricken California.The daunting project announced Wednesday aims to bury about 10% of PG&E’s distribution and transmission lines at a projected cost of $15 billion to as much as $30 billion, based on how much the process currently costs. The utility believes it will find ways to keep the final bill at the lower end of those estimates. Most of the costs will likely be shouldered by PG&E customers, whose electricity rates are already among the highest in the U.S.PG&E stepped up its safety commitment just days after informing regulators a 70-foot (23-meter) pine tree that toppled on one of its power lines ignited a major fire in Butte County, the same rural area about 145 miles (233 kilometers) northeast of San Francisco where another fire sparked by its equipment in 2018 killed more than 80 people and destroyed thousands of homes.Since it started July 13 in a remote area of Butte County, the Dixie Fire has churned northeast through the Sierra Nevada. By Wednesday, the fire spanned a 133-square-mile (344-square-kilometer) area, forcing the Plumas County sheriff on Wednesday to order evacuations along the west shore of popular Lake Almanor.The backlash to PG&E’s potential liability for the Dixie Fire prompted the company’s recently hired CEO, Patricia “Patti” Poppe, to unveil the plan for underground lines several months earlier than she said she planned.Previous PG&E regimes have staunchly resisted plans to bury long stretches of power lines because of the massive expense involved.But Poppe told reporters on Wednesday that she quickly realized after she joined PG&E in January that moving lines underground is the best way to protect both the utility and the 16 million people who rely on it for power.“It’s too expensive not to do it. Lives are on the line,” Poppe told reporters.PG&E said only that burying the lines will take several years.However, getting the job done within the next decade will require a quantum leap. In the few areas where PG&E has already been burying power lines, it has been completing about 70 miles (123 kilometers) annually.PG&E expects to eventually be able to bury more than 1,000 miles (1,600 kilometers) of power lines annually, said its chief operating officer, Adam Wright. While Wright likened the project to the Marshall Plan that helped rebuild Europe after World War II, Poppe invoked President John F. Kennedy’s 1962 pledge for the U.S. to land on the moon.PG&E’s path to this point has been strewn with death and destruction.After previous leaders allowed its equipment to fall into disrepair in a apparent attempt to boost profits and management bonuses, the utility’s grid was blamed for igniting a series of devastating wildfires in 2017 and 2018 that prompted the company to file for bankruptcy in 2019.The biggest fire, in Butte County, wiped out the entire town of Paradise and resulted in PG&E pleading guilty to 84 felony counts of involuntary manslaughter last year just weeks before it emerged from one of the most complex cases in U.S. history.As part of its bankruptcy, PG&E set up a $13.5 billion trust to pay victims of its past wildfires, but that fund is facing a roughly $2 billion shortfall because half its money is supposed to come from company stock that has been a market laggard.Since getting out of bankruptcy, PG&E also has been rebuked by California power regulators and a federal judge overseeing its criminal probation for breaking promises to reduce the dangers posed by trees near its power lines. The utility has also been charged with another round of fire-related crimes that it denies committing.Poppe insisted things are getting better this year under a plan that calls for PG&E to spend $1.4 billion removing more than 300,000 trees and trimming another 1.1 million. But she conceded the utility is “not making enough progress” since it’s only a fraction of that 8 million trees within striking distance of its power lines.But she also defended PG&E’s handling of the tree that may have caused the Dixie Fire and its response. The tree looked healthy and was about 40 feet (12 meters) from power lines, she said, making it a low-risk danger.When a PG&E troubleshooter was sent out to inspect a potential problem, he noticed the tree had fallen and may have started a fire in a treacherous area that he tried to put out before firefighters arrived.“His efforts can be called nothing less than heroic,” Poppe said.

After years of deadly fires, PG&E again vows to do better

After years of deadly fires, PG&E again vows to do better

SANTA ROSA, Calif. — The nation’s largest utility has long vowed to change its reckless ways, but year after year there’s more death and destruction from Northern California wildfires sparked by Pacific Gas & Electric’s equipment.CEO Patricia “Patti” Poppe, who took over in January as the company’s fifth leader in less than three years, has pledged to shareholders that the future will get “easier” and “brighter.” That vow will be put to the test as California sinks deeper into drought and fire danger increases.It’s been a year since the utility emerged from one of the most complex bankruptcy cases in U.S. history, an act driven by a succession of harrowing wildfires ignited by its long-neglected electrical grid. The bankruptcy, PG&E’s second in less than 20 years, was billed as an opportunity to finally hit the reset button for a utility that provides power to 16 million people — more than the population of all but a handful of states.So far, however, it has looked more like a reminder of problems that have resulted in tragedy over the past six years, including a 2018 wildfire that killed 85 people and largely destroyed the town of Paradise, about 145 miles (233 kilometers) northeast of San Francisco. It was the deadliest U.S. wildfire in a century.Already a twice-convicted felon, PG&E has been charged with another round of fire-related crimes that it denies committing. The utility also has been rebuked by California regulators and a federal judge overseeing its criminal probation for breaking promises to reduce the dangers posed by trees near its power lines.Sumeet Singh, PG&E’s chief risk officer, acknowledged the utility hasn’t lived up to expectations in the past but said, “I am very encouraged with new leadership, (a) new playbook, rigor and discipline that we are on the right track. We know we can do better and we will do better.”He listed a wide range of improvements that include using more advanced technology to avoid setting wildfires and help detect them quicker.In the meantime, most of the roughly 70,000 victims who have filed claims for devastation caused by PG&E’s past misdeeds still are awaiting payment from a $13.5 billion trust created during the bankruptcy. The trust, which is run independently of PG&E, is facing a nearly $2 billion shortfall because half its funding came in company stock, despite critics saying it was foolhardy to hold a stake in a utility with such a shoddy record.Those shares have been sagging in a soaring stock market. A windfall could still come if PG&E’s shares rebound as several analysts have projected, but the trust would find itself in an even deeper hole if the stock should fall even further.There are legitimate worries about the shares plunging if the utility sparks another deadly wildfire during the next four months, with most of PG&E’s sprawling service territory mired in extreme drought and climate change contributing to worsening fire conditions in the U.S. West.“Of course, I am nervous. My biggest fear is what is going to happen to the stock,” said John Trotter, head of the victims’ trust, which owns nearly one in every four PG&E shares — far more than any other investor.Trotter, a retired federal judge who is being paid $1,500 per hour as the trustee, has other headaches, too. He and over 300 workers have come under heavy criticism for the slow pace of payments to victims who lost family, homes and other property anywhere from nearly three to six years ago.During its first six months of operation last year, the trust doled out just $7.2 million to victims while running up nearly $39 million in operating expenses that reduced the amount available to be paid out, according to its financial records.“I look at it like a locomotive, starting slowly, but we’re puffing out the steam now and we are starting to roll now,” Trotter told The Associated Press in an interview. “I just wish I had a magic wand and could make it go more quickly, but I can’t. We are doing everything we can.”Trotter said he has a plan for eventually selling the stock without having to pay taxes on potential gains but wouldn’t disclose his target price. The shares, which have recently been hovering around $10, will need to rise to about $14 per share for the trust to reach $13.5 billion.Wall Street analysts project that PG&E’s stock could reach $13 to $17 during the next 12 months, which would mark a dramatic turnaround. The shares have dropped by 17% so far this year, while the S&P 500 has climbed by 14%.As of June 30, the trust had paid out $436.4 million. That is still just 3.2% of the $13.5 billion that was supposed to be earmarked for fire victims, a sign of “designed dysfunction” built into the utility’s bankruptcy settlements, said Will Abrams, a victim of a PG&E-caused wildfire that terrorized his hometown of Santa Rosa, California, in 2017.“I have been really disappointed,” Abrams said. “The bankruptcy was sold as something that was going to hold PG&E to account, and it was not. Bankruptcy is not a process to reorganize. It is a process to divide up the dollars.”Nearly 45,000 victims voted for the plan, with only 6,109 opposed, according to court documents, clearing the way for its approval.Many victims were swayed by lawyers who participated in settlement negotiations and argued that the plan was the best option. Eight of those lawyers are now part of a nine-person oversight committee for the victims’ trust, an arrangement Abrams believes is a conflict of interest.Amy Bach, the only member of the trust oversight committee who wasn’t involved in the PG&E bankruptcy negotiations, insists everyone is trying to ensure all the wildfire victims get as much money as quickly as possible. The lawyers involved are motivated to make that happen, she said, because their fees are contingent on their clients getting paid.“We have kept as much pressure as we can on the claim reviewing team,” said Bach, executive director for United Policyholders, a nonprofit group she formed nearly 30 years ago to fight insurers on behalf of fire victims. “They seem to be hearing us, it feels like things are speeding up.”Frank Pitre, another member of the oversight committee and one of the lawyers who has been representing fire victims, acknowledged that things have been moving slower than he hoped. That’s one of the reasons he gives Trotter and his team a “B” grade for their efforts so far.“There is a lot of room for improvement,” Pitre said, but added that “there is no doubt in my mind that the effort is there.”PG&E says it has already done its part to help fire victims.“We funded the trust in accordance with our plan of reorganization,” the utility said in a statement to the AP. “PG&E is not involved in distributing trust funds.”Trotter, meanwhile, is holding his breath as the weather heats up and the Northern California landscape dries out.“We are dealing with the hand we were dealt,” Trotter said. “(PG&E) is saying the right things. Now we just have to see if they do the right things.”