Return to Transcripts main page
Quest Means Business
Hunter Biden Offers To Plead Guilty On Tax Trial Without Deal; Trump Vows In Speech To Cut Regulations and Lower Taxes; Putin Weighs In On US Election, Mocks Harris Laugh; Optimism Gap Widens Between Execs And Associates; Volkswagen Considers Shutting Down Some German Factories; Former EU Brexit Negotiator Named French Prime Minister. Aired 4-4:45p ET
Aired September 05, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:01]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": The closing bell is about to ring on Wall Street. They always clap before they do it,
and it has been a bit of a topsy-turvy day. The market is sharply lower.
Ring the bell, thank you.
The market has been down, as you take a look at the Dow, you'll see, we are off 238 for the Dow Jones Industrials so far this session, off the lows of
the day, we will get to the reasons why and I can't tell why they always make such a fuss of that gavel, but they are -- trading is over, those are
the markets and the main events that we are talking about.
Donald trump says if he is elected, Elon Musk would play a role in his administration.
France's new prime minister is no stranger to Europeans. The former Brexit negotiator Michele Barnier.
And there is a growing optimism gap between executives and their employees. The trust barometer, Richard Edelman will be here with me later in the
program.
We are live from New York. It is Thursday, September 5th. I am Richard Quest and busy day, busy. I mean business.
Start with breaking news developing this hour, Hunter Biden has offered to plead guilty without striking a deal with federal prosecutors.
The president's son is in a California courtroom at the moment. The allegations are he failed to pay $1.5 million in taxes. He has now
apparently -- initially, there was a thought that he was going to have a plea deal, but now apparently he has agreed to plead guilty without a plea
agreement. So we will get some more on this in an hour -- within the hour as we find out more details, and we parse exactly what he has agreed and
why.
As we wait for more details, let's continue with our business agenda. Donald Trump is promising to slash regulations and increase government
efficiency and he is offering to do so with the help of Elon Musk.
The former president tell the Economic Club of New York that he will raise tariffs and cut taxes and he accused Kamala Harris of leading what he
called an anti-energy crusade, despite the fact the US is producing more oil now than at any point under the Trump administration.
The former president said Elon Musk would help him cut government waste.
(BEGIN VIDEO CLIP)
DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: I will create a government efficiency commission tasked with conducting a complete
financial and performance audit of the entire federal government and making recommendations for drastic reforms. We need to do it. We can't go on the
way we are now.
(CHEERING AND APPLAUSE)
TRUMP: And Elon, because he is not very busy, has agreed to head that task force.
(END VIDEO CLIP)
QUEST: Julia, so Julia Chatterley is with me.
There are two-and-a-half million employees in the US Federal government. The budget is $6 trillion, I mean, that's what they spend.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, "FIRST MOVE": We never stick to it. Carry on.
QUEST: Yes, but --
CHATTERLEY: Yes.
QUEST: And he wants to make drastic changes and Elon Musk is going to do it. What do you make of it?
CHATTERLEY: I love the idea in theory. I think the practice will be near on impossible.
I would love to see efficiency gains. Social Security, Medicare, Medicaid take up what -- just half of just under half of the $6 trillion that you
mentioned, $2.7 trillion. If there was a way that we could be more efficient, that we could cut taxes and find ways to pay for it by being
more efficient, Richard, it would be brilliant.
Do you remember when Elon Musk went into Twitter as was and designated himself Chief Twit? We saw some real chaos there, didn't we? They are
private now of course, so we can't tell what the results are.
Elon Musk in charge of a commission like this? I think it would be very likely.
QUEST: I mean, absolutely. The issue with -- there is a difference though. I mean, every government in opposition says that they are going to look for
efficiencies. They are going to make changes, but they never do because the role of government is one of policy and policy requires conflict of
interest rules, and it requires safeguards, checks, and balances, and that is not efficient.
CHATTERLEY: Well, but you can arguably go into a system like this where you know that half your budget is going towards Social Security, Medicare,
Medicaid and say actually can we do this more efficiently? Are we paying to people that shouldn't be receiving this? But it is granular, Richard.
QUEST: Right.
CHATTERLEY: And there are bigger priorities to your point, so I don't think it is that -- perhaps, it is not important, there are just things that are
more important that overtake it. I mean --
QUEST: So, what about --
CHATTERLEY: -- let's talk about tariffs. Yes.
QUEST: Tariffs, I mean, I am glad you took me to tariffs. What do you make? Twenty percent tariffs across the board and it says that they will
essentially pay for themselves with greater domestic economic growth.
[16:05:08]
CHATTERLEY: Good luck with that.
I loved in your introduction where you said he has promised to cut taxes and raise tariffs, so he has promised to cut taxes and raise taxes.
Actually the Harris campaign has been pretty smart about this and recalled these tariffs and national sales tax, which we know at least in the interim
and the beginning period of that, it is because who pays the tariffs? The companies that are importing the goods in the United States of America.
They offset those costs by pushing them through to the consumer.
The Peterson Institute saying, if we are talking about 20 percent tariffs on a broad array of goods up to 60 percent tariffs on Chinese goods, it is
going to cost households $2,600.00 a year.
Moody's is saying it is going to add a percentage point plus to inflation next year. And Richard, we know it won't just be one country doing this,
other countries will do it, we will end up in some kind of bigger trade war. It is going to hurt growth, not help growth.
I think this is the why --
QUEST: While I have you --
CHATTERLEY: Go on. It is going to reach further.
QUEST: While I have you here, yes, well, I can see you, you were winding yourself up.
CHATTERLEY: I was getting -- I was getting warmed up.
QUEST: You were just getting -- take it easy.
Look, Goldman, you read the report that Goldman brought up. Is it folly or fair when a bank like Goldman comes out and basically says economically,
you'll be better off under Harris, than you will under Trump.
I mean, they are putting their thumb on the scale a bit; however legitimate their research is.
CHATTERLEY: This is independent research, Richard, what are you talking about?
QUEST: Yes, but you know what I am saying here. They are taking sides on economics.
CHATTERLEY: Look, well, and I think that is okay. If you do and get analysis and quite frankly, doing the analysis the hardest parts of this,
not taking a position because we are lacking so much detail, but I do think it is okay for any institution and we can work out where the money is and
how they invest and what the influences are, fine.
But I think if you can make economic assumptions about policies based on both sides, you can come out here and say one is better than the other. I
think they are both awful by the way, so is splitting hairs.
QUEST: I think you need to go and have a sit down and a strong cup of tea. Two hours before "First Move." Thank you, Julia. Lovely.
CHATTERLEY: Thank you.
QUEST: I'll make the tea. Thank you.
Brian Gardner is the chief Washington policy strategist at the investment firm, Stifel. He joins me now.
Brian, you were just listening to that discussion with Julia. It is interesting because we are now at that -- well, we will talk about tariffs
in a second, but we are at that moment when people have to -- they don't take sides, but they have to -- yourselves, for example, you have to
analyze the economic policies of both sides and their proposals, and that means coming down one side or the other with some facts.
BRIAN GARDNER, CHIEF WASHINGTON POLICY STRATEGIST, STIFEL: Sure. And we are a little thin on the facts, that's the problem.
The Trump speech today laid out a series of proposals, kind of vague on the details. The Harris campaign has been very vague since it started up and
took over from the Biden campaign, so when you're trying to go through and gauge what the potential impact of policy would be, it helps to have facts
and really we are lacking key details.
QUEST: So were you surprised when you see something like Goldman basically -- I mean you know, they are saying as honest brokers in a sense, look, if
you take the policies, you'll be better off -- no, let me get this right. Economic growth well, be stronger under Harris by the policies that she
said so far.
GARDNER: Far be it for me to criticize a competitor. It is a great firm. They do very good work, but they do come -- I believe they come to the
debate from a certain angle. It tends to be a more Keynesian angle, and I don't think that they adequately factor in in some of the deregulatory
benefits of the Trump agenda. And I think the street in general, I am not calling out Goldman on this, I think the street in general and lots of
economists kind of missed the boat on Trump in 2016-2017 when the economy and the markets did better than a lot of people thought they were going to
be.
QUEST: Was that as a result of policies? I suppose it has to be at one level, but was the --
GARDNER: One --
QUEST: Yes, but was the economy primed for that level of growth from what had happened previously? You know, as well as I do that you don't suddenly
launch the ship. It takes ages to build it and then launch it.
GARDNER: But the economy, coming out of the financial crisis has underperformed for several years.
QUEST: Right.
GARDNER: And I think that's part of the reason why Donald Trump was elected in 2016. There was frustration over the lack of economic growth and Trump
comes along, whether you like him or don't and kind of unleashed some animal spirits with the deregulatory agenda and some of the tax cuts.
[16:10:10]
I think we can debate this forever, but I don't think you can totally separate the performance of the economy and the market Trump from his
policies. I think there is a direct linkage to them.
QUEST: So, tariffs. I mean, the Peterson Institute, you saw their report. I'm as lost as anybody now on this concept of what a 20 percent across the
board tariff increase would do. I can see that the Trump administration saying that, I mean, this is the number that we are seeing, sort of the
numbers, saying that it will create growth, but it will also bring in revenue, others say quite the opposite. The '17 tariffs didn't.
Harris didn't get -- sorry, Biden didn't get rid of those tariffs and. Harris has got some of her own. Where did all of these tariffs suddenly
come from?
GARDNER: There is a frustration among American workers and American voters and both parties are tapping into that frustration. You know, this populist
sentiment, we've been living in a kind of free trade environment since World War II and maybe just ran its course and people are -- people are
wondering, okay, what's next? What is going to propel me, average voter, to greater prosperity and they don't see a global system working to their
benefit.
I am not agreeing with that or disagreeing with it, but I think there are a lot of American voters who kind of feel left behind and both parties are
trying to tap in.
QUEST: Right, but has the economics changed? The economics that you and I have spent most of our careers following, which is you know, free trade
good, tariffs bad.
GARDNER: I don't think the economics have changed. I think the confidence in the premise of the argument has totally deteriorated and many, if not
most voters, no longer have confidence in the global trade framework that has ordered the world for the last 40-plus years.
Part of that is a failure by the WTO, the World Trade Organization to adequately police China. When China was given entry into the WTO, I think
there were certain promises and expectations that existed at the time that have not played through.
So there is a feeling that the playing field is not level. It is tilted in one direction and so global trade should benefit workers and taxpayers and
voters, but maybe the rules aren't as even as they should be.
QUEST: Brian, get used to talking to me because between now and the election, you and I have got a lot to chew over a great deal, and I am
grateful to you, sir, as always making common sense. Thank you.
GARDNER: Looking forward to it.
QUEST: Our breaking news that we started off with Hunter Biden offering to plead guilty without a deal in his federal tax evasion case in California.
The prosecutors allege that the president's son failed to pay $1.5 million, $1.4 million, call it one-and-a-half and he says, he instead spent the
money on luxury cars, extravagant hotels and sex workers.
The plea proceeding has been going for a few hours now and his attorneys say he is prepared to admit his conduct satisfies the elements of the tax
offenses as charged.
Evan Perez is in Los Angeles. Number one, Evan, why is he doing it? Number two, are we surprised that this has -- at this turn of events?
EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, I will take number two first, Richard, absolutely. This is a shocking turn, frankly.
We were anticipating that this is going to be the beginning of jury selection. There was no deal between prosecutors and Hunter Biden and at
the beginning of the day, what Hunter Biden's attorneys attempted to do was for him to proclaim his innocence, do something called an Alford Plea,
where he would accept the consequences of the crime, of being -- essentially being found guilty, but himself tried to claim that he was
still innocent, that didn't seem to work.
The prosecutors and the judge did not want to accept that immediately. And so after a short break, what we had more recently is now the Hunter Biden
team is asking for him to plead guilty to the outlines of what is charged here.
Now whatever is happening at this minute behind closed doors is behind the -- inside the courtroom rather is the prosecution is reading all 56 pages
of this indictment. All of those ugly details that you outlined, including the spending money on exotic dancers and exotic cars, hundreds of thousands
of dollars from the millions that he earned working -- doing work in Ukraine and China.
And at the end of this, prosecutors -- or I am sorry, the judge is going to ask Hunter Biden whether he pleads guilty to all of these nine charges that
he is facing.
[16:15:08 ]
Now, we don't know whether the judge is going to accept this. the prosecutors want to make sure they say they want to make sure that he
accepted all of the facts in the case.
QUEST: So, Evan, if this guy -- let's say the judge does accept his plea. Is he facing is prison time for this?
PEREZ: Yes, absolutely.
QUEST: Particularly --
PEREZ: Absolutely.
QUEST: well, you've answered the question. But particularly bearing in mind the good character argument that they used in the gun case, can't be used
in this one because he is now being convicted as a felon in the gun case.
PEREZ: Absolutely. That's the reason why the stakes are so high for Hunter Biden. He is facing up to 17 years if he is found guilty in this case,
Richard, but here is the thing, his father is the president of the United States. We know obviously that Joe Biden has said that he is not going to
give a pardon to his son; however, that is back when he was -- when he was running for re-election.
We don't know whether the facts will change after Election Day. Certainly, what we know though, is that Hunter Biden, not only is he facing a lot of
prison time potentially, but also millions of dollars in legal debt. This is a case that could last. This case right here alone could last about five
weeks. That's a lot of money that Hunter Biden says he just doesn't have -- Richard.
QUEST: Evan, I am grateful. Thank you. A lot is there for us to chew over and we are glad you're in Los Angeles for us.
As you and I continue our evening conversation, Vladimir Putin claims with a smirk on his face, he wants Kamala Harris to win the US election.
The Kremlin and the political division it is sowing, the propaganda it is spreading, in a moment.
(COMMERCIAL BREAK)
QUEST: President Vladimir Putin appears to be trying to spread discourse in the United States. He is claiming to support Kamala Harris for president
and then mocking her laugh.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): As I said, our favorite, if you can call it that, was the current president, Mr. Biden,
but he was removed from the race and he recommended all his supporters to endorse Miss Harris.
Well, that is what we will do, too. We will support her. And also she laughs so expressively, and infectiously that it means that she is doing
well.
(END VIDEO CLIP)
[16:20:04]
QUEST: Now, President Putin's comments come a day after the US Justice Department revealed new details on a sprawling effort by the Russian
government to sway the American electorate to more pro-Kremlin points of views.
Jill Dougherty is with me, CNN's contributor and former CNN Moscow bureau chief.
Let's deal with this faux endorsement and comments. It was in an interview. What is he up to here? What is he up to? Is he just being mischievous?
JILL DOUGHERTY, CNN RUSSIAN AFFAIRS CONTRIBUTOR: One word perhaps, Richard, you know, trolling. I think that is really what is happening.
I looked at the original video and what he said in Russian and you look at the entire audience, they are all laughing, they are applauding. It was
basically a joke, because of course, he doesn't support Kamala Harris unless of course maybe in some way he thinks it could hurt Kamala Harris,
but he doesn't, and you just have to look at any Russian propaganda, the media like RT, which are propaganda organs to know that they had been
criticizing and laughing at Biden for a long time.
So I think it is just another way of kind of messing with people. Psychological warfare.
QUEST: Does Putin, does the Kremlin want Donald Trump back?
DOUGHERTY: You know, I think it is simplistic to say they want Donald Trump. Period. You have to say, why do they want Donald Trump? And there
are many, many reasons. But one of the main reasons right now is Ukraine, because Donald Trump is talking about ending support for Ukraine or
bringing the war to an end with many of the demands that the Russians have.
So I think that is what we are dealing with, a main reason the Russians support him is that they want -- they follow what he says and they agree
with it.
QUEST: Now, this disinformation campaign that the DOJ has charged. What is the core of it? And how are they managing to be so successful? Is really
the gullibility of the Americans to fall for it, rather than the sophistry of the campaign that is being put forward?
DOUGHERTY: Well, Americans, many Americans can be gullible. But I think what we've got here, this is a very big allegedly, a very big covert
operation and it is different from the old days, 2016, 2020. Now you have AI, artificial intelligence. Now you have other ways of creating fake news
sites and spoofing and pretending that you're actually Americans.
There are sophisticated things and they are much easier to trigger in kind of an overall attack. So I think that is the difference right now.
And you have to look, the Justice Department says that it found an internal planning document that talks specifically about what the Russians want, and
that is the outcome that they want in the 2024 election.
QUEST: Grateful for you, as always. Jill Dougherty, thank you so much.
The 14-year-old accused of carrying out a mass shooting at a Georgia high school has been charged with four counts of murder. He is expected to make
his first court appearance on Friday.
We are now learning that investigators have found documents referencing past school shootings in the gunman's bedroom.
Police were first notified of Wednesday's shooting from a wearable panic buttons system that was implemented only a week ago. One teacher says, the
technology made the difference.
(BEGIN VIDEO CLIP)
STEPHEN KREYENBUHL, TEACHER, APALACHEE HIGH SCHOOL: Without a doubt in my mind, I think this program that Apalachee instilled upon us a hundred
percent saved lives without a doubt in my mind. I recommend it to any school district.
(END VIDEO CLIP)
QUEST: John Miller is with me.
I am not making light when I say this. This is the equivalent of the I've fallen and I can't get up button that senior citizens are encouraged to
wear.
Tell me about your understanding of this device and the way it worked yesterday.
JOHN MILLER, CNN CHIEF LAW ENFORCEMENT AND INTELLIGENCE ANALYST: So, this is by Centegix. It had only been in effect for a week. This is a relatively
new school. The camera system there is quite extensive, but this is starting to be within the new normal in the active shooter or school
shooter world, which is the device, is part of your ID badge. You wear it with your lanyard.
But if you click it once, it says there is some kind of crisis there you need help. But if you click it three times, that notice goes out to the
entire school that we are going into lockdown. That is kind of the firing of the synapses faster than they've been able to do it before.
[16:25:12]
There is another company in this business called SaferWatch by a guy named Geno Roefaro, who in Fort Lauderdale, after the terrible Fort Lauderdale
school shooting, where there was a school resource officer there, but police took a long time to engage. Nobody knew what was going on. He
developed SaferWatch, which is an app that goes on your phone.
QUEST: Right.
MILLER: And the app on the phone shows you a picture of a gun, a picture of an ambulance, a picture of fire and you just touch an icon and that
immediately goes to the authorities.
QUEST: Right. Extraordinary that we need these now.
John, there is a picture that we've just had to release, the first photograph of the alleged assailant. Now, you see it, 14-year-old and they
are going to try him as an adult in Georgia. How do they get away with doing that? I mean, if he is 14 years old, isn't the age of criminal
responsibility under 16?
MILLER: So in Georgia, when it comes to the arrest of a juvenile, they can be treated as an adult when it comes to how their questioning has to be
handled, they have to get their Miranda warning and they have to indicate with some credibility that they understand it.
But unlike many other places, their parents don't have to be present. They don't need to have an attorney there in questioning.
So, Georgia is a place where the laws regarding juvenile crime have a lot of flexibility for prosecutors to charge as an adult, try as an adult, the
difference is he is in a juvenile holding facility because obviously they won't put him in jail with adults.
QUEST: John, I am grateful for your experience and your guidance on these matters. Thank you, sir.
MILLER: Thanks, Richard.
QUEST: Now, this is interesting. It is the latest Edelman Trust Barometer, and it is a special report they put out: "Without Trust at Work."
Apparently, there is a difference in trust.
Well, there is a difference in optimism between executives and employees. Richard Edelman will explain what that difference is, and more crucially,
why it matters.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:31:03]
QUEST: And the divide between the haves and have-nots is getting worse and not just in terms of wages. The latest Edelman Trust Barometer gauged the
attitude of lower level workers and their executives.
The conclusion was executives are nearly twice as likely to have good mental health and to be optimistic. Associates are much less likely to
trust their employees. In fact, they don't trust institutions very much as we've discussed on this program. And the optimism gaps, 78 percent of
executives think they'll be better off in five years. It's half of that for associates.
Richard Edelman is the chief executive.
And yes, Richard, one in the same time, I'm shocked in a sense, but I'm not. If you're at the top, you have control over your future, more controls
as senior executive, than you do if you're at the bottom. But this is a failure of management not to give associates and lower staff more to be
cheerful about.
RICHARD EDELMAN, CEO, EDELMAN: Richard, I think it's completely tied to expectations of how my family is going to be in five years. What we see is
that the workers basically don't believe that they're going to be better off because they're nervous about A.I. They see inflation eating into their
living standard and they see that their jobs are getting outsourced, so they're just nervous.
And so we have to do a better job as leaders in giving them re-scaling and giving them hope based on action.
QUEST: Right. That's two aspects. The reskilling is long term and it's going to cost money, and it might not work anyway. But this idea of being -
- of giving them hope, you can't give them hope in a sense when there are the prospects that they've got are rather grim.
In a moment, I'm going to be talking about a VW -- you'll be familiar with this, Richard. The VW plant in Germany. First time VW has closed a plant or
expecting to close a plan because EV sales are not as great. That's the sort of thing we're talking about.
EDELMAN: So, again, I think employees want the truth, start there. They also want the chance to improve their skills. And third, I think they want
agency, they want some ability to talk with management, some degree of control. And this mass class divide which you and I talked about in Davos
between the top quartile and bottom quartile has spread to countries all over the world. This is not simply a problem in the U.S. or Germany. It's
now on China and other places.
So this idea somehow that my employer can change this, yes, they can. They can do it through pay, they can do it through reskilling. But more than
anything else, they've got to give people a sense that they have a voice and that the company actually is going to make sure that they're going to
be OK.
QUEST: Isn't the reality that the company doesn't care? In many cases, not all cases, but in many cases, the decisions being taken are taken not on
stakeholder value, but on shareholder value. And you get weird decisions like the Starbucks CEO, who's going to be staying on the West Coast instead
of going up to Seattle.
I was on the way -- I mean, you know, I've been staying inside instead of going up to Seattle. It sends a terrible message to the workers at
Starbucks that they're not important enough for the CEO to move.
I don't expect you to comment on that but there is -- this is where the seeds of the lack of trust begin.
EDELMAN: So there are specific reasons why business has to pay attention to this. If you give economic optimism to your workers, then they'll stay
longer in the company. They'll advocate for you.
[16:35:01]
They'll be much, much more inclined to give the extra effort that's necessary to get the customer satisfaction. So all of these are tangibles
as to why pay attention to give them a sense of the future.
QUEST: I noticed -- we were just saying that we noticed that Edelman has just employed Nikki Haley. I understand that's not a political decision in
any shape or form, and I understand that you probably will appoint people from the opposite side just as much where there is value for you in the
company.
How difficult is it for you to stay down the middle at a time like this?
EDELMAN: We need to give our clients great advice and we need people throughout the ideological spectrum. Governor Haley has joined. We now also
have Senator Max Baucus, who's a Democrat. And the ideal situation is that we give advice based on input from all sides.
QUEST: Right. But do you say to them, as "Rumpole of the Bailey" famously said, when you walk in the office, you leave your politics with your hat
and coat at the door?
EDELMAN: But in fact politics is in everything, as again you and I have talked about, it's in brand marketing, it's somehow how there's a
representation of politics in the workplace now. So again, we have to deal with the reality of politics.
QUEST: Yes.
EDELMAN: But I think CEOs are smart to be internal advocates and not be public spokespeople about geopolitics and other things.
QUEST: That just barometer is fascinating this time. It really is. As I say, on the one hand, I'm shocked and I'm not surprised.
Richard, it is good to see you, sir. I hope you've had a good summer.
EDELMAN: I have.
QUEST: And we're looking forward to the (INAUDIBLE). Thank you, sir.
We were talking there a second ago with Richard about the VW plant and the German economy will barely grow this year according to one of the country's
top research groups, which is bad news clearly for Volkswagen, a symbol the German economic might for the century.
The automakers survived World War II, oil crisis, German unification, and more recently a massive emissions scandal. Now, low demand and competition,
low demand for EVs, competition from the U.S. and China VW says it might shut some of its factories in Germany and workers there are afraid of their
futures.
(BEGIN VIDEO CLIP)
AXEL WENZEL, VOLKSWAGEN EMPLOYEE (through translator): Miserable, everywhere. People are scared of losing their houses. That they will be
fired. I have been working at the plant for 38 years.
TIMOR YILDIZ, VOLKSWAGEN EMPLOYEE (through translator): We don't know what the future holds. Who knows? Maybe we will soon all be unemployed. We don't
know.
(END VIDEO CLIP)
QUEST: Hanna Ziady is with me in London.
I was listening this morning and, you know, Volkswagen says it could sell half a million fewer cars. The demand just is not there. Well, if the
demand is not there, and I know they're going to try and restructure the factories, there's not much more they can do other than close them down.
HANNA ZIADY, CNN WRITER: There really isn't, Richard. They don't expect that demand to come back. Half a million fewer cars is equivalent to about
two car plants. And the whole European market is down. Volkswagen saying this week that two million fewer units a year are being sold in Europe
compared to before the pandemic so about 14 million in total.
The company is saying it has a year, maybe two, to turn things around. So it's pretty monumental for, as you mentioned, this symbol of German
manufacturing might, monumental for Volkswagen and for Germany.
QUEST: So how much of this, bearing in mind the recent results in regional elections and the AfD, how much of what Volkswagen is saying is a sort of a
bit of blackmail to Olaf Scholz to either pay more subsidies, do some bailout, or do something to keep those factories open?
ZIADY: Look, I think the company is in a difficult position because, as you say, if the demand is not there, the demand is not there. There's very
little it can do. Quite how much it's sort of hoping for help from the government is not clear at this stage.
We do know it's going to be facing resistance from labor. Labor representatives holding about half of the seats on the company's
supervisory board, saying today that they will consider striking if it comes to that. That's not their preferred path. They would prefer to
negotiate with the company, but they're not afraid to strike if that's what it takes. So I think we're going to see a showdown between Volkswagen and
labor.
But, Richard, let's talk about EVs because that's really some of the backdrop to this.
QUEST: Right. Because the people that want them, that's an exaggeration, you know what I mean. They're not selling as fast. There's competition from
China and others. And interestingly this plays into the U.S. election and the tariffs and the European tariffs, which I know you've looked at, which
of course are being introduced on imported EVs, cheap imported EVs from China.
ZIADY: Right, so officials in Europe, in Washington are trying to do all they can to kind of stop this onslaught of Chinese EV imports and the rapid
rise of these EV makers in China has been dramatic.
[16:40:09]
Literally in the last four years, we've seen BYD, Nio, Li Auto, XPeng, kind of come out of nowhere and just steal market share away from Volkswagen,
away from Ford, GM, Honda, Toyota, you name it.
In China, which for decades has been a kind of cash cow for these companies, now they can no longer rely on that. But not only in China,
increasingly also encroaching on them in Europe and, you know, the United States I think 100 percent tariffs are quite steep, but certainly China has
Europe in its sights. As one auto analyst put it to me this week, the new center of the world's automotive industry is in China and major global car
brands are still trying to adjust to that and still trying to understand what does that mean. How do we compete with the Chinese?
QUEST: Really grateful. Hanna, thank you very much.
And stay in Europe, France has a new prime minister. Emmanuel Macron has appointed the E.U.'s former Brexit negotiator Michel Barnier to form a
government. To do so, Barnier, who was also a commissioner in Brussels, will have to overcome a divided parliament following that snap election
that President Macron held earlier this year, just before the Olympics.
Saskya Vandoorne is in Paris and gives us the gist of what's taken place.
SASKYA VANDOORNE, CNN SENIOR PRODUCER: The French may have voted for change in a parliamentary elections, but this is not what they got from Michel
Barnier, Richard. He's very much seen as the status quo here, towing Macron's political line especially when it comes to the economy.
Now the left, you'll member, won the most seats in the election and they are apoplectic. They say Macron's decision is denying democracy and they're
calling for him to resign. The announcement won't usher in a new period of stability.
Au contraire, Richard, you can expect more paralysis, division and perhaps a vote of no confidence in the months to come -- Richard.
QUEST: Saskya in Paris. Thank you.
That's QUEST MEANS BUSINESS. I'm Richard Quest in New York. Whenever you're up to in the hours ahead, I hope it's profitable.
"CONNECTING AFRICA" is next.
(COMMERCIAL BREAK)
[16:45:28]
(CONNECTING AFRICA)
END
