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Nikola founder Trevor Milton was sentenced to four years in prison for defrauding investors of the electric- and hydrogen-powered truck maker.
Milton was found guilty in October 2022 on two counts of wire fraud and one count of securities fraud.
Milton became an overnight billionaire when he took Nikola public through a deal with a special purpose acquisition company in June 2020.

Nikola founder Trevor Milton was sentenced Monday to four years in prison in connection to defrauding investors of the embattled electric- and hydrogen-powered truck maker.
Milton also was fined $1 million and could later be forced to forfeit property as part of his sentence.

The punishment was far lower than the 11 years prosecutors had requested at Milton’s sentencing in U.S. District Court in Manhattan.
But it was substantially more than the non-jail sentence of probation sought by Milton’s attorneys.
“I did not intend to harm anyone and I did not commit those crimes levied against me,” Milton told Judge Edgar Ramos before being sentenced, Reuters reported.
Milton has shown little to no remorse for his actions, prosecutors said. In a letter to Ramos on Sunday, prosecutors wrote that the judge should take into account Milton’s “profound denial of accountability and insistence on blaming others.”
The judge allowed Milton to remain free on bail while he appeals his conviction, according to Reuters.

Trevor Milton, founder of Nikola Corp., exits court in New York, US, on Monday, Dec. 18, 2023.
Yuki Iwamura | Bloomberg | Getty Images

Milton was convicted in October 2022 on two counts of wire fraud and one count of securities fraud. He had faced a recommended sentence of 60 years in prison under federal sentencing guidelines for those crimes.
Restitution will be determined at a future proceeding, according to the U.S. Attorney’s Office for the Southern District of New York
“Trevor Milton lied to investors again and again — on social media, on television, on podcasts, and in print. But today’s sentence should be a warning to start-up founders and corporate executives everywhere — ‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price,” Damian Williams, U.S. attorney for the Southern District of New York, said in a statement.
Nikola in 2021 agreed to pay $125 million to settle civil charges brought by the U.S. Securities and Exchange Commission.
Milton became an overnight billionaire when he took Nikola public through a deal with a special purpose acquisition company in June 2020. The company was quickly considered to be one of the most promising EV startups – valued at its peak at more than $30 billion – until allegations regarding false and misleading statements were uncovered by short-seller Hindenburg Research.
Prosecutors compared Milton to disgraced Theranos founder Elizabeth Holmes, who was sentenced to more than 11 years in prison last year for defrauding investors in her blood-testing startup.
“Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck,” prosecutors wrote to Ramos ahead of the sentencing.

CEO and founder of U.S. Nikola, Trevor Milton speaks during presentation of its new full-electric and hydrogen fuel-cell battery trucks in partnership with CNH Industrial, at an event in Turin, Italy December 2, 2019.
Massimo Pinca | Reuters

Milton has attempted to distinguish himself from Holmes, whose company was private. His lawyers argued “that Nikola is still a real business, while Theranos is not,” according to court documents.
Milton, who was the company’s largest shareholder, stepped down as executive chairman of Nikola in September 2020. He did so amid an internal probe after the Hindenburg report, which characterized the company as a house of cards built by Milton.
Since Milton’s resignation, shares of Nikola have cratered and the company has failed to retain executives. Nikola Chairman Stephen Girsky, whose SPAC brought the company public, was named CEO in August.
Shares of Nikola have recently traded under $1, with a market value of about $296 million. The stock fell more than 9% on Monday.
Nikola was among the first heavily publicized companies to go public through a SPAC. It inspired hundreds of other startups to do the same before the SEC cracked down on the practice.
Prosecutors said the SPAC process, rather than a traditional IPO, allowed Milton to make many of the misleading or fraudulent statements. Under the IPO process, he would have not been allowed to make public statements during the time around the company going public.
SPACs are publicly traded companies that don’t have any real assets other than cash. They are formed as investment vehicles with the sole purpose of raising funds and then finding and merging with a privately held company. More

Walmart is adding increasingly popular lab-grown diamonds to its lineup.
The discounter sees an opportunity to sell more fine jewelry during the holidays, the peak season for engagement rings.
Other retailers have also catered to value-driven jewelry customers. Signet Jewelers’ Jared just introduced gold ingot charms, which can be worn on a necklace or stored in a safe.

SECAUCUS, N.J. — Here, shoppers can browse engagement rings, tennis bracelets and pendant necklaces displayed behind glass. Then, they can walk a few yards to grab milk, cereal or socks.
Welcome to Walmart.

During recent inflation, the world’s largest retailer attracted new and higher-income shoppers with cheaper groceries. Now, it’s trying to cater to that shopper with more fine jewelry at lower price points.
Ahead of the holiday season, the company introduced more styles of lab-grown diamond jewelry. It just started to test its largest lab-grown diamond offering yet — a 1.5 carat engagement ring that retails for $698. A mined diamond of that size can sell for a retail price of $6,000, said Walmart, which cited industry data and the typical markup.
Global sales for lab-grown diamonds grew to nearly $12 billion in 2022, a 38% year-over-year jump, according to an analysis by New York-based Paul Zimnisky, a financial and diamond industry analyst. That’s a sharp increase from under $1 billion in 2016, the analysis found.
The rise of lab-grown diamonds — which are made by people rather than mined from the ground — have made it possible for Walmart to carry a wider range of items that fit customers’ budgets, said Michelle Gill, the company’s vice president of jewelry and accessories.
And, she added, the company wants to test other statement pieces and bigger stones.

Walmart isn’t the only company looking for ways to serve shoppers seeking affordable jewelry. Signet Jewelers-owned chain Jared is testing a new product: a 24-karat gold ingot that is set in a charm and can be personalized, and then can be worn on a necklace or locked in a safe. The charm, which comes in different weights, arrived to about 60 of its stores ahead of the holiday shopping season.

Signet Jewelers-owned Jared started selling ingot charms at select stores. The circular or rectangular charms are made of pure gold and can be personalized.

So far, the charms have been a hit, said Claudia Cividino, president of Jared. Customers can personalize them or even inscribe them with a message in the gift-givers’ handwriting.
In times of uncertainty, people “look for stability,” she said. “Gold has always been a stored value. There’s something in the zeitgeist around gold and its properties.”

A high-stakes holiday season

Jewelry is a popular gift during the holidays. The period from October through February, including Valentine’s Day, is also the peak time for engagement ring purchases, Signet CEO Gina Drosos said in early December on an earnings call. Signet also owns Kay Jewelers, Zales and Diamonds Direct.
It could be tougher this season, though. Jewelry sales rose as consumers had extra money to spend on luxury goods during the pandemic and then sprang for extra sparkle as they booked vacations and went to parties. Social distancing during Covid also dampened the dating scene, which has translated to slower sales of engagement rings three or four years later. Signet and Brilliant Earth, a direct-to-consumer jewelry company, both cited this challenge on earnings calls.
Total jewelry sales were $73.08 billion in the U.S. in 2019, according to Euromonitor, a London-based market research company that tracks sales across a variety of retailers. That total is expected to hit $73.8 billion in 2023, Euromonitor estimates.

Fine jewelry has held up better than costume jewelry, however, though both have declined year over year. Sales in the fine jewelry category are expected to grow by nearly 4% compared with pre-pandemic 2019 to a total $62.85 billion in the U.S., according to Euromonitor. Costume jewelry is expected to drop by about 12% to $10.95 billion during the same period.

More sparkle for less

Walmart has carried jewelry since the 1990s, but it’s made a bigger play recently. It started carrying lab-grown diamonds last year in select stores. Now, it has expanded that to nearly 90 items that range from $78 to $498 available at the majority of its stores. In the past, many of Walmart’s items were made from a cluster of diamonds arranged to look like a single diamond, since mined diamonds cost much more, Gill said.
Gill, who worked for more than two decades at high-end department store chain Neiman Marcus, said Walmart also saw an opportunity to sell more fine jewelry, particularly in rural markets and parts of the U.S. dotted with struggling and shuttered malls.

Ahead of the holiday season, Walmart introduced its largest diamond yet — a 1.5 carat lab-grown diamond engagement ring that retails for $698.
Mike Calia | CNBC

Walmart does not break out category revenue, but it said lab-grown diamond sales have increased approximately 600% year over year. That reflects the addition of many more items to the category.
Yet for some shoppers, the idea of buying an engagement ring, anniversary present or other special purchase from the no-frills discounter is out of the question.
Gill acknowledged that Walmart will have to overcome that stigma. The retailer has had a similar uphill climb when trying to establish a reputation for carrying more stylish clothing by developing exclusive brands and teaming up with designers and celebrities. Plus, its stores don’t have dedicated jewelry specialists — something that Gill would like to change.
She said fine jewelry sold by Walmart comes in an elegant wooden box that isn’t marked with the Walmart name or logo.

“We’re elevating our experience in fashion,” she said. “We’ll continue to elevate our experience in fine jewelry.”
Yet she said younger shoppers, especially Gen Z, care less about brand and more about having the style or price they want. She saw that when her daughter, who is 22, recently got engaged and decided on a ring with a lab-grown emerald and lab-grown diamonds.
“This age group, they also love to go thrifting and they like to do secondhand and they rent their clothes online, so they can have new whether it’s for sustainability reasons or whether it’s for ‘I can do more with less,'” she said.

A new golden age

Other retailers, including Pandora and Brilliant Earth, have capitalized on the growth of lab-grown diamonds, too. Pandora introduced lab-grown diamond jewelry in the U.S. after it stopped using mined diamonds in 2021. The company has a growing presence inside Macy’s stores and on the department store’s website.
Brilliant Earth CEO Beth Gerstein said the company serves a different customer base than Walmart or Costco, which saw hot demand when it sold gold bars this fall, selling more than $100 million of them in the last quarter.
Gerstein said the direct-to-consumer jewelry company’s core shoppers are between age 25 and 40, have a household income of $75,000 or more, and tend to be more brand-focused.
Yet she said Brilliant Earth is offering prices and unique designs for shoppers on a budget this holiday season, along with those who are more willing to splurge. For example, she said, it introduced a lab-diamond bezel solitaire pendant necklace that costs less than $500.
She said the company’s holiday giveaways have drawn a stronger-than-usual response this year, too, as shoppers crave freebies. “The customer is looking for value wherever they can find it,” she said.
At Jared, Cividino said the average value of customers’ orders has risen slightly year over year, despite higher costs of many everyday expenses. Yet she said the jeweler has noticed customers visiting more or waiting longer before making a big purchase.
“People think harder before they make a decision,” she said. “That’s what we’re experiencing.” More

Care Bears made in China confronted a tangled supply chain to the U.S. in 2021.
Now, the plush toys face a much easier journey to American shelves and distribution centers.
American consumers are still spending, but they’ve shifted more to experiences than goods.

Business is largely back to normal along the global supply chain, including where it all begins for the Care Bear: the factory floor in China.
Anward Shen, owner of An’Best Toys in China, which produces the plush toys for U.S. retailer Basic Fun!, said the cost of making a Care Bear is back to where it was before the pandemic. He said his factory in the northwestern city of Ankang produces a million Care Bears every month.

Covid exposed weaknesses throughout the system, and so it took much longer, cost considerably more and led to tighter inventory availability for some time. During the global supply chain disruptions in 2021, Shen told CNBC the cost to produce a Care Bear had soared by 25% that year.
“Compared to October of 2021, it’s really night and day” said Jay Foreman, CEO of Basic Fun! “Everything was out of balance, every step in the supply chain.” 
Now, while it’s easier to get Care Bears to American shoppers, and at lower prices, there are new strains in the system, reflecting divergent economic realities in the U.S. and China.
For instance, unlike in the U.S., where policymakers tackle stubborn inflation amid a resilient economy, Beijing is battling deflation and slower growth.

Workers making Care Bears at a factory in Ankang, China.

The slowdown has depressed material prices. High unemployment in the country has allowed manufacturers to rein in rising wages for workers. And with demand declining globally, factories are bidding for U.S. orders more aggressively by offering price cuts.

Shen said the move helps customers and allows him to retain their business. “We passed on nearly all of the cost savings to U.S. buyers and their customers,” he said. “They want the cheaper price. We need the orders.” 
Logistics costs are also in check. Beijing’s decision to lift restrictive Covid controls at the end of 2022 has eased travel across the country. Shipping containers are plentiful at the Chinese ports. Shen said his American buyers are still working through old inventories, freeing up freight space.
“Many buyers overseas bought too much when it looked as though the market was recovering from the pandemic,” he said. “They are de-stocking now.”
In 2021, Care Bears were held up for up to two months, adding to costs. Now, they’re shipped out almost immediately while deflation ripples through export industries.

Funshine Bear

It’s 10 a.m. on a Wednesday, and out on the open water beyond the Port of Los Angeles are two ships carrying fuel, plus another with automobiles. Any large ships loaded with cargo from Asia are already inside the port, being processed by dockworkers.
What a difference two years makes. 
During the supply chain mess of 2021 — when CNBC followed the journey of a Care Bear from a factory in China to a store in New York — there were 65 container ships anchored off the ports of L.A. and Long Beach. “Some vessels without reservations were sitting outside the port for weeks on end,” said Gene Seroka, the L.A. port’s executive director.  
Those ships waited up to 10 days for an appointment to be unloaded. Even after that, containers sat on the docks another 11 to 13 days before being lifted onto a truck or train. The cost of a single traditional shipping container skyrocketed to around $20,000. 

Many Christmas items did not arrive in time.
This year, ships sail right in. Seroka said unloaded cargo is only waiting three days to be placed onto trucks or trains — back to prepandemic turnaround times. Shipping container costs have fallen 90%, he added, back into “normal” territory.  
But not everything is back to normal.
Half the truck gates at the port go unused every day, according to Seroka – “and that means we have capacity.” 
Global trade is down 5% this year, according to the United Nations. Many U.S. retailers bought up inventory early — too much inventory, in many cases — as consumer demand softened. 
But there’s another reason for the lack of activity at his port, Seroka said. The supply chain backlog of 2021 drove some business away from the West Coast. It didn’t help that the dockworkers’ union contract was expiring, and negotiations dragged on for months. 
Shippers began looking at the Panama Canal, which underwent an expansion that ended in 2016. They redirected ships there, and cargo traffic began rising at east coast ports as it fell out west. Seroka said the ports of Los Angeles and Long Beach went from handling at least 40% of all containers to 33%.
“History has shown that when cargo moves away from the Southern California ports, some of it stays in those other port locations,” Seroka said. He’s now criss-crossing the country trying to win back business. “It’s been an uphill battle.” 
Mother Nature may be helping him. A drought has lowered water levels at the Panama Canal, and some ships can no longer pass through. FreightWaves reports that 22% fewer ships transited the canal in November compared to October. The Panama Canal Authority says 2023 could be the second driest year on record.
As a result, container volumes are rising again along the West Coast. In November, total standard container numbers jumped 19% at the Port of Los Angeles versus a year ago, and increased 24% at the Port of Long Beach. In contrast, the numbers fell 6% in New York and New Jersey. 
Bottom line, it’s become faster and cheaper again to ship to Southern California. That could be good news for retailers – not to mention Care Bears – assuming consumers stay in a buying mood. 

Grumpy Bear

It’s a similar story on land. Costs for the next stage of a Care Bear’s journey – moving the toy from the port to a warehouse and on to a retailer – have come down. After consumers loading up on goods during the pandemic, consumers have shifted their spending to experiences. That means trucks and trains are transporting fewer things. 
In October, contracted freight volumes dropped 6% year-over year, according to data the American Trucking Associations gave to CNBC, with spot volumes down nearly 40%. This eats into trucking companies’ profits since they’re paid based on how much cargo they transport. Lower volume translates to higher competition for each load, leading to a decline in trucking companies’ revenue per mile.
The drop in demand coincides with excess supply. During the pandemic when shipping rates soared, and retailers couldn’t get goods to consumers fast enough, a host of companies entered the market. But now there are too many trucks on the road, and executives are pointing to a “freight recession.”

“Trucking has been in a recession for a year,” said Bob Costello, chief economist at American Trucking Associations. There are too many trucks, and too little freight, he said. “It is not a good environment.” 
Cost pressures also remain high for trucking companies, in part because of wage growth, which has outpaced other industries. This difficult operating environment has already pushed some companies into bankruptcy, such as Yellow.
Costello believes the pain isn’t over yet, saying that “not an insignificant number of people” will likely leave the industry next year.
While there’s no question the market has flipped from one favoring freight to one that favors the shipper – in most cases, that’s the manufacturer or the retailer – part of the reversal is also thanks to supply chain normalization.
Still, things might get worse for the trucking industry before getting better. The latest CNBC Supply Chain Survey shows that the global freight recession will continue in 2024, with low order expectations – at least for the first half of the year.

Christmas Wishes Bear

The Care Bear’s journey is faster and cheaper than two years ago, but whether these savings are passed along to the consumer is typically in the hands of the retailer.
Before they settle at home with their new owners, the Care Bears’ final destinations in the supply chain are either store shelves or distribution centers.
Foreman, the Basic Fun! CEO, said the cost of labor is higher right now than it was in October 2021, when CNBC first highlighted the Care Bear’s journey and cost. But there’s less pressure on manufacturing and transportation costs, “so things are kind of balancing out.”
The Care Bear journey took more than two months from the manufacturing facility in China to U.S. retail stores in October 2021. Now, Foreman says it’s back to normal, taking between 32 and 35 days.

Care Bears for sale at Toys R Us, American Dream Mall, East Rutherford, NJ.
Courtney Reagan | CNBC

Transportation made up nearly a quarter of the total cost of the Care Bear in the fall of 2021. It’s back down to 5% today.
Two years ago, Basic Fun! added a transportation surcharge to retailers’ invoices to cover added costs throughout the supply chain, which left retailers to decide whether to pass them along to consumers in the retail price.
Most retailers are charging about $15 for the 14-inch Care Bear, down from $17 to $20 in 2021, according to CNBC research. Foreman attributes this to a combination of lower supply chain costs, deflation, seasonal discounting and consumer preference for lower priced toys.
The Care Bear price drop is more than the overall toy price deflation. Toy prices are down nearly 3% in November this year from last year, and down more than 2% from two years ago, according to the latest consumer price index data.
“The average spend of our customer going down, last Black Friday the average spend was $36 per toy that was purchased from us, this year it’s $21.95 per toy,” which Foreman said is leading to more, but smaller less expensive, toys under the Christmas tree. “There’s lots of deals on toys this year.”
The supply chain has normalized, but “now the big challenge is getting the consumer to come to the market” said Foreman.
–Eunice Yoon reported from Ankang, China; Jane Wells reported from San Pedro, California; Pippa Stevens reported from Burlington, New Jersey; and Courtney Reagan reported from East Rutherford, New Jersey. More

Southwest Airlines reached a settlement with the Department of Transportation for a $140 million fine over last year’s holiday meltdown.
The airline separately paid some $600 million to reimburse and refund stranded travelers.
The DOT said the penalty is 30 times larger than any previous fine for violating consumer protection rules.

A Southwest Airline employee checks luggage as Southwest Airlines canceled more than 12,000 flights around the Christmas holiday weekend across the country and in Baltimore, Maryland, December 27, 2022.
Michael McCoy | Reuters

The U.S. Department Transportation on Monday said it fined Southwest Airlines $140 million for violating consumer protection laws during last year’s holiday meltdown that stranded millions of customers following severe winter weather.
The DOT said the fine is 30 times larger than any fine it has issued for consumer protection violations. It includes a $35 million cash payment to the government, which Southwest said will be paid over three years. The agency ordered Southwest to set up a fund to compensate future travelers for flight disruptions in the airline’s control. The airline also received credit for $33 million for giving travelers affected by the disruption frequent flyer miles.

“Today’s action sets a new precedent and sends a clear message: if airlines fail their passengers, we will use the full extent of our authority to hold them accountable,” Transportation Secretary Pete Buttigieg said in a news release.
Southwest didn’t provide enough customer assistance during the meltdown or give prompt flight change notifications, the DOT said.
“DOT’s investigation found that Southwest’s call center was overwhelmed, which at times led to a full call center queue and meant customers got a busy signal upon calling the customer service telephone number,” the agency said.
The airline also didn’t provide refunds or reimbursements in a timely manner, the DOT said, citing an audit of the process.
Southwest canceled nearly 17,000 flights during the year-end holiday period last year after it failed to recover as well as rivals did from a severe winter storm, stranding some 2 million people and costing the airline more than $1 billion. It paid more than $600 million in reimbursements and refunds to customers alone.

Speaking at an industry event in New York last week, CEO Bob Jordan vowed that last year’s holiday meltdown “will never happen again,” just days ahead of the busy holiday travel period.
The carrier’s executives have touted a host of improvements this year that they say will help it avoid a repeat of last year. Southwest purchased additional de-icing equipment and upgraded crew scheduling technology that last year fell short of what it needed to reschedule pilots and flight attendants during the disruptions.
Those shortfalls last year contributed to the chaos.
“We have spent the past year acutely focused on efforts to enhance the Customer Experience with significant investments and initiatives that accelerate operational resiliency, enhance cross-team collaboration and bolster overall preparedness for winter operations,” Jordan said in a news release on Monday. More

Next year is shaping up to be another pivotal year for weight loss drugs, which skyrocketed in popularity despite hefty price tags, mixed insurance coverage and some unpleasant side effects. 
Investors will be watching to see how Eli Lilly and Novo Nordisk navigate the ongoing supply issues plaguing their treatments.
Those two companies and other drugmakers hoping to join the weight loss drug market are also expected to release crucial clinical trial data.

George Frey | Bloomberg | Getty Images

Weight loss drugs exploded into the public eye this year, and 2024 will bring more change to the evolving market. 
The drugs skyrocketed in popularity in 2023 as they helped patients shed significant weight, despite hefty price tags, mixed insurance coverage and a handful of unpleasant side effects. 

Demand for the drugs is unlikely to slow down in 2024, especially as treatments gradually become more accessible. Much of Wall Street believes the weight loss drug market will only expand, with some analysts projecting that it will be worth $100 billion by the end of the decade. Goldman Sachs analysts expect 15 million U.S. adults to be on obesity medications by 2030.
But next year, investors will be watching how the dominant players in the market, Novo Nordisk and Eli Lilly, navigate supply issues plaguing their treatments. Patients have been struggling to get their hands on Novo Nordisk’s weight loss injection Wegovy, its diabetes treatment Ozempic, and Eli Lilly’s diabetes injection Mounjaro.
Analysts expect supply constraints to improve but note that the broader issue will take years to resolve. 
Outside of supply headwinds and the lack of broader insurance coverage for weight loss drugs, Novo Nordisk and Eli Lilly have a big year ahead of them. 
Novo Nordisk could win approvals for expanded use of Wegovy in the U.S. and Europe. Eli Lilly’s newly approved weight loss drug, Zepbound, could garner more than a billion dollars in sales in its first year on the market.

Both companies are also expected to release new data that could show other potential health benefits of their drugs beyond weight loss and diabetes management, which may increase insurance coverage down the line. 
Next year may mean even more to the other companies hoping to join what’s so far been a two-horse race to make weight loss treatments.
New drug data from Pfizer and Amgen, and the potential for more buyouts or collaborations between larger companies and smaller makers of obesity drugs, could alter the market’s competitive landscape in the coming months.

Supply issues could ease but won’t go away

The supply problems plaguing Wegovy, Ozempic and Mounjaro are likely “the biggest thing” investors will watch next year, Guggenheim analyst Seamus Fernandez told CNBC. 
Some analysts said supply constraints will likely persist for years, but expect them to ease in 2024 as Novo Nordisk and Eli Lilly work to expand manufacturing capacity for their drugs. 

George Frey | Reuters

Novo Nordisk during its third-quarter earnings call in November said it is “looking at significantly scaling our supply” of Wegovy in the U.S. in 2024. TD Cowen analyst Michael Nedelcovych told CNBC that the company during the call appeared to suggest that such a change wouldn’t look like a big jump in supply but rather steady improvements over time.
Supply could increase more significantly years from now: Novo Nordisk in November said it would invest $6 billion to expand its manufacturing facilities in Denmark, noting it will finish construction from the end of 2025 through 2029. The company also said it would spend around $2.3 billion to expand another production site in France. 

Top weight loss and diabetes drugs

Wegovy from Novo Nordisk is a weekly weight loss injection for adults with obesity or who are overweight. The drug mimics a hormone produced in the gut called GLP-1 to suppress a person’s appetite.
Zepbound from Eli Lilly is a weekly weight loss injection for adults with obesity or who are overweight. The treatment mimics GLP-1 and another gut hormone called GIP to reduce appetite and food intake.
Ozempic from Novo Nordisk is a weekly injection that helps lower blood sugar levels in adults with Type 2 diabetes. The medication mimics GLP-1 to suppress appetite and help the pancreas make more insulin.
Mounjaro from Eli Lilly is a weekly injection that helps lower blood sugar levels in adults with Type 2 diabetes. The drug mimics GLP-1 and GIP to curb appetite and stimulate insulin production.

Meanwhile, Eli Lilly said during its third-quarter earnings call in November that supply of Mounjaro has improved in the U.S. even as it remains constrained around the globe.
Executives also said that Eli Lilly is on track to achieve its goal of doubling production capacity for drugs such as Mounjaro, in part through investments in new manufacturing sites in North Carolina and Indiana.
But Eli Lilly CEO David Ricks said on the call that the company is “aggressively planning” further production buildup for Mounjaro and other drugs. He added that “it’s a problem we work on every day. So we’re not at all happy with the capacity.”

Zepbound could become a blockbuster 

The FDA approves Eli Lilly’s Zepbound, a weight loss drug similar to Ozempic and Wegovy.
Courtesy: Eli Lilly

Morgan Stanley expects Zepbound to rake in $2.2 billion in sales in 2024, according to a note released after the drug’s approval in November. Meanwhile, Bank of America analysts in a November note projected $2.7 billion in Zepbound revenue in 2024. 
Some analysts expect far more sales growth for Zepbound and Mounjaro beyond 2024. Tirzepatide, the active ingredient in both drugs, has a “very strong shot of being the best-selling molecule of all time in the pharmaceutical industry,” said Guggenheim’s Fernandez. 
Wall Street is enthusiastic about Zepbound in part because it may cause more weight loss than Wegovy. Studies directly comparing the two, including an ongoing trial from Eli Lilly, would need to confirm that.
Results from that trial could come out next year after initial data from separate studies examining Zepbound as a potential treatment for other health conditions, including heart failure.
Mixed insurance coverage will likely weigh on sales of Zepbound and other weight loss drugs in 2024, but Eli Lilly has already secured some coverage for the drug. 

Wegovy could make history again 

Wegovy made history this year when it slashed the risk of serious heart problems by 20% in people with obesity and heart disease in a late-stage trial. In 2024, the drug could shake up the pharmaceutical industry again if U.S. and European regulators decide to approve it for that purpose. 
Those potential approvals, which would make Wegovy the first GLP-1 drug to have an expanded use for heart health, are a “foregone conclusion” for Novo Nordisk, Cantor Fitzgerald’s Louise Chen told CNBC.  

Still life of Wegovy an injectable prescription weight loss medicine that has helped people with obesity. It should be used with a weight loss plan and physical activity. 
Michael Siluk | UCG | Getty Images

An FDA approval could potentially increase the uptake of Wegovy, encouraging more obesity specialists, primary care providers and cardiologists to prescribe it to eligible patients, said Dr. Eduardo Grunvald, medical director for UC San Diego’s Center for Advanced Weight Management.
An approval may also put more pressure on U.S. insurers to eventually cover Wegovy and similar weight loss treatments, opening the door for broader use.
Eli Lilly is also studying the cardiovascular benefits of Zepbound in a phase three clinical trial in diabetes patients with increased cardiovascular risk, and results are expected in late 2024. The drugmaker is conducting a similar study in obese patients with heart-health risks, but results may not come until 2027. 
Meanwhile, Novo Nordisk’s other treatments could reach their own milestones next year.
Novo Nordisk expects to release data in the first half of 2024 from a late-stage trial examining Ozempic as a treatment for kidney failure in diabetes patients with chronic kidney disease. The company hinted that the trial would be a success when it halted the study a year earlier than planned in October based on an interim analysis.

Upcoming clinical trial data releases

A phase-three trial from Eli Lilly on Zepbound as a treatment for cardiovascular complications in diabetes.
A phase-three trial from Novo Nordisk on Ozempic as a treatment for kidney failure in diabetes patients with chronic kidney disease.
A phase-three trial from Novo Nordisk on a 25-milligram version of its once-a-day weight loss pill.
A phase-three trial on Zepbound as a potential treatment for heart failure in patients with obesity.
A phase-three trial on Zepbound as a potential treatment for non-alcoholic fatty liver disease, which is caused by fat buildup in the liver, in patients with obesity.
A phase-three trial on Zepbound as a potential treatment for obstructive sleep apnea, or the pause of breathing during sleep due to blocked airways, in patients with obesity.
A phase-three trial on IcoSema, a combination of once-weekly insulin and once-weekly semaglutide, in patients with diabetes.

Novo Nordisk will also release phase three clinical trial data on a 25-milligram version of its once-a-day weight loss pill, which uses semaglutide, the same active ingredient as in Ozempic and Wegovy. 
That trial is crucial because Novo Nordisk is waiting to see that data before filing for approval of the oral weight loss drug, said Cowen’s Nedelcovych. He added that in the long term, the availability of weight-loss pills could boost capacity for their injectable counterparts. 
Also in 2024, a study following patients from a previous late-stage trial could potentially generate data supporting Wegovy as a treatment for preventing the development of diabetes, Nedelcovych said.

A make-or-break year for Pfizer

New data next year will be crucial to determining whether Pfizer gets a piece of the weight loss drug space. The stakes are high: CEO Albert Bourla has said the company hopes to capture $10 billion of that market. 
Pfizer axed a twice-daily version of the only obesity product in its pipeline earlier this month after patients taking the pill lost significant weight but had trouble tolerating the drug in a mid-stage study. 
Now, the company is pinning its hopes on a once-a-day version of the pill, known as danuglipron, which it believes may cause fewer adverse side effects. Pfizer said it expects to release more data on that version of the drug in the first half of 2024, which will help the company decide whether to start a late-stage study on the pill. 

CFOTO | Future Publishing | Getty Images

However, some analysts have raised questions about whether the once-a-day version will be easier to tolerate.
“Despite ongoing work, tolerability still appears to be an issue with the product, and it is not clear to us why this will improve” in a phase three trial or with a once-daily version, JPMorgan analyst Chris Schott said in a December note.
Barclays analyst Carter Gould said in a December note that it is “increasingly apparent” that the company will have to look externally for an obesity treatment, whether that’s through an acquisition or partnership, to capture a slice of the weight loss drug market like it had hoped.
Meanwhile, upcoming data will reveal how serious Amgen’s weight loss drug portfolio is. In the first half of 2024, Amgen is slated to publish early stage trial data on an oral weight loss medication.
In the second half of the year, Amgen plans to release mid-stage trial data on an injectable drug that helped cause up to 14.5% weight loss after 12 weeks in an early study.

Watch for buyouts and partnerships

Pfizer isn’t the only company that could benefit from looking externally for obesity drugs. 
Larger drugmakers used acquisitions of smaller businesses, or partnerships with them, to carve out space in the weight loss drug market this year. More companies could deploy the strategy next year, analysts said.
“There are a bunch of other large-cap pharmas on the list who could do this,” said Cantor Fitzgerald’s Chen. 
Swiss company Roche said earlier this month it would buy the privately held U.S. obesity drugmaker Carmot Therapeutics for $2.7 billion. AstraZeneca signed a licensing agreement with Chinese biotech company Eccogene to develop an obesity pill. 
Novo Nordisk and Eli Lilly have also snapped up smaller obesity drug companies this year to maintain their dominance in the market. 

Recent weight loss drug buyouts and partnerships

Roche in December said it will buy privately held obesity drugmaker Carmot Therapeutics for $2.7 billion.
AstraZeneca in November said it signed a licensing agreement with Chinese biotech company Eccogene to develop an obesity pill.
Novo Nordisk in August said it will acquire the privately held obesity drugmaker Inversago Pharma for $1.08 billion. 
Novo Nordisk in August said it will acquire Embark Biotech, which develops obesity and diabetes drugs, for up to $500 million. 
Eli Lilly in July said it will acquire privately held obesity drugmaker Versanis for $1.93 billion.

In a statement to CNBC, Novo Nordisk said it has increased its focus on “sourcing and elevating external innovation” to complement its in-house products and broaden its drug pipeline, especially for diabetes, obesity, cardiovascular disease and rare blood disorders.
The company also said it is interested in the “full range of business development activities,” from acquisitions to partnerships on early or late-stage products, when it comes to companies with new biological drugs, new potential treatment targets and new mechanisms of action, or how a drug works.
Chen said acquisitions or partnerships may be the only way for small- to mid-cap weight loss drugmakers to catch up with Eli Lilly and Novo Nordisk.
Some smaller companies have indicated that they are open to the idea: Altimmune said Dec. 5 that it is looking for partners to launch and develop its experimental obesity drug pemvidutide. 
Shares of Altimmune have jumped more than 140% since Nov. 30, when the company released mid-stage trial data showing that its injectable drug caused 15.6% weight loss on average after 48 weeks.
Other smaller weight loss drugmakers include Structure Therapeutics, whose once-daily pill helped overweight or obese patients lose up to 10 pounds of weight on average after a month in an early-stage trial. The company is expected to report mid-stage trial data on its drug in diabetes patients this month and more results on the pill in patients with obesity early next year, Guggenheim’s Fernandez noted. 
Still, some bigger drugmakers may wait to see larger and later-stage data from smaller companies before moving to acquire them. That data may not come out until 2025 or later for many firms, said Fernandez. More

Professional pickleball players have formed a collective to voice their concerns about the future of the sport.
The collective sent a letter to all Major League Pickleball stakeholders to address their concerns.
MLP and the Professional Pickleball Association Tour are trying to finalize a merger.

Major League Pickleball finals at Pickle & Chill on October 16, 2022 in Columbus, Ohio.
Emilee Chinn | Getty Images

Dozens of professional pickleball players have formed a collective to voice their concerns about recent pay cuts and the future of the sport.
In a letter obtained by CNBC, the collective shared their dissatisfaction with how they have been treated by Major League Pickleball and the Pro Pickleball Association Tour.

It comes after MLP on Nov. 28 asked players to take a 40% percent pay cut in return for a reduction of work obligations to help the league become financially viable over the long term. The MLP and the PPA Tour are currently negotiating a proposed merger.
“We understand the economic reality of pay-cuts, however, lies, threats, deceitfulness, false deadlines, and the refusal to honor written addendums and agreements have no place in the league that we know and love. If we are going to collaborate on contract modifications, we deserve honest answers to honest questions, and we have not received them,” the letter says.
CNBC spoke with multiple players who say they feel like they’ve been unfairly treated or received threats for not agreeing to the proposed pay cuts. Many were not so much against the proposed cuts but the lack of transparency and the way the leagues have handled it. They all spoke on the condition on anonymity out of fear of retribution.
Fueled by a boom in the sport’s popularity, Major League Pickleball has attracted A-list ownership groups featuring superstars such as LeBron James, Tom Brady, Kevin Durant and Patrick Mahomes, to name just a few. Julio DePietro, who bought a stake in the Florida Smash MLP team in 2022, and most recently served as MLP CEO, told CNBC in July that MLP team valuations had soared to $10 million after being acquired for as low as $100,000 since the league began play in 2021.
But recently the league undergone major leadership changes. MLP founder Steve Kuhn and Commissioner Brooks Wiley have departed in recent months. DePietro, who was hired as CEO in July, quietly left that role, too.

Steve Kuhn, MLP Founder, Major League Pickleball at NYSE, May 25, 2022.
Source: NYSE

Despite the proposed merger still being in the works, the players say PPA Tour CEO Connor Pardoe did a lot of the negotiating with MLP players over their contracts, which they found unusual. Many say they had chosen MLP over the PPA Tour to get away from Pardoe, and now they are being forced to negotiate with him.
One player said they were threatened that if they don’t take the pay cut by the following day, the cuts would increase to 60% from 40%. The player requested additional information and for a written proposal which the league failed to provide him.
MLP pay ranges from $30,000 to $2 million a year, according to an owner who spoke to CNBC on the condition of anonymity.
Other players said they were threatened by MLP and PPA Tour leadership that if they didn’t take the cuts they may be scheduled to work in their developmental program coaching clinics or camps – even on their kids’ birthdays.
“We decided to form the collective in response to the immoral, unethical and arguably illegal negotiation tactics that are being used,” another player said.
The collective represents the interests of the vast majority of MLP’s approximately 100 players, according to former MLP Challenger champion and MVP Jillian Braverman, one of the group’s leaders. The group started as a WhatsApp chat and has evolved into a forum where players can collectively share their experiences. Braverman said they have received funding from an angel investor and have hired both an employment attorney and an antitrust attorney.
In a joint statement, MLP and the PPA Tour told CNBC: “The players have shown overwhelming collaboration during this process and have largely understood that we are all collectively making adjustments to build an operation that can ensure the long-term health and success of professional pickleball for all key stakeholders.”
One owner told CNBC he hopes the collective is a wakeup call to the other owners about the proposed merger and how dire things have become.
“It isn’t all rainbows and butterflies, players are not happy. It’s not going well and they feel rightfully aggrieved,” said the owner, who declined to be named, as he was discussing confidential matters.
Ritchie Tuazon, who owns MLP’s California BLQK Bears, said he sees the value of the collective, especially as some players don’t even have agent representation.
“Moving in the direction of a unified player voice is only a positive thing for pickleball,” he said.
The collective’s letter to MLP stakeholders, which includes all owners, also included survey results reflecting the opinions of roughly 65 players.
When asked whether they feel they have been treated fairly during the pay cut negotiation process, 89% of the respondents said no. The vast majority (92%) said that MLP leadership has failed to successfully answer the majority of their questions.

The poll results regarding the PPA Tour were even more damaging, with 57% saying they have felt victimized, harassed or bullied by the rival league. More than 75% said Connor Pardoe and the PPA Tour leadership team are not of high moral character and integrity.
“We believe that MLP has departed from the ethos that we know and love and is instead embodying the exact ethos that we fled from when we signed multi-year deals with Major League Pickleball in August,” the letter says.
Braverman said Major League Pickleball has yet to respond to Sunday’s letter. The group sent a follow-up note Thursday, telling MLP leaders that the collective has retained counsel.
MLP did send a letter to players Thursday, but without explicitly addressing the players collective. Titled “Where We Stand,” the league letter said “over 85% of all 2023 Premiere Level Players” have accepted reductions as well as new agreements with the “NewCo,” which would be the merged MLP and PPA Tour.
The MLP also said they are “at capacity,” and not doing any more reductions. It added that if players who have accepted a reduction want to change back to their original deals “we would be open to that.”
Pickleball Union, a pickleball news website, and the collective challenged these claims. After reaching out to players and agents, they determined the number of people to have accepted the cuts to be closer to 25% to 30% at best.
In MLP’s Thursday letter, the league also touts that MLP owners have pledged an additional $10 million annually to fund operations and will be receiving another $50 million on Jan. 1. Overall, after amended player agreements, there will be a 300% increase in total player salaries in 2024 vs. 2023, it adds.
The league ended the letter with a warning, though.
“If the merger is not completed by Jan. 31, 2024, these new agreements will be null and void, and deals will revert to the contracts you signed with MLP or PPA, which will leave the future viability and sustainability of MLP uncertain,” the letter says. More

State of Freight

Shipping giants Hapag-Lloyd and Maersk have paused travel through the Red Sea, citing security risks.
Iranian-backed Houthi militants from Yemen have attacked container ships amid Israel’s war with Hamas.

The Hamburg flag flies in front of Hapag-Lloyd containers on the Hapag-Lloyd containership “Berlin Express” at Burchardkai in the Port of Hamburg.
Marcus Brandt | Picture Alliance | Getty Images

Two shipping giants, Hapag-Lloyd and Maersk, are pausing their travel through the Red Sea and the Bab el-Mandeb Strait in the Middle East following a series of attacks on their vessels by Iranian-backed Houthi militants from Yemen.
Maersk, the world’s second largest container shipping company, moves 14.8% of the world’s trade. It said it would divert ships away from the Red Sea. The Houthi group backs Hamas, the Palestinian militant group, and has said it is targeting vessels headed for Israel.

In an email to CNBC, a Maersk spokesman said the Danish company is deeply concerned about the highly escalated security situation in the southern Red Sea and Gulf of Aden. The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers, the spokesman added, saying that employees’ safety is the company’s top priority. 
“Following the near-miss incident involving Maersk Gibraltar yesterday and yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice,” the representative said.
Maersk said it would release more details about potential next steps in the coming days.
Hapag-Lloyd, which controls about 7% of the global container ship fleet, told CNBC in an email, that it will “pause all container ship traffic through the Red Sea until Monday. Then we will decide for the period thereafter.”
The Bab el-Mandeb Strait is between the Horn of Africa and the Middle East. It connects the Red Sea to the Gulf of Aden and the Arabian Sea, which feed into the Indian Ocean. This waterway is used by container ships and exports of petroleum and natural gas from the Persian Gulf.

Approximately 12% of the world’s trade, which includes 30% of all global containers, move through the Suez Canal. That then feeds through the Red Sea and Bab el-Mandeb. The significance of the Suez Canal was thrust into the spotlight in March 2021, when container ship the Ever Given was stuck for six days.

A boat of the Lower Saxony water police sails along in front of the container ship “Morten Maersk” of the Danish shipping company Maersk Line, which is moored at a quay wall at the container terminal JadeWeserPort.
Picture Alliance | Getty Images

Israel based ocean carrier ZIM has re-routed vessels to avoid the Arabian and Red Seas to safeguard their vessels and crew amid the threats by the Houthis. The vessels are traveling around the Cape of Good Hope in South Africa. This alternative route to the Indian Ocean adds 10 to 14 days of travel time to a vessel’s journey. The long way around Africa also incurs higher fuel costs because of the longer travel distance. 
Since Houthi militants threatened Saturday to attack any vessels that have ownership ties to Israel, or does business in the country, there have been as many as seven incidents. Overall, 13 vessels have been attacked since the Israel-Hamas war began in early October.
In response to Friday’s attacks, in which three vessels were attacked, the World Shipping Council said it is deeply alarmed and concerned about the escalating crisis, and that it’s calling for decisive action to protect seafarers.
“The right of freedom of navigation stands as a fundamental right under international law, and must be safeguarded,” the council said. “The time for resolute international engagement is now.”
The U.S. government has been in discussions with countries of the 39-member Combined Maritime Forces to form a maritime task force to “ensure safe passage” of ships in the Red Sea.
U.S. Central Command, which oversees America’s military interests in the Middle East, has told CNBC discussions are ongoing. More

Cruise, which is laying off 24% of its workforce, has quickly gone from one of General Motors’ greatest business opportunities to a growing liability.
The self-driving vehicle subsidiary has confronted a wave of problems since an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise vehicle after the person was struck by another vehicle.
GM appears to believe it can eventually move forward with Cruise. GM CEO Mary Barra said the automaker is “very focused on righting the ship” at Cruise.

Sydney Boyo

DETROIT — General Motors’ plans to diversify its business through trendy industries such as ridesharing and other “mobility” ventures or startups have largely fallen flat since the automaker started investing in such growth areas in 2016.
Cruise, its majority-owned autonomous vehicle subsidiary, is increasingly looking like it might be next.

The unit has quickly gone from one of GM’s greatest business opportunities to a growing liability. Cruise, of which GM owns more than 80%, has confronted a wave of problems and investigations sparked by an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise self-driving vehicle after the person was struck by another vehicle.
Since the incident, Cruise’s robotaxi fleet has been grounded, pending the results of independent safety probes. Its leadership has been gutted, including its cofounders resigning and nine other leaders being ousted. GM is massively cutting spending and growth plans for the business, including pausing production of a new robotaxi. Local and federal governments have launched their own investigations. And the venture is laying off 24% of its workforce.

GM, like other companies, has quickly shifted from attempting to impress Wall Street with growth initiatives, including generating $80 billion in new businesses by 2030, to refocusing efforts on core business to generate profits amid economic and recessionary concerns.
Despite all that, GM appears to believe it can eventually move forward with Cruise. GM CEO Mary Barra said Dec. 4 during an Automotive Press Association meeting in Detroit that the automaker is “very focused on righting the ship” at Cruise.
“We are confident in the team and committed to supporting Cruise as they set the company up for long-term success with a focus on trust, accountability and transparency,” GM said Thursday in a statement related to announced layoffs at Cruise.

Past projects

But there’s growing concern across the industry, not just with GM and Cruise, about the viability of autonomous vehicles, or AVs, as a business instead of as a niche science project.
“AV technology, while they’ve made a lot of progress with it, is unlikely to be profitable anytime in the foreseeable future, certainly not this decade,” said Sam Abuelsamid, principal research analyst at Guidehouse Insights. “If they need to make cuts, robotaxis seem like the obvious place to do that.”
Some Wall Street analysts are holding out hope that GM and Barra can turn Cruise around and eventually refocus on growing the business, as the Detroit automaker takes a more hands-on approach with the company. Several are expecting updates at an investor event in March.
“The plan to pause Cruise operations and reduce spending on Cruise in 2024 are only first steps. Once again, we expect these concerns to be addressed and cured at the capital markets day in early 2024 but expect skepticism to remain in the interim,” Morgan Stanley analyst John Murphy said in a Nov. 29 investor note.
If GM can’t turn the operations around, Cruise would join a list of its past defunct growth businesses, partnerships and investments since 2016. They include:

2016-20: A “Maven” mobility brand that offered carsharing from the company as well as peer-to-peer
Starting 2016: Partnerships with Uber and Lyft, including a $500 million investment stake in the latter. (GM made $78 million off its Lyft investment.)
2017-22: In-vehicle Marketplace app
2017-18: Book by Cadillac, a vehicle subscription service
2018-20: E-bikes
2019-21: Tie-ups with EV startups Nikola and Lordstown Motors, in which it had an equity stake as part of a deal to sell an Ohio plant, as well as a reported investment in Rivian that ended up not happening

The automaker also has discussed personal autonomous vehicles as early as mid-decade and evaluating “flying cars” for the mid-2030s, among other things that have been de-emphasized more recently. In 2021, the company said it had about 20 initiatives in its pipeline that targeted $1.3 trillion in new total addressable markets.
“Cruise has been both vastly more ambitious and vastly more costly than any of those other programs,” Abuelsamid said. “It certainly could end up on the trash heap. … They’ve got to take a long hard look at what they want to prioritize.”
Not all of GM’s noncore businesses that were launched in recent years have failed. GM Energy and the BrightDrop commercial EV unit continue to operate; however, GM recently brought BrightDrop in-house from being a wholly owned subsidiary.
GM’s financial arm continues to operate an insurance business that was launched in late 2020 as part of its growth initiatives.
“It’s about reprioritizing … and making sure that you’re reducing what you don’t need to do anymore,” GM CFO Paul Jacobson told media Nov. 30 about the company’s overall cost-cutting measures, including “considerably” scaling back its energy and BrightDrop units.

Brightdrop EV600 van
Source: Brightdrop

Jacobson said the change in Brightdrop was to reduce redundancies and cut costs, as business cases have changed. BrightDrop was expected to generate $1 billion in revenue this year; it’s unclear where that stands.
Jacobson declined to disclose whether GM could bring Cruise into the automaker, which has its own autonomous vehicle unit and recently appointed Anantha Kancherla from Meta Platforms to the newly created position of vice president of advanced driver-assistance systems.
GM continues to operate a military defense unit and fuel cell business that have both recently announced new contracts or partnerships. The company does not report revenue or earnings for these units.
GM says it remains bullish on its software initiatives and investments in joint ventures for EVs — for example, an investment projected to exceed $1 billion with POSCO Future M to increase production capacity of key battery elements in North America.

Are autonomous vehicles viable?

GM acquired Cruise in 2016. At the time, the company was trying to quell Wall Street concerns that traditional automakers wouldn’t be able to compete against emerging competition from Apple and Google, as well as emerging “mobility” companies such as Lyft, Uber and a litany of other startups that were expected to disrupt traditional car ownership.
But commercializing autonomous vehicles didn’t pan out for most, and it’s been far more challenging than many predicted even a few years ago. The challenges have led to a consolidation in the sector after years of enthusiasm touting the technology as the next multitrillion-dollar market for transportation companies.
Cruise was considered one of two front-runners left when it comes to robotaxis in the U.S., along with Alphabet-backed Waymo, which is also operating limited self-driving fleets for consumers. Amazon-backed Zoox also continues to test autonomous vehicles in several states.

Renderings from GM of the “Cadillac halo portfolio” that includes concepts of an autonomous shuttle (right) and an electric vertical take-off and landing (eVTOL) aircraft, also known as a flying vehicle.
Screenshot via GM

Others competitors such as Lyft, Uber and Ford Motor/Volkswagen-backed Argo AI have ended their autonomous vehicle programs, citing the massive investments needed for an unprofitable and untested industry. Stellantis has announced partnerships with BMW and Waymo, but nothing along the lines of Cruise and Argo.
“I want to know what needs to be done to get Cruise back running commercial services for consumers in a safe manner,” said Morningstar analyst David Whiston. “And then by not operating the consumer operations and, perhaps, not growing in other cities for the time being, how much costs can you save? Because the losses have gotten pretty big.”
GM’s investment in Cruise and its share of the company’s losses have cost the automaker more than $8 billion since 2016, according to annual public filings. The losses have been increasing, including $1.9 billion through the third quarter of this year.
After purchasing Cruise, GM brought on investors such as Honda Motor, SoftBank Vision Fund and, more recently, Walmart and Microsoft. However, last year, GM acquired SoftBank’s equity ownership stake for $2.1 billion.
GM has said it will significantly cut spending on Cruise. Barra, who leads Cruise’s board of directors, declined to say at the Dec. 4 press association meeting how much money the automaker is willing to spend on Cruise going forward until it completes its assessments and has a plan to move ahead.
Cruise had $1.7 billion in cash to end the third quarter, enough to last through a majority of next year at the current cash burn rate.
Barra and other proponents of autonomous vehicles have consistently touted that self-driving cars have the ability to significantly reduce crashes and roadway fatalities, while also providing transportation for those who may not be able to drive themselves.
“We’ll work through the challenges we have right now at Cruise,” Barra said Dec. 4. “We have to have the right plan.”
– CNBC’s Michael Bloom and Hayden Field contributed to this report.

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