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Settlement comes days before attorneys were poised to deliver opening statements; terms weren’t disclosed

Tesla TSLA 4.90%increase; green up pointing triangle has reached a settlement with the family of a driver who died in a 2018 crash involving the company’s driver-assistance technology Autopilot, days before attorneys were poised to deliver opening statements.

Terms of the settlement weren’t disclosed in court records.

The wrongful-death suit dealt with a crash involving 38-year-old Apple engineer Walter Huang. The driver died on Highway 101 in California after his Model X sport-utility vehicle crashed into a highway barrier while he was using Tesla’s Autopilot.

Huang’s family, which brought the lawsuit, had pursued a distinctive line of argument, questioning whether the automaker oversold Autopilot’s capabilities and didn’t take sufficient actions to prevent customers from misusing the technology.

Government investigators and the Huangs agree that Huang was distracted in the moments leading up to the crash; Tesla said he was playing a videogame.

The suit was going to be a test of Tesla’s position that drivers, not the automaker, are ultimately responsible for crashes that involve the technology.

Tesla said in a court brief that it agreed to settle the case to end years of litigation. The company asked the judge overseeing the trial in San Jose, Calif., to seal the settlement amount it agreed to as part of the negotiation.

Tesla and the Huang family reached an amicable resolution and the terms are confidential, said Andrew McDevitt, an attorney for the plaintiffs.

Before the settlement, the case was expected to be well-followed in legal circles. The automaker is facing other disputes involving Autopilot.

“Every plaintiff’s lawyer that has one of these cases will be watching,” Matthew Wansley, associate professor at Yeshiva University’s Cardozo School of Law, had said. Wansley has researched automated-driving systems and criticized Tesla’s marketing of the technology.

Elon Musk, Tesla’s chief executive, has demonstrated an appetite for legal risk-taking in the past. He described the carmaker’s approach to litigation in a 2021 tweet: “Tesla policy is never to give in to false claims, even if we would lose, and never to fight true claims, even if we would win.”

A history of scrutiny

Several agencies have been investigating Autopilot, including the Justice Department and Securities and Exchange Commission, which have launched separate probes examining whether Tesla misled customers and investors about how Autopilot performs.

The National Highway Traffic Safety Administration has also been examining Autopilot and the automaker’s more expansive tech called “Full Self-Driving Capability” for years, raising concerns that not enough guardrails are built-in to ensure drivers use the systems appropriately. The regulator has launched more than 40 investigations into accidents suspected to be tied to Tesla’s Autopilot that resulted in 23 deaths.

Autopilot is available on all new Teslas and is designed to help with driving tasks such as steering and lane changes typically on highways. The Full Self-Driving upgrade features navigation on city streets.

Tesla sells subscriptions to enhanced versions of Autopilot as well as to Full Self-Driving. Musk has said such sales could be significant profit drivers for the company.

The automaker says the Autopilot software isn’t designed for fully autonomous driving and allows for drivers to take control when the technology is engaged. Tesla says its website and user manuals make clear that the software requires active driver supervision.

The system deploys a series of warnings to alert drivers if they aren’t paying attention to the road. In December, Tesla issued a safety recall that updated the software underpinning Autopilot, adding more warnings for drivers to ensure they “adhere to their continuous driving responsibility,” the company wrote in a regulatory filing.

Tesla said it made the changes to resolve an investigation by regulators.

The automaker had prevailed in the last two trials, with jurors in the most recent one finding the company wasn’t responsible for the crash because they found no manufacturing defect with Autopilot.

Huang family suit

In the Huang case, the family alleged Tesla drivers were sold on the idea that Autopilot was safer than a human-operated car, and the automaker knew the technology had serious flaws that customers wouldn’t expect to encounter based on how Autopilot was marketed.

On the morning of the March 2018 crash, Huang was making his commute to work after dropping his son off at preschool. With Autopilot engaged while on the highway, Huang’s Model X approached a dividing area that sits between travel lanes of the highway and an exit ramp.

The Autopilot system moved the vehicle off the highway and into the dividing area, and then struck a barrier at about 70 miles an hour. Huang died as a result of blunt force trauma injuries sustained in the crash.

His family’s attorneys said Tesla was to blame for the incident because reasonable drivers believe Autopilot is safe and can navigate highway roads, according to court filings, citing statements and advertising by Musk and the carmaker.

Among the family’s evidence was an email from former Tesla President Jon McNeill. Two years before Huang’s crash, McNeill emailed the company’s head of Autopilot and Musk, saying he had driven several hundred miles in a Model X with the technology activated.

“I got so comfortable under Autopilot, that I ended up blowing by exits because I was immersed in emails or calls (I know, I know, not a recommended use),” McNeill wrote in a March 25 email that year.

One of the Huang family’s attorneys read the email during a deposition, according to a transcript reviewed by The Wall Street Journal. The Journal couldn’t obtain the full text of his message.

Prove your case

The Huangs would have had to demonstrate that Tesla could have improved its warning system for drivers who used Autopilot, which by then had been in use for a little more than two years, said Richard Cupp, law professor at Pepperdine’s Caruso School of Law.

Tesla has said Huang’s hands weren’t detected on the wheel for six seconds before the crash, and that he knew his vehicle had trouble using Autopilot at this particular spot on the highway before, citing testimony from Huang’s wife and text messages. The company also says Huang was playing a videogame on his phone at the moment of impact.

“The sole cause of this crash was his highly extraordinary misuse of his vehicle and its Autopilot features so that he could play a videogame,” Tesla said in a court brief.

Tesla had strong support for its argument that Huang was misusing Autopilot in the seconds before the crash, Wansley said prior to the settlement.

But the case highlighted the issue of drivers becoming too complacent with partially automated technology, Wansley said.

“These crashes are happening because misuse happens all the time,” Wansley said.

Global efforts to secure supply chains put pressure on contractors to establish ‘alternative command system abroad’

Several large Taiwanese manufacturers are considering setting up a second headquarters overseas to ensure they can keep operating in the event of a Chinese attack on their country.

The plans, which remain preliminary in most cases, highlight how global efforts to secure supply chains are forcing companies that play a vital role in manufacturing networks, especially for tech products, to make extensive changes.

“We have clients who are looking into or planning for setting up a second headquarters,” said Rauniei Kuo, a partner and head of the family office business at KPMG in Taiwan. The groups are “in manufacturing [and] currently looking for a location for a second headquarters in south-east Asia, just in case an emergency happens in Taiwan, to give them an alternative command system abroad that they can immediately activate”.

Taiwanese contract manufacturers have for decades formed the backbone of global supply chains for electronic devices and their components, including personal computers, smartphones, servers and telecom networking gear. They are also increasingly penetrating markets for industrial automation, medical devices and electric vehicles.

According to several people involved in the deliberations, companies exploring options for a second headquarters abroad include Lite-On and Qisda, which make electronic components and devices for consumer, telecoms, automotive and medical applications.

China claims Taiwan as part of its territory and threatens to annex it if Taipei resists unification indefinitely. Although Taiwanese experts consider a Chinese attack unlikely in the near term, increased pressure from Beijing and military intimidation tactics have led many foreign companies and customers of Taiwanese groups to initiate some contingency planning.

Driven by rising costs in China, the US-China trade war and customers’ demands to “de-risk” from China, groups such as Apple suppliers Foxconn and Pegatron are expanding in south-east Asia, India, Mexico, the US and Europe instead of China, where much of their production capacity has traditionally been concentrated.

The country head of a global consultancy in Taiwan, who did not want his name published, said many companies were still mostly focused on geographically diversifying production, and other changes such as building contingency structures would follow. “But discussions about back-up headquarters have started at the top in the largest groups,” he said.

The country head said he was urging clients to at least replicate some headquarter functions in a second location. “You have to ask yourselves, if a conflict forces us to cease operations in Taiwan for six months or a year, can we survive? You don’t need investor relations there, but you can’t survive without finance, payroll and receivables.”

The chief financial officer of one company said his group was looking at putting a second headquarters in Singapore because the group was expanding production in two south-east Asian countries.

Other people involved in similar discussions said Singapore, Japan, Switzerland or the Netherlands were options for establishing second headquarters. They ruled out the US. Although it is a major market for Taiwan technology companies, the country was not a suitable location for a second headquarters for tax reasons, they said.

The heightened contingency planning is part of broader structural change in Taiwanese groups as they learn to operate in many new jurisdictions.

Topco, a chemicals and parts supplier for semiconductor plants, has put together a 10-year plan for setting up additional units in various regions and for hiring and training mid-level executives to be rotated through different countries, co-chief executive Charles Lee told the Financial Times. “These mid-level managers will be senior executives 10 years from now,” he said.

But executives, lawyers and consultants said many companies were still moving slowly.

“While their agility has helped Taiwanese companies survive and evolve well, they are not good at planning,” said one consultant.

Chaney Ho, founder of industrial computer maker Advantech, said China’s military exercises around Taiwan in August 2022 in response to a visit to Taipei by then-US House Speaker Nancy Pelosi had triggered discussions about second headquarters. But he argued there was no urgent need for such structures. “You can do almost all of that virtually,” he said.

Qisda and Lite-On declined requests for interviews with top executives. A Qisda spokesperson said the group was not considering setting up a second headquarters abroad. Lite-On did not respond to a request for comment.

Governments need massive private and public investments to expand power grids and energy storage facilities

Europe will need to invest €800bn by 2030 in its energy infrastructure alone to meet climate goals and keep its industry competitive, a new report has found.

The European Round Table for Industry, an influential Brussels lobby group, said in a report published Tuesday that the EU targets of reducing and reaching net zero CO₂ emissions by 2050 would require massive investments in power grids, energy storage and carbon capture facilities.

While the €800bn investment tag was necessary to meet the 2030 climate targets, a total of €2.5tn was needed for the bloc to complete the green transition by 2050 — and stay in business.

“The incentives to attract much needed private investment are not there yet, so policymakers should tackle this urgently” said Dimitri Papalexopoulos, chair of ERT’s energy transition and climate change committee.

“At some point, it will be clear which region or country has won the race to decarbonise — and enjoy the respective competitive advantages. The next five years will determine that,” he added.

Between 2010 and 2018 total investments in power grids in EU countries reached some €32bn. If financing continued at that rate until 2050 there would be a 60 per cent funding gap to what was required, the ERT added.

But leading industry bodies told the Financial Times that such large investments cannot be shouldered by the private sector alone, without government support.

EU businesses were still grappling with the fallout of the worst economic downturn since 2008, driven by volatile post-pandemic demand, red tape and an energy crisis caused by Russia’s war in Ukraine that pushed energy prices up to record highs, said Marco Mensink, director-general of the European chemical industry body Cefic.

“We don’t want decarbonisation by deindustrialisation, that’s the core point,” said Mensink, who noted that Europe’s industrial capacity was being utilised at “historic lows”.

State coffers, however, are also under strain from competing spending priorities, including defence and a revival of the continent’s arms industry against security threats from Russia.

EU institutions themselves have estimated that the bloc needs hundreds of billions in additional investments to deliver on the green agenda, most of which would need to be private capital.

Almost 1,000 EU industry bodies and companies signed a declaration in February outlining an “urgent need for clarity, predictability and confidence in Europe and its industrial policy”.

It also calls for the EU’s €800bn post-pandemic recovery fund to be put to work funding energy infrastructure including carbon capture and storage “as soon as possible”.

Kristian Ruby, secretary-general of the EU power producers trade body Eurelectric, said the new security challenges Europe was faced with were also having an impact on finding the materials needed for the green transition.

“It’s a very different thing to discuss decarbonisation in the context of a peaceful world with a more or less rules-based liberal world order . . . to now where we see a significant fragmentation,” said Ruby.

For some companies wanting to electrify, according to Mensink, grid operators have warned that it would take 12 years to get hold of the copper wire required.

Former Italian premier Enrico Letta next week is set to present a report to EU leaders on how to remedy the EU’s faltering single market in the face of the vast subsidies and aggressive industrial policy in place in China and the US.

Ruby said that what would “make the big difference in the overall investment picture” was access to low-risk capital. “If we create the right de-risking instruments, they can play a huge role,” he said.

The ERT said that the single market was a key “competitive advantage for Europe” and that the “fastest route” to restore growth was to “renew the dynamic of European integration”, particularly for energy flows.

European ports turned into ‘car parks’ as vehicle imports pile up

Chinese EV makers without sales networks or onward transportation among leading causes of congestion, say executives

Imported vehicles are piling up at European ports, turning them into “car parks” as automakers and distributors struggle with a slowdown in sales and logistical bottlenecks including the lack of truck drivers.

Port and car industry executives have pointed to a pile-up of Chinese electric cars as one of the leading causes of the problem, with some companies booking shipping delivery slots without ordering onward transportation. In other instances, carmakers in general are struggling to order trucks because of the lack of drivers and equipment to move the vehicles on.

“Car distributors are increasingly using the port’s car parks as a depot. Instead of stocking the cars at the dealers, they are collected at the car terminal,” said the Port of Antwerp-Bruges, whose port at Zeebrugge is Europe’s busiest port for car imports. “All major car ports” were struggling with congestion, the port added, without specifying the origin of the vehicles.

Some car industry executives said Chinese carmakers were not selling their vehicles in Europe as fast as they expected, which was a major contributor to the glut at the region’s ports.

“Chinese EV makers are using ports like car parks,” said one car supply chain manager.

Some Chinese brand EVs had been sitting in European ports for up to 18 months, while some ports had asked importers to provide proof of onward transport, according to industry executives. One car logistics expert said many of the unloaded vehicles were simply staying in the ports until they were sold to distributors or end users.

“It’s chaos,” said another person who had been briefed on the situation.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that “inland shipping in European markets is difficult [for Chinese EV brands]”.

Emphasising that brands needed to improve their “after sale” services, he added: “[We need to] change the guerrilla warlike car exports, which will throw ourselves into an unfavourable situation.”

BLG Logistics, the company that operates the car-handling terminal at the German port of Bremerhaven, Europe’s second-busiest port for vehicles, said it had experienced longer dwell times at its facilities after Germany’s federal government stopped subsidising purchases of EVs in December last year.

The clogging up of car terminals comes as many of China’s carmakers, such as BYD, Great Wall, Chery and SAIC, are planning an export push to Europe, both to keep their factories in China running and to capitalise on the region’s appetite for electric cars.

China’s car exports in 2023 were 58 per cent higher than the year before, prompting a significant reshaping of the vehicle market. In the first two months of this year, top export destinations of Chinese battery cars, plug-in hybrids and hydrogen vehicles, included Belgium, the UK, Germany and the Netherlands.

Wang Wentao, China’s minister of commerce, said at a meeting with Chinese carmakers in Paris on Sunday that accusations of “overcapacity” were “groundless”.

However, many of the Chinese groups were building teams in Europe from scratch and grappling with real-world logistical challenges, car executives said. As newcomers to the market, they have struggled to find haulage companies to prioritise their orders.

“Lack of trucks” is a “very common problem”, said one person familiar with the situation, who added that many vehicles had been “reserved by Tesla”.

“Any new brand will be facing this issue, if you don’t have scale, if you don’t have regular deliveries, then you are not the [trucking groups’] largest clients,” they added.

The situation has had a knock-on effect on ships unloading their cars. One operator of car-carrying ships, Oslo-based United European Car Carriers, said it had experienced “many frustrating experiences”, with its vessels being delayed in the Italian port of Livorno and the Greek port of Piraeus because of congestion in terminals.

The congestion is the latest setback for the global system for transporting finished cars. The industry has been struggling for months with a shortage of capacity on ships after the jump in Chinese vehicle exports prompted a 17 per cent rise in long-distance movements of vehicles from the year before. The problems were further exacerbated by diversions following attacks on the Red Sea, which have substantially lengthened ship journey times.

BYD, Great Wall, SAIC, Geely and Xpeng did not respond to requests for comment.

Miami-based market maker’s shift shows developing relationship between Big Tech and financial markets

Billionaire Ken Griffin’s Citadel Securities has moved the testing of the algorithms that power its millions of trades a day into the cloud to cope with the vast quantities of data thrown up by financial markets.

The Miami-based market maker has switched storage of trading data and running the programmes that simulate price moves out of its own servers and into Google’s cloud computing service, it told the Financial Times.

The shift makes Citadel Securities the latest financial services company to increase its reliance on Big Tech cloud services and is a win for Google as Silicon Valley companies host more business traditionally guarded closely by Wall Street.

Over the past few years, operators of some of the world’s largest exchanges have put more applications on to servers run by Big Tech companies, to more easily and quickly package and process data.

Citadel Securities is one of the world’s biggest high-speed trading firms, competing with rivals like Susquehanna, Jane Street and Virtu Financial and estimated it was involved in nearly one in every four US equities trades last year.

The US group has moved information that its quantitative researchers use for all markets, including stocks, derivatives, bonds and currencies.

“We’ve moved virtually all the data that we need for every asset that the firm is involved in . . . all the data that all the researchers need,” said Costas Bekas, head of research platform at Citadel Securities.

“The data that we work with is massive, the computations even more so. It includes data from the exchanges we work with but we also subscribe to additional, external types of data that researchers use to build these models,” Bekas said.

“It may be that for a certain time we’ll need a specific number of servers but if market conditions change, we need to scale that five or 10 times. How fast can you build a new data centre and will you need that over time — that is an impossible problem to solve.”

The move marks an expansion of Google’s entrenchment in the financial sector and the newest sign of financial firms cosying up to Big Tech, which has a string of partnerships with exchange operators including Nasdaq and London Stock Exchange Group.

Rohit Bhat, managing director of capital markets, exchanges and digital assets at Google Cloud, said that high-frequency trading firms were a segment “that we are working very closely with”.

The increasingly important position of a small number of large US tech firms has drawn the interest of regulators, who are concerned about the risks that increasing reliance on cloud computing firms might pose to the financial sector.

Google has a 10-year deal with derivatives exchange CME Group and invested $1bn in the Chicago-based business. The tech giant is also running a 10-year partnership with Deutsche Börse, while New York’s Nasdaq is working with Amazon Web Services. Microsoft took a board seat and 4 per cent stake in London Stock Exchange Group as part of a 10-year partnership.

Last year, UK financial regulators and the Bank of England warned of major risks if cloud companies were hacked or failed. 

Bhat added that Google was working with regulators to understand their requirements and make sure the technologies were used securely.

Ilaria Resta and Benoit de Clerck talk about their priorities and the qualities of a good watchmaking boss

The beginning of this year saw two new chief executives start their tenure at venerable Swiss watch brands Audemars Piguet and Zenith.

At Audemars Piguet, the departure of longtime chief executive François-Henry Bennahmias at the end of 2023 has been rumoured for a couple of years and was confirmed 18 months in advance — giving the board of the family-owned company plenty of time to pick a new leader.

And its choice of Ilaria Resta, a former veteran of consumer goods group Procter & Gamble, suggests a change of style for the company, after a decade of maverick management and polarising watch launches, during which revenue and operating margin doubled.

Resta’s appointment is particularly noteworthy not just because female chief executives are still a rarity in the watch business, but also because she was an industry outsider. Her previous jobs at Swiss perfume group Firmenich, where she worked from 2020 until joining AP, and at P&G across sectors such as batteries and haircare, bear little connection to horology.

We meet in her large, bright office at the historic AP headquarters in the Swiss mountain village of Le Brassus, where she disguises her lack of horological experience with a series of well-rehearsed rhetorical questions.

“There is this concept of industries that are self-fulfilled by the same talents over and over again,” says Resta. “My view of business is exactly the opposite. I’ve been trained to be managing businesses no matter what they are. If you ask me, ‘Can you assemble a watch?’ Absolutely not. But I don’t need to. ‘Do I understand watchmaking?’ I’m learning to because you need to master the product. But I don’t need to know how to do it when I manage the company. My mission is to preserve the company for the next generations of the family.”

One of her first objectives was to reaffirm the company’s independence and establish a clear future mission for the business, which at the moment produces 50,000 watches a year. “This company wants to remain an independent family company operating with the same level of quality and watchmaking excellence they’ve done so far,” says Resta.

Indeed, her brief and her approach appear to be more philosophical and conceptual, rather than being gauged by financial metrics alone. And, while careful not to criticise her predecessor, she signals a clear change of pace by choosing not to focus primarily on growth.

“Companies that focus on growth instead of on the ‘muscles’ don’t have sustainable growth,” she says. “So, I believe that there are stages: companies grow, grow fast, stop, consolidate, regrow again.”

Resta argues that she brings relevant skills to the watch industry at a moment of structural change. Her perspective as an analytical and intelligent outsider entering the industry is that, historically, it has been a manufacturing business with many sub-suppliers.

She is committed to expanding the network of AP Houses — the brand’s 21-strong private club-like concept stores, the first of which opened in 2017 — with a new opening in Miami planned for the end of the year.

And the opening of a new AP House in Milan, last month, coincided with the announcement that musician John Mayer had been appointed as a “creative conduit” — a nebulous title indicating a loosely defined role as a liaison between brand and collectors.

Resta plans to make the brand more open. “The story behind this industry is so precious and rich,” she says. “We need to open up the stories to more people, people [who] don’t necessarily buy watches.”

Stories are also important to another freshman chief executive, Benoit de Clerck, who took over at Zenith in January. “I was flabbergasted by the richness of the brand,” he says. “Whenever I am at the manufacture in Le Locle, I roam around with the people in charge of heritage of the brand and I’m discovering treasures. “We have 1km of archives. But, at the moment, we don’t have the time and people to go through them. And this is something that I will definitely dig into in the next couple of years to capitalise on.”

After 25 years in the watch industry, de Clerck’s excitement at being given control of a brand is evident. “I moved to Zenith because I wanted to have the 360-degree view and all the touch points of the role,” he says. He joins the LVMH-owned brand from Richemont’s Panerai, where he was chief commercial officer. “When it comes to having people from, say, the car industry, or aeronautics in the watch industry, I embrace it,” says de Clerck. “It’s great to have other people from different industries joining the watch industry, because it enriches it. But you still need experts as well; you will always need knowledge and expertise.”

While de Clerck declines to give exact figures, he indicates that revenues are a little below SFr200mn ($220mn) and that annual production is about 20,000 pieces per year. “It’s not a big brand and it’s not a small brand,” he says. “It’s like an adolescent brand. That is the way that I describe Zenith.”

De Clerck is also discovering that, while it may be a relatively small business, the brand has a distinct character imparted to it by its historical role as a movement manufacturer.

“Chronograph movements, such as the famous high-frequency El Primero, are much more complicated to assemble and regulate than a simple three-hand movement.”

One of de Clerck’s main priorities is to improve the supply chain, to reduce the time it takes to manufacture watches. “We have a very inflexible supply chain,” he says, adding that integrating new technologies, including artificial intelligence, could be beneficial on that front.

“Manufacturing is another aspect. We produce a lot of parts of the movement in-house and we have around 40 engineers working on optimising existing calibres and working on new movement developments. This relatively high proportion of watchmakers and engineers was a revelation for me, and I want to make sure people know that Zenith will continue to be known for its movements.”

Clearly, his experience in the watch industry enables him to address such technical issues and identify where improvements can be made, but he believes that what won him the job was what he calls his “international aspect”. If nothing else — after having lived in the Middle East, America, Hong Kong and other Asian countries — he is a polyglot.