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20 dividend stocks with high yields that have become more attractive right now

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Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

REIT prices may turn a corner in 2023

REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.50%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

Industry numbers

The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

Screen of high-yielding equity REITs

For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.18%,
which represents 98% of U.S. companies by market capitalization.

We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

For example, if we look at Vornado Realty Trust
VNO,
+1.01%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Brandywine Realty Trust BDN,
+1.82% 		11.52% 12.82% 1.30% $1,132 Offices
Sabra Health Care REIT Inc. SBRA,
+2.02% 		9.70% 12.04% 2.34% $2,857 Health care
Medical Properties Trust Inc. MPW,
+1.90% 		9.18% 11.46% 2.29% $7,559 Health care
SL Green Realty Corp. SLG,
+2.18% 		9.16% 10.43% 1.28% $2,619 Offices
Hudson Pacific Properties Inc. HPP,
+1.55% 		9.12% 12.69% 3.57% $1,546 Offices
Omega Healthcare Investors Inc. OHI,
+1.30% 		9.05% 10.13% 1.08% $6,936 Health care
Global Medical REIT Inc. GMRE,
+2.03% 		8.75% 10.59% 1.84% $629 Health care
Uniti Group Inc. UNIT,
+0.28% 		8.30% 25.00% 16.70% $1,715 Communications infrastructure
EPR Properties EPR,
+0.62% 		8.19% 12.24% 4.05% $3,023 Leisure properties
CTO Realty Growth Inc. CTO,
+1.58% 		7.51% 9.34% 1.83% $381 Retail
Highwoods Properties Inc. HIW,
+0.76% 		6.95% 8.82% 1.86% $3,025 Offices
National Health Investors Inc. NHI,
+1.90% 		6.75% 8.32% 1.57% $2,313 Senior housing
Douglas Emmett Inc. DEI,
+0.33% 		6.74% 10.30% 3.55% $2,920 Offices
Outfront Media Inc. OUT,
+0.70% 		6.68% 11.74% 5.06% $2,950 Billboards
Spirit Realty Capital Inc. SRC,
+0.72% 		6.62% 9.07% 2.45% $5,595 Retail
Broadstone Net Lease Inc. BNL,
-0.93% 		6.61% 8.70% 2.08% $2,879 Industial
Armada Hoffler Properties Inc. AHH,
-0.08% 		6.38% 7.78% 1.41% $807 Offices
Innovative Industrial Properties Inc. IIPR,
+1.09% 		6.24% 7.53% 1.29% $3,226 Health care
Simon Property Group Inc. SPG,
+0.95% 		6.22% 9.55% 3.33% $37,847 Retail
LTC Properties Inc. LTC,
+1.09% 		5.99% 7.60% 1.60% $1,541 Senior housing
Source: FactSet

Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

Largest REITs

Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Prologis Inc. PLD,
+1.29% 		2.84% 4.36% 1.52% $102,886 Warehouses and logistics
American Tower Corp. AMT,
+0.68% 		2.66% 4.82% 2.16% $99,593 Communications infrastructure
Equinix Inc. EQIX,
+0.62% 		1.87% 4.79% 2.91% $61,317 Data centers
Crown Castle Inc. CCI,
+1.03% 		4.55% 5.42% 0.86% $59,553 Wireless Infrastructure
Public Storage PSA,
+0.11% 		2.77% 5.35% 2.57% $50,680 Self-storage
Realty Income Corp. O,
+0.26% 		4.82% 6.46% 1.64% $38,720 Retail
Simon Property Group Inc. SPG,
+0.95% 		6.22% 9.55% 3.33% $37,847 Retail
VICI Properties Inc. VICI,
+0.41% 		4.69% 6.21% 1.52% $32,013 Leisure properties
SBA Communications Corp. Class A SBAC,
+0.59% 		0.97% 4.33% 3.36% $31,662 Communications infrastructure
Welltower Inc. WELL,
+2.37% 		3.66% 4.76% 1.10% $31,489 Health care
Digital Realty Trust Inc. DLR,
+0.69% 		4.54% 6.18% 1.64% $30,903 Data centers
Alexandria Real Estate Equities Inc. ARE,
+1.38% 		3.17% 4.87% 1.70% $24,451 Offices
AvalonBay Communities Inc. AVB,
+0.89% 		3.78% 5.69% 1.90% $23,513 Multifamily residential
Equity Residential EQR,
+1.10% 		4.02% 5.36% 1.34% $23,503 Multifamily residential
Extra Space Storage Inc. EXR,
+0.29% 		3.93% 5.83% 1.90% $20,430 Self-storage
Invitation Homes Inc. INVH,
+1.58% 		2.84% 5.12% 2.28% $18,948 Single-family residental
Mid-America Apartment Communities Inc. MAA,
+1.46% 		3.16% 5.18% 2.02% $18,260 Multifamily residential
Ventas Inc. VTR,
+1.63% 		4.07% 5.95% 1.88% $17,660 Senior housing
Sun Communities Inc. SUI,
+2.09% 		2.51% 4.81% 2.30% $17,346 Multifamily residential
Source: FactSet

Simon Property Group Inc.
SPG,
+0.95%
is the only REIT to make both lists.

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Technology

Why Are U.S. Highway Signs Green?

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Photo: Gabriel Bouys/AFP (Getty Images)

Highway signs are a ubiquitous part of America’s infrastructure iconography. The U.S. highway shields are probably the most well-known mass-produced piece of aluminum in the country. However, the countless green signs that dot every thoroughfare are a subtle staple for millions of journeys, from daily commutes to holiday road trips. These provide all the information necessary for navigating the system, such as the upcoming exits and the mileage to further flung destinations. Also, the design of these signs has largely been the same since the creation of the Interstate Highway System. Yet, why was green chosen as the official color?

According to the Arizona Department of Transportation, green is used because it is a “cool” color. The sign’s green background tends to blend in with the greens, blues and browns of the natural landscape, while also providing a great contrasting surface for white text. John LaBarbera, an ADOT public information officer, stated, “It blends in enough to be considered part of the scenery, but sticks out enough to notice when you need it.” This explanation from ADOT covers the intuitive line of reasoning behind the choice of color.

The standard of green for guide signs stems from the Manual on Uniform Traffic Devices (MUTCD). The first edition of the MUTCD was published in 1935 by the American Association of State Highway Officials (today’s AASHTO), a standard body consisting of representatives from every state department of transportation. The initial manual was primarily focused on road markings, black-on-yellow background warning signs and black-on-white background regulatory signs across the country. There was no standard for guide signs as long-distance road travel still wasn’t as ordinary as we find it today. Travelers were expected to use route markers and their own maps.

Guide signs were officially standardized as white-on-green background signs in 1954, two years before the passage of the Interstate Highway Act. This significant amendment was included in a 15-page supplement to the 1948 edition of the MUTCD. This supplement also mandated that stop signs be white text on a red background. Prior to this change, stop signs were allowed to be either black or red text on a yellow background, in line with the other warning signs.

Guide signs were officially standardized as white-on-green background signs in 1954, two years before the passage of the Interstate Highway Act. This significant amendment was included in a 15-page supplement to the 1948 edition of the MUTCD. This supplement also mandated that stop signs be white text on a red background. Prior to this change, stop signs were allowed to be either black or red text on a yellow background, in line with the other warning signs. AASHO shied away from red signs in the 1930s because fade-resistant red paint finishes didn’t yet exist.

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The current 2009 edition of the Manual on Uniform Traffic Devices lists the standard for guide sign color in Section 2D.03.02:

“Except where otherwise provided in this Manual for individual signs or groups of signs, guide signs on streets and highways shall have a white message and border on a green background. All messages, borders, and legends shall be retroreflective and all backgrounds shall be retroreflective or illuminated.”

Without this standard, the United States could have ended up with a kaleidoscope of sign colors. Arizona once even experimented with color-coded signs based on direction. Blue for westbound signs, brown for eastbound signs, orange for northbound signs and green for southbound signs.

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Business

Collapse of Carvana, the ‘Amazon of Used Cars’, Continues

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The sky is not clearing up for Carvana. 

On the contrary, big clouds continue to gather over the company which was one of the big winners of the covid-19 pandemic, with a massive growth. 

Since announcing its quarterly results on Nov. 3, Carvana  (CVNA) – Get Free Report shares have lost 44% of their value and are currently trading at $8.06 versus $14.35 on that day. This translates into a decline in market capitalization of approximately $1.1 billion in two weeks. Carvana currently has a market value of $1.43 billion.

The company, founded in 2012 and based in Arizona, took advantage of favorable conditions to market its new way of buying a car. The group’s car vending machines stuck well with the pandemic, a period during which consumers wanted to avoid contact as much as possible, to limit their exposure to the virus. 

The federal government had also flooded consumers with money via stimulus programs. Interest rates were almost zero, which meant that financing the purchase of a vehicle cost practically nothing. 

Added to this, the supply chains of car manufacturers were disrupted, which made the production of new vehicles difficult. Faced with these challenges, consumers turned to the second-hand market as the waiting times for new vehicles were long. Used car prices therefore jumped, making it a good deal for Carvana. 

Basically, all the winds were blowing in the right direction for the company.

New Car or Used Car?

But coming out of the pandemic, Carvana’s fortunes seem to have turned completely. The used car market remains hot. But all the other factors have reversed. There is no more stimulus money. The central bank is aggressively raising interest rates and inflation is at its highest in 40 years. The economy is also close to a recession more than ever, and the waves of job cuts follow one another. Used car prices remain high but financing the transaction has become very expensive for consumers. Supply chains have improved significantly, facilitating the production of new vehicles.

This was felt in the latest quarterly results from Carvana: In the third quarter, Carvana’s revenue fell 2.7% year-on-year to $3.4 billion, while net loss jumped to $283 million from just $32 million in the third quarter of 2021, the company said in a letter to shareholders.

Used car sales in the U.S. fell almost 13% year-on-year, in the third quarter of 2022.

“If you’re looking at newer used cars — models in the 1 to 3-year-old range, you may find that prices are still relatively close to what they sold for new,” Consumer Reports said. “If you have to borrow money to buy the car, it may be better to find a new car that can qualify you for a lower interest rate, to say nothing of the benefit of a fresh factory warranty. Many manufacturers subsidize financing and may offer interest rates that are much lower than normal to qualified buyers.”

All this complicates the affairs of Carvana, which had to go into $3.3 billion of debt to finance the acquisition of auctioneer Adesa’s physical auction business this year.

Carvana

Elimination of 1,500 Additional Jobs

The group is therefore under enormous financial pressure.

“Significant nearer-term operational and financial risks for Carvana have emerged and are likely to cloud the CVNA investment story for the foreseeable future,” Oppenheimer analyst Brian Nagel said in a note on Nov. 15, downgrading the stock.

He added that “we do not envision investors bidding CVNA meaningfully higher until prospects for a manageable and sustained capital base become clearer.”

Nagel seems to confirm that Carvana has a liquidity problem which the group must address fairly quickly if it wants to stop the collapse. The company has between $6 billion and $7 billion in debt net of the cash on the balance sheet, according to FactSet. 

But Carvana is not profitable: its adjusted EBITDA margin loss increased by 6.2% in the third quarter. EBITDA refers to earnings before interest, taxes, depreciation and amortization, which helps investors to gauge the financial health of a company.

The company is struggling to try to change things and delay as much as possible raising equity capital or adding more debt. Carvana, for example, is determined to drastically reduce costs. After cutting 2,500 jobs in May, the company has just announced an additional wave of layoffs which affects 8% of its workforce, or 1,500 employees.

“It is fair to ask why this is happening again, and yet I am not sure I can answer it as clearly as you deserve,” Chief Executive Officer Ernie Garcia told employees in an email on Nov. 18. “I think there are at least a couple of factors. The first is that the economic environment continues to face strong headwinds and the near future is uncertain. This is especially true for fast-growing companies and for businesses that sell expensive, often financed products where the purchase decision can be easily delayed like cars.”

In addition, “we failed to accurately predict how this would all play out and the impact it would have on our business. As a result, we find ourselves here.”

The new cuts will affect “many corporate and technology teams as well as some operations teams where we are eliminating roles, locations or shifts to match our size with the current environment,” Garcia wrote.

Reached by TheStreet, Carvana didn’t comment.

The new job cuts come after ratings agency S&P Global Ratings warned it was likely to downgrade Carvana in the near term, changing the outlook from stable to negative.

“GPU [gross profit per unit] is expected to remain weak due to higher used car depreciation rates and lower returns from selling loans and other products,” said the rating agency. “Carvana generates over 50% of its GPU from selling loans and other products. With rising interest rates, it is more difficult for Carvana to compete with the large banks that can keep loan rates low, which will reduce the number of loans allocated to Carvana.”

Garcia ruled out the option of raising capital on Nov. 3. 

“Our goals are going to be on driving down expenses and trying to get positive EBITDA as quickly as we can,” he told analysts. “We’ve got a bunch of committed liquidity. We’ve got a bunch of real estate. And I think that we feel like that puts us in a good position to ride out this storm. And we’re making great moves inside the company.”

But apart from these financial difficulties, Carvana also faces legal challenges. The company is facing lawsuits from customers in multiple states involving alleged issues over titles and registration and over purchasing vehicles.

Michigan Secretary of State Jocelyn Benson also suspended the retailer’s license, with Carvana suing in return.

Carvana has said the lawsuits are without merit and called the decision in Michigan “arbitrary.”



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Technology

Someone Dropped a Ford Focus ST Drivetrain into Ford Transit

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Image: Cars & Bids

At Jalopnik, we love when people come up with crazy combinations to make unexpected vehicles, suddenly become performance gods (or wannabe gods). Take this 2014 Ford Transit Connect listed on Cars & Bids. At first glance, sure, it’s just a Ford Transit van. But underneath the sheet metals beats an unexpected heart: the turbocharged I4 from a 2014 Focus ST.

Together, we have what Ford would likely have never given us, a Ford Transit Connect ST. From the outside, everything appears stock, aside from the ST badging. It’s a subtle hint letting you know that this Transit truly is something special, and different.

Image: Cars & Bids

Sure, keen-eyed observers might recognize a few ST details like the 18-inch Focus ST wheels, the rally car-like mud flaps and the center exit exhaust. But there’s more where that came from.

Now to be clear, this van isn’t just a Focus ST engine thrown into a Transit Connect. This vehicle has been given all the mods to ensure that it drives well, like a Focus ST, too.

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Image: Cars & Bids

Starting with the ST’s 2.5-liter turbocharged I4, which in its stock form makes 252 horsepower and 270 lb-ft of torque, and is paired to a six-speed manual. That part of the drivetrain has been modified with a stage 2 tune from Cobb, a stage 3 clutch kit from SPEC Clutch, a Mishimoto radiator, and a limited-slip differential from MFactory. The owner also threw on an Eibach lowering spring kit. Unfortunately, a dyno sheet wasn’t provided for the Transit’s mods, so it’s not known just how much of the work may have increased power output.

Image: Cars & Bids

Inside there’s what looks to be the ST’s Recaro seats and its whole instrument cluster, auxiliary gauges on the center stack for things like oil pressure and temp, and a nice sound system setup including a Kenwood head unit and an Alpine amp.

Image: Cars & Bids

There’s a rather glaring problem with the instrument cluster. The seller says that when the factory cluster was swapped for the ST cluster “the instrument cluster was programmed to display the chassis mileage.” That means that the exact total mileage of this thing isn’t known, though the seller notes he’s put 7,000 miles on it since the swap was done in May of 2021.

Other problems appear to be a list of weird electrical gremlins like the radiator fan remaining on, or the a/c turning on after the car has run for a bit. Power steering also just kicks in after “the first five or 10 feet of driving,” and the traction control, ABS and rearview camera all do not work. Maybe that comes down to some programming things. But regardless, all things to keep in mind.

If you can see the potential in the list of electrical maladies, the little scratches here and there on the outside, and the wear on the seat bolsters, there’s still time to nab this creation for your garage. At the time of writing, there’s still six days left, and the bid is at $12,500.

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Business

Elon Musk Sends a Message to Tesla Shareholders, Fans

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Elon Musk is a serial entrepreneur. 

He is in charge of several companies at the same time. 

He is involved in The Boring Company, known for its tunnels, and in the company specializing in artificial intelligence Neuralink. He revived the dream of humans living on Mars in the near future with his aerospace company SpaceX, one of whose products has become very popular. This is Starlink, the satellite internet access service, which has become the unique communication system of the Ukrainian armed forces on the front line in the war against Russia. 

Musk has also just acquired Twitter  (TWTR) , the social network he considers the de facto Town Square of our time, for $44 billion. This platform has kept him busy for several weeks. 

The billionaire wants to use it to create a Super App offering multiple varied services such as ordering a car, shopping, buying a plane ticket, etc. But if the influence of Twitter is undeniable in the public debate, the firm is struggling to generate revenue and profits. 

Twitter Is the New Darling

Musk has therefore been working for a few days to find new sources of income. He took controversial measures such as eliminating half of the group’s workforce and increasing the price of Blue, the service subscription by including the option to authenticate an account. 

Musk is also currently trying to retain advertisers who are suspending their ads on the platform because they fear it will become a venue for hateful, racist and anti-Semitic speech. These fears are due to the fact that Musk defines himself as a “free speech absolutist.” In other words, he feels that everything should be said as long as the law is not violated.

So he only has it for Twitter, to the point of making people forget that Musk’s real baby is Tesla. The electric vehicle manufacturer is the first pawn with which Musk established himself as a visionary. 

The Technoking — his title at Tesla —  has pushed the automotive industry away from polluting vehicles in favor of clean vehicles and autonomous technologies that are turning the car into a living room on four wheels.

But Twitter’s attention has raised concerns that CEO Musk is focusing less time on Tesla at a crucial time for the Austin, Texas-based group. The electric vehicle maker faces stiff competition from Chinese groups and legacy carmakers who have all announced billions of dollars of investment in electric vehicles. 

To maintain its leadership, Tesla has a packed product roadmap. The company is due to start production of its Semi truck on Dec. 1 and mid-2023 the start of production of the long-awaited Cybertruck is scheduled. 

‘I Still Do a Lot of Work’

Since Musk made his $44 billion bid to take over Twitter on April 25, Tesla shares lost 38% of their value to $207.47. The company which started the year with a market value of $1.12 trillion saw it melt by more than $450 billion. Tesla’s market cap is currently at $655.2 billion.

Musk is an important part of Tesla’s success. Investors are convinced that without him, the manufacturer of electric vehicles would not have such an important cachet. They therefore identify Tesla with Musk. It’s the entrepreneur’s wild promises that justify much of the valuation of Tesla, which produced barely a million vehicles in 2021, compared to several million for its rivals. But the latter are stock market dwarfs compared to Tesla.

The billionaire is aware of investors’ fears and has therefore just sent them a message aimed at reassuring them. It all started with a post from a Tesla fan account on Twitter.

“It’s strongly bullish that while Elon is focused on restructuring Twitter, Tesla is executing perfectly without him $tsla,” the Twitter user posted.

Musk was quick to respond: “I still do a lot of work at Tesla! Was at our Palo Alto engineering office until late Thursday night when I had to redeye to NY,” he said.

The message achieved the intended goal of reassuring fans of the premium electric vehicle manufacturer.

“Elon, @elonmusk please send some pictures/tweets about $TSLA next time you at any Gaga Factory. Tesla investors love to hear you bragging & being involved with Tesla. ♥️” said one Twitter user.

“Tesla running w/o Elon is intangible. Whether in foreground or in quiet, he’s working the machine,” added another user.



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Business

Toyota Isn’t Quite Ready to Boost EV Output

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Photo: Toyota

Toyota says it still isn’t going to really boost production of its first mass-market electric vehicle for a few more years, Faraday Future is slashing salaries because the start-up EV maker is running out of cash, and Mercedes-Benz is the latest manufacturer to quit the Russian market. All that and more in The Morning Shift for Wednesday, October 26, 2022.

1st Gear: Toyota Needs Time to Boost bZ4x Production

Toyota is reportedly considering a huge jump in bZ4X production, but not before 2025. It’s said to be part of a broader strategy rethink from the Japanese company.

The automaker is mulling over the decision to increase production of its first mass-market EV by either six or 12 times its current monthly output. Right now that stands at about 1,000 cars per month. But, this isn’t happening overnight. The move would happen in 2025 if components (including semiconductors) can be secured in time. From Reuters:

The car is produced at Toyota Motor Corp’s Motomachi plant near its headquarters on a shared assembly line with gasoline cars and hybrids. Both the current and potential production numbers include those of the Subaru Corp Solterra, which is made on the same platform.

The increase would see Toyota add production at another plant near its headquarters, the Takaoka factory, said the three people, who spoke on condition of anonymity because the information was not public.

[…]

The potential ramp-up in production comes as the automaker has faced criticism for not moving faster to embrace all-electric cars and pushing hybrid technology instead. It has launched a review of its EV strategy, Reuters reported this week.

As part of that review – which could result in a more aggressive roadmap for future electric vehicles based on technologies that promise to lower cost and improve performance – it has also suspended development work on some of the 30 new EV models it announced last year and planned to launch by 2030, Reuters reported.

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Toyota recently restarted bZ4X production after a couple of recalls hampered it. At the peak of the planned production increase, Toyota would be producing over 190,000 EVs per years.

2nd Gear: Faraday’s Bleak Future

Faraday Future is reportedly slashing employee salaries by 25 percent starting next month. The move is being done in an effort to save some cash (since it is nearly out) while the company looks for new capital in order to finally launch the FF91.

In an email sent to employees last week, Faraday said the salary cuts expect to last from November 1st through the end of the year. Earlier this month, the company also laid off a few dozen employees. From Bloomberg:

Faraday has seen its cash reserves dwindle rapidly. It recently reported having $39 million in cash as of Sept. 21, down from around $47 million at the end of August.

The company said in the emailed memo, which was viewed by Bloomberg News, that employees will be granted restricted stock units, or RSUs, equivalent to the amount being cut from their salary and which will vest in December. Faraday also offered employees the option of taking a larger salary cut in exchange for more valuable RSUs, though it noted that any RSUs granted will be forfeited if the employee is terminated.

Faraday delayed the launch of its first vehicle until at least 2023. Things are not looking too hot for the Los Angeles-based company right now, though they never really have been.

3rd Gear: Mercedes-Benz Leaves Russia

Add Mercedes-Benz to a growing list of automakers who are pulling out of the Russian market. The company is reportedly selling shares in its industrial and financial service subsidiaries to a Russian investor: car dealer chain Avtodom. From Reuters:

Mercedes Chief Financial Officer Harald Wilhelm, while presenting third-quarter results, said the transaction was not expected to give rise to any further significant effects when it comes to the group’s profitability and financial position beyond those reported in previous quarters.

“Final completion of the transaction is subject to the authority’s approval and the implementation of contractually agreed conditions,” he added.

[…]

“The main priorities in agreeing to the terms of the transaction were to maximize the fulfillment of obligations to clients from Russia both in terms of after-sales services and financial services, as well as preserving jobs of employees at the Russian divisions of the company,” Natalia Koroleva, CEO of Mercedes-Benz Russia, said in a statement.

Mercedes suspended manufacturing in Russia in early March.

Mercedes now joins Volkswagen, Toyota, Nissan and Renault in leaving the Russian market. Other companies like Mazda and Kia are also considering moves out of the country.

4th Gear: $1 Billion for Busses

The U.S. Environmental Protection Agency has announced that it is allocating nearly $1 billion for about 400 school districts around the country to buy zero or low-emission school busses.

The funding will lead to the purchase of 2,463 buses. Over 95 percent of those will be electric, and a “very small number” will be powered by compressed natural gas. Another 100 will be propane-fueled buses. From The Detroit News:

School districts to receive funding were chosen through a lottery system and 99% of the projects are in districts serving low-income, rural or Indigenous students. EPA initially planned to allocate $500 million in the first round of funding, but the agency expanded it to nearly $1 billion after receiving “overwhelming demand” from districts.

Millions of children ride the bus to and from school every day, said EPA Administrator Michael Regan. “It’s a quintessential part of being a kid in America.”

“But we all know that traditional vehicles that rely on internal combustion engines emit toxic pollutants in the air,” he added. Thanks to this funding, “we are forever transforming school bus fleets across the United States.”

Right now in the U.S., over 90 percent of all school buses run on diesel. The outlet reports that the $1 billion allocation is part of a more than $5 billion plan for zero and low-emission school buses though the Infrastructure Investment and Jobs Act. A further $1 billion will be available next year.

School districts that applied and received funding will put in purchase orders with manufacturers, which will be paid directly by EPA, [Karl] Simon [director of the transportation and climate division of the EPA] said. That must be finished by April.

5th Gear: Hyundai’s EV Expansion Starts in Georgia

Hyundai broke ground Tuesday on its $5.54 billion electric vehicle and battery manufacturing project that will build vehicles for Hyundai, Kia, and Genesis.

The factory — called the Metaplant — is set to build up to six different models and has the capacity to produce as many as 500,000 vehicles per year on its 2,800-acres of land located about 30 miles northwest of Savannah, Georgia. From Automotive News:

“We are making the current investment to get to 300,000 vehicles in phase one, and then 500,000,” Munoz said at a media roundtable after the groundbreaking ceremony.

[…]

Munoz did not say which models the Metaplant will produce, but a new three-row Hyundai EV crossover called the Ioniq 7 is expected to be the first. Munoz also said Hyundai is still examining what models it will export from the new plant.

The project also will see the construction of an adjacent battery plant that will be built through a joint venture with a battery supplier that Hyundai has not identified yet.

A new supply chain also will be established to support the EV factory, Munoz said.

Because of this move, Hyundai should be back in a position to for its buyers to get federal EV tax credits under President Biden’s Inflation Reduction Act.

Right now, Hyundai/Kia/Genesis EVs aren’t eligible for the credit because they are imported from Korea, and that doesn’t jive with the criteria laid out in the IRA.

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US

DeSantis’ migrant flights to Martha’s Vineyard appear outside the scope of Florida transport program guidelines, state documents show

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CNN
 — 

A pair of flights carrying migrants from Texas to Martha’s Vineyard last month, orchestrated by Florida Gov. Ron DeSantis, may have exceeded the original scope of the state’s plan to transport undocumented individuals, according to records obtained by CNN.

The records show that in the months leading up to those flights, Florida had planned a narrower mission for a controversial new state program to transport migrants to other states. The goal, according to a callout to contractors and guidelines for the program, was to, “relocate out of the state of Florida foreign nationals who are not lawfully present in the United States.”

But that’s not what transpired. On September 14, two planes picked up 48 migrants in San Antonio – not Florida – and dropped them off in Martha’s Vineyard.

The documents, provided to CNN through a records request and released Friday evening by the Florida Department of Transportation and the governor’s office, offer new details about the stunt that thrust DeSantis even deeper into the middle of a national debate on immigration. From the White House to Florida, Massachusetts and beyond, the condemnation from Democrats was swift. So was the praise from Republicans for DeSantis, who only further bolstered his standing in his party as he considers running for President in 2024.

A Democratic state lawmaker is already suing the state and asking a judge to stop future flights, arguing the DeSantis administration was illegally spending taxpayer dollars. The budget act that created the $12 million program specified the money was set aside to relocate “unauthorized aliens from this state.”

The governor’s office did not immediately respond to a request for comment.

The records for the first time also directly tie a $615,000 state payment made to Vertol Systems Company for the September flights that sent migrants from San Antonio to Martha’s Vineyard. Previously, the payment to Vertol was disclosed by the state, but the governor’s office for weeks declined to confirm that the check was linked to the flights that landed in Massachusetts.

The Florida Department of Transportation, the agency tasked with executing the new migrant relocation program, received a price quote from Vertol CEO James Montgomerie on September 6 for “the first Project,” one document showed. Montgomerie identified that project as “the facilitation of the relocation of up to fifty individuals to the State of Massachusetts or other, proximate northeastern state.” The price, he said, was $615,000.

The next day, FDOT officials sent a letter asking for authorization for the $615,000 and the state made the payment within the next 24 hours, according to financial statements maintained on the Florida Chief Financial Officer’s website previously reported by CNN.

In communications with FDOT earlier during the summer, Montgomerie offered the state services that suggested a considerably less ambitious mission for the migrant relocation program.

On July 26, after a discussion with FDOT’s general counsel, Montgomerie gave the agency estimates for his company to charter flights that could carry four to 12 people from Crestview, Florida, to the Boston or Los Angeles areas, according to an email from the Vertol executive to FDOT.

“We are certainly willing to provide you with pricing information on specific ad-hoc requirements on a case by case basis,” Montgomerie wrote in the email.

The prices quoted for flights originating from Florida more closely aligned with FDOT’s guidelines for the program that it sent to prospective contractors and the agency’s request for quotes. In the three-page guidelines, FDOT stipulated the chosen company needed to ensure “that the Unauthorized Alien has voluntarily agreed to be relocated out of Florida.” The quotes also showed Montgomerie early on anticipated Vertol would be moving less people. Later, in September, his quotes evolved to include many more people on board.

Ultimately, the planes that left San Antonio briefly touched down in Crestview before eventually landing in Massachusetts.

At the time of the state’s request for contractors, DeSantis was publicly claiming that President Joe Biden could send buses of migrants from the US-Mexico border to Florida. But DeSantis acknowledged last month those buses never arrived, and his focus began to shift hundreds of miles away to Texas.

DeSantis has said the intention of executing the flights from Texas was to stop the flow of migrants at the source before they came to Florida.

“If you can do it at the source and divert to sanctuary jurisdictions, the chance they end up in Florida is much less,” DeSantis told reporters in September.

DeSantis has vowed to use “every penny” of the $12 million allocated to his administration for migrant transports. However, the state has not publicly taken credit for any transports since the two planes landed in Martha’s Vineyard.

State Sen. Jason Pizzo, the lawmaker now suing DeSantis, said the governor cannot choose to ignore the law when spending state money.

“You can’t even play by your own rules,” Pizzo told CNN last month when speaking of DeSantis. “This isn’t something that we passed 12 years ago. It was done four months ago at your request.”

DeSantis’ office previously said the lawsuit by Pizzo was an attempt at “15 minutes of fame.”

The state has paid Vertol $1.6 million so far through its migrant program, which is funded by interest earned on federal coronavirus relief money, according to the state budget documents. The initial payment of $615,000 was made by the FDOT on September 8, six days before the Martha’s Vineyard flight. Another payment for $950,000 followed on September 16, though it’s not clear what that payment went for.

A few days after that second payment, reports of a similar flight plan from San Antonio to Delaware, Biden’s home state, sent officials there scrambling to prepare for migrant arrivals. The flights, though, never arrived.

The state did not provide a contract with Vertol in the records released Friday night. Nor do the documents offer further insight into why Vertol was chosen over two other companies that appeared to submit quotes to the state, according to records.

CNN has reached out to Montgomerie for further comment.

Vertol had an existing link to a DeSantis administration official prior to its work with the state. Lawrence Keefe, Florida’s “public safety czar” appointed by DeSantis to lead the state’s crackdown on illegal immigration, represented the aviation company from 2010 to 2017.

In its quoted price to the state, Vertol said it was providing “Project management, aircraft, crew, maintenance logistics, fuel, coordination and planning, route preparation, route services, landing fees, ground handling and logistics and other Project-related expenses,” according to the documents.

The request for quotes from the state also asked that potential contractors have “multilingual capability for Spanish.” The chosen contractor would also have to develop procedures for “confirming with Partner Agencies that the person to be transported is an Unauthorized Alien.” Pizzo and others have questioned whether the migrants are considered “unauthorized” by the federal government if they are legally seeking asylum.

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Business

New York to Ban New Gas-Powered Vehicles, Following California’s Lead

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New York is following in California’s tire treads, making drastic moves to cut greenhouse gas emissions. The Empire State will entirely ban the purchase of new petroleum-powered cars by 2035.

“With sustained state and federal investments, our actions are incentivizing New Yorkers, local governments, and businesses to make the transition to electric vehicles. We’re driving New York’s transition to clean transportation forward, and today’s announcement will benefit our climate and the health of our communities for generations to come,” said Governor Kathy Hochul in a statement outlining the new policy directive.

The regulatory step will take New York closer to its statewide goal of 85% emissions reductions by 2050 from 1990 level.

Transportation accounted for 28% of New York’s total greenhouse gas emissions, according to the 2021 statewide report—pumping 106.92 million metric tons of carbon dioxide and other gases into the atmosphere in a single year. Transitioning to electric vehicles should significantly reduce those emissions, assuming the power grid transitions away from fossil fuels as well.

Hochul pulled up to a press conference in White Plains in a Chevy Bolt on Thursday morning, where she laid out the plans for a future gas-free New York. The regulation will go into effect in phases.

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First, by 2026, 35% of all new light-duty vehicles sold in the state will be required to be electric. Then, by 2030, that percentage will rise to 68%, ramping up to 100% by 2035. New pollution standards for gas-powered vehicles manufactured from 2026 to 2034 are also set accompany the EV mandates.

Additional related policies include moving to an all-electric school bus fleet across New York by 2035 and increased financial support for both individuals and municipalities looking to purchase EVs. The state is adding $10 million to the Drive Clean Rebate program, which offers an incentive of up to $2,000 (on top of the federal tax rebate of up to $7,500) to incentivize and assist people in purchasing electric cars. New York has already issued more than 78,000 rebates statewide, according to Hochul.

“You have no more excuses” to not buy an EV, Hochul said. “We are not heading down that dead-end street [of gas vehicles] any longer.” Although the upfront costs of purchasing an EV are still relatively high, that cost is dropping, and some assessments have found that, in the long-term, electric cars are cheaper to maintain and own than their gas counterparts.

California enacted a similar policy in August, but Hochul wasn’t content to let the West Coast take all the credit. The Governor pointed out that she signed the gas-ban goal in 2021. But she “had to wait for California to take a step because there’s some federal requirement that California had to go first—that’s the only time we’re letting them go first,” she added.

On top of the CO2 reductions, switching from gas-powered vehicles to EVs could have sweeping public health benefits across the state. “Westchester is a non-attainment zone for the Clean Air Act,” said State Senator Pete Harckham, in Thursday’s press conference—highlighting the local benefits of curbing combustion vehicles. Air pollution is deadly and debilitating. And in New York, car exhaust is one of the largest contributors.

New York’s announcement is exciting, at a time when we desperately need gas-powered cars and fossil fuel reliance to die out. Unfortunately, personal EVs aren’t necessarily a perfect fix. There are unresolved questions of how the present supply of necessary materials like lithium, copper, and rare earth metals will be able to meet the growing demand. And all that mining comes with its own environmental costs, even if they’re less existentially pressing than climate change itself. Unfortunately, Hochul’s announcement didn’t address additional state funding for public transit expansion.

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Technology

OG App Says It Can Transport You to the Old Instagram

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OG App doesn’t show adds in its version of your Instagram feed, and the company claims it never will.
Image: Un1feed / OG App

Instagram seems to be caught up in an ever-accelerating vortex of app updates, tweaks, new features, and changes. The feed is different now from what it was before—and if you find yourself wistful for an Insta without Reels, incessant sponsored content, and suggested posts, know that you’re not alone.

Two app developers, Ansh Nanda and Hardik Patil also felt that way (and, obviously, so did Kylie Jenner.) So, Nanda and Patil created the OG App, which can be found in the iOS and Android app stores. OG doesn’t offer a new platform entirely, but rather a way for users to customize the Instagram they see, according to a report from Tech Crunch.

The app automatically gets rid of ads and suggested posts on its filtered version of the Instagram feed. Additional OG features let users toggle Reels and the “Explore” page on or off. Users can also create different feeds for different needs, similar to Twitter’s list concepts, wrote Tech Crunch. Finally, OG aims to give users more control over their own social media usage. There’s an option to turn off feed updates for 24 hours at a time, which could make it easier for people to step away from their phones.

“We saw our friends and family getting affected by social media, and even deleting apps because they didn’t have enough options to modify what they see. We wanted to put users, and not the advertisers, first with this app. We started with Instagram because we thought the app has the most toxic relationship with its users,” Nanda and Patil reportedly told Tech Crunch.

What is it like to use?

But, though noble in concept, the app has some…quirks in its current form. My colleague on the consumer tech desk, Florence Ion, noted that the onboarding process takes awhile—there’s a lot to click through. The app also cuts off a sliver of the top of the Insta interface on a OnePlus 9 running Android 12, she said. And finally, in Android, it takes a while to build the “custom feed.”

Note: The OG App appears to cut off part of the Instagram interface when run on an Android 12.
Screenshot: Florence Ion / Gizmodo

Creating a custom feed, though a cool idea, takes more time than a Gizmodo consumer tech writer would’ve liked.
Screenshot: Florence Ion / Gizmodo

In iOS, Ion also faced issues. The “iOS version took a while to “build the feed” within minutes of setting it up,” she said. And then added, “I’ve been unable to get my actual feed to populate. It is worth noting that I’m on iOS 16.1 Beta 3 right now, so that may be an issue with my software.”

In summary of her usage, Ion told me “it is not very fluid,” comparing her experience to tapping through the web interface, not the standard phone app.

What about privacy?

Downloading into an external app to access Instagram may feel like a bad idea, but at least in terms of privacy, OG seems to have users covered. The app’s policy is refreshingly simple and straightforward. “We collect limited personal information from you. This information may include your name (or username), phone numbers, and email addresses. We only use this information to let you log into The OG App,” the company says on their website.

Unfortunately, Meta-owned Instagram still collects all of your data, as it sees fit, according to a report from 9To5Mac, on the OG App. And, Giz’s consumer tech expert wasn’t too happy about having to login with her Google account before signing into Instagram on Android. “I’m guessing this is to save my user preferences when I make a custom feed,” Ion told me. Though still she said she was “a little wary,” of the step.

What’s next?

Instagram has come under fire in recent months for some of the changes to its platform—including a set of algorithm shifts that reportedly left users’ feeds clogged with unwanted content. Things got so bad, the social media giant had to issue another round of updates. So, it makes sense that OG’s founders went where the widely publicized dissatisfaction has been.

But the company that owns OG App, Un1feed, isn’t done. Nanda, Patil, and their startup team plan to add more features to OG, like shareable custom feeds and more feed filters. Then, they could expand to more apps. Perhaps we’ll end up with an “OG” Twitter, a retro Snapchat, or a Ye Olde Facebook. And maybe some of the original kinks in OG will also be ironed out.

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US

AOC doubles down after Republicans transport migrants to Washington, DC: ‘Crimes against humanity’

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Rep. Alexandria Ocasio-Cortez on Friday doubled down on her criticism of the transportation of migrants from the U.S.-Mexico border to various areas across the country.

In a tweet, the New York Democrat called recent actions by Florida Gov. Ron DeSantis and Texas Gov. Greg Abbott “appalling” and likened them to “trafficking.”

Without naming the two governors, Ocasio-Cortez also said Republicans were guilty of “crimes against humanity.”

Rep. Alexandria Ocasio-Cortez, D-N.Y., speaks during a House Committee on Oversight and Reform hearing on gun violence on Capitol Hill in Washington, June 8, 2022. 
(ANDREW HARNIK/POOL/AFP via Getty Images)

“It’s appalling that far-right politicians seem to have decided that fall before an election is their regularly scheduled time to commit crimes against humanity on refugees,” she tweeted.

AOC SUGGESTS TEXAS GOV. ABBOTT SHOULD RETIRE AFTER TRANSPORTING MIGRANTS TO WASHINGTON DC

Ocasio-Cortez added: “Don’t normalize this. Lying to & trafficking people for TV and clicks isn’t politics as usual. It’s abuse.”

In a pair of other posts, the Bronx native suggested people should refrain from calling migrants “illegal” as “most US families” at one time migrated to the country.

“By today’s standards, most US families would have be deemed undocumented or trafficked at some point in their family history,” Ocasio-Cortez tweeted. “For the most part, people didn’t need lawyers and years of processing to come to this US until immigration became a racialized issue.”

BIDEN SAYS REPUBLICANS ARE ‘PLAYING POLITICS’ AFTER TRANSPORTING MIGRANTS TO MARTHA’S VINEYARD, VP’S HOME

The tweets come as Abbott orchestrated the transportation of two buses full of migrants to the Naval Observatory in Washington, D.C. DeSantis also sent planes of migrants to Martha’s Vineyard.

Previously, Abbott bused migrants to New York and other areas.

The convoys suggest the governor is “struggling” to run his own state and maybe he should consider other employment, she said.

“I remember how folks stepped up to help Texans when you left them cold and hungry during the freeze. We will welcome these families too. They have so much to offer,” Ocasio-Cortez said, referencing the February 2021 power crisis caused by three severe winter storms.

“You do seem to be struggling at your job, though. Maybe you should consider if this is the right work for you,” she concluded.

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Abbott defended his decision to send the migrants as senior Biden administration officials, including President Joe Biden and Vice President Kamala Harris, have repeatedly denied a border crisis. 

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