December 23rd 2020


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Merry Christmas! Whether you love snow or hate it, there's still something festive and almost magical about a thick blanket of white snow on Christmas. But in 2020, a year that's exacted a heavy toll on many in North Carolina because of the coronavirus pandemic, what are our chances of actually experiencing this simple pleasure on Christmas Day? In North Carolina this year, the chances are not likely, according to one weather forecaster. According to the Farmers' Almanac, which recently released its annual Christmas weekend forecast, our state is in for "a fair but unseasonably cold Yuletide," with frosts expected throughout the southeast down to the Gulf Coast. Nationwide, the greatest chance for snow on Christmas rests snugly in the northern Midwest states. If you're in Missouri, Iowa, Minnesota, North Dakota, South Dakota, Nebraska, Kansas, Colorado, Wyoming or Montana, you're in luck. Those in the Northeast can expect a fair and cold Christmas, while weather in the Pacific Northwest and the southwest United States is also expected to turn unsettled with possible snow over the high-terrain areas. The Southeast could see an unseasonably cold Yuletide with possible frosts down to the Gulf Coast. If there's no snow on Christmas Day, will there at least be snow on the ground? In the Sierras, Cascades, the leeward side of the Great Lakes and northern New England, Christmas snow cover is a near certainty, Farmers' Almanac says. In these regions, most precipitation in late autumn and early winter falls as snow, making the probability of snowfall exceed 25 percent. At higher elevations in the Rocky Mountains and at many locations between the northern Rockies and New England, the probability of snow on the ground is more than 50 percent. For those who opt for a green Christmas, the best places to be in late December will be southern California, the lower elevations of the Southwest, and Florida. Beyond Christmas, North Carolina can expect a fair and cold winter, says the almanac. The fascination with a white Christmas was likely popularized by the writings of Charles Dickens. The depiction of a snow-covered Christmas season in his 1843 classic "A Christmas Carol," and a number of his other short stories, was reportedly influenced by memories of his childhood. The song, "White Christmas," written by Irving Berlin and sung by Bing Crosby, is among the best-selling singles of all time. The tune nostalgically speaks of a white Christmas and has since become embedded in American holiday traditions.

This brief synopsis has been taken from Patch's original article:

December 16th 2020


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Volkswagen AG said it would cut production in the first quarter in China, Europe and North America because of a shortage of chips, the latest evidence that chip production is straining to meet demand after pandemic-related cuts earlier this year. Global businesses have struggled to keep pace with the multi speed economic recovery across regions and industries as parts of the world slowly emerge from the pandemic, presaging what could be uneven growth next year with the potential for short-term setbacks. China's strong recovery since the summer has been a lifeline to Western auto makers with exposure to the world's biggest car market. Yet it has also created unexpectedly strong demand for chips that semiconductor makers have had trouble meeting, after driving down supplies in the spring. Now shortages that were first observed in Chinese factories have spread to the rest of the world, and car makers are beginning to respond by cutting production, which could cause ripples throughout the global economy. "We came through the crisis well thanks to excellent management of production and materials purchasing," said Murat Aksel, who takes over as a Volkswagen board member in charge of procurement in January. "But now we are beginning to feel the effects of the global shortage in semiconductors." As a result, Volkswagen is reducing production at its factories in China; Puebla, Mexico; Chattanooga, Tenn.; and its main plant in Wolfsburg, Germany, which produces its bestselling Golf model. The production stoppage effects models that use the company's standardized passenger-car technology that is shared across the VW, Skoda, Seat and Audi brands. General Motors Co. said it was also feeling the pinch but declined to provide any detail about the impact of the chip shortage. "We are aware of the increased demand for semiconductor microchips as the auto industry continues its global recovery," said David Barnas, a GM spokesman. "Our supply chain organization is working closely with the supply base to ensure adequate supply and mitigate any potential impacts on production." The chip shortage is affecting many global manufacturers in industries as diverse as consumer electronics, auto manufacturing and computers. Industry leaders and analysts have been warning about the bottlenecks for weeks, though they hadn't caused production stoppages until now. Over the past two decades the auto industry has become one of the largest consumers of computer chips, rivaling the personal computer industry, as cars become increasingly powered by software. Chips now power everything from engines and emissions control to brakes, air conditioning, raising and lowering windows and a growing array of sophisticated safety features such as automatic lane control and crash avoidance. The first signs of trouble appeared in the fall when big chip makers such as Intel Corp. began warning of potential production bottlenecks as the industry was struggling to keep up with a broad recovery in global manufacturing. Shortages in the auto industry were first noticed in China, where manufacturers depend on imports. "The situation is getting more critical as demand has risen due to the full-speed recovery of the Chinese market," a China representative of Volkswagen, whose supply of certain auto electronic components has been affected, told The Wall Street Journal in an email. Officials from Chinese industry bodies have confirmed the short supply but denied the market would see a large-scale halt in production. "The production of some car makers may be greatly affected in the first quarter of next year," Li Shaohua, vice secretary-general of the government-backed China Association of Automobile Manufacturers, told the group's publication AutoReview. "The impact, however, won't be significant for the whole of next year." A handful of suppliers from Europe, Japan and the U.S. dominate the global auto-chip market, while China largely relies on imports. Supplies from leading auto chip makers including Infineon Technologies, NXP Semiconductors and Micron Technology account for two-thirds of the Chinese market, research firm Strategy Analytics has estimated. Connected vehicles and self-driving cars rely on advanced electronics. Analysts have warned that a bottleneck in the type of semiconductors that China isn't producing itself could hold back the country's ambitions in the market for next-generation vehicles. "Chips are the new oxygen," said Michael Dunne, chief executive of automotive consulting firm ZoZo Go. "Access to chips could become an existential risk for China's premium electric and connected car makers as their sales numbers expand." 



This brief synopsis has been taken from WSJ's original article:

December 9th 2020


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Big tech was going to revolutionize the car market, then reality happened. Just a few years ago, Silicon Valley seemed to have Detroit in its sights. Google had self-driving test cars roaming around, while Apple was building its own automated car from scratch. Chip giant Intel  made its second largest acquisition ever with Mobileye for $15.3 billion in early 2017, while rival Nvidia was building powerful chips designed to become the central brains of autonomous vehicles. And wasn't even keeping its dreams on the ground. The e-commerce giant was testing air delivery drones in the U.K. by late 2016. Most of those efforts haven't died, but the hype has faded considerably. Apple seemed to make the biggest reversal, reportedly laying off more than 200 workers last year from its autonomous-car effort called Project Titan. Google is still at it, with its Waymo car venture now offering a highly limited taxi service in Phoenix. But Waymo remains buried in parent company Alphabet Inc.'s "other bets" segment, where it doesn't appear to be generating much actual business. The company's most recent quarterly filing said Other Bets revenue is still derived primarily from its broadband service once known as Google Fiber and licensing from its Verily Life Sciences venture. Intel, meanwhile, hasn't exactly revved up with Mobileye. Revenue for the unit, which makes computer-vision and driver-assistance technology, rose only 6% for the trailing 12-month period ended in September, lagging Intel's overall revenue growth of 11% in that time. It also still makes up barely 1% of Intel's overall business. Nvidia's automotive segment revenue has fallen over the past three quarters due to the coronavirus pandemic's impact on auto sales and a decline in "legacy infotainment systems," according to the company. Auto-related sales now make up less than 4% of the chipmaker's revenue compared with 7% four years ago. The car market, as it turns out, isn't so easy to disrupt. Car designs evolve slowly over years and involve thousands of suppliers with deep relationships. Most automakers are understandably reluctant to hand over the keys to tech giants that have upended many other industries such as telecommunications, media and advertising. A fully automated car is also a legitimately hard technological feat pull off, even for companies with deep expertise in computing and cash hoards exceeding $100 billion. Tech news site The Information reported earlier this year that Waymo's "robotaxi" venture-easily the furthest along of competing autonomous vehicle projects-uses a "chase van" that follows each taxi with a spare human driver. None of this is to say that big tech companies have no future in cars. More vehicles are becoming connected, which provides opportunities for new software and services without the need for costly and time-consuming physical redesigns. And capabilities such as enhanced driver assistance still demand more computing power, presenting an opportunity for chip makers supplying the necessary components. New Street Research projects that automotive semiconductor revenue will jump 16% next year, recovering from a pandemic-driven slump of 10% this year. Further out, it remains to be seen which tech giants will be in the driver's seat for automated cars. Amazon may have the strongest motivation. The company runs a massive, human-intensive delivery network that now runs up more than $52 billion a year in fulfillment costs. Its acquisition of robotaxi venture Zoox earlier this year for $1.3 billion makes sense in this light. But that price was also about one-third the valuation Zoox fetched in a funding round just two years prior-a sign that even the ambitious and long-term oriented Amazon knew when to stay out of a hyped market.




This brief synopsis has been taken from WSJ's original article:

December 2nd 2020


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About 150 General Motors Co.  dealers have decided to part ways with Cadillac, rather than invest in costly upgrades required to sell electric cars, according to people familiar with the plans, indicating some retailers are skeptical about pivoting to battery-powered vehicles. GM recently gave Cadillac dealers a choice: Accept a buyout offer to exit from the brand or spend roughly $200,000 on dealership upgrades including charging stations and repair tools to get their stores ready to sell electric vehicles, these people said. The buyout offers ranged from around $300,000 to more than $1 million, the people familiar with the effort added. About 17% of Cadillac's 880 U.S. dealerships agreed to take the offer to end their franchise agreements for the luxury brand, these people said. Most dealers who accepted the buyout also own one or more of GM's other brands Chevrolet, Buick and GMC and sell only a handful of Cadillacs a month, the people familiar with the effort said. The skepticism from some Cadillac dealers underscores that, even as investors bid up the value of electric vehicles, questions persist about interest among consumers and the retailers who serve them.  Tesla Inc. has become an electric-vehicle juggernaut by selling directly to customers, without franchise dealers, a model several startups intend to follow. Traditional automakers, on the other hand, are tasked with overlaying their electric-car plans on dealer networks that today make their money selling gasoline-powered vehicles. Dealers across brands say they are weighing costly facility investments, such as electrical-system upgrades, against uncertainty about demand for the vehicles, which now account for about 2% of U.S. vehicle sales. Some retailers say they are putting off orders of electric models, worried they will sit too long on their lots. Even in markets where electric vehicles are more popular, like San Francisco, dealers say the lack of commuting during the pandemic has led to a drop off in demand for cars like GM's Chevrolet Bolt. Cadillac global brand chief Rory Harvey confirmed that the company offered buyouts to dealers but declined to specify how many had taken them or the value of the offers. "The future dealer requirements are a logical and necessary next step on our path towards electrification," Mr. Harvey said. Those who aren't ready to make that commitment are getting fair compensation for exiting the brand, he added. As plug-in models take up more space in showrooms, they are also likely to reshape the economics of running a dealership, analysts and executives say. Electric vehicles have fewer components and require less frequent maintenance, for example, posing a threat to dealers' parts and service business, a key profit source. "The way dealers make money selling electrics will be different than selling combustion-engine vehicles," said Erin Kerrigan, who runs an advisory firm that helps dealers sell their businesses. "There will be an opportunity for [auto makers] to rethink their franchise models." Cadillac is set to play a central role in GM's electric-vehicle push, which is among the most aggressive of legacy auto makers. The nation's largest car company last month said it would boost its spending on electrics, as well as driverless-car development, by more than a third compared with previous plans, up to $27 billion by mid-decade. That represents the majority of GM's planned capital spending, even though electrics account for only about 2% of its global sales today. Mr. Harvey said he views Cadillac's broad network of dealerships as a competitive advantage. But to prepare for the influx of electric models that will hit showrooms in the coming years, dealers need to start making upgrades now, GM executives say. The buyout will shrink Cadillac's dealership network, which is nearly triple the size of luxury competitors like Lexus and Audi. GM executives and some Cadillac dealers for years have said the large dealership footprint crimps the profitability of Cadillac outlets and hurts the brand's cachet. Minnesota Cadillac dealer Todd Snell said he views the upfront costs for electric cars as an investment in the future, even if he is uncertain how quickly sales will take off, especially in his farming community. "I'm not 100% convinced electric cars will be the silver bullet everyone says they will be, but I do think they will become an important part of the business," Mr. Snell said. "We're looking to get bigger and, hopefully, be around for the future." Cadillac executives see GM's electric-vehicle focus as a chance to transform the image of the luxury brand, which has seen its U.S. market share steadily slide since losing its status in the late 1990s as the No. 1 luxury brand in the U.S. by sales. Cadillac will get first dibs on electric-vehicle innovations as the company rolls them out, and its dealerships could feature plug-in models only by 2030, GM executives have said. The brand's first all-electric model, a sporty crossover SUV called the Lyriq, is scheduled to go on sale in the spring of 2022. Cadillac dealer Claude Burns plans to spend the money to sell electric vehicles, but he is unsure how quickly he will be able to recoup his investment, which he figures will end up being less than $200,000. But he also noted the growing number of Teslas on the roadways around his community of Rock Hill, S.C., about 25 miles south of Charlotte. "It looks to me like to me this electric-vehicle market might be fixing to take off," he said. "So, I decided I'm going to hang with Cadillac."




This brief synopsis has been taken from WSJ's original article:

November 25th 2020


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General Motors Co. has agreed to recall 5.9 million SUV and pickup-truck models to replace potentially faulty Takata air-bag inflaters, a fix that could cost the auto maker more than $1 billion. GM had asked the National Highway Traffic Safety Administration not to order a recall of the vehicles because the auto maker believed they were safe. The agency denied that request Monday, saying its research shows Takata inflaters installed in GM vehicles are prone to the deadly explosions reported in other auto makers' cars. The vehicles GM has agreed to recall include some of its bestselling models from the 2007 to 2014 model years, including Chevrolet Silverado and GMC Sierra pickups, Cadillac Escalade SUVs, Chevy Tahoe and Suburban SUVs and GMC Yukon SUVs. The Takata air-bag recall has been one of the largest and most complex in U.S. history, involving 19 auto makers and tens of millions of vehicles, according to the NHTSA. The agency says a design defect can cause the air-bag inflaters to degrade over time, putting them at risk of exploding during a crash and sending shrapnel-like metal fragments into the cabin. Joyson Safety Systems, which acquired Takata's assets after the air-bag maker filed for bankruptcy in 2017, didn't immediately respond to a request for comment. Incidents involving ruptured Takata air bags have killed 18 people in the U.S. and at least 12 more elsewhere, the NHTSA said. GM has previously recalled some models for faulty Takata inflaters, but it had petitioned the NHTSA four times since 2016 to avoid this latest one. The auto giant said evidence from independent evaluation shows inflaters don't need to be replaced. It has said that it is aware of nearly 67,000 air-bag deployments without a single rupture involving the models the NHTSA identified and that the vehicle and inflater design differs from that of other affected cars, making the models safe. The NHTSA said in its decision that GM's claim that the vehicles aren't at risk is unfounded. GM, which has said in previous federal filings that replacing the inflaters would cost about $1.2 billion, said Monday that it would begin the process of fixing them. "We disagree with NHTSA's position. However, we will abide by NHTSA's decision and begin taking the necessary steps," GM said. The auto maker's shares were up 2.8% in midday trading. The NHTSA said it had conducted engineering and field tests that show "the GM inflaters in question are at risk of the same type of explosion after long-term exposure to high heat and humidity as other recalled Takata inflaters." The agency gave GM 30 days to submit a schedule for notifying vehicle owners and beginning the process of replacing the parts in question. The problems that led to the recall and Takata's bankruptcy stem from its use of ammonium nitrate in air-bag inflater propellants. The chemical was later found to become unstable and lead to ruptures after aging and prolonged exposure to heat and humidity. The problem led to explosions that spray shrapnel in vehicle cabins, officials said. Takata filed for bankruptcy in 2017, and auto makers set aside billions to cover settlements and replacement costs. The recall the largest-ever automotive-safety campaign in the U.S. affected cars from about 20 manufacturers, including Honda Motor Co. , Ford Motor Co. and luxury makers like BMW AG and Tesla Inc.




This brief synopsis has been taken from WSJ's original article:

November 18th 2020


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Dealer lots have fewer cars these days, but the industry likes it that way. The Covid-19 pandemic is changing an entrenched aspect of car shopping in America: finding your new ride on the lot and driving it home that day. For months, dealer stocks have been running about 25% thinner than normal, a hangover effect from two months of pandemic-related factory closures last spring. The shortfall is requiring many buyers to order their cars and wait a few weeks, running counter to the American car shopper's desire for instant gratification, and dealers' impulse to send the customer home in a new car that day. That change may outlast the pandemic as industry executives find that stocking fewer cars, amid high demand, has lifted profits for car companies and dealers alike. Now both are talking about carrying fewer vehicles on the dealership lot permanently, in what would mark a monumental shift in the way cars are sold in the U.S. For decades, American car dealerships have kept endless rows of vehicles outside their stores in enough colors and variations for buyers to find what they want, when they want it. Reducing that mass of sheet metal would result in more customers preordering their cars weeks in advance, a practice common in Europe and elsewhere. The change could have implications for dealer-owned real estate and how car companies run their factories. The benefits of leaner dealership lots have been an unexpected byproduct of the pandemic. Auto makers have been straining to boost output after the spring shutdowns, a task made difficult by an unexpected surge in demand for new vehicles. The result has been a seller's market, with car companies able to hold the line on discounts, driving prices to record highs. Due to the inventory crunch, car companies have been giving priority to their most popular models and feature combinations, which has reduced complexity and cut supply-chain costs, the companies say. Meanwhile, dealers are saving money by holding less inventory, and cars are selling faster, at higher average prices. The typical new vehicle spent about 56 days on a dealer lot in October, down 27% from the same month last year, according to car-shopping website A shift to online shopping has been a factor, too. With fewer prospective buyers visiting showrooms during the pandemic, dealers say they don't need as many cars on the lot for test drives. There were nearly a million fewer cars at all U.S. dealers at the end of October, or 25% fewer compared with a year earlier, according to research firm Motor Intelligence. "We're spending a lot of time trying to understand this and saying 'Hey, is there a better distribution model?" General Motors Co. U.S. sales chief Steve Hill said. "You never want to let a good crisis go to waste." GM's dealers have been working with just one-third of their typical level of inventory in pickup trucks, the biggest moneymaker for the company and dealers. Even so, GM has gained market share in that lucrative category recently, a sign that dealers and customers are adapting, he said. Georgia dealer Mike Bowsher, who owns four GM stores across the Southeast, said his profit per vehicle is up sharply because of lower discounting. And he is spending less money on inventory because about half his customers have been pre-purchasing cars before they hit his lot. In normal times, nearly all his customers buy straight from his on-hand selection. Auto-industry analysts, dealers and executives likened the new approach to dealer inventories in the U.S. to that of Europe, where customers have for years ordered from the factory rather than picking from a pool of cars at a dealership. Still, such a shift for American consumers could be a harder sell in the long run, dealers say. Car makers for years have tried to thin dealer stocks and simplify their model offerings but have historically failed as brands compete for customers.



This brief synopsis has been taken from WSJ's original article:

November 11th 2020


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The pandemic has been surprisingly helpful to the turnarounds under way at Nissan and its French alliance partner Renault. On Thursday, Nissan slightly upgraded its profit outlook for the year through March alongside reporting its quarterly results. The news was actually somewhat disappointing compared with more dramatic announcements last week from Toyota and Honda, which both more than doubled their forecasts for full-year operating profit compared with the numbers put out three months ago. Nissan still expects to make losses. The company is in the early stages of a multiyear recovery following a crisis precipitated by the departure of Carlos Ghosn. The former chairman focused on scale, which he achieved by setting sales targets. This ultimately had the effect of undermining profit as pushing cars into the U.S. rental market, in particular, cheapened the brand. The new narrative-both at Nissan and Renault, where Mr. Ghosn was chief executive is "value over volume." The companies are intent on improving vehicle prices and margins. This year's distorted vehicle markets have been an ideal backdrop for such a strategy, as lockdowns flushed inventories out of the system while boosting demand for driving. Nissan had 530,000 cars on its own lots and those of its dealers at the end of September, down from 800,000 at the end of March. This, combined with the collapse of the travel-oriented rental market, helped the company achieved a 3% increase in U.S. vehicle prices in the quarter through September compared with the same period last year. Renault, which hired a new chief executive with a marketing background from Volkswagen in July, is on a similar journey, though it is arguably behind its Japanese partner. French companies don't report quarterly profits, but revenue for the three months through September reported last month was lifted by higher prices. Whether the companies can maintain the momentum as the market normalizes depends on the popularity of new products. At Nissan, a redesigned version of the Nissan Rogue sport-utility vehicle went on sale in the U.S. last month. Next year will come the Ariya electric crossover, which the company is counting on to revive its flagging reputation for technology leadership. So far, signs of success on the long road to recovery for Nissan and Renault can mainly be attributed to good fortune. They will need more driving skills for the next leg.



This brief synopsis has been taken from WSJ's original article:

November 4th 2020


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General Motors Co. is recalling its Chevrolet Bolt electric vehicles to limit the battery's charging capacity, becoming the latest auto maker to fix its plug-in models because of fires related to the lithium-ion batteries. The measure covers nearly 69,000 Bolts from the 2017-2019 model years, including about 51,000 sold in the U.S. GM said it was aware of five fires involving the cars so far, which resulted in two injuries from smoke inhalation. Bolt owners shouldn't park their cars in their garages before bringing their vehicles to dealerships to limit the batteries' charging capacity to 90% until a permanent fix can be found, the company said. The auto maker is still investigating the defect's root cause but has found that the batteries were at or near fully charged in each of the fires so far, it said. Safety is GM's highest priority, and the company is cooperating with federal regulators while also performing its own investigation, said Jesse Ortega, the Bolt's executive chief engineer on a call with reporters Friday. Auto makers have been rolling out new plug-in models as the industry looks to accelerate its shift from gasoline-powered vehicles toward battery-powered ones. But some of those rollouts have been disrupted by fires involving the vehicles' lithium-ion batteries. Hyundai Motor Co. , Ford Motor Co. and BMW AG have each issued recalls for new battery-powered models in recent months, which have created headaches for companies' product planning and compliance costs amid tightening regulations on tailpipe emissions. Researchers have said the risks of fires for electric vehicles are comparable to those in gas-powered ones, with an uptick to be expected as more cars and models hit the road. Still, the auto industry's troubles with lithium-ion batteries echoes those of other industries like consumer electronics and jetliners, which led to high-profile and expensive recalls and groundings as the technology proliferated over the past two decades. Batteries and their supply have become increasingly important to the auto industry, with companies spending tens of billions to ensure the steady supply of high-quality batteries needed to execute on their plans. That has fueled rapid growth in battery manufacturing, with roughly 175 factories planned or under construction globally to meet demand, according to battery market research firm Benchmark Mineral Intelligence. The Ford, Hyundai and BMW recalls all implicated manufacturing quality issues at the companies' battery suppliers, the auto makers said. GM said Friday that the batteries in the affected Bolts were all produced at one LG Chem Ltd. factory in Korea between 2016 and 2019. The issue doesn't affect some Bolts made during the 2019 model year with batteries provided by a different LG Chem factory in Michigan, the auto maker said. LG Chem is cooperating with GM's investigation, a spokesman said.



This brief synopsis has been taken from WSJ's original article:

October 28th 2020


Image Copyright of Sean Proctor/Bloomberg news

Finance chiefs are closely tracking how U.S. trade policy could change after the presidential election, potentially leading to higher tariff-related costs and new restrictions on certain products. The winner of the election will have to navigate tensions with China and Mexico as well as determine the course on trade tariffs that can hurt a company's financial health, disrupting its cash flow and supplies. Washington currently imposes tariffs on roughly three-quarters of all products China sells to the U.S. A second Trump administration is expected to continue using tariffs to try to protect U.S. companies from foreign competition and negotiate better trade agreements. President Trump in a second term will also likely continue using unilateral tools such as new tariffs to address trade concerns with China. By contrast, Democratic challenger Joe Biden has said he intends to consult with allies on a common approach toward China and won't sign new trade deals until he gives the middle class an economic boost, in part by creating jobs. The former vice president has also said he would use tariffs, such as quotas on imports from countries that fail to meet climate targets. Some U.S. companies struggled during the roughly two-year U.S.-China trade war as uncertainty around trade policy weighed on their profits, sales and investments. Businesses sought to tighten their inventories and adjust pricing to ease the impact of tariffs on their goods. The Trump administration had said tariffs were necessary to pressure China to change practices that were unfair to U.S. companies, and that it pushed American companies to build or source products domestically. Major auto makers such as Ford Motor Co. and Tesla Inc. were hit hard by the increase in tariffs in recent years because they make a large volume of cars in the U.S. for export to China. The U.S. and China in January signed a Phase One trade deal, serving as a cease-fire in their trade war. Thanks to that deal, Ford now faces some nominal tariffs on auto parts exported to China and auto parts it makes there and imports into the U.S., but not at the level of 2018, when China put a 40% tariff on U.S. car imports. The auto maker hopes a phase-two deal will resolve any remaining issues between the countries, a Ford spokeswoman said. "The lower we can get duties when it comes to exporting to other countries, obviously, the better financially it is for Ford," the spokeswoman said. Ford doesn't import any furnished vehicles from China, unlike some of its U.S. competitors, but its exports to China during the trade talks were heavily impacted by the tariffs. Ford isn't anticipating significant change in trade policy should Mr. Biden win because he also has signaled his intent to be tough on China, the company's spokeswoman said. Motorcycle manufacturer Harley-Davidson last year shifted production of certain models outside of the U.S. after the European Union imposed tariffs on its vehicles in response to the Trump administration imposing tariffs on steel and aluminum producers in Europe and elsewhere. The Trump administration criticized Harley-Davidson's move. Executives consider U.S.-China business relations and new trade agreements to be top policy risks regardless of who wins the election, according to an Oct. 13 survey of U.S. corporate executives by professional-services firm PricewaterhouseCoopers. But under a second Trump term, those risks ranked higher for companies. If Mr. Trump wins, 42% of respondents said their companies will likely reduce investments in China, compared with 20% of respondents who said that if Mr. Biden wins, the survey found. Twenty-eight percent said they would likely increase investment in China under Mr. Biden, compared with 15% under Mr. Trump. 



This brief synopsis has been taken from WSJ's original article:

October 21st 2020


Image Copyright of Porsche/Aimé Leon Dore

In February, before we all began sheltering in place, visitors streamed into the Jeffrey Deitch Gallery in downtown Manhattan to ogle a one-of-a-kind Porsche. The refreshed vintage Porsche 964 coupe white with a shiny red Pegasus emblem, a honey-tinted leather interior and a swooping "duckbill" spoiler tacked on the back was designed by Teddy Santis, the founder of Aimé Leon Dore, a 7-year-old streetwear label based in Queens. The result of an official partnership between the label and the German automaker, the car sat in the gallery's center on an interwoven heap of Persian-style rugs. For four days, Mr. Santis's fans poured through the doors in droves to inspect the interior's splashes of Loro Piana fabric, scoop up co-branded apparel and take photos of the extremely hyped, extremely not-for-sale auto. The partnership was the first of several 2020 pair-ups between luxury automakers and youth-seducing clothing designers. This April, Italy's Lamborghini and the streetwear virtuosos at Supreme released a run of hoodies, quilted jackets, tees and other items splayed with the car brand's glimmering gold-lettered logo. In September, Mercedes-Benz debuted "Project Geländewagen," a widely publicized and frankly confusing initiative in which the German carmaker worked with artistic director Virgil Abloh of Off White and Louis Vuitton to design a G-Class SUV. The only tangible result: Sotheby's auctioned a one-third-scale mock-up of the concept car, with the proceeds going to charity. The most extensive collaboration yet between BMW and Kith, a New York hoodie-and-sneaker emporium was unveiled last week. The results included: a co-branded 94-piece clothing and accessories line; a single rebuilt vintage BMW M3; and 150 special-edition, Kith-branded M4 Competition sports cars that started at $109,250 and were distributed through BMW dealerships. By selling an actual automobile, the BMW-Kith partnership most closely resembles car and fashion pair-ups of the past, which typically focused on producing limited-edition automobiles. Among the many motor-minded marriages of the past: Lincoln and Givenchy(1979), Peugeot and Lacoste (1984), Mercedes-Benz and Armani (2004) and Thom Browne and Infiniti (2013). During a preview last week, Kith owner Ronnie Fieg was quick to point out that outsiders might underestimate the number of big spenders who worship his brand. True enough, within an hour of the Friday morning release of the "Kith-ified M4s", all 150 of the six-figure cars were spoken for. However, for the 2020 partnerships, selling a car is not, the only (or even primary) objective; for the automobile brands, it's also about targeting a young demographic that could someday evolve into a reliable customer base. As Uwe Dreher, head of marketing for at BMW North America put it, it doesn't matter if the "people who buy the hoodie with the Kith BMW log also buy the car." As he said in an interview before the launch, many of Kith's shoppers aren't even old enough to drive. The partnership is also about building awareness. For car manufacturers, young people are an increasingly elusive demo. "The people who are buying new cars are people my age, baby boomers," said Carla Bailo, the president and CEO of the Center for Automotive Research, a nonprofit in Michigan. A study released in 2019 by Sivak Applied Research found that in 2017, half of all vehicle buyers in the U.S. were over 54 years old, while those 34 and under comprised just 14% of the total. Instead of purchasing cars, many young people are turning to ridesharing apps like Uber and Lyft. Mr. Santis, the Aimé Leon Dore designer, said that Porsche voiced these very concerns at the outset of his collaboration with the brand. "They came to us and they felt like the sports car consumer and enthusiast they had was kind of getting aged out. And the newer kid, the younger kid was more caught up with, you know, Uber and Lyft," he said. Deniz Keskin, Porsche's head of brand management and sponsoring, said that "getting access to these new people was definitely a plus" in working with Mr. Santis. Many of the oglers who poured into the Jeffrey Deitch Gallery to see the resulting car, he said, "were only coming from the angle of Teddy's fashion brand and would normally not attend a Porsche-type event." Meanwhile, BMW and Kith previewed their collaboration for editors and influencers at a small, relatively socially distanced event in Brooklyn, spurring some buzz on social media albeit much less than Porsche enjoyed from its partnership with Aimé Leon Dore. Nevertheless, by Friday afternoon, just a few hours after it launched on Kith's website, most of the clothing collection had sold out.


This brief synopsis has been taken from WSJ's original article:

October 14th 2020


Image Copyright of Yves Herman/Reuters

New-car sales in Europe rose last month for the first time this year, a sign that the global auto industry is slowly beginning to pull out of its worst slump in decades. Yet even as consumers return to dealerships in the U.S., China and Europe, a full recovery from the sharp decline triggered by lockdowns earlier this year is likely to take years, analysts said. China, the world's biggest car market by sales, was the first to succumb to the Covid-19 pandemic and the first to see its auto industry return to growth this summer. The U.S. quickly followed. Now, Europe appears to be turning the corner, too. The European Automotive Manufacturers' Association said Friday that new-car registrations, a proxy for sales, totaled 1.3 million vehicles, an increase of 1.1% from the previous year. That compares with an increase of 6.2% for the month in the U.S. In September, sales at Volkswagen AG, which includes Audi, Porsche, Seat and Skoda, rose 14%, making it the fastest-growing car maker in the region. Audi was the best-performing automaker in Europe last month, posting a 48% sales increase. Fiat Chrysler Automobiles NV's European sales rose 14%, and those of Toyota Motor Corp. increased nearly 9%. Over the entire quarter, European new-car sales were still down about 6% in the three months to Sept. 30, according to industry data. That compares with a decline of 9.6% in the U.S. and an increase of 7.9% in China, the first time new car sales in China grew on a quarterly basis in two years. Auto makers such as General Motors Co. , Ford Motor Co. , Volkswagen and Daimler AG have all benefited from demand in China, which has helped offset swooning home markets. Daimler reported on Friday that earnings before interest and tax in the three months to Sept. 30 rose to €3.07 billion-or $3.6 billion-beating market estimates of around €2 billion, after a loss of €1.7 billion in the second quarter. The company attributed the profit boost to improved markets and cost-cutting, saying it would adjust its outlook for the full year when it published final figures on Oct. 23. Returning demand in Europe was uneven. A resurgence of Covid-19 infections in France and Spain appears to have stifled any rebound in those countries, while Germany and Italy, where infections remained subdued last month, posted strong growth in new-car sales. The European manufacturer's data show that several car makers, including some premium-car brands, continued to lose ground last month. Toyota's Japanese rivals Mitsubishi Corp. and Mazda Motor Corp. were the weakest performers in Europe in September, with sales falling 25% and 23%, respectively. European premium-car makers Jaguar Land Rover, BMW and Mercedes-Benz also suffered sharp sales declines. The fragility of the recovery was highlighted by PSA Group, which includes the Peugeot and Citroën brands. For the past several years one of the fastest-growing auto makers in the world, PSA suffered a 14% fall in sales last month. Pent-up demand in the wake of the lockdowns was one driver of global demand for new cars, analysts said. But some analysts saw a boost from pandemic-inspired changes in consumer habit: Commuters around the world who have relied on public transportation and car-sharing services are now buying cars to avoid crowds on their journeys. "People's lifestyles are changing, and individual mobility is more appreciated than ever before," said Arndt Ellinghorst, an automotive analyst at Bernstein Research. The unpredictability of the virus's trajectory in the coming weeks and months has clouded any long-term optimism. GlobalData, a research group, expects global vehicle sales this year to fall 16% compared with 2019. It also predicts that global auto sales will rebound next year but won't return to pre-pandemic levels of demand until 2023, and even that scenario is fraught with risks. "Demand and industry output are now in recovery phase, but the economic foundations for the global vehicle market are fundamentally damaged," GlobalData automotive analyst Calum MacRae said in a statement.


This brief synopsis has been taken from WSJ's original article:

October 7th 2020


Image Copyright of Jorg Cartensen/DPA/Picture Alliance/Getty Images

Is the heart of your car a screen? Having spent years and tens of billions of dollars preparing for a shift in production toward electric vehicles, German car makers are expressing a new angst: that digitally "connected cars" could prove even more disruptive to their traditional strengths. This second leg of their race against Tesla could become a fresh excuse to squander investors' capital. Daimler set two priorities for technological leadership in a new strategy for its Mercedes-Benz brand this week: electric drive and car software. For the latter, the company is working on an entire operating system, MB.OS, that from 2024 will run not just Mercedes's proprietary infotainment system and its mobile broadband connection but also crucial elements of the driving experience, including self-driving features and battery management. The company will partner with technology specialists for specific applications, notably Nvidia for automated driving. Yet the closer the software gets to the customer experience; the more Daimler wants to do in-house. The interface with the driver in particular "is not something that we would like to outsource to somebody else," said Chief Executive Ola Källenius. Volkswagen is on a similar road. At last week's annual general meeting, Chief Executive Herbert Diess said replacing engines with electric batteries and motors would be simple to manage compared with the transformation of the car into a "fully networked mobility device." He is tackling the challenge by investing heavily in coding: VW wants to increase the proportion of software written in-house to at least 60%, from 10% currently, at a cost of €7 billion, equivalent to $8.23 billion, by 2025. The shadow haunting the German automotive industry is, of course, Tesla. Mr. Diess regularly spurs on his managers by invoking the U.S. company's technological lead and astronomical market value. The starring role accorded to the infotainment screen in a Tesla seems to be a popular feature with the kind of tech-loving consumers who might otherwise buy an Audi. Auto makers are also envious of Tesla's capacity to keep consumers' systems fresh via "over-the-air" updates. One reason Daimler cited for focusing on software was the scope for using this kind of live digital connection with its customers to sell them services well after they have bought their Mercedes-Benz. Many manufacturers have talked of this potential, but Daimler was bold enough to pin a number on it: It hopes to make €1 billion in operating profit from digital services by 2025. The software industry has been through a wrenching transition over the past decade from selling one-off packages to subscriptions for access to a constantly updated, cloud-hosted service. As more vehicles are connected to the internet, infotainment systems are likely next in line. One big unknown is what consumers will be prepared to pay for, and who will get it-vehicle manufacturers or software developers. Another is how deeply the infotainment system will end up being linked to driving controls. For now, though, most car makers are more relaxed than Daimler and VW about ceding control of at least infotainment to the tech industry. General Motors, Volvo Cars, the Renault-Nissan-Mitsubishi alliance and Peugeot (which Fiat-Chrysler will likely follow)

Are all partnering with Google's Android Automotive.


This brief synopsis has been taken from WSJ's original article:

September 30th 2020


Image Copyright of  Wards Intelligence

This year's coronavirus crisis has only cemented the American preference for the monsters of the road. In the third quarter, U.S. light-truck sales were down just 5% relative to the same period last year, according to Wards Intelligence. Car sales fell 22%. Light trucks-a category that includes sport-utility vehicles-now account for 77% of the total market, up from roughly half a decade ago. But sales this year say less about consumer tastes than about the geographic impact of the pandemic, which has been concentrated in cities. U.S. sales have held up much better in small towns and rural markets, which have a bias toward larger vehicles, says Tyson Jominy, vice president of data and analytics at research firm J.D. Power. Another factor has been incentives: Early in the crisis, General Motors and its crosstown peers offered extremely generous credit terms on their bestselling vehicles to keep the profit machine humming. They withdrew them as dealer inventories shrank over the summer, but loans remain cheap by historic standards thanks to the Federal Reserve's rate cuts. The Japanese players that dominate the smaller end of the vehicle market have been much less aggressive. Consumer demand could get more cautious over the coming months, depending in part on the progress of another stimulus package through Congress. This summer, spending was buoyed by federal top-ups to unemployment insurance that have now expired. Layoffs are gathering pace. Fuel prices have also bounced back since the May trough. For the vehicle market, this might not necessarily trigger a shift toward sedans and the car category, but it could mean a move away from Detroit's sweet spot of pickup trucks and larger SUVs. At the very least, Americans seem likely to pay less for profitable extras, weighing on manufacturers' margins. The relative winners from any reversal in the current trend would be the Japanese players, which are strong in compact or "crossover" SUVs as well as sedans. After decades of growing market share, their U.S. businesses have stagnated in recent years, hitting profits. Unlike the Japanese manufacturers, GM, Ford and Fiat Chrysler have all but abandoned sedans. That has improved margins and their reputation on Wall Street. Even if the current taste for trucks and SUVs lasts, though, the strategy carries one risk: That entry-level consumers without families still want cars. "You don't want to give up a person's first introduction to your brand, even if it's not a major profit driver," says Mio Kato, founder of LightStream Research in Tokyo, who publishes on the Smartkarma research platform. Despite very robust truck sales, the past few years haven't been easy for the Detroit players, largely because of the cost and threat of new technologies. If consumer demand moves against them, they will have nowhere left to hide.


This brief synopsis has been taken from WSJ's original article:

September 23rd 2020


Image Copyright of  David Paul Morris / Bloomberg / Getty Images

Mr. Musk for months has been promising to host the event, which was delayed by the pandemic and now is set to kick off Sept. 22 in conjunction with Tesla's annual shareholder meeting-both are being live streamed on the company's website. He has dropped several hints in recent months about what is on his mind. During the company's most recent earnings call, he issued a public plea for people to "please mine more nickel," a key ingredient in cells. "Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way," Mr. Musk added. Last month, he tweeted about plans for a cell that could store far more energy than current versions. A 400 watt-hours per kilogram battery that could be produced at high volume, he said, "is not far" and attainable in possibly three to four years. That would roughly double today's energy storage capacity. So Why is everyone focused on car batteries? Battery technology is the secret sauce behind today's electric vehicle revolution. As more car makers compete in the market and try to persuade customers to abandon their gas guzzlers, companies are pushing to overcome two hurdles to the mass appeal of electric vehicles-price and performance. Tesla's success is built partly on its bet on using lithium batteries similar to those found in consumer goods. That has allowed it to drive down the cost of cells used in electric cars while delivering driving ranges that are attractive to the average consumer. But electric cars still come with a premium price tag-a disincentive to getting people to make the switch from gas guzzlers. Tesla has helped lower battery costs from north of $600 per kilowatt-hour to nearer $150 kWh today, according to Bernstein Research. Batteries costing around $100 kWh would put the cost of an electric car roughly on par with that of a gas-powered vehicle, according to analysts. LG Chem is the biggest cell provider, working not just with GM, but also with Tesla and other car makers. Its market share was above 30% around the middle of this year, according to Bernstein Research. Japan's Panasonic Corp also is a major player. It has partnered with Tesla in a relationship that at times has been fraught. The companies jointly operate out of the so-called Gigafactory outside Reno, Nev., where cells for Tesla cars are made. It isn't an exclusive relationship, though. Panasonic also counts Ford Motor Co. as a customer. China's Contemporary Amperex Technology Ltd., known as CATL, is another major player working with manufacturers including Germany's BMW AG and Tesla. Mr. Musk, in a tweet Monday, said the company intends to increase, not reduce, battery-cell purchases from Panasonic, LG and CATL. "Even with our cell suppliers going at maximum speed, we still foresee significant shortages in 2022 & beyond unless we also take action ourselves," Mr. Musk tweeted. Electric-truck maker Nikola Corp. has turned to California-based Romeo Systems Inc. to source its core battery technology for both prototypes of its Nikola Tre semi-truck, as well as the final production version, which is expected go on sale in 2021, according to people familiar with the matter. That is a contrast to the company's earlier statements that it has developed its own battery technology.


This brief synopsis has been taken from WSJ's original article:

September 16th 2020


Image Copyright of ARND Wiegmann & Reuters

Volkswagen AG is in talks about a potential sale of its Bugatti luxury sport car brand, a move that could signal a broader realignment of the German car maker's vast stable of automotive brands. VW, whose brands range from Audi to Porsche and Skoda to Lamborghini, is discussing the possible divestment with Croatia's Rimac Automobili, a person familiar with the talks said, stressing that there was no guarantee these would lead to a deal. The existence of the talks, which were first reported by Germany's Manager Magazin, suggests that the world's biggest car maker by sales is moving beyond efforts to preserve its cash during the pandemic and exploring more strategic questions, such as the reordering of its vast portfolio of assets, many of which the company has discussed selling in recent years. While the talks are in early stages, Volkswagen appears willing to sell and the company holds Rimac and its founder, Mate Rimac, in high regard, the person said. Volkswagen and Rimac declined to comment. Rimac is an electric car maker in Zagreb, Croatia, that provides technology for high-performance electric cars to auto makers such as Volkswagen's Porsche, which owns 15.5% of Rimac, Aston Martin, Pininfarina, and Koenigsegg. Volkswagen's late patriarch Ferdinand Piech purchased the century-old Bugatti trademark in 1998 for an undisclosed price, three years after the company had gone bust and ceased production. He also bought Lamborghini the same year, part of a strategy to build a stall of luxury brands to enable Volkswagen to compete directly against German rivals BMW and Mercedes-Benz. Last year, Bugatti presented at the Geneva Motor Show the most expensive sport car ever built, the Bugatti La Voiture Noire, a 1,500-horsepower machine with a top speed of 265 mph that sells for just under $20 million. Industry analysts and investors have complained for years that Volkswagen's conglomerate structure conceals a lot of the value in its most lucrative brands, such as Porsche. Some investors have urged Volkswagen to group Porsche with the company's luxury brands and spin them off as a separate entity. Volkswagen rejects the idea, citing the synergies it gets across its brands. Porsche and Audi serve high-end markets and provide hefty returns. Other illustrious brands such as the Ducati motorcycle brand, Bugatti and Lamborghini offer little more than their brand cachet, analysts say, and aren't core business. "These brands are completely irrelevant in the broader context of VW," said Arndt Ellinghorst, an automotive analyst at Bernstein Research, adding a sale of Bugatti would make no difference to the company. "I'm sure there's some strategic rationale, but for investors it's irrelevant."


This brief synopsis has been taken from WSJ's original article:

September 9th 2020


Image Copyright of Miguel Medina, Agence France-Presse, Getty Images

Fiat Chrysler Automobile NV's years of struggles in Europe faded for an evening as its Maserati brand lavishly unveiled a new luxury sports car it hopes will reinvigorate the unprofitable product. Booming music, strobe lights and video clips recalling Maserati's illustrious racing past met hundreds of socially distanced, mask-wearing observers gathered Wednesday to get a first peek at the MC20. The brand's first new car for four years can accelerate to 60 miles per hour in less than 3 seconds and has a top speed of 200 miles an hour. The brand sold just 19,300 cars in 2019 down by almost two-thirds in two years and coronavirus lockdowns contributed to a further 50% drop in first-half sales this year. A new five-year target calls for Maserati to achieve an operating profit margin of 15% on sales of 75,000 vehicles. Fiat Chrysler's European business, which also includes the struggling Alfa Romeo and Fiat brands, has long strained to make a profit, with the group's finances depending in recent years on strong sales of Jeep sport-utility vehicles and Ram trucks. Once the PSA merger is finalized by the end of March, the combined company is expected to cut costs, putting more pressure on the Italian brands. While Fiat Chrysler has barely broken even in Europe in good years, PSA has been on an upward trajectory since Chief Executive Carlos Tavares took the wheel in 2014. The French company sells almost 90% of its vehicles in Europe typically a tough market for mass-market car makers and is a rarity among the region's auto makers in having turned a profit in the first half of this year despite the pandemic. Fiat has grappled with overcapacity in Italy for decades, with some factories making use of government-funded furlough programs even before the coronavirus hit. The company had its European factories working at about 50% capacity last year, well below the average in Europe, according to LMC Automotive, a research firm. "Fiat's biggest problem in Europe is a very elderly product range," said Bernstein analyst Arndt Ellinghorst. "Marchionne starved the business of money as he couldn't see a way to justify investment." While that made sense at the time, the strategy is now catching up with the company and its new leadership, Mr. Ellinghorst said. Mr. Marchionne died in 2018, and his successor as CEO, Mike Manley, said Thursday he would unveil his new role at the merged company later this year. While volumes of Maserati's new MC20 are expected to be low the super-car segment sells only about 20,000 vehicles a year globally executives hope the car will increase the brand's credentials in the luxury-car market, thanks to its newly designed 630-horsepower engine and extensive use of carbon fiber. Initially available only with a traditional engine an electric option is planned the car has a starting price of about $200,000, putting it within range of an entry-level Ferrari or Lamborghini.


This brief synopsis has been taken from WSJ's original article:

September 2nd 2020


Image Copyright of Paul Sancya & Associated Press

General Motors & Honda Motor Co. plan to jointly develop new vehicles for North America through an alliance that would deepen existing ties between two longtime rivals. The companies said this week that the strategic alliance would entail cooperation on everything from engineering the underlying components of a vehicle to purchasing parts. The work could begin next year, the car makers said, declining to estimate cost savings or specify any future models that could be included. Honda executive vice president Seiji Kuraishi said the company hoped to achieve substantial cost savings in North America and would maintain its own distinct offerings under the planned partnership. The two automakers have signed a non binding memorandum of understanding to form the alliance, but details on how exactly it would operate and what aspects of the vehicles would be jointly used on future models weren't released. A committee of leaders from GM and Honda will manage the alliance, the companies said. The plan would fortify the budding collaboration between the American and Japanese automakers, competitors in the lucrative U.S. market that have nonetheless joined forces in recent years to work on innovative technologies. Honda said earlier this spring, that they plan to develop two electric vehicles using General Motors technology. GM's stock closed down nearly 5% Thursday at $29.48 as the broader market fell. Global car companies face pressure to invest billions of dollars on innovations such as electric and driverless cars, technologies that are likely years from returning profits. At the same time, they must continue to fund the core business of engineering and building traditional vehicles, a capital-intensive endeavor with relatively low profit margins. Stricter auto-emissions regulations in places such as Europe and China are only adding to the financial demands at a time when car companies are still trying to navigate through a pandemic that has plunged the car business into its worst sales slump in years. GM and Honda said their pact could lead to the companies working together on research and development, including in areas of advanced safety and connected-car technologies. "This alliance will help both companies accelerate investment in future mobility innovation by freeing up additional resources," GM President Mark Reuss said.

This brief synopsis has been taken from WSJ's original article:

August 26th 2020


Image Copyright of Qilai Shen & Bloomberg News

Xpeng, an electric startup and one of Tesla's biggest Chinese rivals, raised $1.5 billion through an initial public offering in the U.S. This amount is way more than initially planned, because of high investor demand. Xpeng sold 99.73 million American depositary shares at an offer price of $15 Thursday. That was more than the 85 million shares that were previously planned, and the offer price was higher than the initial guidance of $11-$13. On the first day of trading the shares leaped 41% to $21.22. They trade on the New York Stock Exchange under the symbol XPEV. The electric-car maker joins the more than 20 Chinese technology companies to tap the U.S. market this year by listing on the Nasdaq Stock Market or the New York Stock Exchange and raising a total of more than $6 billion, according to Dealogic data. China's electric-vehicle startups, which faced declining sales last year while collectively incurring billions of dollars of losses, are resurgent. The turning point came, according to auto analysts, when Nio, the highest-profile Chinese EV startup, secured nearly $1 billion in funding from several state-owned companies in the eastern city of Hefei, allaying fears about the company's solvency. Since then Nio's New York-listed shares have rallied from under $3 to about $20. Tesla's strong performance in China has also buoyed investors, said Bill Russo, the founder of Shanghai-based consulting firm Automobility. Just as the Apple iPhone seeded the Chinese smartphone market and enabled the rise of local players such as Huawei Technologies Co. Tesla's China sales took off after its Shanghai plant started delivering Model 3 sedans in December, helping convince wavering investors that electric cars remain the automotive industry's future. While Tesla builds its own cars in Shanghai, Nio employs a local state-run auto maker to manufacture its vehicles. Xpeng does both, outsourcing production of its first model-an SUV-and starting production of a new sedan at its own plant in the southern city of Zhaoqing in May. Credit Suisse, J.P. Morgan and Bank of America Securities are among the banks that advised on the offering.

This brief synopsis has been taken from WSJ's original article:

August 19th 2020


Image Copyright of AJ Mast for General Motors

Detroit's two largest automakers are nearing completion of federal contracts to manufacture tens of thousands of ventilators, capping a frenzied effort begun in the spring to mass-produce the breathing machines for the sickest Covid-19 patients. Ford by late next week will have made about 43,000 ventilators with its partner, GE (General Electric) at a factory in suburban Detroit, a Ford spokeswoman said Friday. The companies expect to reach 50,000 by the end of August to fulfill a $336 million contract with the Department of Health and Human Services, she said. GM (General Motors) plans to turn over operations at the factory to Ventec for future production, citing a continued need for ventilators beyond the federal contract. Ford declined to comment on what will happen with the facility producing its ventilators once work under the contract is complete. Completion of the work by GM and Ford would conclude an unusual and high-profile push by the car companies to apply an assembly-line approach to mass-produce breathing machines that normally are hand-built in the dozens a week. GM signed its federal contract after President Trump invoked this spring the Defense Production Act, a Cold War-era law he used to order companies to manufacture devices and medication to fight Covid-19. He had criticized GM and Chief Executive Mary Barra for wasting time in negotiations with federal officials over ventilator production. Ford worked with GE to produce a ventilator with a design that operates on air pressure rather than electricity. The design was developed by Airon Corp., a small Florida medical-device maker. Ford and GE originally said they expected to reach 50,000 ventilators in July. Ventilators mechanically pump air into the lungs of patients who can't breathe on their own, a situation common in the worst Covid-19 cases. The devices are made with hundreds of parts, including valves, blowers, tubes, electronics and software, which regulate how much oxygen reaches the lungs and with how much air pressure. The auto makers said they stepped in because they wanted to apply their manufacturing expertise in a moment of national crisis. It's nice to know in a time where businesses are failing left and right, we have American companies willing to put their main source of revenue on hold while they help try and save lives with their ventilators.

This brief synopsis has been taken from WSJ's original article:

August 12th 2020


Image Copyright of Patrick T. Fallon/Bloomberg News

Carvana, an online-only seller of used vehicles, is generating new interest from both car buyers and Wall Street as its business benefits from the burst in internet shopping. Carvana's recent success comes at a critical moment for the eight-year-old company, which was founded with the mission of changing the way people buy cars but has yet to turn a profit and is fending off tougher competition in the online-retailing space. The Tempe, Ariz., company last week posted a 25% increase in vehicles sold for the second quarter, a time when many dealerships were still closed because of the Covid-19 pandemic. Total revenue grew 13% to $1.12 billion for the April-to-June period. Carvana is still losing money as it invests heavily in its own operations in an effort to grow its U.S. market share. Analysts polled by FactSet don't expect it to be profitable on a net basis until 2023. Challenges related to reconditioning used vehicles for sale also have weighed on results. For the April-to-June quarter, the company reported a loss of $160 million. Still, Carvana's latest results beat Wall Street's expectations, and the company's stock rose 28% the day after the quarterly report, closing at $222.99. Shares have since retreated to $192, as of Friday's close, but remain double where they started the year. Carvana, known for its tall, glass towers that dispense vehicles purchased by customers, was built with the intent of giving car buyers an alternative to going to a dealership. Shoppers can browse and purchase pre-owned models through the company's website, and then arrange for the purchase to be delivered by truck to their home or office. Carvana promotes a seven-day return policy to ease concerns about buying a car sight-unseen. Used vehicles, unlike those sold new, aren't required to be sold through a franchise dealership network, allowing Carvana and rivals Vroom Inc. and Shift Technologies Inc. to operate without bricks-and-mortar storefronts. Investors, meanwhile, are increasingly placing their bets on the upstarts. Carvana's stock price has more than quadrupled since late March when lockdowns began proliferating across the U.S. Competitor Vroom Inc. went public in June in an effort to challenge Carvana and take advantage of investor enthusiasm for online-car retailing. "The fact that Carvana is multiple years ahead of the competition on this front certainly helps," said Zack Fadem, an analyst for Wells Fargo & Co. But it is still building its operations, and that can take time, he added. Carvana has set a goal of eventually selling more than two million vehicles annually through its online retailing network. "If Carvana can achieve a certain level of scale, they can be very profitable," Mr. Fadem said.

This brief synopsis has been taken from WSJ's original article:

August 5th 2020


Image Copyright of  Agence France-Presse/Getty Images

After years of losses that made many investors wonder if Tesla, the Silicon Valley car maker, could ever operate in the black, Tesla has sustained a profit through one of the worst economic shocks in history, Covid-19. The progress is helped in part by the sale of regulatory credits. It is expanding rapidly at a time when larger rivals are losing money and cutting production, even as they chase Tesla's lead in electric vehicles. Tesla's share price has skyrocketed 400% this year, to a level even Elon Musk has said is "excessive." Behind that string of successes is a series of moves Mr. Musk made over the past year that positioned the company well when the coronavirus struck, coupled with his determination to keep Tesla operating as much as possible during the coronavirus pandemic, even in defiance of health authorities. Mr. Musk is aiming to rapidly add production capacity and plans new vehicle models, activities that have strained Tesla before. If he pulls it off, Mr. Musk could achieve his long-held goal of transforming Tesla from a niche into a mainstream vehicle maker. And he could bring Tesla out of the pandemic positioned much the way Ford Motor Co. emerged from the 2007-2009 recession in much healthier form than its rivals. Tesla's rosy future is no certainty. Mr. Musk nearly lost Tesla and his personal fortune during the last recession, betting everything that his vision for electric cars could catch on if he could just buy time, raise funds and develop the best vehicle possible. This time, Tesla is positioned to emerge stronger. It is working on a new car plant outside Berlin and has announced plans to put its fourth assembly facility in Austin, Texas. Tesla's annual revenue, Mr. Jonas forecasts, will rise from $24.6 billion last year to top $170 billion in 10 years. That would exceed Ford's $156 billion in sales last year, even though Tesla's total vehicle deliveries would still be much smaller. Meanwhile, Mr. Musk promises more action to drive growth, including development of a subcompact vehicle aimed at the European and China markets. And he has signaled a focus on sustaining the recent earnings momentum. "We want to be like slightly profitable and maximize growth and make the cars as affordable as possible, and that's what we're trying to achieve," he told investors last month.

This brief synopsis has been taken from WSJ's original article:

July 29th 2020


Image Copyright of Chris Helgren & Reuters

The second quarter could have been much worse for General Motors (GM). However, the Detroit car maker to most likely boost investors earnings this season is Ford. Lockdowns to control the spread of Covid-19 made it the most difficult period for car sales in decades, and an even harder for new car production. GM said Wednesday that it delivered 62% fewer vehicles to dealers in its all-important North American market than in the same three months last year, thus generating 60% less revenue. Yet the company made an adjusted operating loss of only $536 million, which was far less than the $2.8 billion analysts had expected. That reflected two factors: an aggressive clampdown on costs and surprisingly strong vehicle prices. Meanwhile, the cost reductions came from halting advertising spending, furloughing employees and deferring pay. Most of these apparent gains will reverse as GM ramps production back up in the second half. Even so, the second-quarter performance does show that the company's operations are more flexible than they used to be in an industry infamous for its high fixed costs. GM has consistently outmaneuvered Ford in recent years, but this could be one quarter where the smaller company fares better-at least relative to dire expectations. Three months ago, Ford said it would lose a staggering $5 billion in the second quarter. Yet its sales performance has been relatively strong, with market-share gains and an average U.S. selling price in the second quarter of $45,121, according to Edmunds, up 9.2% year over year. On the other side of things, Vehicle sales slipped in mid-July, according to J.D. Power. This is most likely due to the pandemic flaring up again in some states. U.S. unemployment, which typically weighs on demand for big-ticket items such as cars, remains high. Above all, Tesla's market valuation has ballooned, highlighting the need to keep spending money on electric vehicles and other new technologies with little immediate prospect of making decent returns. GM expects to spend more than $20 billion on its electric and automated-driving programs over the next five years. Even normal times, whenever they finally come, won't be easy for Detroit.

This brief synopsis has been taken from WSJ's original article:

July 22nd 2020


Image Copyright of Krisztian Bocsi & Bloomberg News

As the auto industry contemplates the impact of technology; from electric cars, internet connectivity, and ultimately vehicles that drive themselves, designers are reinventing the interior of the automobile and how its passengers experience the ride. One doesn't have to imagine some fantastic future with Jetsons-like inventions zipping around on the ground and in the air because the future is already on the drawing boards of car makers today. While it is too soon to say how the Covid-19 pandemic will affect car interiors in the future, designers think there is more emphasis now on cars as a safe space. Last month, Hyundai Motors took the wraps off its latest concept car, simply dubbed 45 (pictured above). It is an all-electric vehicle with swivel front seats. The doors slide open to reveal a spacious interior with clean, simple lines. "It's all about the soothing, relaxing environment just for you," SangYup Lee, design chief for Hyundai Motors, says in a video presentation of the new 45 concept vehicle, describing the calming effect of the lemon-colored light that illuminates the interior "almost as if you're sitting in a Jacuzzi." The self-driving hype of the past few years has given way to the sober reality that it will take longer to develop and deploy. And the coronavirus pandemic has put some of the investment by auto makers on hold. "Autonomous vehicles are going to be the real game-changer that will bring new ways of using the cars and new business models," says Frank Rinderknecht, 64, founder and CEO of Rinspeed Inc., a Swiss designer of concept vehicles and automotive consulting firm. Rinspeed has developed a series of prototypes dubbed Oasis to demonstrate a new idea about modular design that can be applied to a range of vehicles. "Oasis will only happen when we have autonomous vehicles," says Mr. Rinderknecht. "It's going to be five or 10 years before we see any implementation of self-driving cars." Mr. van Hooydonk says BMW is thinking beyond the dashboard, to when the windows become the display, even more so than today's "head-up" display, in which dashboard information such as speed, mileage or the charge left on the electric car's battery is projected onto the windshield at eye level, allowing the driver to see it without taking his or her eyes off the road. "When you get rid of dials and use head-up display you can do a lot with that space. But it's when you get rid of the steering column that things really open up," says Lisa Reeves, 39, Volvo Cars director of interior program design. Volvo, the Swedish car maker owned by China's Zhejiang Geely Holding Group, is developing a model that could be tailored to drivers' needs, just as trucks and delivery vans are today. Today, Volvo is building cars for Uber Inc. that the ride-hailing service can adapt with its own software and features. Volvo also had this business model in mind when developing its 360c project.

This brief synopsis has been taken from WSJ's original article:

July 15th 2020


Image Copyright of Marco Bertorello/AFP/Getty Images

Fiat Chrysler plans to change names after their recent merger with PSA group (Peugeot). The move marks an important step in solidifying a merger that was announced in October. The tie-up aims to create a $50 billion auto giant that would rank among the world's largest car companies by sales. The deal comes at a time of mounting cost pressures in the global car business, with auto companies investing billions in new technologies, such as electric cars, as demand for cars and trucks in the top auto markets weakens. They settled on the name "Stellantis" for the new mega brand. The new name has its roots in the Latin word "stello," meaning "to brighten with stars." The change marks the first time that Fiat and Chrysler won't appear in the parent company name, but they will live on as badges for individual brands. Likewise, brand names such as Jeep and Peugeot will continue. "The stakes are high here," said Marcus Collins, a marketing professor at the University of Michigan. "A new name presents a clean slate, but you only have so many chances to reinvent yourself." Chrysler, named after Walter Chrysler, who founded the company in 1925, has endured as a corporate name for nearly a century and had survived previous mergers, including the failed Daimler-Chrysler tie-up in the early 2000s. Italy's Fiat traces its roots back to 1899 when the Italian car company was founded by Giovanni Agnelli. PSA Group, which is based in France, is the parent company for the makers of Peugeot, Citroën and other automotive brands. The two companies became Fiat Chrysler Automobiles through a 2014 tie-up executed by then-Fiat CEO Sergio Marchionne, who took control of Chrysler out of bankruptcy. Mr. Marchionne died in 2018. Company executives have said the two sides will have equal share in the newly formed company, and the deal will result in annual cost savings of about $4.22 billion. 

This brief synopsis has been taken from WSJ's original article:

July 8th 2020


Image Copyright of Hi-Line Autohaus/Morgan Marlowe

The Covid-19 pandemic has rattled the auto sector, but one part of the industry is doing better than it was before the crisis, used cars. Sales of used vehicles in the U.S. have roared back after dropping 38% in April, when states were shut down and some dealerships were forced to close. In June, used-vehicle sales rose 17% above the pre-pandemic forecasts, according to research firm J.D. Power. A number of factors are drawing buyers to the used-car lot. Some have used federal stimulus checks on their purchases, dealers and analysts say. Interest rates have fallen during the pandemic, to about 4.73% on average for a 36-month used-car loan, from about 5% in early March, according to Bankrate. Meanwhile, many dealers are having trouble getting new vehicles from the factory, after the health crisis forced automakers to close their plants for nearly two months this spring. That has led salespeople to more readily redirect customers to the used-car lot. A sharp rebound in used-vehicle demand has overwhelmed concerns about falling values for now. The average wholesale price in June likely will finish at an all-time high of more than $14,600, according to Manheim, which has tracked an index of used-car values since the mid-1990s. Used-car shoppers willing to wait might be rewarded with a better deal in the coming months, said Alex Yurchenko, senior vice president of data science at Black Book, which tracks used-car values. He expects an influx of used cars to hit the market as rental-car companies, hit hard by a decline in travel, look to purge their fleets. Also, more people will be returning their leased vehicles to the dealership after having been granted extensions because of the pandemic. "Our expectation is that retail prices will start to decline," Yurchenko said.


This brief synopsis has been taken from WSJ's original article:

July 1st 2020


Image Copyright of Bloomberg News

Amazon has reached an agreement to acquire autonomous-car developer Zoox. The company Zoox was founded in 2014 and grew quickly amid expanding interest in autonomous vehicles and ride hailing but has more recently struggled to raise funding. The deal with Amazon is valued at slightly more than $1.2 billion. The plan is for Zoox to continue development of its robot taxi, an electric vehicle that it has been working on, with Amazon investing money in Zoox so it can deploy these vehicles. Hours after the deal was announced, Tesla Inc. Chief Executive Elon Musk weighed in on Twitter, calling Amazon founder Jeff Bezos a copycat. It was the latest exchange between the rival billionaires who are increasingly competing for the future of transportation whether it be driverless cars or space rockets. Amazon has shown interest in autonomous vehicles, in part as a way to bring more delivery services in house. Previous dealings include participation in fundraising rounds for Aurora Innovation Inc. and Rivian Automotive LLC, two other companies that are working on autonomous-vehicle development. The deal brings Amazon into the ranks of corporate titans that have established substantial in-house autonomous-vehicle efforts. In 2016, General Motors Co. spent more than $1 billion to acquire Cruise Automation, and Uber Technologies Inc. acquired an autonomous-vehicle startup for $680 million. Alphabet Inc. is working to develop autonomous vehicles through its Waymo subsidiary, which began as a division of Google. The question now is, just how much longer will it be, until we see these vehicles on our roads?


This brief synopsis has been taken from WSJ's original article:

June 24th 2020


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The Covid-19 Pandemic has shifted almost everything we do to more digital and contact-less forms of purchasing. From buying groceries and small goods online to now buying vehicles online, the pandemic has changed the way we interact with one another when it comes to purchasing. The auto industry has embraced the internet during these times. Auto makers have expanded at home delivery programs, all in the hopes of making things easier for customers to eventually buy the car they are looking for. Dealers have redesigned their websites to help customers tour showrooms virtually and complete more of the car-buying process online in attempt to limit interaction with others and help "flatten the curve" of the virus. Many across the industry expect the trend to continue. In this day and age, people want convenience more than anything. We are now used to getting items delivered straight to our door with free two-day shipping and other convenient features that online retailers have embraced, so why should car buying be any different? Many dealerships are now rethinking how they staff locations and are starting to shift sales roles into digital operations. However, when it comes to car buying, the majority of people still would like to see the car in person and have the ability to have a look up close and test drive the vehicle. "Definitely we'll see more customers wanting to do most, if not all, of the transaction online," GM Chief Executive Mary Barra told reporters this week. "But I don't think everyone will want to do that, and that's why we have to meet them where they're at." So, the bottom line is, everyone is different, some like the convenience of buying online, and some prefer traditional methods. Good businesses can listen, learn and meet in the middle when it comes to taking care of their customers and putting their needs and desires first.  


This brief synopsis has been taken from WSJ's original article:

June 17th 2020


Image Copyright of Massimo Pinca/Reuters

Nikola Corp, an electric truck startup company drew big attention this week when it began publicly trading through a merger. The company plans to be just as disruptive to the auto industry as Tesla. Nikola hopes to power big rig trucks with batteries and hydrogen fuel, instead of the decades-old diesel fuel dependence that we all are used to seeing with huge trucks and eighteen-wheelers. Critics are claiming that with no deposits, no manufacturing plants, no revenue, and no actual cars, it is almost as if pictures and promises alone have helped boost their brand name and IPO so far. Currently, Nikola has set up partnerships with equipment maker CNH Industrial. Nikola also plans to build a U.S. factory in Coolidge, Arizona but initial production of its first semi-trucks will be at a plant in Ulm, Germany, operated by IVECO, CNH's commercial vehicle brand. IVECO also will help Nikola establish a fueling network in Europe for its hydrogen-electric big rigs, Mr. Russell (Nikola's CEO) said. Those trucks, which are planned for production starting in 2023, are to be powered by hydrogen that passes through a fuel cell stack to produce electricity that sends energy to the vehicle's wheels. "The reason hydrogen hasn't taken off is there isn't enough infrastructure to serve them if you bought one," Mr. Russell said. "We have to build the vehicle and we have to build the stations to refuel them." For now, only time will tell if the world is ready for the switch to more energy efficient big transport vehicles. Big-transport operators are lining up to test the electric trucks. Companies including Walmart Inc., FedEx Corp., United Parcel ServiceInc., Ryder System Inc. and J.B. Hunt Transport Services Inc. have placed reservations for Tesla's Semi. Trucker U.S. Xpress Inc. and the U.S. subsidiary of Anheuser-Busch InBev SA have reserved hundreds of Nikola's hydrogen-electric trucks.


This brief synopsis has been taken from WSJ's original article:

June 10th 2020


Image Copyright of Vroom 

Vroom Inc.'s shares skyrocketed on their first day of trading, adding the online automobile seller to a list of companies that have had strong public offerings over the past few weeks. The company's stock VRM, opened at $22 a share on Monday, and by Tuesday's closing, it ended up more than double at $47.90 a share. The opening price gives the New York online auto retailer a valuation of more than $4.6 billion. The U.S. IPO market has been pretty quiet over the last few months due to Covid-19. However, with the recent burst in activity more companies could be willing to "come off the sideline" and offer their IPO's. Vroom generated sales of $1.19 billion in 2019, up from $855 million in 2018. The company has stated that it expects roughly $497 million in proceeds this year, which could be used for advertising, marketing and technology development. Vroom said in a security filing that the pandemic could set back some of their operations, leading to higher costs and lower e-commerce sales. This is due to a decrease in demand and the looming uncertainty regarding future vehicle pricing. "Our revenues during this pandemic are difficult to predict with certainty," the company said, adding that its business, operations and financial condition for fiscal 2020 might be significantly affected by Covid-19-related disruptions.


This brief synopsis has been taken from WSJ's original article:

June 3rd 2020


The German auto giant Volkswagen is investing $1.11 billion in a Chinese auto maker and another $1.11 billion in a local Chinese battery producer. The investment is the latest strategy to capitalize on the Chinese electrical vehicle segment. The plan aims to increase their stake from 50% to 75% in existing joint venture with Anhui Jianghua Automobile Group (JAC). Volkswagen is looking to bet on the hopes of an upward trend after China's electrical vehicle market has been left in a slump since the emergence of Covid-19. Volkswagen and other auto makers feel comfortable that China, as well as the rest of the world will ultimately embrace electrical vehicles. VW aims to deliver 1.5 million electrical vehicles in China by 2025. "It's a signal to the industry and especially to Tesla of how determined they are," said Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight. In 2018 China liberalized their auto market, allowing foreign car makers to completely own their Chinese ventures for the first time. This has led to an influx of outside investors looking to capitalize on China's huge and ever-expanding market.

This brief synopsis has been taken from WSJ's original article:

May 26th 2020

Image Copyright of Car & Driver 

Ford Motors stopped production on their assembly lines at some of their key factories in Chicago and Michigan last Wednesday (May 20th). The stoppage came after "Lear Corp" (a factory in Indiana that makes seats for Ford) ceased production on their assembly lines. Covid-19 has continuously disturbed production and supply chains in every business, and none is more apparent than that of the automotive industry. On the same day, May 20th, Ford temporarily closed one of its pickup-truck plants in Michigan after one of the workers tested positive for Covid-19. The Michigan plant is one of two factories that produce the F-150, Ford's biggest cash cow. Work did resume the next day after part of the factory was disinfected. Management at the plant did however state that, "due to incubation time, we know that these employees did not contract Covid-19 at work." Analysts have warned that the industry's restart will be a very slow and complex process. Infections popping up at factories, production plants and other suppliers, all add to the uncertainty of the situation.

In other news, Aston Martin fired their CEO Andy Palmer in an attempt to resuscitate their brand, which has been on life support for quite some time. The replacement is Tobias Moers (chief of Daimler AG's AMG). Andy Palmer's efforts to revive the Aston Martin brand had failed and the company's share price has continuously slumped after the initial public offering back in October 2018. Aston Martin is one of the last surviving British car brands and this move comes as an attempt to save a brand that has been on the brink of financial collapse for years.

This brief synopsis has been taken from two of WSJ's original articles: