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: