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


Image Copyright of World.edu

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: