|Bid||36.04 x 124500|
|Ask||36.03 x 73800|
|Day's Range||34.87 - 36.78|
|52 Week Range||21.01 - 54.50|
|Beta (5Y Monthly)||1.67|
|PE Ratio (TTM)||102.90|
|Earnings Date||Jul. 23, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Apr. 02, 2020|
|1y Target Est||62.70|
(Bloomberg Opinion) -- Famed investor Carl Icahn couldn’t save an American emblem, Hertz Global Holdings Inc. So why does a Beijing-backed enterprise think it can rescue China’s largest car rental company? With its prospects for fresh capital dimming, Car Inc., which shares a chairman with scandal-hit Luckin Coffee Inc., says it’s selling a stake to Beijing Automotive Group Co., the Chinese joint venture partner for Daimler AG-owned Mercedes-Benz and Hyundai Motor Co. BAIC plans to buy up to 21.26%, or a maximum 450.8 million shares, the entire ownership of parent UCAR Inc. That would make the state-owned entity the second-largest shareholder behind Legend Holdings, parent of computer maker Lenovo Group Ltd. Another agreement that was in the works between UCAR and a vehicle linked to private equity giant Warburg Pincus LLC will be terminated. Investors cheered Monday’s news, with the stocks and bonds rising from near rock-bottom. The sale would help sever ties between Car Inc. and Luckin and, in theory, reduce further fallout from the scandal engulfing the coffee chain and Chairman Charles Lu Zhengyao that has riled regulators. But the rescue doesn’t make much strategic or financial sense for either Car Inc. or BAIC.The last thing BAIC needs in the current auto market, which was sagging even before the pandemic, is the stress of a troubled rental company and all the strings attached. The auto giant’s first-quarter results showed that net profit declined 95% on year. The local Beijing brand posted a loss of 1.4 billion yuan ($196 million). Mercedes-Benz was better off because premium-segment demand has held up. Sales volume halved on the Hyundai side. BAIC is already playing rescuer elsewhere, bolstering dealerships with financial support like payable extensions, interest waivers and higher subsidies.What BAIC will — or can — do for Car Inc. through such an arrangement is unclear. The company may end up being a sink for BAIC. The rental business relies heavily on financing and needs capital with high costs on vehicle acquisitions and other such operations. UCAR, the parent, has also been a source of revenue for Car Inc. through fleets; what happens to those relationships once ties are cut will be in doubt. Car Inc. has to deal with the residual value of its cars because in China, manufacturers don't offer guaranteed depreciation or repurchase programs. The company also has guaranteed subsidiary borrower loans onshore along with other shadow financing arrangements. It will be on the hook if there are any defaults. The rental company’s future, with or without a savior, was already up in the air. Moody’s Investors Services expects its leverage ratio to rise over the next 12 months as revenues and demand fall. The cancelled sale of the second tranche of shares to Warburg would have made the firm Car Inc.’s largest shareholder, and could have eased worries about governance and capital shortages, according to S&P Global Intelligence. UCAR sold the first portion — a 4.65% stake — in April to the U.S. firm.This raises several questions for Car Inc. bondholders should BAIC eventually buy the entire stake. UCAR had pledged the shares as collateral for some loans last June. Now, there’s the risk of a change of control event and accelerated debt repayments. Any modifications to the ownership, that is, if the cumulative stakes of major shareholders fall below a 35% threshold, would trigger the clause.There are other considerations. Does Daimler want a part of this? The German company owns 30% of BAIC’s Hong Kong-listed shares. The stake sale, if completed, could open it up to the risk of helping Car Inc. That may weigh on its Chinese partners’ financial standing domestically if Daimler is pushed to support the rental firm’s business.It’s one thing to bail out a good company with a bad balance sheet. But Beijing’s modus operandi of rescuing all companies and banks lands it just where it doesn’t want to be: holding the bag for many bad actors. Consider this: In March last year, UCAR took a 67% stake in an entity related to BAIC through a complicated transaction. It still hasn’t fully paid back the equity portion, according to local media reports. It also owes principal and interest payments. Perhaps this is the way in to get some money back? Either way, this bailout looks wrong. The imminent arrival of a white knight does little in the way of reorganizing or fixing this business; it just shifts around liabilities and a web of ties. Investors shouldn’t rejoice too soon. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- On a gloomy Friday in March, with the devastation of the coronavirus becoming clear, senior officials in Chancellor Angela Merkel’s government realized that extraordinary measures were needed to shore up Europe’s largest economy.At breakneck speed, aides based at the Economy Ministry’s former Prussian estate on the Spree river in Berlin pulled together a rescue program totaling 600 billion euros ($660 billion) to prevent a collapse.With infection rates surging and stringent restrictions on people and businesses, there was little time for debate and no serious opposition. Yet behind the feverish crisis management was a deeper strategy that had been months in the making.It had already been rejected as too radical for the political and business establishment when first proposed last year. But with the crisis as a catalyst, the package passed cabinet the following Monday and was law by the end of the week. It puts Merkel in charge of the most dramatic re-engineering of the German economy since post-war reconstruction.By the time she’s finished, the chancellor will have installed a kind of state capitalism in Germany that borrows heavily from France and is even informed by China’s success. It will give officials in Berlin new powers to intervene in the economy: they’ll be picking winners and losers, seeding new industries and grooming national champions. Buying stakes in companies is no longer taboo, and the touchstone balanced-budget policy has been jettisoned to unleash the full power of the German balance sheet.In other words, this week’s landmark 9 billion-euro ($9.8 billion) bailout of Deutsche Lufthansa AG — including the government’s 20% stake and the right to block unwanted takeovers — is only the beginning. More than just securing Germany’s air links to the outside world, the deal sets down a marker for how the Merkel administration intends the economy to be run in the post-pandemic era.The package was approved by Germany’s brand new WSF Economic Stability Fund, which includes 100 billion euros of taxpayer money to directly invest in and even buy out companies. The fund was created during that hectic weekend in March, but its origins and the broader strategy behind it were sketched out more than a year ago by Economy Minister Peter Altmaier.Spurred by leading German executives’ alarm about the country’s struggles against foreign competition, Merkel’s former chief of staff took it into his own hands to craft a response. Writing some of the passages himself, he presented the resulting policy paper in February 2019 — long before anyone had ever heard of Covid-19.His industrial strategy called for enhanced government authority to invest in technology such as artificial intelligence, battery cells and clean energy. He wanted closer ties with industry to nurture homegrown global players.The country will go “from a bystander of a process that’s already in full swing in the U.S. and China into a shaper,” he said at the presentation.The effort was buried in an avalanche of criticism.Germany’s powerful Mittelstand of family-owned manufacturers attacked it as a paean to big business, while lawmakers from Merkel’s Christian Democratic Union made it clear that they weren’t ready to give the government that much power. European partners also fretted about the protectionist, Germany First undertones.Altmaier was forced to back down and in November presented a watered-down version — called “Made in Germany: Industriestrategie 2030.” The initiative was dead, until the coronavirus changed the game.The new approach shows a country that is ready to make bold bets on its economic future, but true to Germany’s frugal traditions. In the Lufthansa deal, the administration — still battling with the European Commission for approval — is paying less than one-third the market price for its stake, which can be raised to 25% plus one share if the airline doesn’t pay a guaranteed dividend on the bulk of the funding.“We have sent a convincing signal of support for the free-market economy. But this is also a signal that the German government is willing to defend the technological and economic sovereignty of this country,” Altmaier said after announcing the bailout.Contours of the strategy will become more visible in early June, when Merkel’s administration unveils a much-anticipated economic stimulus plan.Read more: Merkel’s Stimulus Sequel May Total as Much as 100 Billion EurosAnother sign of the government’s determination to change things up is the one industry that will come up short: autos.Germany’s powerful carmakers were the main beneficiaries of stimulus spending after the financial crisis. There will likely be some incentives for car purchases this time, but Volkswagen AG, Daimler AG and BMW AG won’t get another sweeping cash-for-clunkers program that bolsters profitable conventional vehicles alongside electrics.In fact, Merkel canceled a meeting with leading representatives of Germany’s car industry scheduled for next Tuesday due to disagreements over the package. She has bristled at auto executives’ demands for the taxpayer to come to their rescue — a surprising snub from the so-called “auto chancellor.”When she announced an end to stringent restrictions on the public earlier this month, she told the car companies they would have to pitch for funds like everyone else, making them sound more like startups rather than the titans of the German economy.“It’s not like you can only talk about a restart of the economy if the state gives more money,” she said. “We will indeed need a stimulus program, but the initiative must come from the companies.”The spending plan is only one piece of the puzzle. Strategic programs are either already under way or in the works, including measures to protect companies against foreign competition, to reduce dependence on overseas supply chains and to prop up local industry.Key Pillars of Merkel’s Activist Strategy100 billion-euro fund to buy stakes in companies, to be increased if needed; German states encouraged to set up similar funds to safeguard local champions Takeover controls are being extended to give the government authority to block foreign purchases for “potential interference” Seeding burgeoning industries like artificial intelligence, battery-cell production and clean energy; promoting local suppliers to reduce reliance on companies outside the EUIt’s a unique opportunity for Merkel to atone for past mistakes. Even before the pandemic hit, Germany was stumbling. A reliance on carbon-intensive technologies, a spotty national digital network and a plodding bureaucracy revealed cracks in the chancellor’s management of the country’s export machine.After the financial crisis, her strategy had been simply to steady the ship and get out of the way. But the world has changed significantly since then.The transatlantic partnership with the U.S. has frayed under President Donald Trump, and China is targeting Germany’s position as the world leader in advanced manufacturing. Beijing’s Belt and Road Initiative — an infrastructure program that ends at the inland port of Duisburg in Germany’s industrial Ruhr Valley — seeks to extend the country’s influence deep into Europe.The Asian power has also been buying up German businesses including industrial-robot maker Kuka AG, and Chinese billionaire Li Shufu is the biggest shareholder in Mercedes-Benz maker Daimler. The concerns have caused Merkel to clash with European Union, demanding takeover law be changed to reflect global competition rather than focusing on the impact within the bloc. And they have inspired the more protectionist provisions in Altmaier’s plan.Read More: Merkel Says EU Antitrust Rules Are Naive About Threat of ChinaEchoes of the activist strategy were there too in the proposal presented by Merkel and French President Emmanuel Macron to backstop a European Union recovery fund. That plan included policies for an ambitious overhaul of the bloc’s economy as well as looser state-aid rules to help foster the creation of larger and greener companies.“We have seen that others, whether the United States of America, South Korea, Japan or China, have relied very heavily on global champions,” Merkel said. “I believe that this approach is the necessary answer.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- At a factory near Germany’s border with the Czech Republic, Volkswagen AG’s ambitious strategy to become the global leader in electric vehicles is coming up against the reality of manufacturing during a pandemic.The Zwickau assembly lines, which produce the soon-to-be released ID.3 electric hatchback, are the centerpiece of a plan by the world’s biggest automaker to spend 33 billion euros ($36 billion) by 2024 developing and building EVs. At the site, where an East German automaker built the diminutive Trabant during the Cold War, VW eventually wants to churn out as many as 330,000 cars annually. That would make Zwickau one of Europe’s largest electric-car factories—and help the company overtake Tesla Inc. in selling next-generation vehicles.But Covid-19 is putting VW’s and other automakers’ electric ambitions at risk. The economic crisis triggered by the pandemic has pushed the auto industry, among others, to near-collapse, emptying showrooms and shutting factories. As job losses mount, big-ticket purchases are firmly out of reach—in the U.S., where Tesla is cutting prices, more than 36 million people have filed for unemployment since mid-March. Also, the plunge in oil prices is making gasoline-powered vehicles more attractive, and some cash-strapped governments are less able to offer subsidies to promote new technologies.Even before the crisis, automakers had to contend with an extended downturn in China, the world’s biggest auto market, where about half of all passenger EVs are sold. Total auto sales in China declined the past two years amid a slowing economy, escalating trade tensions, and stricter emission regulations. EV sales are forecast to fall to 932,000 this year, down 14% from 2019, according to BloombergNEF. The drop-off is expected to stretch into a third year as China's leaders have abandoned their traditional practice of setting an annual target for economic growth, citing uncertainties. Economists surveyed by Bloomberg expect just 1.8% GDP growth this year.The global market contraction raises the prospect of casualties. French finance minister Bruno Le Maire has warned that Renault SA, an early adopter of electric cars with models like the Zoe, could “disappear” without state aid. Even Toyota Motor Corp., a hybrid pioneer when it first introduced the Prius hatchback in 1997, is under pressure. The Japanese manufacturer expects profits to tumble to the lowest level in almost a decade.Automakers who for years have invested heavily in a shift to a high-tech future—including autonomous vehicles and other alternative energy-based forms of transportation such as hydrogen—now face a grim test. Do their pre-pandemic plans to build and sell electric cars at a profit have any chance of succeeding in a vastly changed economic climate? Even as Covid-19 has obliterated demand, for the car makers most committed to electric, there’s no turning back.“We all have a historic task to accomplish,” Thomas Ulbrich, who runs Volkswagen’s EV business, said when assembly lines restarted on April 23, “to protect the health of our employees—and at the same time get business back on track responsibly.”Volkswagen Pushes AheadGlobal EV sales will shrink this year, falling 18% to about 1.7 million units, according to BloombergNEF, although they’re likely to return to growth over the next four years, topping 6.9 million by 2024. “The general trend toward electric vehicles is set to continue, but the economic conditions of the next two to three years will be tough,” said Marcus Berret, managing director at consultancy Roland Berger.Volkswagen’s Zwickau facility became the first auto plant in Germany to resume production after a nationwide lockdown started in March. Before restarting, the company crafted a detailed list of about 100 safety measures for employees, requiring them to, among other things, wear masks and protective gear if they can’t adhere to social-distancing rules.The cautious approach has reduced capacity—50 cars per day initially rolled off the Zwickau assembly line, roughly a third of what the plant manufactured before the coronavirus crisis. (VW said Wednesday that daily output had risen to 150 vehicles, with a plan to reach 225 next month.) Persistent software problems also have plagued development of the ID.3, one of 70 new electric models VW group is looking to bring to market in the coming years. Still, Ulbrich and VW CEO Herbert Diess over the past three months have reaffirmed Volkswagen’s commitment to electrification. “My new working week starts together with Thomas Ulbrich at the wheel of a Volkswagen ID.3 - our most important project to meet the European CO2-targets in 2020 and 2021,” Diess wrote in a post on LinkedIn in April. “We are fighting hard to keep our timeline for the launches to come.”Diess has described the ID.3 as “an electric car for the people that will move electric mobility from niche to mainstream.” Pre-Covid, the company had anticipated that 2020 would be the year it would prove its massive investments and years of planning for electric and hybrid models would start to pay off.A more pressing worry that could hamper VW’s ability to scale up production is its existing inventory of unsold vehicles. The cars need to move to make room for new releases, but sales are down as consumers are tightening their spending. One response has been to offer improved financing in Germany, including optional rate protection should buyers lose their jobs. VW also has adopted new sales strategies first used by its Chinese operations, such as delivering disinfected cars to customer homes for test drives, and expanding online commerce.Other German automakers are similarly pushing ahead with EV plans. Daimler AG is sticking to a plan to flank an electric SUV with a battery-powered van and a compact later this year. BMW AG plans to introduce the SUV-size iNEXT in 2021 as well as the i4, a sedan seeking to challenge Tesla’s best-selling Model 3.A potential obstacle for all these companies—apart from still patchy charging infrastructure in many markets—is the availability of batteries. Supply bottlenecks appear inevitable given that the number of electric car projects across the industry outstrip global battery production capacity. And boosting cell manufacturing is a complicated task.China's (Weakened) EV Dominance For VW and others, the first big test of EVs’ appeal in a Covid-19 world will come in China. Diess has referred to China as “the engine of success for Volkswagen AG.” VW group deliveries returned to growth year-on-year last month in China, while all other major markets declined.Not long ago, China appeared to be leading the world toward an electric future. As part of President Xi Jinping’s goal to make the country an industrial superpower by 2025, the government implemented policies that would boost sales of EVs and help domestic automakers become globally competitive, not just in electric passenger cars but buses, too.With the outbreak seemingly under control in much of the country, China is seeing some buyers return to the showrooms, but demand for passenger cars is likely to fall for the third year in a row, putting startups like NIO Inc. at risk and hurting more-established players like Warren Buffett-backed BYD Co., which suffered from a 40% year-on-year vehicle sales decline in the first four months of 2020.The Chinese auto market may shrink as much as 25% this year, according to the China Association of Automobile Manufacturers, which before the pandemic had been expecting a 2% decline. EV sales fell by more than one-third in the second half of 2019.NIO, the Shanghai-based startup that raised about $1 billion from a New York Stock Exchange initial public offering in 2018 but lost more than 11 billion yuan ($1.5 billion) last year, was thrown a much-needed lifeline when a group of investors, including a local government in China’s Anhui Province, offered 7 billion yuan last month.Other Chinese manufacturers are counting on support from the government, too, including tax breaks and an extension to 2022 of subsidies, originally scheduled to end this year, to make EVs more affordable.For now, the government will also look to help makers of internal combustion engine vehicles, at least during the worst of the crisis, said Jing Yang, director of corporate research in Shanghai with Fitch Ratings. But, she said, “over the medium-to-long term, the focus will still be on the EV side.”America is Tesla CountryCompanies can’t count on that same level of support from President Donald Trump in the U.S., where consumers who love their SUVs and pickup trucks have largely steered clear of electric vehicles other than Tesla’s.The U.S. lags China and Europe in promoting the production and sale of EVs, and that gap may widen now that Americans can buy gas for less than $2 a gallon.“When you’re digging out of this crisis, you’re not going to try to do that with unprofitable and low-volume products, which are EVs,” said Kevin Tynan, a senior analyst with Bloomberg Intelligence.Weeks after announcing plans to launch EVs for each of its brands, General Motors Co. delayed the unveiling of the Cadillac Lyriq EV originally planned for April. Then on April 29, the company said it would put off the scheduled May introduction of a new Hummer EV. The models are part of CEO Mary Barra’s strategy to spend $20 billion on electrification and autonomous driving by 2025, to try to close the gap with Tesla.In another move aimed at winning over Tesla buyers, Ford Motor Co. unveiled its electric Mustang Mach-E last November at a splashy event ahead of the Los Angeles Auto Show. The highly anticipated model had been scheduled to debut this year. Ford has not officially postponed the release, but the company has said all launches will be delayed by about two months, potentially pushing the Mach-E into 2021.Elon Musk, whose cars dominate the U.S. electric market, cut prices by thousands of dollars overnight. The Model 3 is now $2,000 cheaper, starting at $37,990. The Model S and Model X each dropped $5,000.Musk engaged in a high-profile fight with California officials this month over Tesla’s factory in Fremont, California, which had been closed by shutdown orders Musk slammed as “fascist.” In a May 11 tweet, he said the company was reopening the plant in defiance of county policy. On May 16, Tesla told employees it had received official approval.During most of the shutdown in California, the company managed to keep producing some cars thanks to better relations with local officials regulating its other factory, in Shanghai. That plant closed as the virus spread from Wuhan in late January, but the local government helped it reopen a few weeks later in early February.First Zwickau, Then the WorldThe ID.3’s new electric underpinning, dubbed MEB, is key to VW’s strategy to sell battery-powered cars on a global scale at prices that will be competitive with similar combustion-engine vehicles. Automakers typically rely on such platforms to achieve economies of scale and, ultimately, profits. MEB will be applied to purely electric vehicles across all of the company’s mass-market brands, including Skoda and Seat.VW said it spent $7 billion developing MEB after Ford last year agreed to use the technology for one of its European models. Separately, the group’s Audi and Porsche brands are built on a dedicated EV platform for luxury cars that the company says will be vital in narrowing the gap with Tesla.VW plans to escalate its electric-car push by adding two factories, near Shanghai and Shenzhen, that it says could eventually roll out 600,000 cars annually, more cars than Tesla delivered globally last year.While China is the initial goal, making a dent in Europe and the U.S. is the long-term one. Like China, Europe had been tightening emissions regulations significantly before the pandemic. New rules to reduce fleet emissions will gradually start to take effect this year, effectively forcing most manufacturers to sell plug-in hybrids and purely electric cars to avoid steep fines.Because of the mandates, Europe’s commitment to electrification isn’t going away, said Aakash Arora, a managing director with Boston Consulting Group. “In the long term, we don’t see any relaxation in regulation,” he said.For VW, this crisis wouldn’t be the first time it started a new chapter in difficult times. Diess saw an opportunity coming off the manufacturer’s years-long diesel emissions scandal that cost the company more than $33 billion to win approval for the industry’s most aggressive push into EVs. When VW unveiled the ID.3, officials compared its historic role to the iconic Beetle and the Golf, not knowing that this might hold in unintended ways: The Beetle arose from the ashes of World War II, and the Golf was greeted by the oil-price shock in the 1970s.“We have a clear commitment to become CO2 neutral by 2050,” VW strategy chief Michael Jost said, “and there is no alternative to our electric-car strategy to achieve this.”(Updates with Tesla price cut starting in the third paragraph. An earlier version corrected the spelling of Berret in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Daimler AG <DAIGn.DE> plans to invest in Farasis Energy's planned $480 million (393.06 million pounds) IPO, aiming to ensure a stable supply of batteries from the Chinese firm as it ramps up electric vehicle production, three people familiar with the matter said. The two firms struck a deal last year for Farasis to supply Daimler with lithium-ion battery cells and Farasis is building a factory in Germany. Daimler and Farasis declined to comment on the potential IPO investment.
China's Geely will explore the possibility of deeper cooperation with German luxury automaker Daimler AG <DAIGn.DE>, its Chairman Li Shufu said on Friday. Geely built a 9.69% stake in Stuttgart-based Daimler in 2018. Geely would also "launch several new products and services to our markets around the world" this year, Li said in a statement to Reuters.
According to the China Passenger Car Association, Tesla only sold 3,635 Model 3 vehicles in China last month, down 64% from sales in March. Yahoo Finance’s Emily McCormick joins Seana Smith to discuss.
(Bloomberg) -- Tesla Inc. asserts that restarting its operations in the midst of the coronavirus pandemic doesn’t make the company an outlier, nor is it going against the grain.But its chief executive officer’s handling of the health crisis has been anything but ordinary. Tesla sued the county blocking its car plant from reopening, with Elon Musk calling the local health officer -- a former infectious diseases professor with a master’s degree in public health -- “unelected & ignorant.” He threatened to move Tesla’s headquarters out of California, warning that all its manufacturing may leave the state, too.The weekend flare-up was without precedent in the three months since the first confirmed Covid-19 death in the U.S. -- a resident of Santa Clara County, home to Tesla’s headquarters and neighbor to its factory in Fremont, California. As the nation’s death toll approaches 80,000, Musk has emerged as arguably the loudest voice in corporate America advocating for the economy to reopen.“I’m not messing around,” the 48-year-old billionaire tweeted after Tesla filed its lawsuit against Alameda County. “Absurd & medically irrational behavior in violation of constitutional civil liberties, moreover by *unelected* county officials with no accountability, needs to stop.”Tesla shares fell 2.7% as of 7:20 a.m. Monday in New York, before the start of regular trading. The stock has soared 96% this year.Auto RestartTesla does have a case to make for being unexceptional within the auto industry. Ford Motor Co., Fiat Chrysler Automobiles NV, Toyota Motor Corp. and others also have set dates for restarting their operations, only to then call off those plans due to shutdown orders.Daimler AG has reopened a Mercedes-Benz plant in Alabama, as has its German peer BMW AG in South Carolina. Toyota and Honda Motor Co. will resume work at U.S. factories this week, followed by General Motors Co., Ford and Fiat Chrysler on May 18.But no carmaker other than Tesla has publicly attacked local health officials or threatened states over shelter-in-place measures that virtually wiped out North American vehicle production for more than a month.Read more: What you need to know about the U.S. auto industry’s restartDuring GM’s first-quarter earnings call on May 6, CEO Mary Barra said the automaker was having “very constructive” conversations with government officials.“We’re in a good position as we talk to country leaders and state leaders,” she said. “We’ll continue to have dialogue with our unions, as well as with the government leaders, to do the right thing.”Bay Area ExceptionTesla’s handling of the health crisis also has been unique among companies in the San Francisco Bay area. Ajay Shah, the CEO of Smart Global Holdings Inc., last month credited Alameda for allowing the manufacturer of memory modules to continue operating.“We’ve had discussions with the Alameda County health authorities and show them exactly what we’re doing and they’ve been satisfied with it,” Shah said on an April 7 earnings call.Earlier: Tesla’s drive to stay open irked officials who saw health riskFaceboook Inc. CEO Mark Zuckerberg, whose staff can more easily work from home than Musk’s manufacturing employees, has voiced his concern about lifting stay-home measures too soon.“While there are massive societal costs from the current shelter in place restrictions, I worry that reopening certain places too quickly before infection rates have been reduced to very minimal levels will almost guarantee future outbreaks and worse longer-term health and economic outcomes,” Zuckerberg said during Facebook’s April 29 earnings call.Back to WorkOn the same day, Musk called shutdown orders “fascist” and unconstitutional, likening them to forcible imprisonment and saying they were “breaking people’s freedoms in ways that are horrible and wrong.” His comments were embraced by some Silicon Valley venture capitalists and political conservatives.Tesla released a 38-page “Return to Work Playbook” late Saturday laying out the safety protocols it will adopt at all of its facilities. While the company will disinfect work areas, enforce social-distancing precautions and provide personal-protective equipment, among other measures, the document doesn’t include any plans to test workers other than by checking their temperatures.Alameda officials have said more testing needs to come online and that Covid-19 case counts need to drop before they’ll feel comfortable moving to the next phase of reopening.Tesla has signaled it may disregard Alameda’s order, saying in a blog post Saturday that it had “started the process of resuming operations.” Several Fremont workers shared text messages with Bloomberg News in which supervisors were calling them back to the factory.“Our employees are excited to get back to work, and we’re doing so with their health and safety in mind,” the company said.(Updates with pre-market trading in the fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Yahoo Finance's Rick Newman joins Jen Rogers and Andy Serwer to discuss the possibility of a bailout for the auto industry amid the coronavirus pandemic.
The world’s big carmakers have taken a beating as lockdowns shuttered plants and dealerships. But Wednesday (April 29) saw two of Europe’s heavyweights offer some hope. After a tough few months, Volkswagen says it still expects to be in profit for the full year. Earlier this month the group said that sales were down by 23%, with operating profit down by four-fifths. But the German giant this week restarted some production, marking the event with an image of its logo munching the coronavirus. Wednesday’s comments suggest it does see light at the end of the tunnel. Meanwhile Daimler says it expects a rise in full-year profits for its key Mercedes-Benz brand. Though that is a bit of a technicality, with last year’s numbers weighed down by hefty one-off charges. Analysts also cheered news that it hadn’t yet seen any spike in defaults by customers who bought cars on finance deals. The firm is sticking to its dividend plans, and says it doesn’t need any state-backed loans. The news from the automakers was among the positives on a mixed day for stocks. Daimler shares were up over 2 percent in early trade, with VW up around 1%. Both strongly outpaced the broader market.
Daimler <DAIGn.DE> said it expected the full-year operating profit of its Mercedes-Benz Cars & Vans division to be above the prior-year level but warned that the coronavirus pandemic will push the group to an operating loss in the second quarter. Anticipating a higher rate of defaults among customers, the carmaker hiked risk provisions for delinquencies among customers who leased or bought Mercedes-Benz cars to 448 million euros($486.71 million), even as default rates have not yet started to spike. "There is nothing cheering in the auto numbers we have seen so far across the industry but Daimler seems to have had a decent start to Q1 and managed working capital better than we had feared," Jefferies analyst Philippe Houchois said.
Mercedes-Benz maker Daimler <DAIGn.DE> has seen business stabilise in China after the country ended coronavirus lockdowns, a senior manager at the German carmaker told a newspaper on Sunday. Mercedes-Benz delivered a total of approximately 477,400 passenger cars worldwide between January and March. The report did not say how many of those went to customers in China, who bought 694,200 Mercedes-Benz cars last year, 29% of total sales.
(Bloomberg) -- Some of the world’s largest companies have advised against the use of Zoom Video Communications Inc.’s conferencing app, fueling a growing backlash against a service that shot to prominence during the Covid-19 pandemic.Daimler AG, Ericsson AB and NXP Semiconductors NV are among a wave of companies forbidding or warning employees against using Zoom because of concerns about its security, according to people familiar with their operations. At Bank of America Corp., staff need to get permission to use the service. They join corporations like Tesla Inc. and government agencies from Taiwan to Singapore that have banned the app’s use, though the city-state has since backtracked. India has deemed Zoom an unsafe platform and initiated a public contest to develop a secure homegrown video-chat alternative.Zoom emerged during the global coronavirus lockdown as a home for everything from virtual cocktail hours to cabinet meetings and classroom learning. It passed the milestone of 300 million daily meeting participants this week, having never crossed 10 million before the start of this year. Its share price rose to another record Thursday. However, cybersecurity researchers warn hackers can exploit flaws in the software to eavesdrop on meetings. Weak protection has given rise to the phenomenon of “Zoombombing,” where uninvited trolls gain access to a video conference to harass participants.Daimler wrote “the software has various security gaps and data protection problems” in a memo to employees reviewed by Bloomberg News. The automaker, employer to close to 300,000 people globally, wasn’t a Zoom corporate customer before but is now explicitly prohibiting the video-calling app, pointing workers to Microsoft Teams as a more trustworthy alternative.“Daimler prohibits the use of Zoom for corporate content until further notice,” company spokesman Christoph Sedlmayr said in an emailed statement.Zoom CEO Eric Yuan has focused on bolstering the security of his videoconferencing application with the goal of winning back customers who abandoned the company. Zoom is working on improving its encryption and argues that many of its problems stem from the fact the app was initially geared toward enterprise clients with their own IT security teams instead of the broad consumer app it’s become. Singapore’s government banned Zoom’s usage by schools but later lifted that moratorium after putting in place security safeguards.NXP, a provider of wireless communications technology, uses Microsoft Corp.’s Teams internally and recently banned the use of Zoom with external parties, one person said, asking not to be identified discussing internal matters. Networking giant Ericsson also relies on Teams, previously Skype for Business, for remote meetings and now asks staff not to use Zoom. If clients or partners want to use the app, Ericsson staff will need to make sure the outside parties understand and are willing to accept the risks of using Zoom before proceeding with a meeting, said another person familiar with the measures.An NXP spokesman declined to comment, while Ericsson said in an emailed statement it has internally approved apps and guidelines for meetings, without elaborating.“A large number of global institutions ranging from the world’s largest financial services companies, to leading telecommunications providers, government agencies, universities and others have done exhaustive security reviews of our user, network and data center layers and confidently selected Zoom for complete deployment,” said a Zoom spokeswoman via email. “We are proud to be helping these customers maintain business continuity in this challenging and unprecedented time.”Bank of America doesn’t typically use Zoom internally because it has other video conferencing tools, and in cases where clients seek to communicate via Zoom, bankers need to go through an approval process to use it, a person familiar with the situation said. Of the bank’s 208,000 employees, more than 175,000 are working from home, Chief Executive Officer Brian Moynihan said at the company’s annual shareholder meeting Wednesday.A Bank of America spokesperson declined to comment.(Updates Zoom share price in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Global auto makers continue to count the cost of halted sales and production. South Korea's Hyundai said on Thursday (April 23) first-quarter net profit slumped 44% to its lowest level for the quarter in a decade. Net profit for January-March was $376 million - well below forecasts. As distancing measures were implemented, consumer demand began tumbling in January. First in China, then in South Korea and from March in Europe and the U.S. Hyundai has suspended production at three of its eight plants globally. Its shares rose slightly after the results, but were underperforming the wider market. Also on Thursday, Germany's Daimler said it expects to report a near 70% plunge in a key first-quarter earnings figure. As customers have been forced to shun its Mercedes-Benz car showrooms, Daimler reported preliminary adjusted Q1 earnings of $777 million. The forecast provides further evidence of the damage inflicted on the market. Passenger car sales tumbled by more than 50% in Europe's major markets last month. Renault is in talks with the French government to secure a state-backed loan worth several billion euros to shore up its liquidity. The firm says it has enough liquidity to see it through the turmoil, but was lining up credit lines and aid when possible. Its shares rose as much as 3.5% in early trading. Renault has suspended its outlook for 2020, but posted a 19.2% drop in first-quarter revenue. It says it will resume production in Europe where possible and cut costs in areas such as advertising.
German car and truck maker Daimler <DAIGn.DE> reported a plunge of nearly 70% in first-quarter operating profit on Thursday due to the coronavirus pandemic and warned that the cash flow it uses to pay dividends would fall this year. The maker of Mercedes-Benz vehicles suffered as customers shunned car and truck showrooms during coronavirus lockdowns and analysts said the slide in Daimler's valuation over the past year put more pressure on it to deepen alliances with rivals. Daimler said preliminary adjusted first-quarter earnings before interest and tax (EBIT) slumped 68.9% to 719 million euros (628.24 million pounds) while both vehicle sales and revenue would fall this year.
Mercedes-Benz is ramping up engine production at its plant in Bad Cannstatt, Stuttgart, this week after Germany eased lockdown measures in a sign Europe's largest economy is getting back to work after the coronavirus brought the country to a standstill. Daimler <DAIGn.DE>, parent company of Mercedes-Benz, is gradually opening its plants in Europe using lessons learned from resuming production at its plant in China, to ensure that the coronavirus does not spread among workers in Germany. "Anywhere we can not guarantee a 1.5 metre distance, employees are required to wear face masks," said Frank Deiss, vice president of powertrain production.
(Bloomberg) -- Ligado Networks LLC overcame powerful opposition to its proposed broadband network with some help from inside-the-Beltway figures close to President Donald Trump’s White House.As late as Friday, the Defense and Transportation departments said they were “strongly opposed” to Ligado’s plan to use airwaves they feared would interfere with global positioning system navigation.The Democratic and Republican leaders of both armed services committees also called last week for rejecting Ligado’s plan. And in March, agencies including the departments of Interior, Commerce, Justice and Energy and Homeland Security all signed a letter opposing the company’s plan.But on Monday the U.S. Federal Communications Commission, led by a Trump-appointed chairman, Ajit Pai, reversed itself and signed off on the plan anyway, realizing a vision set out by hedge fund manager Philip Falcone a decade ago.The Reston, Virginia-based company prevailed with a costly persuasion campaign overseen by a blue-chip roster of lobbyists and board members. Since emerging from bankruptcy in 2016, Ligado has spent about $7.9 million on lobbying, including more than $2.5 million during 2019, according to a Bloomberg News tally of Congressional disclosures.During the first quarter of 2020 alone, Ligado spent $730,000 on its advocacy, a 20% increase over the previous three-month period, according to the documents.The company engaged Matt Schlapp, chairman of the American Conservative Union and husband to Mercedes Schlapp, an aide in the Trump White House now working on his re-election campaign. Other figures in its camp include Jeff Miller, a prolific fundraiser for Trump.Ligado cast its service as a fit with the Trump administration’s push for deploying fast, advanced 5G service -- and doing so ahead of China.The FCC’s engineering analysis found that Ligado’s network could be deployed “to advance our country’s economic and security interests while fully protecting GPS,” Doug Smith, the company’s chief executive officer, said in an emailed statement.That argument won it the support of Attorney General William Barr, who last week called the company’s airwaves plan “essential if we are to keep our economic and technological leadership and avoid forfeiting it to Communist China.”Secretary of State Mike Pompeo called approval of Ligado’s plan “vital to our national security.”Ligado received FCC approval more than eight years after the agency blocked its proposed wireless network over concerns the service would interfere with GPS. That led to a trip through bankruptcy for the company, founded as LightSquared by Falcone who then lost control to investors.The company emerged from bankruptcy with backers including JPMorgan Chase & Co. and private equity firms Centerbridge Capital Partners LP and Fortress Investment Group LLC. The event brought with it a new board, a new name and a modified plan that Ligado said would resolve interference concerns from the Defense Department and other GPS users including U.S. airlines.At the American Conservative Union, Schlapp, a former White House political director under President George W. Bush, leads a group known for its annual CPAC event that draws speakers including Trump, Vice President Mike Pence -- as well as FCC commissioners.Mercedes Schlapp, was director of strategic communications for the White House from late 2017 through last July.Matt Schlapp leads a lobbying firm, Alexandria, Virginia-based Cove Strategies, that says it “specializes in established relationships and connections to Republican officeholders and center-right influencers.”Cove has received $200,000 for its work on behalf of Ligado since September 2018, according to disclosures. In the documents, Cove listed no contacts aside from individuals in the Executive Office of the President.Cove didn’t respond to a request for comment on their efforts on behalf of Ligado.Since early 2019, Miller has raised almost $2.8 million for Trump Victory, a joint fundraising venture between Trump’s re-election campaign and the Republican National Committee. Over the same time, Miller has written at least $77,300 of his own checks to the president’s campaign committee, the RNC and Trump Victory.Ligado has paid his firm, Miller Strategies, at least $390,000 since signing on as its client last February. Its efforts were focused almost exclusively on the offices of the president and vice president, according to public records.Lobbying ShopsLigado has nine other lobbying shops working on its behalf, according to disclosures filed with Congress. Ashley Durmer, its in-house lobbyist, didn’t respond to a request for comment on the effort.At the end of February, Ligado hired David Urban, a longtime Trump ally who runs the lobbying firm American Continental Group and has been a vocal defender of the president as a CNN political commentator, to work on its behalf. Despite only working for the company for a little more than a month, the company paid American Continental Group $100,000, according to disclosure forms released Monday.Urban, who didn’t respond to a request for comment, was a member of the West Point class of 1986 along with Pompeo, the secretary of state, and Defense Secretary Mark Esper. Urban lobbied the White House, the Pentagon and the State Department, according to disclosures.Board members for Ligado include Reed Hundt, a former FCC chairman; Ivan Seidenberg, former chairman of Verizon Communications Inc.; and Timothy Donahue, former executive chairman of Sprint Corp.Hundt said the FCC has a “proud legacy of showing bipartisan leadership in times of crisis, looking ahead to strengthen our communications infrastructure.”Approval of Ligado’s plan will help extend U.S. mobile leadership, Hundt said in a statement.The Department of Homeland Security issued a statement Tuesday that said it “remains concerned that an approval creates a high degree of uncertainty” for GPS users. The department said it would watch for interference.Falcone, who was was forced from the board in 2014 amid the bankruptcy proceedings, said the FCC action “is welcome news that has been 10 years in the making.”Falcone’s Harbinger Capital Partners remained a minority investor as the company left bankruptcy, the FCC said.“We look forward to seeing Ligado execute on its plan and support the development of 5G,” Falcone said in a statement.(Updates with statement from Department of Homeland Security in 27th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Daimler and Volvo Trucks have agreed to join forces to develop, produce and sell fuel cell systems for heavy-duty vehicles, in a sign that the coronavirus crisis is accelerating consolidation. "The common goal is for both companies to offer heavy-duty vehicles with fuel cells for demanding long-haul applications in series production in the second half of the decade," Daimler <DAIGn.DE> and Volvo <VOLVb.ST> said on Tuesday. The joint venture agreed by the two companies will operate as an independent and autonomous entity, with Daimler Truck AG and the Volvo Group continuing to be competitors in all other areas of business, they said in a joint statement.
Swedish truck maker Volvo <VOLVb.ST> said on Tuesday it had signed a deal with German rival Daimler <DAIGn.DE> to set up a joint venture to develop and produce fuel cell systems for heavy-duty vehicles. Daimler will consolidate all its current fuel cell activities in the joint venture. Volvo said in a statement it will acquire 50% in the joint venture for the sum of approximately 600 million euros (24.26 million pounds) on a cash and debt free basis.
German car factories will restart production from next week, after an easing in restriction measures across the country. Carmakers including Volkswagen and Mercedes-Benz have been implementing new social distancing measures to ensure the safety of their employees on the production line. VW says it has adapted to ensure that workers keep 1.5 meters apart and will stagger shifts to change the way workers interact. First to reopen will be Volkswagen’s plant in the German town of Zwickau and then in Bratislava. Others across Europe and the United States will ramp up production from the end of the month, before factories in South Africa and South America come back online in May. Almost all of VW’s plants in China have already resumed production and none have reported any new health concerns. Mercedes-Benz parent Daimler also said that three of its German plants will resume production next week. German Chancellor Angela Merkel said Wednesday (April 15) that the country has achieved a "fragile intermediate success" to emerge from lockdown and would also start partial reopening of shops next week and schools from May 4.
Europe led world stock markets back to higher ground on Thursday as tentative moves to reopen parts of the some of its larger coronavirus-hit economies and a bounce in oil offset some truly dismal global economic data. The pan-European STOXX 600 index batted off equally grim UK retail figures and more warnings of countries facing double-digit recessions to rise 1% , while Wall Street futures were 0.8% up despite another sky-high jump in U.S. jobless claims. In the currency and bond markets both the euro and Italy's bonds got a lift while speculation mounted that the European Central Bank was looking to prevent further stress in the country's debt markets where debt-to-GDP now looks set to top 150% this year.
China's auto market, the world's biggest, will gradually recover and remain stable for a long period despite short-term pressure from the coronavirus epidemic, officials said on Thursday. The statement came as executives from Mercedes-Benz <DAIGn.DE> and Volkswagen <VOWG_p.DE> said demand is rebounding in China after restrictions on social life were eased and dealerships reopened. China's auto sales dropped 79% from a year earlier in February due to the epidemic.