|Bid||814.00 x 200|
|Ask||814.00 x 400|
|Day's Range||812.00 - 820.00|
|52 Week Range||772.00 - 856.00|
|Beta (5Y Monthly)||0.56|
|PE Ratio (TTM)||11.57|
|Earnings Date||Mar. 19, 2020|
|Forward Dividend & Yield||4.80 (0.59%)|
|Ex-Dividend Date||May 15, 2019|
|1y Target Est||N/A|
(Bloomberg) -- Downtown Beirut often resembles a ghost town these days. When it does get busy, it’s usually because anti-government protesters have gathered, chanting slogans such as: “Eat the rich!”One of the targets of their anger has been Solidere, which rebuilt that part of Lebanon’s capital after a devastating civil war ended thirty years ago.Yet the company’s shares have soared since the demonstrators first took to the streets in October, even as the rest of the stock market sinks, the local currency tumbles on the black market and the cash-strapped government weighs defaulting on its Eurobonds.Once a bellwether for political stability in the Middle Eastern country, Solidere’s surge now reflects the desperation of Lebanese as the economy unravels.They’re scrambling to protect their savings from potential banking collapses or their dollar deposits from being converted into Lebanese pounds if the foreign-exchange squeeze gets more acute. Real estate and Solidere shares, which trade in dollars, are suddenly popular.“You have a new class of investors,” said Faysal Barbir, head of fixed income at FFA Private Bank in Beirut. “These investors were bank depositors that are now looking to diversify, and they have very limited options.”Solidere’s main shares have climbed 46% since touching a 15-year low in October, giving it a market valuation of $1.4 billion, the biggest in Lebanon. Over the same period the country’s equity gauge, the Blom Stock Index, has lost 21%, the most in the world.The protesters -- many of them young and jobless -- accuse the company of gentrifying central Beirut, which is filled with luxury shops such as Louis Vuitton, Hermes and Rolex, and pushing out working-class people. At least until the troubles started, two-bed flats overlooking a marina Solidere built would sell for more than $1 million. Carlos Ghosn, the former chief executive of Nissan Motor Co. and now international fugitive, lives barely a mile away.The company’s closely connected to the political establishment. It was founded by billionaire and then-Prime Minister Rafic Hariri. He was assassinated with a car bomb in 2005 in central Beirut. His son, Saad, also led a government, until the protests forced him to step down.Getting ScaredDespite Solidere’s unpopularity, it is seen as a safe bet compared to other stocks such as banks.Local lenders are under increasing strain. They’ve restricted customers’ ability to withdraw dollars and transfer money abroad. The government’s pressured them into lowering the interest rates they get on some sovereign bonds. Their shares are among the worst performers on the Lebanese bourse this year -- BLOM Bank SAL and Bank Audi SAL are each down more than 40%.Solidere made a $42 million profit in the first half of 2019, its most recent financial statements show, compared with a loss of almost $100 million a year earlier.“We are seeing quite a bit of demand on land,” said Ghazi Youssef, a Solidere board member and former lawmaker. “A lot of people are trying to park their money in real estate.”Still, Solidere’s hardly immune from Lebanon’s economic strife. Its return to profit was mostly down to a decision to increase land sales to repay bank loans. It hasn’t paid a dividend to shareholders in more than five years, though it plans to do so again in 2021, Youssef said.For now, though, it’s about the only choice for Lebanese with money to spare.“People are getting scared,” said Raja Makarem, chief executive of Ramco, a real estate advisory firm in Beirut. “Some people are rushing out of the banking system to go to real estate, thinking this will be a good temporary shelter for them until things get better.”\--With assistance from Filipe Pacheco.To contact the reporters on this story: Abeer Abu Omar in Dubai at firstname.lastname@example.org;Dana Khraiche in Beirut at email@example.comTo contact the editors responsible for this story: Alex Nicholson at firstname.lastname@example.org, Paul Wallace, Paul AbelskyFor 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) -- A profit bonanza for Egyptian banks is ripening the industry for acquisitions. If only there were more willing sellers.One buyer found a way in. First Abu Dhabi Bank PSJC is in talks for the Cairo-based unit of Lebanon’s Bank Audi SAL, which needs cash to cope with an economic crisis back home. The bid is the first for an Egyptian bank by a Gulf lender in seven years, as companies seek new markets because of lower oil prices and rising geopolitical tensions.Egyptian banks “have excessively strong balance sheets, they have very strong amounts of cash,” said Allen Sandeep, director of research at Naeem Brokerage in Cairo. “It’s more of a question of who’s willing to sell than who’s willing to buy. They’re rarely up for sale.”The nation’s central bank is no longer issuing licenses, making an acquisition the only way of gaining a foothold in the Middle East’s fastest growing economy, according to data compiled by Bloomberg.The only other banks in play among the nation’s 38 registered lenders are both state-owned institutions. United Bank, which has been involved in a years-long process of being sold, and Banque du Caire, which plans to complete an initial public offering by the end of this quarter for as much as 30% of its stock.Reforms undertaken by President Abdel-Fattah El-Sisi since his election in 2014 helped revive economic growth that had stalled in the wake of the 2011 uprising. Soaring interest rates after the devaluation of the currency prompted an inflow of money into the local debt market, with heavy buying by banks in Treasury bills and bonds sending their profitability to record highs.Still, there is reason to be cautious even though the outlook for the banking industry over next 12 to 18 months is stable, Moody’s Investors Services said in a note dated Jan. 22. In large part, that caution is linked to four interest rate cuts by the central bank last year that have lowered borrowing rates and spurred consumer lending.Untested new loans and “a borrower-friendly legal framework will leave banks vulnerable to a future economic downturn,” Moody’s said. Rising costs and higher taxes may also eventually erode profit margins.Also fueling demand for loans is the central bank’s decision to raise the percentage of monthly income that can be allocated for consumer loans to 50% in December. There’s been a 41% increase in total non-governmental loans in the three years through June 2019, according to the Central Bank of Egypt.Egyptian banks “have been generating all-time high profits every year on the back of the high interest-rate environment and the high yield on government securities,” said Monsef Morsy, the head of financial analysis at CI Capital in Cairo. “We have a very high conviction about banks sustaining the level of profitability for the coming two years.”\--With assistance from Tarek El-Tablawy and Mirette Magdy.To contact the reporter on this story: Farah Elbahrawy in Dubai at email@example.comTo contact the editors responsible for this story: Stefania Bianchi at firstname.lastname@example.org, ;Michael Gunn at email@example.com, Vernon WesselsFor 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.
Skoda is hoping government moves to drag regulations for cars sold in India up to developed market standards will help turn around its fortunes in a market where it has stalled. The Volkswagen-owned Czech carmaker has been tasked with helping its German parent achieve a 2025 target of a 5% market share in India, which is dominated by home-grown automakers including Maruti Suzuki, Tata Motors and Mahindra & Mahindra.
(Bloomberg) -- Volvo Car AB is counting on tripling sales of plug-in hybrid models this year as a way to avoid paying what could amount to hundreds of millions of euros in European penalties for the sale of its more polluting yet popular combustion-engine SUVs.A fifth of all new Volvos sold in 2020 should be plug-ins or all-electric, compared with just 6.5% of the total last year, according to Chief Executive Officer Hakan Samuelsson. That would see hybrid sales rising to more than 150,000 based on the pace of growth in 2019. The company is only planning to start shipping its first fully-electric model -- the XC40 Recharge -- later this year.The stakes are high for Volvo’s electric strategy because conventional SUVs made up more than half of sales last year and are largely behind the carmaker’s success since the takeover by China’s Zhejiang Geely Holding Group Co. a decade ago. As Europe’s tough emissions rules kick in, the company could pay dearly. PA Consulting Group puts Volvo’s potential fines for this year at a quarter of annual operating profit.“Paying fines is something that just shouldn’t be in the equation,” Samuelsson said in an interview at the company’s headquarters in Gothenburg, Sweden. “That’s not part of our plans. We want to invest in product development, not in fines to Brussels.”The CEO pointed to Volvo’s goal for half of all cars sold in 2025 to be all-electric and the rest plug-in hybrids. It will relaunch its battery-powered range under the “Recharge” moniker, and while the volume of the electric XC40 will be modest this year, Volvo has the capacity to produce “tens of thousands” next year, he said.The question for Volvo and other conventional manufacturers selling cars in the EU is whether consumers will buy into the plans. Rival automakers including Daimler AG’s Mercedes-Benz, BMW AG and Volkswagen AG’s Audi are also rolling out battery-powered models. The threat of penalities for the companies, dubbed “the 2020 CO2 cliff” by Evercore IS auto analyst Arndt Ellinghorst, comes at a tricky time, when the region’s market is expected to shrink.Read more: Trump Hits EU Carmakers With Trade Threat as Outlook SoursPA Consulting Group earlier this month warned that the EU could inflict 14.5 billion euros ($16.1 billion) in fines on the region’s 13 largest carmakers for surpassing carbon-dioxide targets. The penalties will be calculated on the basis of the average emissions of new car registrations. For Volvo, they could reach 382 million euros by 2021, based on the assumption that only 14% of its sales will be all electric or plug-in hybrids, the consultancy said.Volvo’s bet on plug-ins comes despite criticism of the technology for being a half-measure that doesn’t go far enough in reducing emissions, especially as some users run them on fossil fuels without charging the battery. European sales dropped in the first nine months of last year, but according to a report by BloombergNEF are expected to rise quickly this year due to new models on the market and the emissions crackdown.Volvo’s own studies indicate its plug-ins run on battery 40% to 50% of the time. The company plans to promote recharging by paying owners’ electricity costs.“We don’t feel that there’s any reason to feel guilty about plug-in hybrids,” Samuelsson said. “Plug-ins are necessary for the transition, but it’s also a more long-term solution for those who may not have adequate access to charging.”To contact the reporter on this story: Niclas Rolander in Stockholm at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Tara Patel, Andrew NoëlFor 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.
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we'll...
(Bloomberg) -- For Paul Boudre, U.S. President Donald Trump’s push against Chinese telecommunications companies is less about espionage than the race for technological supremacy.Boudre, the chief executive officer of Soitec, a French maker of semiconductor materials that go into 5G equipment, automobiles, cloud computing and IT infrastructure, says Trump’s actions are aimed primarily at allowing American firms to catch up.“Trump’s kick in the pants for companies is to wake them up and to catch up,” Boudre said in an interview Tuesday in Paris. “Trump is the emissary saying that if nothing is done, we’ll be blown away. That’s why he’s been trying to put a brake on the advances that China has made.”With the “everything-connected” era well under way, the race for a technological edge is intensifying. Trump has repeated railed against China and its companies, including Huawei Technologies Co., citing industrial espionage and intellectual property theft. He has limited their access to the U.S. market and to American suppliers, while also pressing allies from Japan to The Netherlands to review policies toward the Asian giant.The executive push and the infrastructure policy are driving U.S. companies like Cisco, Qorvo Inc., Skyworks Solutions to accelerate their research, a move that could allow American players to get new 5G technologies rolling out potentially in 2021, Boudre said.“Technology has become political today,” he said.Supply ChainsThe U.S. pushed to block the sale of chip manufacturer ASML’s technology to China by sharing a classified intelligence report with the Dutch government, Reuters reported on Monday, citing unidentified people familiar with the matter.Soitec, which has factories and licenses for producing the substrate for handsets and infrastructure in France, Singapore and China, can provide “China Free” material if requested, Boudre said, adding that no such demands have been made by its clients.“What’s happened with Trump is a modification of supply chains,” he said. “Huawei won’t rely exclusively anymore on Qorvo, Skyworks, Qualcomm, because there is a risk. So they’ve developed relations with Murata, STMicro and others.”Developments in the U.S. 5G market this year and next will be a test of whether Trump’s policies were fruitful, Boudre said.“Clearly, two technologies are now being implemented,” with China’s 5G building on 4G, while the U.S.’s 5G that’s more of a new development called “millimeter wave.” The U.S. technology may hit the broad market in 2021, Boudre said, with Cisco driving the innovation. Qualcomm’s modem chip using millimeter wave technology is likely to hit the market in 2020.Soitec RisingWhile Trump’s moves have roiled trade and supply chains for companies building 5G and other technologies, Soitec has been spared, the executive said.The company, whose material goes into almost every smartphone in the world, plans to double sales in the next three years, reaching $1 billion in its fiscal year 2022, and sees revenue tripling in the next five years or so.Founded in the early 1990s in the French Alps, Soitec, which now employs 1,500 people, sits at the heart of the revolution that’s made possible everything from mobile phones, personal assistants like Amazon.com Inc.’s Alexa and Google’s Nest, to 5G antennas and connected devices in cars.In the automotive sector, where Europe has an edge, Soitec is working with Robert Bosch GmbH, Audi AG, STMicroelectronics NV and others to define future components, Boudre said. In artificial intelligence, he sees a shift of computing power from the cloud to devices lifting demand for Soitec’s materials, which allow chipmakers to combine computing, memory and connectivity on a single chip.The extent of all that growth will be evident when the company discusses its long-term plans in June, Boudre said.Soitec’s stock rose 85% in 2019, making it among the top 10 performers of the benchmark SBF120 index.\--With assistance from Caroline Connan and Francine Lacqua.To contact the reporters on this story: Helene Fouquet in Paris at firstname.lastname@example.org;Rudy Ruitenberg in Paris at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Vidya RootFor 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) -- If automakers learned anything from 2019, it’s that the have and have-nots of the U.S. electric-vehicle market are Tesla Inc.’s Model 3 -- and everything else.The Model 3 sold in serious volume, with website InsideEVs.com estimating almost 160,000 sales for the year. Other automakers investing billions to roll out electric models have serious catching up to do.After the Model 3, one has to scroll far down the sales rankings to find Tesla’s Model S and X and offerings from General Motors Co. and Nissan Motor Co. And 2019 was a year to forget for the Chevrolet Bolt and Nissan Leaf, with deliveries dropping 8.9% and 16%, respectively.And what of those pricey European models that are supposed to challenge Elon Musk? Porsche is just starting to sell the much-hyped Taycan and handed over the first 130 units in December. Audi sold 746 of its all-electric e-tron crossovers and tallied just 5,369 units for the year. Jaguar was even further behind, delivering 2,594 I-Pace SUVs.To give Musk a more-serious run for his money, automakers are probably going to need models with longer range before plugging in and charging. Even then, the controversial chief executive officer may still have a leg up by building an allure around the company.“Perhaps Tesla’s best asset is its brand,” Joe Spak, an analyst at RBC Capital Markets, wrote in a report Friday. “Many consumers are evangelical about their vehicles.”(Updates with Porsche, Audi and Jaguar EV sales in the fourth paragraph)\--With assistance from Gabrielle Coppola.To contact the reporter on this story: David Welch in Southfield at email@example.comTo contact the editors responsible for this story: Craig Trudell at firstname.lastname@example.org, Melinda GrenierFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
(Bloomberg) -- Tesla Inc. will start delivering China-built cars on Monday, a major milestone for Elon Musk’s company as it expands in the world’s largest electric-vehicle market.The first 15 units of Model 3 sedans assembled at Tesla’s new multi-billion-dollar Shanghai plant -- its first outside the U.S. -- will be delivered to company employees on Dec. 30, capping several months of wins for Musk. The latest came Friday, when the locally built car was included on a list of vehicles qualifying for an exemption from a 10% purchase tax in China.The shares closed little changed at $430.38 on Friday. The stock has surged since the carmaker reported a surprise profit on Oct. 23, and is now more than double its year low of $178.93 in June.Chief Executive Officer Musk is counting on the China plant to help build on recent momentum for the company in the world’s largest market both for EVs and autos in general. The Model 3 will compete with electric cars from local contenders such as NIO Inc. and Xpeng Motors, as well as global manufacturers including BMW AG and Daimler AG.The Shanghai Gigafactory broke ground at the start of this year. Originally just a muddy plot about a 90-minute drive away from Shanghai’s city center, it is now a crucial test of Musk’s bid to keep his carmaker profitable as he bets big on Chinese appetite for electric cars.With Tesla’s volatile stock price and strained finances, investors will be watching closely how the ramp-up unfolds. The multibillion-dollar investment will be a deciding factor to determine whether Tesla will be able to take on local competitors and fend off challenges by the likes of Mercedes-Benz, BMW and Audi.Junheng Li, an analyst at JL Warren in New York, noted that the made-in-China Model 3s are not fully manufactured there yet. Tesla is importing parts and assembling them at the facility near Shanghai, with production localization expected later in 2020.“Localization of suppliers has been very slow,” said Li in an email Friday. Tesla didn’t immediately respond to an inquiry seeking comment.Although Musk has said he’s never seen a factory built so quickly, the first delivery will come only a day before the end of 2019. Back in April, the CEO predicted Tesla would make at least 1,000 cars a week in Shanghai by the end of the year — a volume the company’s original factory in California spent months trying to hit. He’s also said a weekly rate of 3,000 is a target at some point.Tesla said in October the locally built Model 3 will be priced from about $50,000. On top of the tax exemption announced Friday, the China-built model this month qualified for a government subsidy of as much as about 25,000 yuan ($3,600) per vehicle.The company may lower the price of the locally assembled sedans by 20% or more next year as it starts using more local components and reduces costs, people familiar with the matter have said.The launch will also provide clues about Tesla’s ability to truly go global. The company is planning to follow up with a production facility in Europe.\--With assistance from Dana Hull.To contact Bloomberg News staff for this story: Chunying Zhang in Shanghai at email@example.comTo contact the editors responsible for this story: Young-Sam Cho at firstname.lastname@example.org, Cécile Daurat, Chester DawsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- After a week in which Daimler AG and Volkswagen AG’s Audi announced thousands of job cuts, it’s easy to forget that the German car industry once seemed unassailable.The 2009 recession forced a massive downsizing of America’s auto giants. General Motors Co. and Chrysler filed for Chapter 11 bankruptcy protection; Ford Motor Co. escaped a similar fate only by cutting its workforce to the bone. By contrast, Volkswagen, BMW AG and Daimler’s Mercedes-Benz overcame the crisis with barely a scratch. Afterwards they took full advantage as wealthy Chinese splurged on luxury German vehicles. Germany’s carmakers and their suppliers went on a hiring spree at home and abroad.There were early signs of hubris: Volkswagen paid its chief executive officer 17.5 million euros ($19.3 million) in 2011. But Germany’s powerful trade unions made sure workers benefited too. In recent years production line staff at BMW and VW’s Porsche subsidiary took home almost 10,000 euros as an annual bonus. BMW spends an average of more than 100,000 euros per employee on salary, pension and social security costs, according to its annual report. Now that jobs boom has come to a screeching halt, and not before time. An industry facing unprecedented upheaval can’t afford such largess.The chief reason for the belt-tightening is, of course, the vast cost of moving beyond combustion engines. Volkswagen expects to spend an astonishing 60 billion euros on hybrid, electric and digital technology in the next five years. Doing this requires the hiring of even more people, but the products they’re developing aren’t always big money spinners yet.For a time, the industry will have to provide a full range of propulsion options. For their factories this means “peak complexity” — to borrow a phrase from Mercedes’s management. Eventually, however, many of these factory workers will become unnecessary because electric motors are much simpler to build than diesel and gasoline engines. Last week's job cuts won’t be the last.The German industry has been caught out too by an unexpected slowdown in demand. Continental AG, the supplier that’s cutting 20,000 jobs, expects production to stagnate over the next five years. Daimler said last month that sales haven’t matched its production capacity. Audi’s domestic plants are reportedly particularly under-utilized, not helped by the popularity of SUVs over sedans (the former tend to be built overseas).Volkswagen, BMW and Daimler will still generate about 24 billion euros of net profit this year, according to analysts polled by Bloomberg. But the era of 10% operating profit margins — long a benchmark for German luxury carmakers — is over. Mercedes thinks 4% is more realistic next year.The automakers therefore have to tackle their bloated fixed costs. In view of its spending commitments, Volkswagen was unwise to let its workforce swell to almost 700,000. That’s about 80% more than Japan’s Toyota Motor Corp., which builds a similar number of cars (though Volkswagen has a big truck unit too).Volkswagen’s labor expenses have crept higher as a percentage of sales since the last recession. Doubtless this reflects the influence of the German unions and hence it’ll be very difficult to rectify. Like their peers, German employees at the Volkswagen brand have job guarantees until 2029.Ultimately the German car jobs boom was a bet that demand would increase, combustion engines would have a long life and global trade would remain encumbered. Instead, the electric shift is happening faster than expected and Trump’s tariff crusades have turned the German industry’s global production presence into a liability.Cars are superfluous for many young people today, and if they do buy one it will soon have a simple electric motor, not a combustion engine made of hundreds of intricate components. The hiring practices of German carmakers look like a bubble that’s burst.To contact the author of this story: Chris Bryant at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Denmark’s Astralis is set to become the first esports team to go public in a bid to cement its status in a $1.1 billion global market that’s more than doubled since 2016.Astralis is ranked the world’s number one in Counter-Strike: Global Offensive, a popular first-person shooting game, and has won millions of dollars in tournament prizes. The success has earned it commercial endorsements with brands such as Audi and Logitech. Now operating as a media company, the Astralis Group has expanded with teams competing in League of Legends and EA’s FIFA.The listing is due to take place Dec. 9 on Nasdaq’s Copenhagen exchange for small companies. According to its prospectus, Astralis plans to raise 125 to 150 million kroner ($18-22 million), with shares priced at 8.95 kroner.Professional esports is by no means in its infancy -- in the 1990s, games like Counter-Strike, Quake and StarCraft were staples of a competitive gamer’s diet, and businesses sprang up to bolster the titles’ longevity and appeal. But Amazon.com Inc’s Twitch and Google’s YouTube created platforms for spectators to watching in their millions, and with that came enormous marketing and sponsorship opportunities.Surging InterestAccording to recent projections, the global esports market will generate almost $2 billion in 2022, with global esports viewership expected to reach 595 million that year.Superstars like Kyle “Bugha” Giersdorf have brought winning potential into the view of broader audiences. In July, hundreds of thousands of fans went online to watch the 16-year-old win the Fortnite World Cup final in New York.“We believe that the foundation of some of the most valuable and iconic brands in 10 years’ time is being set today,” said Astralis Group Chief Executive Officer Nikolaj Nyholm.Nyholm says he’s confident that the IPO will succeed and cites pre-commitments worth around $8 million “from a range of European and Asian investors.” The subscription period ran out on Friday.A successful IPO would provide a yardstick for other esports valuations. But the CEO, who has a background as a venture capitalist, says he understands why some might be hesitant to invest in a new area with only limited historical data to draw on.“In this respect it is also our responsibility to help educate the market through a continuous high level of information,” Nyholm told Bloomberg in an emailed response to questions.Esports BuzzPer Hansen, an investment economist at Nordnet in Copenhagen, says he expects the offer to be oversubscribed, given the levels of pre-IPO subscriptions.“There’s a lot of buzz around esports and what it might turn out to become in five years’ time,” Hansen said. The timing is also good, given investors’ appetite for new equity during the current regime of ultra low interest rates.Nyholm says going public rather than raising venture capital will allow Astralis to focus on a longer time horizon and “allow us to bring new investors on board.” The money raised will help “strengthen our position in the market through investments in our brands and media platforms. We will also look to use the listing to position us well in an anticipated future market consolidation,” he said.The world’s most valuable esports company, Cloud9 is worth $400 million, according to Forbes.(Adds subscription deadline in 8th paragraph)To contact the reporter on this story: Nick Rigillo in Copenhagen at email@example.comTo contact the editors responsible for this story: Christian Wienberg at firstname.lastname@example.org, Nate LanxonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Audi plans 9,500 job cuts to save £5bn for electric car investmentCarmaker says 2,000 new jobs will be created in specialist digital areasWorkers assemble Audi sedans on an assembly line at the Ingolstadt plant. Photograph: Andreas Gebert/Getty Images
(Bloomberg) -- Volvo Cars isn’t just electrifying its lineup to cut carbon emissions. Now the Swedish automaker says it will pay customers to make sure they plug in.Volvo is tying the launch of its first all-electric vehicle -- the XC40 Recharge crossover -- to a broader plan for shrinking the carbon footprint of its models by 40% through 2025. And it’s backing that pledge with a promise to pay the first year’s worth of charging costs for owners of its plug-in hybrids, starting with the 2021 model year.Volvo placed itself at the forefront of electric car hype in 2017 when it vowed to rid its lineup of cars running purely on fossil fuels by 2025. To get there, it’s going to roll out a new battery-electric model every year until 2025, starting with its XC SUVs, Chief Executive Officer Hakan Samuelsson said. Those will join a growing range of hybrid models.“We believe we should treat sustainability as as much of an integrated part of our business as safety, not just something we do as an add-on,” Samuelsson said in a phone interview. “We’re making it part of our product offering.”Model 3 RivalBuyers of 2021 model year hybrids will be able to claim a refund for their electricity costs during the first year of ownership based on power consumption data extracted from Volvo’s app for Apple and Android smartphones. Volvo plug-in hybrid owners drive in electric mode only about 40% of the time, Samuelsson said in an interview with Bloomberg Television.The XC40, which Volvo unveiled earlier today in Los Angeles, will have 200 miles of range in the U.S., 402 horsepower and take 40 minutes to get to 80% battery capacity on a fast-charging system, the company said. That compares to the 240-mile range of Tesla Inc.’s Model 3 sedan.Samuelsson said Volvo will start producing its first EV late next year and price it to compete with the Model 3, which starts at about $39,000 but has been selling on average for roughly $50,000.“It’s affordable for a much broader range of people” than higher-priced luxury brand electric cars, said Volvo’s Chief Technology Officer Henrik Green. The XC40 is “more like a $50,000 car than a $100,000 car,” he said.The electric XC40 will join a wave of new EVs debuting to keep up with tightening emissions regulations in China and Europe. While uptake remains slow, carmakers including Volkswagen AG and Daimler AG have launched new models like the Audi e-tron and Mercedes EQC to chase after Tesla.Volvo is pushing ahead with its electric ambitions as others in the space struggle. NIO Inc., China’s would-be Tesla competitor, is running short of cash. Jia Yueting, founder of electric vehicle start-up Faraday & Future Inc., filed for bankruptcy. And Dyson Ltd., the famed maker of vacuum cleaners, pulled the plug on its battery-powered car project.‘Midterm’ Profitability GoalVolvo would not be making a fully electric XC40 if it wasn’t “absolutely sure” the car will be profitable, Samuelsson said.“It might be lower profit margin initially, but what counts is more midterm” profitability goals, he said.The bet on electrics comes at a time when the carmaker is coping with a global sales slowdown and tariffs that led to a 30% drop in first-half operating income. To cut costs, the company plans to merge engine operations with Chinese parent Geely.Samuelsson said Volvo wants to increase the appeal of electrified vehicles so they sell without government subsidies -- and incentives like free charging for the first year. “Long term, if this is really going to do something to the climate or the environment, the cars need to be attractive and need to be bought by customers with their own money,” he said.(Adds CTO comment in eighth paragraph.)\--With assistance from Shery Ahn and Amanda Lang.To contact the reporters on this story: Gabrielle Coppola in New York at email@example.com;Ed Ludlow in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Craig Trudell at email@example.com, Gabrielle Coppola, Chester DawsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.