The self-driving and autonomous industry is putting emphasis on coming up with ideal safety norms. In a bid to help regulators frame appropriate guidelines pertaining to autonomous vehicles, three major global auto giants namely, General Motors Company GM, Ford Motor Company F and Toyota Motor Company TM collaborated with the automotive engineering group, SAE International.
Tesla, Inc. TSLA announced another round of job cut this week. This electric vehicle manufacturer axed several members from sales teams in Chicago; Brooklyn, NY; and Tampa, FL.
In another development, Ford’s Brazil unit announced that it initiated a voluntary layoff program for the plant in Camacari, Bahia. The company informed that this move is in sync with the strategy of restructuring operations and cutting the excess workforce.
(Read the previous roundup here: Auto Stock Roundup for Apr 4, 2019)
Recap of the Week’s Most Important Stories
1. In a major development, Volkswagen AG VWAGY announced that it started testing self-driving vehicles in Hamburg, Germany, per CNBC. This is the first time that instance of the German auto giant conducting automated vehicle test runs in real conditions in a major German city.
The tests, being conducted by Volkswagen Group Research, will feature five specially equipped e-Golfs, driving on a three-kilometer stretch of a road. The highly autonomous vehicles have laser scanners, ultrasonic sensors, radars and cameras. The vehicles will have drivers behind the steering wheel to examine performance and take control in the event of an emergency.
The computing power of 15 laptops has been installed in the e-Golf trunk. This alongside the sensor technology will equip the vehicle to gather different data related to cyclists, pedestrians, other vehicles and intersections.
In order to make self-driving comfortable and safer, vehicles not only have to become more intelligent but the city must also facilitate digital infrastructure. A nine-kilometer “digital test bed” for connected and automated driving is being built in Hamburg. This is likely to be completed in 2020. (Read more: Volkswagen Commences Testing of Self-driving Cars in Germany)
Volkswagen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. A few days after the report of a decline in production and deliveries in first-quarter 2019, Tesla announced another round of job cut, per Bloomberg. This electric vehicle manufacturer axed several members from sales teams in Chicago; Brooklyn, NY; and Tampa, FL.
The total number of employees dismissed has not been revealed by the company. This move is in sync with its plan of lowering staff as part of the retail retrenchment strategy adopted in February 2019. The chief executive officer of Tesla, Elon Musk outlined the strategy to shut some showrooms and switch to online-only ordering model to ramp up the production process.
Notably, in the first quarter of 2019, the company’s vehicle production and delivery numbers witnessed sequential declines of 10.9% and 31%, respectively. During the quarter, this electric automaker struggled with Model 3 deliveries to Europe and China, owing to longer transit time.
In a bid to cut costs, Tesla slashed employees, who delivered cars in the United States, and opted for store closures. In fact, in February, Elon Musk indicated that the company would evaluate all areas of sales and marketing in the following weeks. He further gave hints of job cuts and employee transition to different parts of the company. (Read more: TTesla Opts for Another Round of Sales Job Reduction)
Tesla currently carries a Zacks Rank #5 (Strong Sell).
3. Fiat Chrysler Automobiles N.V. FCAU is about to pay $110 million to settle a lawsuit filed by the U.S. investors in 2015, per Reuters. Shareholders charged this automaker on claims that they were misinformed that the vehicles were in compliance with diesel emission and federal safety regulations.
Further, the investor group claimed that they lost money when shares tumbled on reports of Fiat Chrysler’s failure to properly undertake the vehicle recall. The settlement for investors, who bought shares between Oct 13, 2014, and May 23, 2017, must be approved by a federal judge, per Bloomberg.
Despite paying the settlement, Fiat Chrysler disagrees with claims issued by the investor group in the lawsuit. Its insurance will be used to pay for the settlement.
Prior to this, the company agreed on a settlement with Environmental Protection Agency (“EPA”), which cost it roughly $800 million in January 2019. EPA sued this automaker on charges of using illegal engine-control software in diesel vehicles to pass emissions tests in 2017. (Read more:Fiat Chrysler to Pay $110M as Settlement Despite Disagreement)
Fiat Chrysler currently carries a Zacks Rank #4 (Sell).
4. Ford’s Brazil unit announced that it initiated a voluntary layoff program for the plant in Camacari, Bahia, per Reuters. The company informed that this move is in sync with the strategy of restructuring operations and cutting the excess workforce.
The exact number of employees to be laid off has not been revealed by the company. However, the plant in Camacari produces the compact Ka and mid-sized EcoSport SUV, and employs 7,400 people. Earlier, Ford revealed that the plant was operating with 700 excess workers.
Notably, the company sold 24,000 Ka vehicles in Brazil in first-quarter 2019, almost flat year over year. Also, it sold 7,600 EcoSports, more than 7,000 reported in first-quarter 2018. A couple of months ago, as part of the restructuring move and to cut losses, the company made the announcement of closing the oldest plant in Sao Bernardo do Campo, Brazil. This move could lead to the layoff of 2,700 workers.
Nevertheless, the recent move to initiate a voluntary layoff program for the plant in Camacari, Bahia, is due to its objectives to align the workforce with current market demand. (Read more: Ford Initiates Voluntary Layoff Program for Brazil Plant))
Ford currently carries a Zacks Rank #3.
5. Nissan Motor Co. NSANY announced that its premium brand, Infiniti, will come out with the first electric vehicle in around three years, per Reuters. The sporty electric sedan will be produced in China, which holds a lot of promise for electric vehicles. It is expected that the e-sedan would be on a new flexible architecture, which will be very useful for accommodating electrified powertrains. Also, its interior design will be considerably different from current models.
This move is in sync with this Japanese automaker’s long-term strategy to electrify the product line up on a massive scale. Previously, Nissan revealed the plan to make Infiniti predominantly an electrified offering. From 2021 onward, all vehicles under the Infiniti brand will be either an all-electric vehicle or of e-Power version.
Intensified competition in the electric car market in China led startups as well as established players to launch several vehicle models. In order to comply with official quotas, automakers in China are raising the production of new-energy vehicles, either battery electric cars or plug-in electric hybrids. The proposed e-sedans from Nissan are likely to face competition from established players. (Read more: Nissan to Introduce First Electric Sedan in China )
Nissan currently carries a Zacks Rank #4.
Last week, Harley-Davidson, Inc. HOG gained the maximum while Tesla declined the most.
In the past six months, AutoZone, Inc. AZO has increased the most, whereas Harley-Davidson declined the most.
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What’s Next in the Auto Space?
Watch out for the usual news releases over the next week.
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