|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||27.45 - 27.81|
|52 Week Range||21.61 - 29.25|
|Beta (3Y Monthly)||1.33|
|PE Ratio (TTM)||5.82|
|Forward Dividend & Yield||1.30 (4.73%)|
|1y Target Est||N/A|
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Bayerische Motoren Werke Aktiengesellschaft and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
(Bloomberg) -- Chris Ballinger came away from a year of crunching numbers at Toyota Motor Corp.’s Silicon Valley skunkworks convinced that his dream of automotive automation was no more fanciful than his bosses’ ambition to make a vehicle that can drive itself.So the former derivatives trader who spent 14 months as finance chief at Toyota’s innovation hub launched a non-profit that aims to turn cars into rolling wallets able to autonomously make and receive payments in a virtual currency. Drivers would earn small sums for sharing data on everything from traffic congestion to weather and be debited for infrastructure use and contribution to pollution.‘’Everyone focusing on autonomous vehicles thinks they’ll be able to drink cognac in the back, but machines will do many other things autonomously before they can surmount a problem of driving around somewhere like Bangalore or in particularly bad weather,” said Ballinger, a 62-year-old resident of Los Angeles, where he runs his Mobility Open Blockchain Initiative. “It’s a very hard engineering problem, but setting up machine-to machine payments is comparatively very simple.”Simple is a relative word. The vision is as futuristic as it is ambitious. It depends on a myriad of technological advancements, not to mention regulatory change and cooperation among traditional rivals. While cars already have ever more computing power, changing long-held views on infrastructure funding, vehicle ownership and even the nature of money could prove insurmountable. And then there’s the law of unintended consequences.“When tech is applied to cities and transportation by smart people who understand tech but don’t understand cities, the outcome can actually be bad for cities and create new or bigger problems,’’ says Brent Toderian, former chief city planner in Vancouver. “There’s a danger to boosterism with these kinds of ideas, and a need to be cautious and critical in a way that tech folks often aren’t.’’ As an example, he said new technology could lead to more driving, reducing any positive environmental impact such advances were supposed to deliver.Whatever the challenges, the mobility sector is -- in industry jargon -- a burning platform, meaning urgent change is required to head off obsolescence. While artificial intelligence and blockchain could make Ballinger’s vision possible, the dominance of a small club of Silicon Valley heavyweights means automakers risk being left behind in the digital age, said Jamie Burke, an adviser to MOBI and founder of Outlier Ventures, which invests in companies developing such technologies.Facebook Inc.’s Libra stablecoin, a global currency that social networking behemoth is developing, is like gasoline on the burning platform he said.“We don’t have the luxury of tinkering around anymore, we need to get our acts together to accelerate action toward what is moving already,” said Ballinger. “Everybody is asking should every market have its own token and do we need to have one?”Ballinger co-founded MOBI last year with the likes of BMW AG and Ford Motor Co among its founding members. The consortium, which now has about 90 members from International Business Machines Corp. to Honda Motor Co., is exploring how blockchain and related technologies can contribute to a safer and more efficient transport system, while also reducing congestion and pollution.The first blockchain — a public ledger -- was created to track Bitcoin transactions, and the technology has since been adopted far beyond the realm of cryptocurrencies for everything from enabling international payments to verifying products in a supply chain. The digital currency universe has also expanded rapidly in the past decade, with low-volatility digital tokens known as stablecoins among the fastest growing sub sectors.For the vision to materialize, city infrastructure will have to be equipped to communicate with vehicles. Smart cities, urban metropolises pulsating with sensors and powered by artificial intelligence, are on the drawing board. Alphabet Inc.’s urban innovation unit Sidewalk Labs LLC is working on creating a “city of the future” on Toronto’s waterfront.The building blocks exist, making the bigger challenge getting the various technologies and devices to communicate, according to Maria Minaricova, head of business development at Fetch.ai, a Cambridge, U.K.-based company focused on AI, blockchain and internet of things technologies that is also a member of the MOBI consortium.“There are already so many sensors -- cars have sensors, so do traffic lights and cameras, and so on -- but they’re currently disconnected and what’s also missing is interoperability,” said Minaricova. “Historically if you produced somethingm, you would keep it on your platform and it could only communicate with your devices, but the new generation will need to open this up so all devices can speak to each other.”MOBI is now working with BMW, Ford, Honda, General Motors Co. and Renault SA to develop a trusted digital identity for vehicles as a first step toward enabling a mobility payments network. Last month MOBI hosted a gathering of industry executives in Los Angeles to discuss how such a payments system might work.MOBI could develop an industry stablecoin, as low volatility virtual currencies are known, or use an existing coin to make and receive micropayments on a blockchain network, says Ballinger. The project would not only change how vehicles and cities interact but could also provide a real world use case for digital currencies beyond speculation.“Everyone is excited by the promise of technology and waiting for the first killer app, for what will be to digital currencies what email is to the internet,” he says. “That is, where does it get used in a way that consumers find it adds value compared to existing payment systems, and we think mobility and machine-to-machine payments are likely to be one such area because we have big issues with funding public infrastructure and charging for congestion and carbon.”To contact the author of this story: Alastair Marsh in London at email@example.comTo contact the editor responsible for this story: James Hertling at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
A new and distinct problem has been discovered in air bags made by the now bankrupt company Takata which has led to at least one death.
Germany's main automobile industry body said on Wednesday it expects global car sales to fall by 5% this year, the steepest drop since the financial crisis, and warned of more job cuts in 2020 as a result. "The competition is getting tougher, the headwinds are getting stronger," Bernhard Mattes, president of industry association VDA, told reporters. The association expects global car sales to fall by 4.1 million to 80.1 million vehicles this year, driven by a slump in China, he said.
Sales of new cars in Germany overall are forecast to fall by 6.2% next year but electric car sales should rise sharply, German auto importers association VDIK said on Wednesday. Electric car sales are due to rise 60% to at least 160,000 in 2020 while new car sales were seen falling to 3.35 million in 2020, the association said. This year, car sales are due to rise by 4% to 3.57 million, the highest level since 2009.
(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 Opinion) -- Here’s the state of Social Democrats across continental Europe: In two corners, Scandinavia and Iberia, they’re alive and well, having become pragmatic centrists or, as in Denmark, having turned hard right on issues such as migration. Almost everywhere in between — from France to the Netherlands, Germany, Austria and Italy — they’re in various states of disarray or dissolution. What happened? And is their decline terminal?That’s what Germany’s SPD, founded 156 years ago as the ancestor of the movement, should be asking itself, as it convenes next week to anoint new leaders and decide whether to quit its coalition with the conservative bloc of Chancellor Angela Merkel. But this more existential question won’t be debated, at least not honestly.To get the big picture, look at the chart below. It shows the percentage of eligible voters in the Federal Republic of Germany who plumped for the SPD in national elections. What you see is a rise in the postwar years, when the SPD formally dropped its Marxist doctrines to appeal to potentially all Germans, not just the blue-collar types. The SPD then peaked in the 1970s under two Social Democratic chancellors, Willy Brandt and Helmut Schmidt, who promised to lift more people into prosperity.But in the 1980s and 90s, the ideological left wing of the party fought back. Lifting up was de-emphasized. Leveling down was the new message, as the SPD cast aspersions on “the rich.” Its support dwindled. The lifters briefly prevailed again over the levelers in 1998, putting the third Social Democrat in the chancellery, Gerhard Schroeder. But since then the levelers have dominated rhetorically. According to polls, the next bar in this chart will be the smallest yet.Something similar has taken place around the neighborhood. The equivalent party in France, called PS, had an absolute majority of the National Assembly in 2012, then got overrun by the brand-new centrist movement of President Emmanuel Macron; it’s now irrelevant. Its Italian sister, called PD, is in government again, but as a much diminished junior partner to populists. Emulating Macron, Matteo Renzi, the PD’s former star, will quit and form his own party. One lesson is that Social Democrats, not unlike the Democrats in the U.S., do well whenever they promise opportunity and badly whenever they preach, as Winston Churchill put it, “the gospel of envy.” But envy is all they’ve got these days. Hence calls by Germany’s SPD (and others) to bring back a wealth tax, even though it was suspended in the 1990s because it was a nightmare to assess and brought in little revenue.Another lesson: You can’t just keep looking for new demographic groups that allegedly suffer some urgent “injustice” that must be fixed (by Social Democrats, of course). But that’s what the SPD keeps trying. It has just spent months haggling with its coalition partners to top up the state pensions of low-income retirees who’ve paid into the system for 35 years or more. Why not 34 years? Nobody knows. Not discussed was the unsustainability of the whole pension system, in which ever fewer young people will pay ever more of their income to ever more old people. As usual, the SPD is baffled that it hasn’t risen in the polls.The bigger insight is that the Social Democrats are simply out of ideas and out of date. They sprang from the second industrial revolution, when workers eked out miserable and unsafe existences in factories, smelting ores or bashing metals. Just by fighting for the right to safe workplaces and paid leave, Social Democrats did lift many people up. But today, at the dawn of the fourth industrial revolution, that proletariat is disappearing. Unions are shrinking. Jobs are moving into the service sector and the gig economy. Brains are more important than brawn.The new threat to workers is not from “capitalists” but from artificial intelligence, automation and the Internet of Things. Some very low-wage jobs (such as janitors) are pretty safe. Many high-wage jobs (the creative and brainy ones) will boom. But in between, many professions — especially those based on routines or algorithms, whether in manufacturing or administration — could well disappear. Overall, society will be better off. But for many individuals, the transition will be hell. What about them?Beats the Social Democrats. Rhetorically, they enjoy calling for “fresh” thinking. So what did Kevin Kuehnert, the allegedly up-and-coming 30-year-old leader of the SPD’s youth organization, come up with? He recently had a brainstorm — wait for it — to collectivize BMW. Bold and visionary, in a bygone century.Nobody in politics has yet found convincing and comprehensive answers to the twin challenges or our time: reconciling the economy and ecology on a heating planet, and assuring social cohesion as technology first supplements, then competes with, human intelligence. The answers will eventually touch everything from education to taxation, welfare and consumption. There are people probing deeply and curiously into these fields. Just not among the Social Democrats.To contact the author of this story: Andreas Kluth at email@example.comTo contact the editor responsible for this story: Timothy Lavin at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andreas Kluth is a member of Bloomberg's editorial board. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Audi plans to eliminate roughly 15% of its German workforce to lift earnings by 6 billion euros ($6.6 billion) as Volkswagen AG’s largest profit maker pushes ahead with a restructuring plan to help adapt to the costly transition to electric cars.The turnaround is aimed at regaining ground lost to luxury-car leaders Mercedes-Benz and BMW AG and counter pressure from Tesla Inc. Volkswagen has been scrambling to revive Audi’s fortunes after turmoil sparked by the aftermath of the 2015 diesel-cheating scandal.By 2025, Audi plans to cut as many as 9,500 jobs in Germany and streamline operations at its two main factories in its home country. The positions will be reduced through attrition and voluntary measures including early retirement, Audi said in a statement Tuesday after reaching an agreement with employee representatives.The approximately 50,000 remaining employees in Germany will have job guarantees through 2029, and Audi will create 2,000 new jobs to strengthen its engineering muscle for electric cars and digital offerings.“We are now tackling structural issues in order to prepare Audi for the challenges ahead,” Chief Executive Officer Bram Schot said in the statement. “In times of upheaval, we are making Audi more agile and more efficient.”Management ShakeupTalks with labor unions on the job cuts had dragged on for months, and Volkswagen appointed former BMW executive Markus Duesmann, 50, as the brand’s new chief starting in April to advance the process. He will replace Schot, who succeeded Rupert Stadler after his arrest in connection with the diesel crisis.“VW group has embarked on a potentially significant reorganization of its activities,” Timm Schulze-Melander, Redburn industry specialist, said in a note. “Things may not move in a straight-line, but progress is expected by investors given the significant challenges in 2021 in Europe.”VW shares fell as much as 0.8% in Frankfurt trading, paring gains for the year to 27%.Complying with tighter European emissions rules requires significant investment, while trade wars and uncertainty related to Brexit fallout adds to the complexity of managing the disruptive technology shift.Audi has been wrestling with stricter emission-test procedures that took effect in Europe last year and led to significant production bottlenecks that bogged down deliveries.Electric ExpansionThe world’s third-largest luxury-car brand has been pushing for a fresh start with a review of its product range, which led to the decision to halt the TT coupe. The former design icon will be replaced with a battery-powered model.To revive momentum, Audi will launch five fully-electric and seven plug-in hybrid models within two years and broaden the lineup to more than 30 electrified cars by 2025. But the transition will be costly after higher spending on electric models like the E-Tron contributed to returns last year dropping to 6% from 7.8%.Audi produces the E-Tron at its factory in Brussels. It will add electric-car production at its two main German factories in Ingolstadt and Neckarsulm as well as part of the labor pact to ensure sufficient output.Audi targets slightly higher deliveries and revenue this year, and an operating profit margin between 7% and 8.5%. The cost-cuts are aimed it lifting margins back to a range of 9% to 11%. Audi didn’t specify whether it can reach the goal next year as planned.(Adds analyst comment in seventh paragraph)To contact the reporter on this story: Christoph Rauwald in Frankfurt at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Chris Reiter, Tara PatelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Not every advance in electric-vehicle technology takes place inside the sterile calm of a research laboratory.BMW AG, Volkswagen AG’s Audi and a Silicon Valley-based battery maker are helping push the boundaries by racing electric-powered cars through Saudi Arabia, New York, London and Seoul at speeds topping 170 mph.Breakthroughs made by competitors in Formula E, which started its sixth season over the weekend, are being incorporated into family SUVs and sedans –- and even India’s electric rickshaws -- as manufacturers seek to improve and extend their electric lineups while nations gradually phase out gas guzzlers. More powerful batteries and better motors, energy-management software and braking systems are all being transferred from the racetrack to the showroom.“What we are doing in Formula E is highly relevant back on the road,” said Dilbagh Gill, chief executive officer and team principal of India’s Mahindra Racing, the motorsport unit of Mahindra & Mahindra Ltd. “We are able to come in and help them immediately in improving the product.”Formula E, which began in 2014 with an “E-Prix” in Beijing, has 12 teams, almost all of which involve automakers producing or developing battery-powered vehicles for consumers – such as Nissan Motor Co. and Tata Motors Ltd.’s Jaguar brand.Volkswagen’s Porsche and Daimler AG’s Mercedes-Benz brand are new participants in the 14-race season that opened Friday in Saudi Arabia. The schedule runs through July, concluding with the two-day London E-Prix.Briton Alexander Sims, racing with BMW i Andretti Motorsport, won Saturday’s race on the outskirts of the Saudi capital, Riyadh. Envision Virgin Racing’s Sam Bird won Friday’s opening race.Last season’s champion was DS Techeetah, the Chinese-owned team of PSA Group’s DS Automobiles. Its DS E-Tense FE20 machine can accelerate from zero to 100 kph (62 mph) in 2.8 seconds.DS Automobiles is taking the powertrain –- parts including the motor and inverter -– from its Formula E entry and putting it inside a concept car called the DS X E-Tense. It also will use the same operating software across its planned range of electric passenger vehicles.PSA Group, also home to the Peugeot and Citroen brands, is targeting a fully electrified fleet by 2025.“The cars that win in Formula E are the most energy efficient, which is largely driven by software,” Paris-based DS Automobiles said. “Everything we do in Formula E with algorithms and software we try to replicate in series production.”Rules intended to limit costs for teams and keep the series competitive mean racers use a standardized lithium-ion battery manufactured by a unit of Newark, California-based Lucid Motors Inc.During the first four seasons of Formula E, drivers needed to change cars in the middle of a race -- leaping from one cockpit into another -- because the power packs couldn’t complete a whole event, which typically lasts about 45 minutes.Lucid’s batteries, introduced last season, eliminate the need for that switch.“The real reason we are doing this is to demonstrate that we have world-class technology, which will find its way into our forthcoming road car,” said Chief Executive Officer Peter Rawlinson, previously chief engineer of Tesla Inc.’s Model S.The company plans to start producing its Lucid Air sedan in Arizona next year, boasting of a range topping 400 miles and a speed exceeding 200 mph.Lucid’s Formula E batteries pack in more energy than alternatives that are commercially available for regular cars, said James Frith, a London-based analyst for BloombergNEF.“If Lucid can transfer this technology to commercial electric vehicles, it could give them a real advantage,” he said.Another key focus for Mahindra, DS Techeetah, Audi and the others is finding the best way to slow a car down.Since most vehicles lose energy as heat when a driver hits the brakes and causes friction, electric race cars use regenerative braking systems. In effect, a car’s motor goes into reverse to both slow the wheels and act as a generator to send power back into the battery.The technology helps to boost driving range, meaning passenger cars could use smaller batteries, said Allan McNish, team principal of Audi Sport ABT Schaeffler.“Regenerating energy is going to be a key factor for the development of road cars,” said McNish, an ex-Formula 1 driver and a three-time winner of the 24 Hours of Le Mans endurance race.For Nissan, the technology transfer goes both ways, Azusa Momose, a spokeswoman, said. Racing engineers working with the Nissan e.dams team are drawing on the company’s experience developing the electric Leaf hatchback.“They share the same DNA,” Momose said in an email. Formula E cars are at the leading edge of energy management and powertrain development, she said.Yet not all the gains are connected with technology or software.Mumbai-based Mahindra will share racers’ cockpit tips with India’s auto rickshaw drivers to help them extend their battery’s range between refills. India is home to about 1.5 million battery-powered, three-wheeled rickshaws. Mahindra is among the manufacturers of electric versions.“As soon as they improve range, their earning capacity improves,” Gill said.Putting high-speed EVs onto circuits using regular city streets is considered another major benefit to the racing series, lifting the profile of the battery-powered sector in key consumer markets. Formula E races last season drew more than 400,000 spectators and a cumulative TV audience of 411 million people, the series said in September.Last season’s racers zipped along Brooklyn’s Clinton Wharf and Hong Kong’s Victoria Harbour. This season, competitors will loop around the National Monument in Jakarta, and, in the U.K., teams will tackle a circuit that weaves inside the ExCeL London exhibition center and then back outside onto the city’s Royal Docks.“You are racing in the heart of cities, and that’s where electric vehicles will be driven,” McNish said. “You are effectively taking your product to the people.”\--With assistance from Ed Ludlow and Tsuyoshi Inajima.To contact the reporter on this story: David Stringer in Melbourne at email@example.comTo contact the editors responsible for this story: Alexander Kwiatkowski at firstname.lastname@example.org, Michael Tighe, Will DaviesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The clock has run out on President Donald Trump's "Section 232" tariffs on imports of foreign-made cars and auto parts, after he failed to announce a decision by a self-imposed deadline, trade law experts say. The U.S. administration may have to find other means if Trump wants to tax European or Japanese car imports, a key part of the U.S. president's pledge to make America's trade relationships more fair, the experts say. Section 232 of that act lays out how a U.S. president can tax specific imports if the Department of Commerce deems them a threat to national security.
(Bloomberg Opinion) -- If you’ve dropped the kids off at school in London or the New York suburbs recently, the idea that Jaguar Land Rover Automotive Plc is struggling must seem far-fetched. The British carmaker’s Range Rover SUVs have become a common feature of the upper-middle class lifestyle. How else would one get to brunch and the gym?Yet a decade after India’s Tata Group acquired and dramatically reinvigorated these famous old brands, JLR is back on the ropes. The unit lost an eye-peeling 3.3 billion pounds ($4.2 billion) in the fiscal year to March and burned through 1.3 billion pounds of cash. No wonder Tata is casting around for help.JLR’s cost-base has become bloated, its sales in China have collapsed and its big bet on Jaguar saloon (sedan) models has failed to pay off. Selling SUVs to Brits and Americans has prevented its fall from being even more dramatic. However, new gasoline and diesel cars are going to be banned in the U.K. and elsewhere by 2040 and the climate crisis could trigger a backlash against gas-guzzlers well before then. Either way, refashioning the company for a zero-emissions future will be very expensive.Tata insists JLR is not for sale but that doesn’t mean it wants to continue this journey alone. The unit had about 2.2 billion pounds of net debt at the end of September.The Indian parent has approached fellow automakers including China’s Zhejiang Geely Holding Group Co. and Germany’s BMW AG, about forging partnerships to help JLR save money, Bloomberg reported this week. These would supplement existing collaborations with BMW on electric drive systems and with Waymo on autonomous vehicles.This hunt for allies makes sense because JLR’s business model is looking shaky. More than 80% of the vehicles that it sold in Europe last year run on diesel, a technology that’s been undermined by Volkswagen AG’s emissions cheating and the threat of bans in many cities.SUVs make up an even higher percentage of sales. The boom in these vehicles has contributed to a rise in average carbon emissions from carmakers over the past year or two. No wonder they’re in the cross-hairs of climate campaigners. Last month JLR listed “increasing environmental activism” among its biggest challenges.The Extinction Rebellion crowd has a point here. A top-specification Range Rover can weigh more than 5,700 lbs (2,585kg), which is why the company’s vehicles tend to spew out more CO2 than peers.Because it sells less than 300,000 cars annually in Europe, JLR has special dispensation from Brussels to pollute more.(1) However, these lenient fleet emission targets expire in 2028, so the company needs to change its ways sharpish.It says it’s on track to cut emissions by 45% in 2020 compared to 2007 levels, as required by regulators. From next year there will be a hybrid or electric variant of all of its models; and Jaguar’s all-electric I-Pace compact SUV deservedly won car of the year. Creating zero emissions versions of the group’s biggest SUVS will be more difficult, though, because of their hefty weight and poor aerodynamics.Footing the bill will be a stretch too. The company has to manage a 4 billion pound yearly investment budget while selling far fewer cars than its bigger rivals: JLR sold less than 600,000 vehicles last year, about 5% of Volkswagen’s haul. Lackluster sales have left it with unused production capacity.Its attention to detail in manufacturing has also been found wanting. The Jaguar and Land Rover brands came bottom in J.D. Power’s U.S. new vehicle quality rankings, and high warranty costs are an unwelcome feature of its earnings. All of this means JLR’s profit margins are thinner than you might expect given the $210,000 price tag of a high-spec Range Rover.Even as far out as 2023, JLR anticipates an operating return on sales of 6% at most. This is similar to Daimler AG’s 2022 target for Mercedes-Benz, but is way below the margins of French mass-market carmaker Peugeot SA.Thanks to progress on cost-cutting and signs that plunging China sales have bottomed out, investors have become more confident in Tata’s ability to turn JLR around. It returned to profit in the second quarter, prompting a rally in Tata Motors’ shares and JLR’s beaten up bonds. President Donald Trump’s threat of a 25% U.S. tariff on imported vehicles appears to have receded somewhat, as has the likelihood of a no-deal Brexit that would have been ruinous for carmakers.Might this moment of calm tempt a buyer of the company out of the shadows? Tata’s reluctance to sell isn’t the only barrier. Peugeot was rumored to be keen but its chief executive officer Carlos Tavares has found another merger partner in Fiat Chrysler Automobiles NV. Bernstein analyst Max Warburton says BMW would fit but the Bavarians lost a lot of money when they owned Rover in the 1990s.There are also politics to consider. The backlash against SUVs, many built by BMW, is acute in Germany. Doubling down on gas-guzzling urban tractors might harm BMW’s emissions footprint.(2) It might also be viewed poorly by the Berlin government, which boosted electric vehicle subsidies recently.While SUVs can carry lots of baggage, increasingly it’s the wrong kind.(1) JLR's new cars must have average emissions of about 130 g/km of CO2 by 2021, compared to an industry average of 95g.(2) Depending on what happened to JLR's emissions derogationTo 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) -- When Elon Musk tweeted last year that Germany was a front-runner for Tesla Inc.’s first European car factory, it sent politicians into a frenzy to win over the billionaire.Berlin’s economy minister, Ramona Pop, responded with a two-page letter that waxed lyrical about Musk as a pioneer and visionary and offered financial sweeteners to attract him to a city bustling with a vibrant tech scene and a network of auto research institutes. She even floated access to a nearby race track where Tesla could take its cars for a spin.As the beauty contest gained momentum, it turned into a battle. Two federal states that border France also touted their virtues. Musk already had a connection with that part of Germany from his purchase of an automation company there a few years ago. There’s also Berlin’s patchy track record shouldering large infrastructure projects -- its new airport remains a mothballed mess, years behind schedule and massively over budget.Yet when Musk’s Gulfstream jet touched down in the German capital early this week, his mind was made up: the European gigafactory would sit on the outskirts of Berlin, with an additional engineering and design center within the city limits. Musk casually dropped the news at a red-carpet award populated by the top brass of Germany’s car industry, including the CEOs of BMW AG and Volkswagen AG, two companies pushing hard into an electric future.“There was very intense competition in recent months among different European nations,” Economy Minister Peter Altmaier told reporters on Wednesday in Berlin. “It’s an important and positive development that Germany was chosen.”Mounting PressureMusk is taking his fight for the future of transport into the heartland of the combustion engine, where the established players long laughed off Tesla as an upstart on feeble financial footing that couldn’t compete with their rich engineering heritage. But Musk has captured the imagination of the think-different consumer, putting pressure on the Germans to respond. Volkswagen has pulled out all the stops, earmarking more than 30 billion euros ($33 billion) to develop the industry’s largest fleet of electric cars.The choice of Berlin and its surrounding area hands Musk several advantages, not least free money in form of subsidies. There’s the proximity to a government keen to sponsor the industry’s transformation. Labor costs in eastern Germany are generally lower than in the traditional engineering hubs in the southern part of the country. And Berlin, where new startups are founded each day, is an attractive place to live for the tech workers Tesla would seek to attract for its design center.The area where Tesla plans to put the factory, called Gruenheide just east of Berlin in the state of Brandenburg, provides quick access via the Autobahn and a link to public transport. It’s a site that BMW had considered before choosing the city of Leipzig a few hours south for a new factory in 2001, the last time a car company built a major new facility in Germany.Roller-CoasterThe government in Brandenburg, one of five federal states in the former communist east, also lobbied hard to win over Musk, offering at least 100 million euros in aid. The state’s negotiators kept up the pressure in the past months, touting Brandenburg’s proximity to Berlin, its skilled labor force and an abundance of clean-energy plants, Premier Dietmar Woidke said.“Berlin can do a lot that we aren’t able to, and we can do a lot that Berlin can’t,” Woidke told reporters in Potsdam. “Together, that’s an unbeatable mix.”Officials in Brandenburg described the negotiations with Musk as an emotional roller-coaster ride, with the politicians struggling to read the billionaire’s intentions. But by last week, things were looking up. After Musk arrived in Berlin, he toured the location where the factory would sit, and he took a local train back to central Berlin to try for himself how long the commute might take.Fresh from his experience building a factory in China, Musk had a demand that was as clear as it was hard to execute for notoriously bureaucratic Germans: to build the site as swiftly as the one in Shanghai, according to Brandenburg’s economy minister, Joerg Steinbach. That caused considerable consternation among officials still chafing from the new-airport debacle.Shanghai FactoryTesla long relied on a single assembly plant, based in Fremont, California, for its car production. The company is on the verge of starting sales of Model 3s produced at its latest facility, near Shanghai, which it erected in record time. Musk estimated earlier this year that Tesla’s European gigafactory probably won’t be operational until 2021.The factory will make batteries, powertrains and vehicles, beginning with the Model Y crossover unveiled earlier this year, he said in a tweet. It’s also expected to churn out the Model 3, which beat out BMW and Audi for the award Tuesday night.With Tesla adding as many as 10,000 jobs to Berlin and the region, according to Bild, it’s also a boon for the German capital and its burgeoning tech scene. Famously labeled “poor but sexy” by a former Berlin mayor, the city has thrived in recent years thanks to a steady influx of young entrepreneurs and IT professionals attracted by the capital’s mix of affordable housing (the city just announced a rent freeze), top-notch universities, and homegrown tech successes including fashion retailer Zalando SE and food delivery startup Delivery Hero SE.In the last five years, Berlin’s population has grown by almost 50,000 annually, underscoring its attraction that can’t be matched by cities like Stuttgart, home to Daimler AG and Porsche, or Wolfsburg, where Volkswagen is based. As a sweetener, the Berlin government offered locations including the site of the existing Tegel airport for Tesla’s design center.Tech HubsThe appeal of Berlin hasn’t been lost on Musk’s rivals. Virtually all the major German carmakers have created tech hubs, and dozens of local startups are active in fields including artificial intelligence, 3D printing and autonomous driving. Tesla will have to compete for local talent with U.S. tech giants including Apple Inc., Oracle Corp., Google and Amazon.com Inc., which is preparing to move into Berlin’s highest office building by 2023 in the rugged-yet-fashionable Friedrichshain-Kreuzberg district.“The Berlin location, home to an ever growing co-working, digitally focused, young programming demographic, has already proved why many German OEMs such as Volkswagen, Porsche, BMW and Daimler are opening digital offices on the Spree” river, said Matthias Schmidt, an independent automotive analyst in Berlin.All the jubilation notwithstanding, Berlin and Brandenburg have their work cut out to build a new home for Tesla. The region lost most of its heavy industry during World War II, and much of what remained after the war was ground up by the country’s separation. Siemens AG is the only global company with a sizable manufacturing footprint in Berlin.And the sprawling new airport, still under construction, is a massive blemish on the region’s record of getting big projects off the ground. It’s an ignominy that was on the U.S. billionaire’s mind when he followed his announcement with an appeal to get the job done.“We definitely need to move faster than the airport,” Musk said.\--With assistance from Iain Rogers, Oliver Sachgau, Christoph Rauwald and Chris Reiter.To contact the reporters on this story: Stefan Nicola in Berlin at email@example.com;Birgit Jennen in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Elon Musk’s announcement that Tesla Inc. will build a factory and a research center near Berlin makes perfect sense as a loud statement. Berlin isn’t known as a car city but it does have a vigorous tech scene and Tesla isn’t so much a car company as a tech one. But it’s also reasonable from other points of view.Musk, who has spent some time deciding on a European factory location, has decided on Gruenheide in Brandenburg, the German state that surrounds Berlin, and the research facility is to be located near Berlin’s yet-to-open new international airport.That the new factory should be in Germany is logical. Germany is Europe’s biggest market for electric vehicles and the one with the biggest potential. Germany is Europe’s most populous country, Germans are in love with cars and worried about the environment, as evidenced by the recent electoral successes of the Greens.It also matters that Germany is a country with some of Europe’s strongest incentives for electric car buyers. It recently decided to increase the maximum subsidy for buyers of battery vehicles to 6,000 euros ($6,600) from 4,000 euros and extend it until 2025. France, Italy and Slovenia offer roughly as much. One could regard Musk’s move as a cheeky foray into the land of its top competitors. Volkswagen AG has launched an all-out electrification strategy that pits it directly against Musk’s mass-market hope, the Model 3 (which apparently won’t be made at the new Berlin factory, at least to start with). In September, the German giant launched the ID.3, the first car on its new platform meant for electric vehicles. Berlin is flooded with electric Golfs that VW made available this year for WeShare, the company’s nascent car-sharing operation. And even before VW starts turning out tens of thousands of cars especially developed as EVs, the e-Golf is already among the Model 3’s strong competitors in Germany, along with Bayerische Motorenwerke AG’s somewhat clunkier i3 and some other European electric cars.But then, it makes sense to keep close to the competition, work with the same suppliers and be able to poach star managers, engineers and designers. Tesla isn’t the cheeky challenger here — the German automakers are, when it comes to EVs. Musk, in a sense, is buying insurance against being overtaken technologically. That could even justify the large differential in workers’ wages: While the average Tesla assembly worker at in California makes $18 per hour, the lowest-paid German auto worker makes about 27 euros per hour, almost $30. There’s also some symbolism to Tesla’s move into Berlin in particular. The capital city was the first German location for Ford, which started assembling Model T’s there in 1926, not fearing competition from German automakers who were slower to catch on to mass production. And yet Berlin and its surrounding area aren’t obvious locations for an auto industry operation. Though BMW makes motorcycles in Berlin, Daimler AG has production sites both in and outside the city and VW has a design center in Potsdam, most of Germany’s car production, engineering and design take place elsewhere. Instead, Berlin has a flourishing startup culture. According to Deutscher Startup Monitor, 16% of Germany’s startup companies are located in Berlin. Only the country’s most populous state, North Rhein-Westphalia, has a bigger share. And when it comes to the number of tech workers, Berlin has more of them per 100,000 residents than any German state except Hamburg and Hesse. Arguably, as a European tech hub the German capital ranks second only to London and possibly Paris. Musk said Brexit ruled out the U.K. as a potential site, and France has such restrictive labor laws that it’s difficult to imagine Tesla opening a 10,000-job operation there when there are other choices.“Berlin rocks,” Musk said as he announced Tesla’s plans.On the other hand, it could be argued that the heart of the automotive industry is shifting east, and it won’t be beating too far from Berlin in the near future. Zwickau in Saxony, three hours’ drive from the capital, is where VW has started production of the ID.3. Saxony is an emerging auto-industry hub that includes BMW and Porsche factories; IG Metall, the labor union that represents many auto workers, counts Saxony as part of the same area as Berlin and Brandenburg. In other words, Musk’s choice of Tesla’s next production and development site is a considered one, even if an impulse to take the battle to Tesla’s deep-pocketed German challengers on their home turf has played an obvious role.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Jonathan Landman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Elon Musk picked a glitzy event in Germany, a few hours’ drive from the birthplace of the internal combustion engine, to drop the news before some of the world’s biggest car bosses: Tesla Inc. plans to set up shop in their backyard.The billionaire chief executive officer announced Tuesday that Tesla will expand its global manufacturing network with a factory near Berlin. At a red-carpet awards ceremony attended by the heads of BMW AG, Volkswagen AG and Audi AG, he said the company will also establish an engineering-and-design center.“Some of the best cars in the world are obviously made in Germany,” Musk said while accepting a trophy for the Model 3, which beat out BMW and Audi sedans for midsize car of the year. He said the country is “not that far behind” in electric cars, while also acknowledging that the market for them is “unproven.”The news wasn’t completely out of left field -- Musk has said before that Tesla would announce the location for a factory in Europe before the end of this year, and that Germany was a front-runner. But it nonetheless bolstered the CEO’s flair-for-the-dramatic reputation. Fresh off a surprise profit report that sent Tesla shares surging, he threw down the gauntlet in front of rival executives that no longer dismiss his company as a niche automaker.“Elon Musk has an ability to make a splash,” said John Boyd, principal of an eponymous manufacturing site-selection firm based in Princeton, New Jersey. “Not only does Germany bring top-level manufacturing skill sets and positive supply chain dynamics to the table, but there is a cachet value to Tesla establishing a brick-and-mortar presence in Germany -- a nation synonymous with precision car manufacturing.”Tesla shares traded up as much as 1.7% shortly after the start of regular trading Wednesday in New York, rising a sixth straight day. The stock closed Tuesday at $349.93, the highest in 11 months.Making a StatementMusk has until now relied on a single auto assembly plant in Fremont, California, to build a $63 billion company. That facility is supported by the first of the company’s so-called gigafactories near Reno, Nevada, that makes batteries. Tesla is on the verge of starting sales of Model 3s produced at its latest production facility, near Shanghai.While adding a European factory raises the stakes for established automakers already facing a serious threat from the electric upstart, it’s likely going to take time for the plant to get up and running. Musk estimated earlier this year that Tesla’s European gigafactory probably won’t be operational until 2021.“The Berlin location serves two unique goals,” said Gene Munster, a managing partner at venture capital firm Loup Ventures. “It’s strategic to lure German automotive talent to Tesla, and it’s a statement that Elon wants to one-up auto companies from that region.”The gigafactory will be located near Gruenheide, just outside Berlin in eastern Germany, according to Tagesspiegel newspaper -- near the coming Berlin Brandenburg Airport. It’s expected to produce both the Model Y and Model 3.For Tesla’s design center, Berlin has offered locations including the site of the existing Tegel airport, which will be phased out after the new hub is opened, according to a letter from the city’s economy minister. Around 10,000 jobs will be created, Bild reported.Tesla’s modest presence in Berlin now includes a store and service center near the Schoenefeld airport, and showrooms near Potsdamer Platz and on the West Berlin shopping boulevard Kurfuerstendamm.While the future of Germany’s electric-car market looks crowded, the politics of shifting away from the internal combustion engine also are going to be messy. Daimler AG, the maker of Mercedes-Benz cars, is running into labor-union resistance over where future electric cars will be produced ahead of a critical meeting with investors Thursday in London. Audi, the biggest profit contributor to Volkswagen AG, faces similar fights over safeguarding employment at its main German factories that specialize in sedans and station wagons.Chancellor Angela Merkel’s government and local automakers have agreed to boost incentives for EVs, intensifying Germany’s effort to move away from the combustion engine to reduce exhaust emissions. Still, building vehicles in a country that has some of the highest labor and energy costs worldwide is bound to be a challenge. European customers also expect a network of dealers and repair shops to reliably handle maintenance and repair work, which Tesla has struggled with lately.“There was very intense competition in recent months among different European nations,” Economy Minister Peter Altmaier told reporters in Berlin, adding that subsidies haven’t been discussed. “It’s an important and positive development that Germany was chosen.”Demand BoostAdding production in Germany and China will probably help Musk boost Tesla’s sales in those regions, according to Kevin Tynan, a Bloomberg Intelligence auto analyst. “The sustainability of the demand will be more the question,” he said. “And if local competition becomes real competition, it will be more difficult.”Merkel’s government announced last week that cash incentives will jump by 50% to as much as 6,000 euros ($6,680) per electric vehicle, with the auto industry covering half the cost. The changes will take effect this month and run through 2025.For Musk, choosing greater Berlin for a factory was “surprising but not fallacious,” said Ferdinand Dudenhoeffer director of Center for Automotive Research at the University of Duisburg-Essen. Battery-cell manufacturing requires space, infrastructure and subsidies, and the city is a good fit for a premium brand like Tesla’s, he said.Shortly after dropping the news, Musk sent out a pair of tweets to make sure it wouldn’t be missed by his 29.3 million Twitter followers. He said the factory will make batteries and powertrains in addition to cars, beginning with the Model Y crossover unveiled earlier this year.(Updates shares in sixth paragraph)\--With assistance from Gabrielle Coppola, Chris Reiter, Birgit Jennen, Iain Rogers and Stefan Nicola.To contact the reporters on this story: Christoph Rauwald in Frankfurt at firstname.lastname@example.org;Dana Hull in San Francisco at email@example.comTo contact the editors responsible for this story: Craig Trudell at firstname.lastname@example.org;Anthony Palazzo at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Let's talk about the popular Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW). The company's shares led the XTRA...
Over the next few years, passenger car sales are expected to drop whereas demand for light trucks is expected to increase as the growth in CUVs is coming largely at the expense of traditional car sales. By 2025, SEMA projects that light trucks that include: pickups, SUVs, CUVs and vans, will represent 69% of all light vehicles sold.
Moody's Investors Service ("Moody's") has today affirmed SGL Carbon SE's (SGL Carbon) B3 corporate family rating (CFR) and B3-PD probability of default rating (PDR). Concurrently, Moody's has affirmed the B2 instrument rating of SGL Carbon's EUR250 million senior secured notes. On 25 October 2019 the company published its second profit warning within a short period of time and some initial performance indications for 2020.
Let’s go back in time to June 2008, when Apple introduced the iPhone 3G. What we did not know at the time was that Nokia was actually the largest dumb phone maker and that Apple was about to become the largest smartphone maker—a crucially important nuance. Nokia should have looked at the iPhone and thanked Apple for showing the future of the phone—then gone on to develop its own smartphone.
The U.S. Justice Department has issued civil subpoenas to four major automakers, demanding that they disclose details on a deal struck with California in July to follow strict vehicle emissions standards, a source briefed on the matter said on Thursday. The Justice Department is carrying out an antitrust investigation into the voluntary agreement. It comes against a growing number of fights between the Republican White House and California on a number of fronts, including numerous environmental issues.
(Bloomberg) -- Lyft Inc. held talks with London’s main transport regulator about making an entrée into the European city through its bike-share program this summer -- a move that, had it happened, would have marked a significant departure for the ride-hailing company that has long focused only on the U.S. and Canada.In June, Lyft approached Transport for London about allowing its users access to the city’s bike-share system, called Santander Cycles. The talks fizzled after TfL ruled out a potential tie-up, according to information obtained in a Freedom of Information request by Bloomberg. TfL credited the success of its own app as a reason not to seek third-party partnerships.Although it didn’t come to fruition, the effort by Lyft sheds light on a potential push into international cities by the San Francisco-based company, which has lost more than 40% in the public markets since its initial public offering in March.“While we currently have no plans to launch rideshare services in London, we regularly meet with cities around the world to discuss urban transportation,” a spokeswoman for Lyft wrote in an email.Any entry into Londonwould pit Lyft against its major rival Uber Technologies Inc., which has long operated in the city and is currently working to improve its rocky relationship with TfL. The regulator in September granted Uber a two-month extension to operate in London.“We haven’t rushed to do international beyond Canada in a big way, and those are all very thoughtful decisions,” said John Zimmer, co-founder and president of Lyft, at a conference in September. “We’re setting the stage to be able to have to more easily go to additional markets. We have not made a final decision on when and how we will do that.”Lyft has kept up regular contact with TfL since 2016. Most recently its executives -- including Julia Haywood, a vice president -- met Michael Hurwitz, director of transport innovation at TfL, and Gareth Powell, managing director of surface transport, in July.The meeting covered the “status of the transport market in London and an update on the range of Lyft’s business activities, from ride-hailing to bike-rental,” according to TfL. Lyft representatives also held regular meetings with TfL counterparts to discuss data-sharing agreements and the implementation of payments software, the information request revealed.“We have considered the possibility of enabling people to hire bikes directly from third party apps,” Danny Price, TfL’s general manager of sponsored services, wrote in an email to Bloomberg. “But we have ruled this out at this time due to the popularity of hires made by contactless payment and our own app.”Lyft acquired an existing relationship with TfL via its takeover of bike-sharing company Motivate in mid-2018. Motivate owns 8D Technologies, which provides point-of-sale products for bike-share programs, including TfL’s Santander Cycles. Over the past year, Lyft has increased user access to shared bikes and scooters. Via the acquisition of Motivate, it acquired New York’s Citi Bike system, which is now available via its app.Lyft has also been building its presence in Europe with a new location and acquisitions. Early last year, the company opened its first European office in Munich, home to companies like BMW AG and Siemens AG. In October of last year, the company bought Blue Vision Labs, a London-based augmented reality startup.To contact the reporter on this story: Giles Turner in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Mark Milian at email@example.com, Anne VanderMey, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.