DDAIF - Daimler AG

Other OTC - Other OTC Delayed Price. Currency in USD
-0.51 (-0.90%)
At close: 3:58PM EST
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Previous Close56.36
Bid0.00 x 0
Ask0.00 x 0
Day's Range55.81 - 56.24
52 Week Range44.80 - 67.20
Avg. Volume45,492
Market Cap59.685B
Beta (3Y Monthly)1.56
PE Ratio (TTM)5.66
EPS (TTM)9.87
Earnings DateN/A
Forward Dividend & Yield3.64 (6.46%)
Ex-Dividend Date2019-05-23
1y Target Est64.85
  • Daimler slashes jobs in bid to save $1.1 bln
    Reuters Videos

    Daimler slashes jobs in bid to save $1.1 bln

    Daimler is set to slash jobs. The Mercedes maker wants to save 1 billion euros - about 1.1 billion dollars - by the end of 2022. Among those to go will be around 10% of management positions. The move comes as tougher emissions rules kick in. Daimler expects them to sap profits next year and in 2021. They will require it to sell more electric vehicles - something many automakers are struggling to do at a profit. Then add trade tensions and Brexit. The German firm says those two factors could depress returns by up to 1%. Investors didn't like what they heard. Daimler shares were down over 3% by early afternoon Thursday. That made them the biggest decliner on Germany's DAX index.

  • Autonomous Taxis Become a Rough Ride for Europe

    Autonomous Taxis Become a Rough Ride for Europe

    (Bloomberg Opinion) -- As recently as March, Daimler AG, the German carmaker, promised to put 10,000 autonomous taxis on the streets by 2021. But this week, Daimler chairman Ola Kaellenius announced that the company was taking a “reality check” on the project and focusing on self-driving long-haul trucks instead. It’s fine that self-driving cabs aren’t coming as fast as some expected — and it’s even better that Silicon Valley-style big talk appears to be going out of fashion.Kaellenius’s “reality check” has some solid business reasons: Daimler is cutting costs and can’t commit to a large, capital-intensive project without a clear idea of what kind of first-mover advantage it might confer. But mostly, it comes because of a long-obvious technical problem. Making sure self-driving cars aren’t a menace in city traffic is a job that’ll take more than a couple of years. Investigators are still trying to get to the bottom of the March 2018 accident in which a driverless Uber killed a pedestrian in Tempe, Arizona, and it appears Uber Inc.’s cars had been involved in dozens of previous nonfatal incidents in the course of the same testing program. No one wants to be in the same situation as Uber — so General Motors Co. subsidiary Cruise won’t be launching self-driving taxis in San Francisco this year, as previously promised, and maybe not next year, either. There's been lots of news stories about Waymo Llc, an Alphabet Inc. subsidiary, launching a self-driving taxi service in Arizona, and in April, it even put an app for it on the Google Play store. But in September, Morgan Stanley lowered Waymo’s valuation because of delays in the commercial use of its technology, and last month, Waymo chief executive John Krafcik said driverless delivery trucks could come before a taxi service.For European carmakers, which have to deal with older cities not laid out on a grid, launching autonomous taxi services appears even more daunting than for Americans. They know it’s a long way from Tempe to Amsterdam or Rome. That’s one reason Volkswagen AG, a latecomer to self-driving development, isn’t worried about being overtaken. Alexander Hitzinger, chief executive of Volkswagen’s autonomous-vehicle subsidiary, said in a recent interview that even an industry pioneer such as Waymo was “a long way away from commercializing the technology” and that Volkswagen’s autonomous vehicles would be developed by the mid-2020s.That time frame may be no more realistic than the previous hype about big 2019 and 2020 launches. Autonomous car developers can complain all they want about unpredictable human drivers and pedestrians who are causing all the accidents with their flawlessly superhuman creations, but nobody is going to clear the cities of people to give self-driving cars a spotless safety record. And making sure that, after millions of hours of training, artificial intelligence is finally able to drive like a human after a few hundred hours on the road, is not all that’s required for robotaxis to be viable. There's still the whole matter of figuring out how to reduce rather than increase urban congestion by using cars that don't “think” like humans.It’s also dangerous to adopt any kind of specific framework for the launch of automated truck services, even though that’s an easier project than taxis because the routes are fixed. The presence of humans in what is still a predominantly human world has rather unpredictable consequences for robot behavior. And the first movers have an obvious disadvantage: Like Uber with a taxi, they can get burned in ways that could set the whole business back years, and the earnings potential is unclear.None of this means, of course, that self-driving development has failed or even hit a dead end. Given enough time and a few technological breakthroughs, autonomous vehicles will be safe around actual people in actual winding, narrow, crowded streets. Engineering challenges exist to be overcome. The problem isn’t with the tech, which is moving along at a reasonably rapid pace, but with how that progress is communicated.Nobody forced experienced managers at venerable companies such as Daimler or GM to make overly optimistic statements about self-driving taxi launches. Waymo is a cash-burning startup, and it’s difficult to hold it responsible for getting ahead of itself. But the adults in the room look silly for having tried to play catch-up. There’s no reason for the big car companies to make any promises on self-driving at all. Unlike with vehicle electrification, which is part of many countries' climate policies, there’s no regulatory pressure to eliminate human drivers. And autonomous mobility-related business models are purely theoretical at this point.It would be enough for companies involved in autonomous car development to say they’re working on it. Pretty much all the big players are, to some extent. The time for any other kind of announcement will come when someone is really ready to launch a commercial service, whenever that may be. No rush.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.netThis 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.

  • The Climate Crisis Is Coming for Your Land Rover

    The Climate Crisis Is Coming for Your Land Rover

    (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 cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis 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.

  • Benzinga

    Today's Pickup: Daimler Is Laying Off Over 1,000 Workers To Save Money Amidst Auto Sector Slowdown

    German automaker Daimler has announced that it will be laying off workers to save more than €1 billion by 2022, citing the global auto slowdown and the €870 million fine it had to pay in September for selling vehicles that exceeded emissions limitations. Daimler will also be channeling resources to expand its range of plug-in hybrids and all-electric vehicles, trying to keep up with Volkswagen, which is quickly becoming one of the largest stakeholders in the electrification landscape. With the now-announced entry of Tesla into the German market, the onus is on Daimler to get its foot in the door.

  • Daimler takes 'reality check' on robotaxis

    Daimler takes 'reality check' on robotaxis

    Daimler has taken a "reality check" on self-driving "robotaxis", acknowledging that making them safe is proving harder than first thought amid questions over their future earnings potential. Daimler would "rightsize" its spending level on robotaxis and that self-driving technology would more likely be applied to commercial vehicles for freight companies on long haul routes. Carmakers raced to develop self-driving vehicles after Google presented a prototype car in 2012, leading Daimler to develop an autonomous Mercedes.

  • Daimler’s New CEO Warns Electric-Car Shift Will Be Painful

    Daimler’s New CEO Warns Electric-Car Shift Will Be Painful

    (Bloomberg) -- Daimler AG’s new chief executive officer warned there will be no quick fix for the automaker’s struggle to revive squeezed profit margins during a costly shift to electric and self-driving cars.After two rapid-fire profit warnings earlier this year, Ola Kallenius said on Thursday that the German icon’s earnings would remain under pressure for the next two years. The Swede laid out a plan to gradually lift margins by capping investment and cutting jobs to save more than 1.3 billion euros ($1.4 billion).“To remain successful in the future, we must therefore act now and significantly increase our financial strength,” Kallenius said in his first big major strategy presentation since taking charge in May. “Comprehensive measures to increase efficiency” are needed “in all areas.”The expensive transition to electric vehicles is colliding with legacy diesel issues and trade disputes to put pressure on the maker of Mercedes-Benz vehicles. Kallenius’s response failed to win over skeptical investors. The stock fell as much as 4.7%.“Mid-term targets are very disappointing,” and the strategic announcements are “much too general,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler.After the critical Mercedes car division dropped its profit margin forecast this year to a range of 3% to 5% -- well below the returns of French mass-market rival PSA Group -- Daimler predicted margins of at least 4% next year and 6% in 2022, excluding the fallout from higher tariffs and restructuring costs. The trucks division will target margins of more than 5% in 2020 and 7% in 2022.Job cuts are a critical component of the effort to make the manufacturer leaner. At the Mercedes cars unit, 10% of management positions as well as an indefinite number of “indirect” administrative roles will be eliminated to reduce costs be more than 1 billion euros. The trucks unit will save 300 million euros in personnel costs in Europe.“In the automotive industry we are facing difficult times,” Michael Brecht, Daimler’s leading employee representative, said in a statement. “We have to face this reality, but we must not save on the future viability of our company.”Daimler shares fell to as low as 51.04 euros and were down 3.7% at 51.55 euros at 4:47 p.m. in Frankfurt, paring gains for the year to 12% and valuing the company at 55 billion euros. Tesla Inc., which plans to locate its European factory in Germany, has surpassed Daimler in market capitalization.Alongside moves to rein in spending, the successor of veteran Dieter Zetsche outlined plans to introduce more than 20 new plug-in hybrid and fully-electric Mercedes cars by 2022. The underpinnings of the EQS design concept shown in September will serve as basis for more purely battery-powered luxury cars, Kallenius said.While the rollout of hybrid and fully-electric cars will enable the company to get “within reach” of complying with tighter emissions limits in Europe, Kallenius cautioned that buying behavior of customers will play a key role for actually meeting the target. Demand remains difficult to predict as charging infrastructure in some markets remains patchy, he said in his presentation at London’s five-star Corinthia Hotel.“Daimler urgently needs to move away from its ‘spray and pray’ investment philosophy and toward a materially more focused, sharpened allocation of its funds,” Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note prior to the presentation. “Otherwise, the group will simply be unable to self-fund its premium mobility aspirations.”Kallenius and new Chief Financial Officer Harald Wilhelm gave no indication for a potential deeper reorganization after Daimler adopted a new corporate structure that gives its cars, trucks and mobility services divisions more independence. Investors have urged management to consider a partial listing of the trucks division.“We have no plans to change the capital structure of the group,” Kallenius said.(Adds CEO comments from telephone conference in last paragraph)To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Chris Reiter, Tara PatelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Tesla (TSLA) to Open First European Gigafactory in Berlin

    Tesla (TSLA) to Open First European Gigafactory in Berlin

    Car production in Tesla's (TSLA) Berlin Gigafactory is likely to begin in late 2021.

  • Barrons.com

    Daimler Stock Reverses on Profit Warning and $1.8 Billion Cost-Cutting Plan

    Daimler’s stock fell on Thursday as the German automobile giant warned tougher emissions rules would hit earnings over the next two years and unveiled plans to save more than €1 billion ($1.1 billion) by cutting jobs.

  • European stocks edge lower on China trade concerns and ‘worst of all worlds’ German economic data

    European stocks edge lower on China trade concerns and ‘worst of all worlds’ German economic data

    European stocks slipped on Thursday on concern over the state of U.S.-China trade talks as data showed a stagnating economy in Germany.

  • Daimler seeks 1 billion euros in savings at Mercedes-Benz by cutting jobs

    Daimler seeks 1 billion euros in savings at Mercedes-Benz by cutting jobs

    Tougher emissions rules will hit Daimler's profits in 2020 and 2021, prompting the German carmaker to seek more than 1 billion euros ($1.1 billion) in savings from cutting staff costs at its Mercedes-Benz business by the end of 2022, it said on Thursday. Daimler shares were down 2.3% in early trading at 52.17 euros, the biggest decline on Germany's DAX blue-chip index, which was down 0.3%. Management positions will be cut by around 10%, and company said it would also seek more than 300 million euros from cutting personnel costs - plus another 250 million euros in fixed costs - at its trucks business.

  • Germany Dodges Recession With Surprise Third-Quarter Growth

    Germany Dodges Recession With Surprise Third-Quarter Growth

    (Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.Germany narrowly dodged what would have been its first recession in six years, putting a damper on speculation that the government will add fiscal stimulus any time soon.The surprise expansion doesn’t change the fact that the economy is going through a torrid period that’s turned it from the euro area’s traditional growth engine into a source of weakness. Expansion was just 0.1% in the third quarter, with the 19-country currency bloc only a little better, at 0.2%.A pile up of trade tensions, weaker world demand and turmoil in the automobile sector has led to Germany’s worst manufacturing slump in a decade and put question marks over its role as an economic powerhouse.Weakness in the global economy was also evident elsewhere on Thursday. Expansion in Japan cooled sharply in the third quarter, and China saw slower growth in factory output and consumption coming off the boil.Germany’s GDP increase was led by consumer and government spending. Construction and exports also rose, while investment in machinery and equipment fell. The contraction in the second quarter -- which had sparked months of recession speculation -- was revised to 0.2% from 0.1%.What Bloomberg’s Economists Say“The question remains how much of the weakness in manufacturing will spread to services. Our base case is that some of the damage will be transmitted, keeping growth slow, but that a downturn will be avoided.”\--Jamie Rush. Read the GERMANY REACTThere have been some signs recently that the economy may be through the worst of its downturn, and business sentiment appears to have stabilized. Third-quarter growth in most major euro economies beat expectations.But it’s far from an all-clear, with most key indicators still at multi-year lows and the economy expected to post sub 1% growth in 2019 and 2020. The pain has been felt across the major names in German corporate royalty, with firms from Siemens to BASF repeatedly warning that trade fights are hitting sentiment and investment.Upheaval in the car industry from emissions and the switch to electric engines have compounded the slump, and there’s little end in sight. Parts maker Continental AG said two days ago it sees no material improvement in global car production in the next five years, and Daimler AG announced plans to slash headcount at its Mercedes-Benz cars division.“The German economic model is more challenged than it has been in the past,” Dietmar Hornung at Moody’s said on Bloomberg TV. “We’re seeing headwinds, but it’s also a structural issue that could lead to a gradual weakening over time of Germany’s economic strength.”Concern about the economy has pushed German bond yields below zero and meant Germany faced a growing chorus of calls to unleash fiscal stimulus. The government has said that’s not needed and it’s likely to feel vindicated by Thursday’s figures.However, Economy Minister Peter Altmaier, speaking on ARD television shortly after the data were published, characterized growth as “still too weak.”“That means the upward trend has started but it’s proceeding very slowly,” he said.Much hinges on developments in the U.S.-China trade battles that have dominated the global economic landscape. The danger of U.S. levies on European automobiles isn’t fully off the table, suggesting manufacturing momentum will remain subdued.Consumers have also become wary. Households’ assessment of the growth outlook is at a seven-year low, financial expectations are deteriorating rapidly and fears of unemployment are rising.\--With assistance from Piotr Skolimowski, Zoe Schneeweiss, Iain Rogers, Kristian Siedenburg and Harumi Ichikura.To contact the reporter on this story: Yuko Takeo in Frankfurt at ytakeo2@bloomberg.netTo contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters

    UPDATE 2-European shares hit by Daimler warning, weak economic data

    European shares closed lower on Thursday as a warning from German carmaker Daimler and weak economic data from major economies added to concerns about a global slowdown. Daimler dropped about 3%, the biggest decline on Germany's blue-chip index after the carmaker said tougher emissions rules would hit earnings in 2020 and 2021.

  • Financial Times

    Daimler to slash more than €1bn in personnel costs

    Daimler plans to slash €1.4bn in personnel costs and 10 per cent of managers worldwide as the German carmaker warned that the race to roll out electric vehicles would drastically reduce its profits over the next two years. “The expenditure needed to achieve the [EU’s] CO2 targets require comprehensive measures to increase efficiency in all areas of our company,” said chief executive Ola Källenius, who took the reins at Daimler in May.

  • Reuters

    European shares slip, Daimler drags on Germany

    European shares dipped lower in early trade on Thursday, as a drop in Daimler shares and lackluster economic data from Asia as well as Europe, checked any gains from a handful of positive corporate updates. Daimler slumped more than 3% after the German carmaker said tougher emissions rules will hit earnings in 2020 and 2021, forcing it to seek more than 1 billion euros in personnel cuts at Mercedes-Benz Cars by end of 2022. Earlier, data showed Germany's output grew 0.1% in the third quarter compared with the previous three months, defying investors expectation that Europe's economic powerhouse will slide into a recession.

  • TheStreet.com

    Daimler Slides on Emissions Costs Warning as Trump Auto Tariff Decision Looms

    Daimler shares traded lower Thursday, pulling European auto stocks firmly into the red, after the luxury carmaker told investors that tighter emissions stands would clip profits for at least the next two years.

  • Benzinga

    Krispy Kreme Delivery Man Given Sprinter Van At FreightWaves LIVE

    When Jayson Gonzalez was asked by FreightWaves CEO Craig Fuller to speak at the FreightWaves LIVE event in Chicago on Nov. 12 about the difficulties of making interstate deliveries, he had no idea that a special delivery would be made to him. The 21-year-old gained national attention earlier this year when his budding donut delivery business in the Midwest was shut down by the Krispy Kreme company (NYSE: KKD) for taking the donuts across state lines. Fuller was moved by the young entrepreneur's story and reached out to Daimler Trucks North America (OTC: DDAIF) about securing a new Sprinter van for Gonzalez.

  • Tesla and Berlin Are a Perfect Match

    Tesla and Berlin Are a Perfect Match

    (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 lbershidsky@bloomberg.netTo contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.netThis 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.

  • German Companies Love Stability. That’s Becoming a Problem

    German Companies Love Stability. That’s Becoming a Problem

    (Bloomberg) -- Tucked between rapeseed fields and wooded hills in the Austrian countryside sits one of the remaining outposts of a frantic push by the German car industry into a pricey alternative to steel.The goal was to make carbon fiber the core of future cars: combustion or electric. But it proved to be more of an engineering vanity project and highlights the shortcomings of a corporate culture that creates a bias for stability.While Germany’s focus on steady improvement has worked well in the past, it’s ill-suited for a period of rapid change. And the risks have become evident as Europe’s largest economy struggles with trade conflicts and the value chain shifting away from traditional engineering. Third-quarter economic data on Thursday are expected to show that Germany fell into technical recession for the first time in six years.Inside the SGL Carbon SE factory in Ort im Innkreis near the German border, two dozen workers in blue t-shirts shuttled between about 30 industrial robots on a recent fall day. The machines stacked, cut and glued carbon-fiber parts for rooftops and rear spoilers.What they didn’t do was churn out entire auto frames by the masses, as envisioned by BMW AG and Volkswagen AG earlier this decade.Ahead of the 2013 rollout of the BMW i3, which has a body based on the material, “the hype around carbon fiber was huge,” said Herwig Fischer, who heads the plant located in what’s known as Austria’s Composite Valley. The i3 “has been a revolutionary project. Today, it’s more about an evolution.”At the time, BMW teamed up with SGL to set up a plant in the U.S. to produce the sleek black fiber and vied with VW for control of the Wiesbaden-based company. Mercedes-Benz maker Daimler AG jumped on the bandwagon by setting up its own joint venture with a Japanese peer. The German giants were keen to secure access to the material that’s lighter and stronger than steel, but costly and cumbersome to work with.iPhone on WheelsShortly after the carbon-fiber craze started, Tesla Inc. introduced the Model S, featuring a 265-mile range, wireless software updates and a 17-inch touchscreen display. In other words: While German auto engineers tinkered with a complex material that drivers couldn’t see or touch, the California upstart was inventing the iPhone on wheels.Similar fizzled developments include BMW’s 2005 combustion-hydrogen car fueled by a liquid form of the gas that’s almost impossible to store safely in a vehicle. And then there was the original Mercedes A-Class in 1997. The compact infamously rolled over during testing and featured an innovative but boxy design that turned off its target audience of younger customers.While the stumbles have been relatively minor, the window for business-as-usual overengineering is closing.Germany -- only now developing a car-battery sector to power its shift to electric vehicles -- has already started to lose its edge, according to the World Economic Forum’s latest report on global competitiveness. The country dropped to rank seven worldwide from third last year, largely because it’s struggling to adopt new Internet and communication technologies, the report says.The complex way decisions are made in corporate Germany has contributed to the slow pace of adaption. At the top of the pyramid are supervisory boards, which hire and fire top executives and sign off on major strategy decisions.Employee representatives make up half the seats on the boards and tend to take a dim view of moves that could reduce jobs. They generally need to seek a compromise with the investor side. Those representatives are 60 years old on average, 93% male and many split their time between multiple oversight bodies, according to a recent study from consultancy EY.The investor delegates were described as often being “ill-equipped,” “relatively useless” and “all old guys” in a 2018 study from consultancy Alvarez & Marsal, which was based on interviews with 20 German executives.Daimler’s effort to become more nimble is a case study in the complexity of German corporate decision making. In 2013, the automaker sought to untangle its conglomerate structure by making its commercial vehicle unit more independent, but internal dynamics shot down the plan at the time.It took Daimler six years to finally succeed. And the company had to pay dearly to gain support just for creating legally separate units for cars, trucks and services: agreeing to invest 35 billion euros ($39 billion) in Germany and safeguard jobs through 2029.Wake-Up CallThere has been progress. Most big German companies are making an effort to add more diverse views. Last year, Daimler recruited Marie Wieck, head of IBM Corp.’s blockchain operations, to its supervisory board, and Volkswagen added communications executive Marianne Heiss to its group of overseers. This year, SAP SE appointed Germany’s first-ever female DAX chief executive officer.Volkswagen’s diesel scandal also delivered a painful wake-up call to German automakers, which have since accelerated efforts to develop self-driving, electric cars. And it looks like there’s still time: Tesla’s development remains volatile, and other game-changing risks, such as ride-sharing services and robo-taxis, are still in the works.BMW is now exiting its joint venture with SGL and its future iNEXT flagship won’t rely as heavily on carbon fiber as the i3. While the prospects for an entire car frame -- with the exception of elite models like the Lamborghini Aventador -- are a stretch, the push wasn’t totally in vain.Many components benefit from the material’s low weight, durability and fire resistance, and it’s gradually becoming more economical.SGL churns out parts faster than ever before. It’s developing battery cases for China’s NIO Inc. and will start 10 new projects to produce automotive parts in 2020, from three new lines this year. It’s also expanding outside the car industry, and similar composite materials have become well established in plane making.“It took about half a century for aluminum to make its way from the aviation industry into serial production in cars,” said Andreas Woeginger, SGL’s head of technology for its composites division. “Our industry is still young.”To contact the reporters on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net;Eyk Henning in Frankfurt at ehenning1@bloomberg.net;Richard Weiss in Frankfurt at rweiss5@bloomberg.netTo contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Chris Reiter, Andrew BlackmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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    Americans contemplate Berlin Wall's fall, U.S.-German ties at "Wunderbar Together"

    For Michael Mucchetti, the fall of the Berlin Wall 30 years ago marked the start of a deeply personal relationship with Germany, and he is determined to ensure that broader U.S.-German ties survive political disputes currently dividing the allies. Mucchetti, chief of staff for a Democratic lawmaker from Texas, shared his story with Georgetown University students this week at the end of a $50 million, yearlong German government campaign aimed at reaching a new generation of Americans and moving beyond battles over trade and defense spending.

  • Daimler to cut 1,100 managing positions worldwide - Sueddeutsche Zeitung

    Daimler to cut 1,100 managing positions worldwide - Sueddeutsche Zeitung

    Daimler will cut 1,100 leadership positions worldwide, or about 10% of its management, German daily Sueddeutsche Zeitung said on Friday, citing a newsletter circulated by the company's works council. "The works council was recently informed by management about the personnel and financial situation of the company," Brecht told employees. Daimler's works council rules out compulsory layoffs until 2030, Brecht said, adding that voluntary buyouts should be possible but only in a situation when both parties consent.

  • Daimler to cut 1,100 managing positions worldwide: Sueddeutsche Zeitung

    Daimler to cut 1,100 managing positions worldwide: Sueddeutsche Zeitung

    Daimler will cut 1,100 leadership positions worldwide, or about 10% of its management, German daily Sueddeutsche Zeitung said on Friday, citing a newsletter circulated by the company's works council. "The works council was recently informed by management about the personnel and financial situation of the company," Brecht told employees. Daimler's works council rules out compulsory layoffs until 2030, Brecht said, adding that voluntary buyouts should be possible but only in a situation when both parties consent.