Volkswagen's plans to reach margin parity between electric and combustion engine vehicles may not become a reality until 2025, according to CFO Arno Antlitz. The delay is due to rising raw materials costs, which have made it impossible for the automaker to achieve parity without making its own batteries. Volkswagen hopes to achieve a positive margin on its ID.2 EV model, due to enter production in Spain in 2025. The company may convert its existing Wolfsburg operation rather than build a new factory for future Trinity line EVs, at a lower cost.
Volkswagen has denied that it is negotiating with Chinese tech firm Huawei to licence software for its cars in China. During an interview at the Reuters Events Automotive Europe conference in Munich, VW’s chief financial officer, Arno Antlitz, confirmed that the company was looking to improve its China-specific software but denied that it was in talks with Huawei.
Stellantis’ warning that Britain’s trade rules with the EU could threaten electric van plant viability at Ellesmere Port has reopened the issue of rules of origin for the car industry. Car factories are concerned that anything that affects their exports to Europe will make them less competitive and more at risk. Rules of origin ensure that goods have sufficient locally-made content to qualify for tariff-free access to markets. Under the EU's post-Brexit Trade and Cooperation Agreement, vehicles sold from one to the other must have 55% of their “content” from within the EU or UK. By January 2024, 60% of an electric vehicle battery pack must originate from Europe or UK to qualify as “local”.
Ford 'disappointed' in Ottawa's handling of rocky Stellantis deal for EV battery plant
CBC
23-05-17 20:01
Ontario Premier Doug Ford has criticised the Canadian federal government for its handling of auto maker Stellantis, following its appeals for assistance with electric vehicle battery plant construction in Windsor. Both the provincial and federal authorities are keen to prevent Stellantis from ending its joint project with LG Energy Solutions, but Ford suggested it is up to the government to deliver on its promises. While Ottawa wants Ontario to pay its "fair share", Ford said the he is unsure what that equates to. The government wanted capital contribution and production subsidies to open Volkswagen's battery factory in St. Thomas, which was licensed in March.
Stellantis, parent company of Chrysler, Jeep, and Fiat, has halted construction on its EV battery factory in Windsor, Ontario, citing its demands to match the US's manufacturing incentives under the Inflation Reduction Act. The province and federal government each contributed CAD $500m ($399m) for the facility, demanding that Stellantis and LG Energy Solution match subsidies to keep the project competitive in Canada. The Windsor facility will employ 2,500 workers once it reaches its full capacity. The Inflation Reduction Act was introduced six months after the initial March 2022 deal between the government and Stellantis, in which the federal government is contributing CAD $700m to VW's EV battery factory. However, negotiations became difficult as Stellantis demanded that the government live up to its promise to honour the agreement that was made three weeks prior to construction.
Volkswagen (VW) is reportedly planning to carry out a cost-cutting overhaul of its core brand in an attempt to drive up profit margins. In an internal memo seen by Reuters, VW brand chief Thomas Schaefer wrote: "We need to create good, competitive returns in times of crisis and in a continually volatile world. Pressure is mounting. The Volkswagen brand must act." The proposed plans are expected to aim for at least a €3bn ($3.23bn) annual boost to earnings, rather than job cuts, with more details to follow in coming weeks.
The future of a $5bn electric vehicle battery plant joint project from automaker Stellantis LV and battery maker LG Energy Solution, in Windsor, Ontario has been thrown into doubt after the two companies halted construction and called on Ottawa to "keep its commitments." The federal government wants Ontario to contribute what it considers its "fair share" to the project, despite having promised in recent years to match subsidies available in the US on similar projects. Ontario Premier Doug Ford says the amounts requested are not clear and says it is Ottawa's job to match US support.
Volkswagen is to overhaul its core brand in an attempt to increase efficiency and returns. An internal memo from Thomas Schaefer, the VW brand chief, laid out the overarching plans and set a target for the company’s brand to attain a return on sales of 6.5% compared with the 3% of Q1 2018. The move is meant to help VW maintain its economic foothold in what Schaefer calls a challenging environment marked by the risks of recession, geopolitical conflict, and volatility in raw material and energy prices. In particular, VW’s plans could be aimed at reducing production overcapacity in German sites. Handelsblatt reports that the strategy could generate at least €3bn ($3.56bn) in annual results and result in job reductions. However, members of VW’s Works Council have indicated that they are considering the proposals and that job and wage cuts would be off the table.
Stellantis construction still stalled as industry urges haste on 'once in a generation' investment
CBC
23-05-18 00:35
The Canadian Vehicle Manufacturers' Association has said that Canada must not hesitate if the country wants to secure foreign investment as the automotive industry moves towards electrification. CEO Brian Kingston highlighted Canada's natural advantages, such as access to critical minerals, and called for a "straightforward" deal to be struck with Stellantis over investment in the country, with a dollar-for-dollar match to what is being offered in the US. Negotiations on the future of the Stellantis EV battery plant in Windsor, Ontario are ongoing while construction remains paused.
The Inflation Reduction Act, signed into law by US President Joe Biden in August, has spurred a subsidy race and rankled foreign allies and global companies with its economic protectionism. Despite prompting concerns from some G7 leaders and global CEOs, Japanese officials have agreed a trade deal with the US to expand eligibility for EV tax credits. Tesla has declared a strategy shift centred on the Act’s incentives while Mercedes-Benz and Audi are looking to invest further in the US. However, some of the biggest global drugmakers are preparing to fight the Act’s plan to negotiate Medicare drug prices.
European stocks rose on Thursday, following the positive sentiment on Wall Street due to signs that the US was nearing a deal to raise the debt ceiling and avoid default. The STOXX 600 index rose 0.4%, with automakers and technology stocks leading gains. German carmaker Volkswagen gained 2.6% on plans to overhaul its brand for higher efficiency and returns, while Deutsche Bank slipped 1.3% following a $75m settlement with women who claim they were abused by Jeffrey Epstein and accused the bank of facilitating his sex trafficking. Luxury fashion brand Burberry fell 4.9% despite stronger-than-expected fourth-quarter sales.
Europe aims to entice EV battery makers to establish factories in the bloc to reduce its dependence on Asia and challenge the US in the green subsidy race. Europe is also attempting to attract electric-vehicle component suppliers. Recent investments in the EV industry in Europe include Volkswagen’s construction of six battery factories, Northvolt’s €3bn-€5bn ($3.30bn-$5.50bn) electric-vehicle battery factory in Germany, and India’s Tata Group looking at Spain or Britain to locate a battery factory.
The Canadian and Ontario governments are currently learning the hard way that when you pay a subsidy to one particular industry it can create a domino effect of ransom notes from other companies in that same industry. This is currently happening as Stellantis and LG Energy Solution are requesting an increase in state-subsidised funding for their electric vehicle battery factory after having seen their competitor, Volkswagen, already receive substantially better terms. Last year, Volkswagen was given $13bn worth of subsidies from Ottawa over ten years for its factory, which is 13% of the company’s market value, plus $500m from Ontario. Unfortunately for Canada, it doesn't look like it was satisfied with simply subsidizing Volkswagen and is now in danger of overpaying even more for Stellantis and LG’s ventures. This highlights the problematic nature of the government’s aggressive pursuit of electric vehicles, which could leave the taxpayer footing the bill for a series of increasingly extortionate ransom notes.
Volkswagen has launched its latest electric vehicle (EV), the ID.5 - a battery-powered coupé version of the ID.4 SUV. The ID.5 offers an official range of 324 miles on a single charge, powered by the same two rear-wheel drive motors seen in the ID.3 hatchback, which can produce up to 296bhp. The ID.5 is larger and roomier than its sibling, but like the ID.4, doesn't impress critics with its "lumpen ride quality" and "cheap-feeling interior plastics". The ID.5 retails at around £54,000, making it more expensive than rival similar EVs offered by Tesla, Kia and Hyundai, but according to the Telegraph, the monthly repayments are on a par with the competition.
ARC Automotive is refusing to recall potentially exploding airbag inflators that are present in the vehicles of more than 33 million people in the US. The National Highway Traffic Safety Administration (NHTSA) has demanded the recall of the units, which have been linked to two deaths and at least seven injuries, and has claimed that the inflators have been found to be defective following an eight-year investigation. Automakers, including Chevrolet, BMW, Ford and Porsche, have sought clarity from the NHTSA. No manufacturer has so far identified an issue affecting all 67 million inflators, necessitating a recall, according to ARC.
Foreign automakers are being hit by China's improved domestic competition, which is pushing prices down and lowering their market share. Car companies are looking at different courses of action, with some such as Volkswagen doubling down on China, while others, such as Ford, are adopting a more focused approach, pulling back to commercial vehicles to concentrate on specific areas of development and listening to consumer trends. The US firm's move underlines the need for carmakers to act judiciously when attempting to lay down roots in regions with different sales tendencies.
Billionaire investor Carl Icahn has lost money every year since 2014, mostly due to hedges made against a fast-rising market to protect his investment empire against another financial crisis, according to analysis by the Financial Times. Since 2017, the prominent activist investor has lost around $9bn due to hedges which would have paid out if asset prices had collapsed. According to the analysis, Icahn lost approximately $1.8bn in 2017 on hedging positions and $7bn between 2018 and Q1 2019. Icahn has bet on a market collapse since the aftermath of the 2008 financial crisis, deploying a strategy that involved shorting broad market indices, corporations, commercial mortgages and debt securities. At times, the notional exposure of his trades surpassed $15bn. This has neutralised approximately $6bn in gains from his activist wagers.
China has become the world's largest exporter of cars, surpassing Japan in the first quarter of 2022. This was driven by an increase in demand for electric vehicles and rising sales to Russia, which has seen a surge in Chinese exports since the Ukraine war. Chinese carmakers, including Tesla's China arm, SAIC, BYD, Geely, Chery, and Great Wall, have benefitted from the shift towards electric vehicles and the opportunities offered by Russia's sanctions. Tesla's Gigafactory in Shanghai is currently capable of producing 1.25 million vehicles a year, and the company is planning to further increase capacity.
A cross-party group of federal lawmakers is backing a call for climate-focused rules on how Canada’s banks, insurers and pension funds invest their money. Ryan Turnbull, the Liberal MP leading a new push to bring the country's financial system in line with its commitment to reduce carbon emissions, made a call for Canada's financial system to be aligned to the Paris Agreement. Turnbull's motion does not explicitly support Senator Rosa Galvez's Climate-Aligned Finance Act (CAFA).
Revenue at Tesla Motors UK rose 75% to £2.8bn last year despite spiralling electricity prices eating into sales demand for electric vehicles. The manufacturer registered profits of £31m. The company has reduced the prices of its leading models in the UK to boost sales. Tesla's Model Y sold 35,551 vehicles last year, making it Britain's most popular electric car. Policymakers and industry analysts suggested the market for EVs had peaked, and less-affluent buyers were deterred by persistently high battery prices.
