|Bid||36.22 x 0|
|Ask||36.96 x 0|
|Day's range||36.48 - 37.72|
|52-week range||21.02 - 54.47|
|Beta (5Y monthly)||N/A|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg Opinion) -- Back when Tesla Inc. delivered 95,000 cars to customers during the spring quarter of 2019, the stock price was languishing at about $235 and Elon Musk’s electric car company was valued at “only” $40 billion. Fast forward a year and the shares are now priced at more than $1,200. With a market capitalization of $224 billion, Tesla has surpassed Toyota Motor Corp. as the world’s most valuable automaker.Yet in the second quarter of 2020, Tesla delivered 91,000 vehicles — about 5% fewer than the same period last year. That’s pretty underwhelming for a company whose fans view it as a fast-growing technology company in the mold of Amazon.com Inc., rather than a sluggish metal-bashing carmaker. So how is the massive recent jump in its market value justified?In fairness, it shows resilience to sell this many cars when the company’s main California plant was shut by the pandemic for much of the spring period. Doubtless, Tesla’s new Shanghai plant picked up the production slack, which suggests the expense and effort of getting that China factory up and running was worth it. The launch of Tesla’s new Model Y crossover vehicle will have helped. Ford Motor Co. and General Motors Co. both saw their U.S. deliveries decline by a third in the same quarter. Nevertheless, Tesla’s stock market acolytes pushed the shares up another 8% on Thursday, adding $16.5 billion to the market value. Such exuberance is hard to understand. Musk’s company sold 7,650 more vehicles than analysts expected during the second quarter, and the stock price jump equates to about $2 million of added shareholder value for each of those additional sales. This seems a little excessive given that a Tesla Model 3 sells for less than $40,000, and the profit margin on those cars is pretty slim. The shareholder reaction makes even less sense when you consider that Tesla investors aren’t really meant to buying the stock because of the company’s current sales, which are less than 4% of Volkswagen AG’s. Rather, the investment case is a long-term one: that it will come to occupy a dominant position in clean transport and energy in the years ahead. That explains why the shares trade at 320 times its analyst-estimated earnings this year. Viewed through this lens, Tesla’s ability to shift a few thousand extra cars in recent weeks shouldn’t matter so much for the valuation. Investors’ tendency to overreact to Tesla news made more sense when its survival was open to doubt. A year ago it was laying off workers, U.S. sales were slowing and its retail strategy was confused. Senior staff kept heading for the exit. The company was burning through cash and ran pretty low on financial fuel. It had just $2.2 billion of cash in March 2019, compared with more than $8 billion now.But subsequent evidence that Tesla can sell cars for more than it costs to produce them has transformed the mood — and with it Tesla’s stock price.Instead of “killing” off Tesla, the tepid electric offerings of established carmakers such as Audi and Mercedes have only underscored the quality of their rival’s battery and powertrain technology (the same can’t be said of Tesla’s build quality). Volkswagen’s software problems with its forthcoming ID.3 electric vehicle suggest catching Tesla won’t be straightforward, even with the Germans’ vast resources.Tesla’s stratospheric valuation appears to have become self-reinforcing. Should it require more money to fund its roughly $9 billion of capital expenditure over the next three years, it can raise it from shareholders without worrying about diluting them too much.Similarly, holders of more than $4 billion of convertible bonds that Tesla issued to fund its expansion should be happy to convert them into stock, rather than demand cash repayment, taking some of the pressure off the company and its balance sheet. Still, Tesla’s valuation remains impossible to justify by any standard metrics. Analysts’ average price target is more than 40% below the current level. Even Musk has suggested that the share price, which has almost trebled since the start of 2020, is too high — although, as with his taunting of the U.S. Securities and Exchange Commission and his comments about “fascist” lockdowns, it’s usually better to tune out what Musk says and focus on his actions instead. The skeptics might have more faith in Tesla’s new position as the leader of the automaker pack when Musk stops his provocations and his shareholders stop getting giddy over modest good news.This 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Here’s a list of companies that are planning to halt spending on social media. Some have joined a boycott of Facebook Inc. after critics accused the social network of inadequately policing hateful and misleading content on its platform:Harley Davidson Inc. -- The motorcycle maker said in an email it was pausing Facebook ads in July “to stand in support of efforts to stop the spread of hateful content.”Pernod Ricard SA -- The French distiller of Jameson whiskey and Absolut Vodka, which spends more than 1.5 billion euros ($1.69 billion) on advertising annually, is boycotting Facebook and some other U.S. sites through July 31 and working with partners on an app to help victims of online abuse.Daimler AG -- The Mercedes-Benz maker is pausing its paid advertising on Facebook platforms in July, while adding that it expects to the relationship to resume because it’s confident the social-media company will take “necessary steps.”Molson Coors Beverage Co. -- The brewer is choosing to pause advertising on Facebook, Instagram and Twitter while it reviews its own standards and ways to protect the brands and guard against hate speech, Chief Marketing Officer Michelle St. Jacques said in an internal email.Constellation Brands -- The maker of Corona beer and Kim Crawford wines is pausing Facebook ads for the month of July.Dunkin’ Brands Group -- The donut chain is temporarily pausing its paid media on Facebook and Instagram, a spokesperson says, adding that it’s in discussions with Facebook about efforts to stop hate speech and thwart “the spread of “racist rhetoric and false information.”Lego A/S -- Stopping all advertising on social media for at least 30 days to review its standards and will “invest in other channels” during that time.The Body Shop -- The beauty chain says it’s halting paid activity on all Facebook channels and asking the social-media company to enhance and enforce its content-moderation policies.Starbucks Corp. -- Pausing advertising on all social media platforms. Will post on social media without paid promotion.Microsoft Corp. -- Paused global advertising spending on Facebook and Instagram because of concerns about ads appearing next to inappropriate content, according to a person familiar with the matter.Unilever Plc -- Halting advertising on Facebook, Instagram and Twitter in the U.S. through Dec. 31.Volkswagen AG -- The ad stop on Facebook affects the direct ad accounts of the German manufacturer’s brands, including Porsche, Audi and Lamborghini. VW, its ad agencies and the Anti Defamation League will enter talks with Facebook over how to deal with hate speech, discrimination and false information, according to an emailed statement.Mars -- Starting in July, a pause on paid advertising globally across social-media platforms, including Facebook, Instagram, Twitter and Snapchat.Target Corp. -- Pausing ads on Facebook in July.Coca-Cola Co. -- Pausing advertising on all social media platforms.Clorox Co. -- Will stop advertising spending with Facebook through December.Conagra Brands Inc. -- Will stop advertising in U.S. on Facebook and Instagram through the rest of the year.Ford Motor Co. -- Halting U.S. social media for 30 days, won’t purchase social media ads for Bronco unveiling.Honda Motor Co. -- “For the month of July, Honda will withhold its advertising on Facebook and Instagram, choosing to stand with people united against hate and racism.” Acura, a Honda brand, said in a tweet that it was “choosing to stand with people united against hate and racism.”Hershey Co. -- Will halt spending on Facebook in July and cut its spend on the platform by a third for the remainder of the year, according to Business Insider.Diageo Plc -- Pausing paid advertising globally on major social media platforms beginning in July.PepsiCo Inc. -- Pulling ads on Facebook from July through August.Verizon Communications Inc. -- “We’re pausing our advertising until Facebook can create an acceptable solution that makes us comfortable and is consistent with we’ve done with YouTube and other partners,” said John Nitti, chief media officer for Verizon.SAP SE -- “We will suspend all paid advertisements across Facebook and Instagram until the company signals a significant, action-driven commitment to combatting the spread of hate speech and racism on its platforms.”Levi Strauss & Co. -- Pausing all paid Facebook and Instagram advertising globally and across all brands through July.Diamond Foundry Inc. -- Pulling all of advertising from Facebook, including Instagram, for the month of July.Patagonia Inc. -- Will pull all ads on Facebook and Instagram, effective immediately, through at least the end of July, pending meaningful action from Facebook.Viber Media Inc. -- The messaging service, owned by Japanese conglomerate Rakuten, plans to cut ties with the social network entirely, according to the Guardian.VF Corp. -- The North Face will pause ads on Facebook for the month of July. Vans, another VF brand, will also pull ad dollars from Facebook and Instagram next month, and said it will use the money to support Black communities through empowerment and education programs.REI -- “For 82 years, we have put people over profits. We’re pulling all Facebook/Instagram advertising for the month of July.”Upwork Inc. -- No Facebook advertising in July.Eileen Fisher Inc. -- Pulling ads from Facebook through July.Adidas AG -- Will stop ads on Facebook and Instagram internationally through July, according to Adweek.Puma SE -- Will stop all advertisements on Facebook and Instagram throughout July.Madewell Inc. -- Will pause ads on Facebook and Instagram through July.Pfizer Inc. -- Removing all advertising from Facebook and Instagram in July, calls on Facebook to heed the concerns of the StopHateForProfit boycott campaign “and take action.”Chipotle Mexican Grill Inc. -- To pause Facebook advertising beginning July 1, according to an email.Chobani -- The Greek-yogurt company paused all paid social-media advertising.Peet’s Coffee -- Paused advertising on Facebook.Sony Interactive Entertainment Inc. -- ”In support of the StopHateForProfit campaign, we have globally suspended our Facebook and Instagram activity, including advertising and non-paid content, until the end of July.”(Updates with Sony Interactive Entertainment)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- TDK Corp. sees a silver lining to the coronavirus pandemic in a boost to demand for its batteries and sensors in electronic gadgets and a long-term push toward greater use of tech in the auto industry.Once ubiquitous across cassette tapes and compact discs, the Japanese household name now provides batteries for one in three phones globally. Though TDK has seen revenue fall as U.S.-China trade tensions weighed on auto sales, the outbreak should quicken digitization across the home and industry and propel imminent demand for batteries in personal devices and long-term demand for sensors in connected cars, Chief Executive Officer Shigenao Ishiguro said in an interview.“Digital transformation is a huge opportunity for us and I have no doubt that the coronavirus will push the world to go that direction at a faster pace,” Ishiguro said.The CEO, who witnessed first-hand how the Thai floods of 2011 disrupted supply chains and quickened a transition from hard disk drives to solid-state storage, sees in the coronavirus outbreak a similar catalyst for change.TDK over the past decade and a half has reinvented itself as a purveyor of batteries for smartphones, but the global car market slump hurt its overall business. The company is coming off its first revenue decline since 2012, even though it remains a leader in compact power cells. TDK’s lithium-ion cells earned 600 billion yen ($5.6 billion) in the fiscal year ended March, having powered close to a quarter of all laptops, 43% of game console hardware and more than half of all tablets sold in 2019, according to Techno Systems Research. Demand for these device categories surged around the virus outbreak, according to IDC market researchers.For TDK’s battery division, “business opportunity can be found around every corner of the tech industry in a world with the coronavirus and 5G,” said Morningstar Research analyst Kazunori Ito. Growing product categories include drones, wireless earphones and smartphones with fifth-generation networking -- all of which require small-sized batteries that can provide reliable power for many hours. TDK’s Hong Kong-based subsidiary Amperex Technology Ltd. is widely recognized for having a technological lead on this front, said Ito, calling it “the absolute battery king.”Read more: Investors Are Favoring Firms That Let People Work From HomeBut TDK faces much more skepticism with the other wing of its business: sensors. The company offers magnetic sensors to aid stabilization of mobile cameras and MEMS (microelectromechanical systems) sensors used in noise-canceling headphones. Neither has managed to stand out in a fiercely competitive components market, said Ace Research Institute analyst Hideki Yasuda.Acknowledging the charge, Ishiguro said his most urgent task now is to bring that business up to speed before looking at additional M&A deals.“I moved things around to beef up our sensor business, and my top priority is to generate convincing returns from it,” he said. Ishiguro, who took the top job in 2016, oversaw the acquisition of U.S.-based MEMS specialist InvenSense Inc. the year after and is keen to prove that division’s worth.The auto industry presents another potent opportunity, as TDK’s magnetic sensors can be used at multiple spots around a car, from power-steering to windshield wipers. The Tokyo-based company’s technology is “already in a lot of car pipelines, including ones awaiting approval and ones waiting for mass production,” Ishiguro said. “In a not so distant future, our sensors will be the de facto standard in the car industry.”TDK in May forecast a 14% drop in its production for the auto market this fiscal year, as the industry battles the effects of Covid-19 and lingering trade tensions. But Ishiguro’s belief, shared by SMBC Nikko Securities analyst Hiroharu Watanabe, is that the upheaval is more likely to hasten automakers’ transition to smart electric vehicles and thus expand the market for component makers.“Tesla has adopted an upgradeable computer platform for its Model 3, which we can almost call a smartphone in terms of the semiconductor chips it equips,” Watanabe said. Daimler AG last week announced it will use Nvidia Corp.’s similar smart car technology in all its vehicles starting with 2024 models.Read more: Mercedes Will Use Nvidia Technology in All Cars From 2024For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.S. campaign to hamstring China’s Huawei Technologies Co. is gaining fresh impetus as the Trump administration chokes off supplies of vital microchips and Beijing causes dismay on both sides of the Atlantic with its stance on Hong Kong and the coronavirus.The U.K. is reconsidering its embrace of Huawei while carriers in Denmark and Singapore have chosen other providers for their telecommunications networks. Meanwhile, Germany and France are reassessing the role of the company that the U.S. accuses of theft, sanctions busting and providing an avenue for espionage.Only months ago, the U.S. was struggling to persuade its allies not to use Huawei’s equipment. But in May, Washington moved to handcuff Huawei to outdated technology by denying it chips made with U.S. techniques. The change could turn Huawei into a permanent laggard, unable to update and maintain cutting-edge 5G networks that will be communications backbones for decades to come.At the same time, politics have been unkind to Huawei’s ambitions. Officials in Europe and the U.S. have criticized China over its handling of the Covid-19 pandemic. And Beijing drew condemnation for preparing national security laws for Hong Kong, a step seen as a threat to the city’s autonomy.“Two years ago no one worried about buying Huawei - that’s not true any more,” said James Lewis, director of the technology policy program at the Center for Strategic & International Studies in Washington. He sees “some progress,” in swaying other countries to ban Huawei “although well short of a total ban.”President Donald Trump is boasting of success, saying in a recent interview with the Wall Street Journal, “Look how tough I’ve been on Huawei. Nobody has been tougher than me.”The U.S. says Huawei is a threat to security for the fifth-generation, or 5G, wireless systems that are beginning to be deployed around the world. The networks promise speed and ubiquity: a thick forest of always-on links to billions of devices in homes, factories, surgical suites and autonomous vehicles. As more and more devices and networks are connected, vulnerability to hacking or espionage grows apace.Because Huawei is subject to control by China’s ruling Communist Party, it can be compelled by law to cooperate with the country’s security apparatus, and has been implicated in espionage, according to the State Department. The Pentagon chimed in Wednesday, sticking Huawei on a list of 20 companies it says are owned or controlled by China’s military, opening them up to potential new US. sanctions.Rob Manfredo, a U.S.-based spokesman for Huawei, didn’t respond to a request for comment.Huawei has denied allegations of spying, saying it would lose customers if it weren’t trustworthy. The Shenzhen-based company says it’s a private business that can’t be directed by Beijing, and that no Chinese law requires private national companies to engage in cyber-espionage.Chip BanThe Commerce Department’s ban in May of the sale of any silicon made with U.S. know-how was a potentially crippling blow to China’s tech champion. Huawei’s stockpiles of certain self-designed chips essential to telecom equipment will run out by early 2021, people familiar with the matter have said. While Huawei can buy off-the-shelf or commodity mobile chips from a third party like Samsung Electronics Co., it couldn’t possibly get enough and may have to make costly compromises on performance in basic products, they added.The chip restrictions add “uncertainty and potential costs” that could leave Huawei unable to meet commitments to build and maintain networks, said Robert Williams, executive director of the Paul Tsai China Center at Yale Law School. “The trade-offs between cost and security risks may look different now than they once did to the U.K.”Huawei’s position is sharply contested in Britain.The U.K. in January barred Huawei from sensitive core network components and high-risk areas like nuclear-power sites, but said the Chinese company could still constitute as much as 35% of networks’ 5G and fiber equipment elsewhere.That prompted an angry phone call from Trump to U.K. Prime Minister Boris Johnson. The Trump administration has said any country that uses an “untrustworthy” 5G vendor jeopardizes intelligence sharing with the U.S. That would strike at the heart of the traditional “Five Eyes” security alliance linking the U.S. and U.K., along with Australia, Canada, and New Zealand to cooperate on espionage.The U.K.’s January decision also triggered a rebellion of junior lawmakers in Johnson’s Conservative Party. Since then, Hong Kong and Covid-19 have helped to harden their stance.U.K. government officials now are seeking ways to phase the company out in as little as three years.“There’s been a pretty effective relentless American campaign,” said Sam Armstrong, spokesman for the Henry Jackson Society, a London-based policy group that has argued for blocking Huawei from the U.K.’s 5G networks. “The evidence in Parliament and the threats to Five Eyes intelligence-sharing arrangements have all contributed to a sense that this has had a seriously undermining effect on our trans-Atlantic relationship.”Despite the storm clouds obscuring its future in the U.K., Huawei committed Thursday to invest $1.2 billion in a research and development center near the English city of Cambridge, drawing criticism from a former leader of the ruling Conservative party. It said the timing was coincidental and the plans had been in the works for years. Growing TensionThe issue is fraught in other European countries, too. The company is losing luster in Europe after winning contracts across the continent, said John Strand, a consultant based in Copenhagen.“Around Europe, there is a growing focus on the use of Chinese equipment including Huawei,” Strand said in an interview. “When it comes to Hong Kong, it obviously has an impact.”Strand predicted other countries would follow paths such as those taken by Denmark, where the biggest phone company TDC A/S in March chose Stockholm-based Ericsson AB to build its 5G network, rather that its existing supplier Huawei. Earlier, Energy Minister Lars Christian Lilleholt highlighted security considerations for 5G, without mentioning Huawei.Such moves would represent a change of momentum for a beleaguered U.S. campaign, said Justin Sherman, a fellow at the Atlantic Council’s cyber-statecraft initiative.“There are many countries that have not done what the U.S. wanted,” including Germany, France and Italy, Sherman said. “There’s legitimate reason to be concerned about Huawei’s position on the 5G networks,” he said.U.S. diplomats say Ericsson and Finland’s Nokia Oyj build 5G gear and can be alternatives to Huawei. The European providers have struggled to compete with Huawei and ZTE Corp. equipment that’s often cheaper and at least as capable.“5G systems carry the most private information and intellectual property. It comes down to one question: Who do you trust?” Keith Krach, the U.S. undersecretary of state for economic affairs, said in an interview. “People are realizing that Huawei’s 5G is the backbone of that surveillance state.”U.S. officials point to progress in persuading allies, citing the European Union’s January adoption of a policy that said companies based in non-democratic countries could be excluded from parts of the network. The EU stopped short of an outright ban on Huawei.The German government is struggling to settle on rules that would require security certification for vendors in the 5G network. Earlier senior Chinese officials highlighted German car companies – the crown jewel of Europe’s biggest economy – as a potential target for retaliation if Huawei is banned from their markets. China is the biggest single market for Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG. German Chancellor Angela Merkel has resisted a blanket ban on Huawei from 5G networks.France won’t ban any equipment maker from its 5G network, but will seek to protect critical infrastructure, finance minister Bruno Le Maire said earlier this year. With a spectrum auction set for September, carriers including Bouygues SA await a decision from the French cyber security agency Anssi on whether Huawei can be part of their plans. In a tweet earlier this week, U.S. Secretary of State Mike Pompeo praised France’s leading phone company Orange SA, calling it a “clean” telecom carrier after it picked “trusted” 5G equipment suppliers Nokia and Ericsson in January.Italy hasn’t moved against Huawei, though it has adopted rules to closely monitor telecommunications equipment suppliers, and scrutinize gear that comes from outside Europe. Italy has pursued a friendly approach with Chinese investors and especially with Huawei, which has poured money into the country, financing research centers, universities and schools.In Canada, Prime Minister Justin Trudeau has been stalling a decision on whether to ban Huawei from 5G wireless networks. Tensions between the two countries have been rising since Canadian authorities arrested Huawei Chief Financial Officer Meng Wanzhou on a U.S. extradition request in late 2018. After her arrest, China put two Canadian citizens in jail, halted billions of dollars in Canadian imports and put two other Canadians on death row. On June 2, two major Canadian wireless companies -- BCE Inc. and Telus Corp. -- said they’d build out their 5G wireless networks with equipment from Ericsson and Nokia.India has allowed Huawei to participate in trials, but the company’s entry into the country’s 5G commercial network could be blocked as tensions persist following border clashes with China. India is the largest wireless market outside China by number of subscribers, and has been a focus for investment by Huawei.“The tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party’s surveillance state,” Pompeo said in a statement Wednesday.(Updates to add reference to U.K. development site in 19th paragraph. An earlier version of this story was corrected to fix the spelling of Huawei in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Daimler AG unit Mercedes-Benz said it will use Nvidia Corp. technology in all vehicles starting with the 2024 models, part of a push toward automated cars.Nvidia’s Drive software and chips will give Mercedes-Benz cars the most “sophisticated and advanced computing architecture ever used in an automobile,” the companies said Tuesday in a statement.Automakers and semiconductor companies are increasingly joining forces as the car industry tries to progress rapidly from adding electronics that help drivers to vehicles that don’t need a human behind the wheel. Nvidia, based in Santa Clara, California, and led by founder and Chief Executive Officer Jensen Huang, is looking to parlay its dominance of computer graphics into a leading position in the market for automotive silicon.Unlike other cars that require physical upgrades, the companies said the new systems will feature updates through software. That may allow owners to configure their vehicles in the way that smartphone users customize their handsets, will provide remote safety and maintenance updates and give manufacturers a way to sell services after the car has been purchased.Huang said in a statement that the companies share a vision of the “automobile of the future” that “will come with a team of expert AI and software engineers continuously developing, refining and enhancing the car over its lifetime.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- In parts of Germany, Bavarians were once known as “needleheads.” One day, God, angered at the solipsism in the country’s beautiful southernmost state, is supposed to have picked a local up by the head, thus elongating it like a needle, and rotated it. “See,” God said, “there’s more to the world than just Bavaria.”The tale might offer a useful lesson to Volkswagen AG’s Bavarian chief executive officer, Herbert Diess, and the company’s board. Internecine conflict at the top of the world’s biggest carmaker risks derailing its 33 billion-euro ($38 billion) bet on electric vehicles at the worst possible moment, with car sales at their lowest in decades and Tesla Inc. becoming a genuine threat. Volkswagen needs to be looking outward beyond its domestic concerns, not inward.The parent company of Audi, Porsche, Lamborghini and Bentley has been buffeted these past two weeks as tension between Diess and some members of the firm’s supervisory board broke into the open. At an internal event for more than 3,000 managers last week, the former BMW AG executive accused directors of committing crimes by leaking confidential discussions, Bloomberg News reported. On Monday, the board responded by stripping him of direct control of the Volkswagen brand — he’d been CEO of both Volkswagen AG and its dominant, namesake division. Diess apologized, and the board issued a lukewarm statement, saying they would “continue to support him in his work.” The contretemps is another ugly distraction from Diess’s otherwise largely successful leadership of the German giant. Since taking the reins in 2018, he has helped the company move on from the 2015 dieselgate scandal by accelerating a pivot toward electric vehicles, and integrating more closely the company’s disparate fiefdoms of 12 brands spanning motorbikes to 16-ton trucks. The stock has outperformed German rivals BMW and Daimler AG under his leadership. While Mercedes owner Daimler has issued five profit warnings in the same period, VW has issued one, prompted by the coronavirus pandemic.Managing the conflicting interests at Volkswagen is an unenviable task. Its dual-class share structure — a rarity in corporate Germany — means the 75 billion-euro company is essentially family owned, with descendants of automotive engineer Ferdinand Porsche controlling 53% of the voting shares. The State of Lower Saxony, where Volkswagen is based, controls 20% of the votes, and powerful labor representatives have slightly less than half the board seats.It’s a stark contrast with Tesla, which suffers from the inverse problem: a lack of oversight for its brilliant but flawed CEO. While Elon Musk can unilaterally decide to build a tent to accelerate assembly of Tesla’s Model 3 sedan, Diess has to satisfy a panoply of interested parties as he tries to transform his company.But Diess, who has a history of poorly judged comments, needs to get out of his own way too. His recent accusation of boardroom criminality followed a staggeringly distasteful assertion to managers last year that “Ebit macht frei.” That translates roughly as “profit sets you free,” echoing the “Arbeit macht frei” (“work sets you free”) sign above the gates of Nazi concentration camps.Volkswagen has changed CEO twice already since 2015. It doesn’t need another upheaval. At stake is more than just the interests of the Porsche family and Lower Saxony. The carmaker employs about 670,000 people, and it’s among the biggest employers in countries such as Hungary, the Czech Republic and Portugal. Its actions have significant implications for European stability. The company’s leadership needs to get the transition to electric cars right. There’s more to the world than its corporate headquarters.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Car Inc. has lost the chairman that it shared with scandal-tarred Luckin Coffee Inc., (almost) cut a deal for a state-backed bailout, and is working with lenders for waivers on debt.So, all’s well with China’s largest car rental company? Not quite.Let’s start with the chairman’s departure. On Wednesday, Charles Lu Zhengyao resigned to spend more time at affiliate UCAR Inc., one of the rental firm’s largest shareholders, and other businesses. This is good news, in theory, as he’s likely to be distracted by the deepening accounting fraud case reported by local media at his much-hyped coffee chain. The reality is more complicated, but investors once again have cheered news that his hold on Car Inc. is easing.Is it? Even if Lu is out, Car Inc. and UCAR remain deeply intertwined. Investors should wonder whether his name coming off the securities filings really means he’s gone for good. Some other board members remain affiliated with UCAR, or are management-level executives there. The ex-chairman, through various entities he controls, conducts several related-party transactions.As of the first quarter, the rental company was owed almost 500 million yuan ($70 million) in trade receivables from its parent and owed around 100 million. UCAR was Car Inc.’s largest customer, largely due to fleet rentals. As of March 30, Car Inc. also held a stake in UCAR, losing money on it last year as fair value decreased. They’re tied up in other ways: Car Inc. shelled out 788 million yuan in the last half of 2019 toward UCAR’s subsidiary Beijing Borgward Motor Co. This tangle isn’t going away, but Car Inc. hopes pressure from its obligations can. The company says that it’s speaking to creditors about waiving $168 million of immediately due debts. The expectation is that their jitters will be eased by last week’s news that a deal is in the works for state-backed car company Beijing Automotive Group Co., the Chinese joint-venture partner for Daimler AG-owned Mercedes-Benz and Hyundai Motor Co., to rescue the rental firm.There are questions about how much sense the proposed bailout makes for either company, as I wrote, and if it can really free Car Inc. from its ties to UCAR. It’s unclear whether the transaction will even be completed; final terms haven’t been agreed. The deal would be similar to one with U.S. private equity firm Warburg Pincus LLC that Car Inc. terminated a few weeks ago. Such agreements at Chinese companies don’t always work out, according to analysts at HSBC Holdings Plc. For instance, bonds rallied at Huachen Energy Co. when a state-owned entity came in for a rescue, but the deal eventually expired and nothing was concluded.Next, consider the waivers. Agreements with Car Inc.’s creditors hold that if Lu is no longer a director, lenders can ask for the immediate return of the outstanding principal, accrued interest and other payables. Given the stress on the company and the market, Car Inc. is asking for a waiver. But why should creditors defer the $168 million due to them? It’s not like the business is going to turn around any time soon, and the balance sheet needs work. Conditions for renting cars will stay gloomy for some time after the Covid-19 hit. The company’s capital allocation is poor, as analysts at Lucror Analytics note. That isn’t going to change.Car Inc. could talk lenders into a distressed exchange. That may help stave off a default as Lu’s network unravels, but would probably come at a loss to creditors, a phenomenon that analysts at Moody’s Investors Service have noted in recent months at other troubled companies. Geo Energy Resources Ltd. is a case in point. The mining company bought back over $100 million of its debt at around a 40% discount to par value. Typically, the lower the likelihood of a borrower making good on obligations, the larger the discount. Car Inc. has few alternative channels to raise cash.Car Inc. remains China’s biggest rental company in the world’s largest car market. The prospects for growth — pre-pandemic — were bright. It could make the business work, or at least get access to the credit it needs to keep things rolling until the market comes back, should it manage to be restructured to cut dependence on Lu’s web. Short of that, there’s not much to look forward to.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Famed investor Carl Icahn couldn’t save an American emblem, Hertz Global Holdings Inc. So why does a Beijing-backed enterprise think it can rescue China’s largest car rental company? With its prospects for fresh capital dimming, Car Inc., which shares a chairman with scandal-hit Luckin Coffee Inc., says it’s selling a stake to Beijing Automotive Group Co., the Chinese joint venture partner for Daimler AG-owned Mercedes-Benz and Hyundai Motor Co. BAIC plans to buy up to 21.26%, or a maximum 450.8 million shares, the entire ownership of parent UCAR Inc. That would make the state-owned entity the second-largest shareholder behind Legend Holdings, parent of computer maker Lenovo Group Ltd. Another agreement that was in the works between UCAR and a vehicle linked to private equity giant Warburg Pincus LLC will be terminated. Investors cheered Monday’s news, with the stocks and bonds rising from near rock-bottom. The sale would help sever ties between Car Inc. and Luckin and, in theory, reduce further fallout from the scandal engulfing the coffee chain and Chairman Charles Lu Zhengyao that has riled regulators. But the rescue doesn’t make much strategic or financial sense for either Car Inc. or BAIC.The last thing BAIC needs in the current auto market, which was sagging even before the pandemic, is the stress of a troubled rental company and all the strings attached. The auto giant’s first-quarter results showed that net profit declined 95% on year. The local Beijing brand posted a loss of 1.4 billion yuan ($196 million). Mercedes-Benz was better off because premium-segment demand has held up. Sales volume halved on the Hyundai side. BAIC is already playing rescuer elsewhere, bolstering dealerships with financial support like payable extensions, interest waivers and higher subsidies.What BAIC will — or can — do for Car Inc. through such an arrangement is unclear. The company may end up being a sink for BAIC. The rental business relies heavily on financing and needs capital with high costs on vehicle acquisitions and other such operations. UCAR, the parent, has also been a source of revenue for Car Inc. through fleets; what happens to those relationships once ties are cut will be in doubt. Car Inc. has to deal with the residual value of its cars because in China, manufacturers don't offer guaranteed depreciation or repurchase programs. The company also has guaranteed subsidiary borrower loans onshore along with other shadow financing arrangements. It will be on the hook if there are any defaults. The rental company’s future, with or without a savior, was already up in the air. Moody’s Investors Services expects its leverage ratio to rise over the next 12 months as revenues and demand fall. The cancelled sale of the second tranche of shares to Warburg would have made the firm Car Inc.’s largest shareholder, and could have eased worries about governance and capital shortages, according to S&P Global Intelligence. UCAR sold the first portion — a 4.65% stake — in April to the U.S. firm.This raises several questions for Car Inc. bondholders should BAIC eventually buy the entire stake. UCAR had pledged the shares as collateral for some loans last June. Now, there’s the risk of a change of control event and accelerated debt repayments. Any modifications to the ownership, that is, if the cumulative stakes of major shareholders fall below a 35% threshold, would trigger the clause.There are other considerations. Does Daimler want a part of this? The German company owns 30% of BAIC’s Hong Kong-listed shares. The stake sale, if completed, could open it up to the risk of helping Car Inc. That may weigh on its Chinese partners’ financial standing domestically if Daimler is pushed to support the rental firm’s business.It’s one thing to bail out a good company with a bad balance sheet. But Beijing’s modus operandi of rescuing all companies and banks lands it just where it doesn’t want to be: holding the bag for many bad actors. Consider this: In March last year, UCAR took a 67% stake in an entity related to BAIC through a complicated transaction. It still hasn’t fully paid back the equity portion, according to local media reports. It also owes principal and interest payments. Perhaps this is the way in to get some money back? Either way, this bailout looks wrong. The imminent arrival of a white knight does little in the way of reorganizing or fixing this business; it just shifts around liabilities and a web of ties. Investors shouldn’t rejoice too soon. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
US President Donald Trump will hold a press conference on China later today, with fears he will declare Hong Kong no longer legally independent from China.
(Bloomberg) -- At a factory near Germany’s border with the Czech Republic, Volkswagen AG’s ambitious strategy to become the global leader in electric vehicles is coming up against the reality of manufacturing during a pandemic.The Zwickau assembly lines, which produce the soon-to-be released ID.3 electric hatchback, are the centerpiece of a plan by the world’s biggest automaker to spend 33 billion euros ($36 billion) by 2024 developing and building EVs. At the site, where an East German automaker built the diminutive Trabant during the Cold War, VW eventually wants to churn out as many as 330,000 cars annually. That would make Zwickau one of Europe’s largest electric-car factories—and help the company overtake Tesla Inc. in selling next-generation vehicles.But Covid-19 is putting VW’s and other automakers’ electric ambitions at risk. The economic crisis triggered by the pandemic has pushed the auto industry, among others, to near-collapse, emptying showrooms and shutting factories. As job losses mount, big-ticket purchases are firmly out of reach—in the U.S., where Tesla is cutting prices, more than 36 million people have filed for unemployment since mid-March. Also, the plunge in oil prices is making gasoline-powered vehicles more attractive, and some cash-strapped governments are less able to offer subsidies to promote new technologies.Even before the crisis, automakers had to contend with an extended downturn in China, the world’s biggest auto market, where about half of all passenger EVs are sold. Total auto sales in China declined the past two years amid a slowing economy, escalating trade tensions, and stricter emission regulations. EV sales are forecast to fall to 932,000 this year, down 14% from 2019, according to BloombergNEF. The drop-off is expected to stretch into a third year as China's leaders have abandoned their traditional practice of setting an annual target for economic growth, citing uncertainties. Economists surveyed by Bloomberg expect just 1.8% GDP growth this year.The global market contraction raises the prospect of casualties. French finance minister Bruno Le Maire has warned that Renault SA, an early adopter of electric cars with models like the Zoe, could “disappear” without state aid. Even Toyota Motor Corp., a hybrid pioneer when it first introduced the Prius hatchback in 1997, is under pressure. The Japanese manufacturer expects profits to tumble to the lowest level in almost a decade.Automakers who for years have invested heavily in a shift to a high-tech future—including autonomous vehicles and other alternative energy-based forms of transportation such as hydrogen—now face a grim test. Do their pre-pandemic plans to build and sell electric cars at a profit have any chance of succeeding in a vastly changed economic climate? Even as Covid-19 has obliterated demand, for the car makers most committed to electric, there’s no turning back.“We all have a historic task to accomplish,” Thomas Ulbrich, who runs Volkswagen’s EV business, said when assembly lines restarted on April 23, “to protect the health of our employees—and at the same time get business back on track responsibly.”Volkswagen Pushes AheadGlobal EV sales will shrink this year, falling 18% to about 1.7 million units, according to BloombergNEF, although they’re likely to return to growth over the next four years, topping 6.9 million by 2024. “The general trend toward electric vehicles is set to continue, but the economic conditions of the next two to three years will be tough,” said Marcus Berret, managing director at consultancy Roland Berger.Volkswagen’s Zwickau facility became the first auto plant in Germany to resume production after a nationwide lockdown started in March. Before restarting, the company crafted a detailed list of about 100 safety measures for employees, requiring them to, among other things, wear masks and protective gear if they can’t adhere to social-distancing rules.The cautious approach has reduced capacity—50 cars per day initially rolled off the Zwickau assembly line, roughly a third of what the plant manufactured before the coronavirus crisis. (VW said Wednesday that daily output had risen to 150 vehicles, with a plan to reach 225 next month.) Persistent software problems also have plagued development of the ID.3, one of 70 new electric models VW group is looking to bring to market in the coming years. Still, Ulbrich and VW CEO Herbert Diess over the past three months have reaffirmed Volkswagen’s commitment to electrification. “My new working week starts together with Thomas Ulbrich at the wheel of a Volkswagen ID.3 - our most important project to meet the European CO2-targets in 2020 and 2021,” Diess wrote in a post on LinkedIn in April. “We are fighting hard to keep our timeline for the launches to come.”Diess has described the ID.3 as “an electric car for the people that will move electric mobility from niche to mainstream.” Pre-Covid, the company had anticipated that 2020 would be the year it would prove its massive investments and years of planning for electric and hybrid models would start to pay off.A more pressing worry that could hamper VW’s ability to scale up production is its existing inventory of unsold vehicles. The cars need to move to make room for new releases, but sales are down as consumers are tightening their spending. One response has been to offer improved financing in Germany, including optional rate protection should buyers lose their jobs. VW also has adopted new sales strategies first used by its Chinese operations, such as delivering disinfected cars to customer homes for test drives, and expanding online commerce.Other German automakers are similarly pushing ahead with EV plans. Daimler AG is sticking to a plan to flank an electric SUV with a battery-powered van and a compact later this year. BMW AG plans to introduce the SUV-size iNEXT in 2021 as well as the i4, a sedan seeking to challenge Tesla’s best-selling Model 3.A potential obstacle for all these companies—apart from still patchy charging infrastructure in many markets—is the availability of batteries. Supply bottlenecks appear inevitable given that the number of electric car projects across the industry outstrip global battery production capacity. And boosting cell manufacturing is a complicated task.China's (Weakened) EV Dominance For VW and others, the first big test of EVs’ appeal in a Covid-19 world will come in China. Diess has referred to China as “the engine of success for Volkswagen AG.” VW group deliveries returned to growth year-on-year last month in China, while all other major markets declined.Not long ago, China appeared to be leading the world toward an electric future. As part of President Xi Jinping’s goal to make the country an industrial superpower by 2025, the government implemented policies that would boost sales of EVs and help domestic automakers become globally competitive, not just in electric passenger cars but buses, too.With the outbreak seemingly under control in much of the country, China is seeing some buyers return to the showrooms, but demand for passenger cars is likely to fall for the third year in a row, putting startups like NIO Inc. at risk and hurting more-established players like Warren Buffett-backed BYD Co., which suffered from a 40% year-on-year vehicle sales decline in the first four months of 2020.The Chinese auto market may shrink as much as 25% this year, according to the China Association of Automobile Manufacturers, which before the pandemic had been expecting a 2% decline. EV sales fell by more than one-third in the second half of 2019.NIO, the Shanghai-based startup that raised about $1 billion from a New York Stock Exchange initial public offering in 2018 but lost more than 11 billion yuan ($1.5 billion) last year, was thrown a much-needed lifeline when a group of investors, including a local government in China’s Anhui Province, offered 7 billion yuan last month.Other Chinese manufacturers are counting on support from the government, too, including tax breaks and an extension to 2022 of subsidies, originally scheduled to end this year, to make EVs more affordable.For now, the government will also look to help makers of internal combustion engine vehicles, at least during the worst of the crisis, said Jing Yang, director of corporate research in Shanghai with Fitch Ratings. But, she said, “over the medium-to-long term, the focus will still be on the EV side.”America is Tesla CountryCompanies can’t count on that same level of support from President Donald Trump in the U.S., where consumers who love their SUVs and pickup trucks have largely steered clear of electric vehicles other than Tesla’s.The U.S. lags China and Europe in promoting the production and sale of EVs, and that gap may widen now that Americans can buy gas for less than $2 a gallon.“When you’re digging out of this crisis, you’re not going to try to do that with unprofitable and low-volume products, which are EVs,” said Kevin Tynan, a senior analyst with Bloomberg Intelligence.Weeks after announcing plans to launch EVs for each of its brands, General Motors Co. delayed the unveiling of the Cadillac Lyriq EV originally planned for April. Then on April 29, the company said it would put off the scheduled May introduction of a new Hummer EV. The models are part of CEO Mary Barra’s strategy to spend $20 billion on electrification and autonomous driving by 2025, to try to close the gap with Tesla.In another move aimed at winning over Tesla buyers, Ford Motor Co. unveiled its electric Mustang Mach-E last November at a splashy event ahead of the Los Angeles Auto Show. The highly anticipated model had been scheduled to debut this year. Ford has not officially postponed the release, but the company has said all launches will be delayed by about two months, potentially pushing the Mach-E into 2021.Elon Musk, whose cars dominate the U.S. electric market, cut prices by thousands of dollars overnight. The Model 3 is now $2,000 cheaper, starting at $37,990. The Model S and Model X each dropped $5,000.Musk engaged in a high-profile fight with California officials this month over Tesla’s factory in Fremont, California, which had been closed by shutdown orders Musk slammed as “fascist.” In a May 11 tweet, he said the company was reopening the plant in defiance of county policy. On May 16, Tesla told employees it had received official approval.During most of the shutdown in California, the company managed to keep producing some cars thanks to better relations with local officials regulating its other factory, in Shanghai. That plant closed as the virus spread from Wuhan in late January, but the local government helped it reopen a few weeks later in early February.First Zwickau, Then the WorldThe ID.3’s new electric underpinning, dubbed MEB, is key to VW’s strategy to sell battery-powered cars on a global scale at prices that will be competitive with similar combustion-engine vehicles. Automakers typically rely on such platforms to achieve economies of scale and, ultimately, profits. MEB will be applied to purely electric vehicles across all of the company’s mass-market brands, including Skoda and Seat.VW said it spent $7 billion developing MEB after Ford last year agreed to use the technology for one of its European models. Separately, the group’s Audi and Porsche brands are built on a dedicated EV platform for luxury cars that the company says will be vital in narrowing the gap with Tesla.VW plans to escalate its electric-car push by adding two factories, near Shanghai and Shenzhen, that it says could eventually roll out 600,000 cars annually, more cars than Tesla delivered globally last year.While China is the initial goal, making a dent in Europe and the U.S. is the long-term one. Like China, Europe had been tightening emissions regulations significantly before the pandemic. New rules to reduce fleet emissions will gradually start to take effect this year, effectively forcing most manufacturers to sell plug-in hybrids and purely electric cars to avoid steep fines.Because of the mandates, Europe’s commitment to electrification isn’t going away, said Aakash Arora, a managing director with Boston Consulting Group. “In the long term, we don’t see any relaxation in regulation,” he said.For VW, this crisis wouldn’t be the first time it started a new chapter in difficult times. Diess saw an opportunity coming off the manufacturer’s years-long diesel emissions scandal that cost the company more than $33 billion to win approval for the industry’s most aggressive push into EVs. When VW unveiled the ID.3, officials compared its historic role to the iconic Beetle and the Golf, not knowing that this might hold in unintended ways: The Beetle arose from the ashes of World War II, and the Golf was greeted by the oil-price shock in the 1970s.“We have a clear commitment to become CO2 neutral by 2050,” VW strategy chief Michael Jost said, “and there is no alternative to our electric-car strategy to achieve this.”(Updates with Tesla price cut starting in the third paragraph. An earlier version corrected the spelling of Berret in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares in the struggling car maker jumped over 30% after the leadership change that was leaked over the weekend was confirmed by the board.
Daimler AG plans to invest in Farasis Energy's planned $480 million IPO, aiming to ensure a stable supply of batteries from the Chinese firm as it ramps up electric vehicle production, three people familiar with the matter said. The two firms struck a deal last year for Farasis to supply Daimler with lithium-ion battery cells and Farasis is building a factory in Germany. Daimler and Farasis declined to comment on the potential IPO investment.
Daimler AG <DAIGn.DE> plans to invest in Farasis Energy's planned $480 million (393.06 million pounds) IPO, aiming to ensure a stable supply of batteries from the Chinese firm as it ramps up electric vehicle production, three people familiar with the matter said. The two firms struck a deal last year for Farasis to supply Daimler with lithium-ion battery cells and Farasis is building a factory in Germany. Daimler and Farasis declined to comment on the potential IPO investment.
China's Geely will explore the possibility of deeper cooperation with German luxury automaker Daimler AG <DAIGn.DE>, its Chairman Li Shufu said on Friday. Geely built a 9.69% stake in Stuttgart-based Daimler in 2018. Geely would also "launch several new products and services to our markets around the world" this year, Li said in a statement to Reuters.
Oil companies may be facing uncertainty as the coronavirus pandemic triggers a collapse in demand for their products, but auto makers are betting the crisis will help accelerate an electric future. With economies reeling from lockdowns to curb the virus, the sharpest plunge in oil prices in two decades has slashed the cost of filling up a tank of gas, eroding some of the incentive to make the switch to cleaner fuels. Looking ahead, cuts in capital spending forced upon energy companies as their revenues crumble could tighten supply enough to cause a spike in oil prices, making electric vehicles more attractive just as automakers ramp up production, analysts say.
Four-times Formula One world champion Sebastian Vettel is set to quit Ferrari at the end of the year after contract talks broke down, German media reported late on Monday. Italy's Gazetta dello Sport newspaper recently reported Vettel being offered a one-year extension with a salary reduction. Vettel joined Ferrari in 2015 after winning all his titles with Red Bull and dreaming of emulating his boyhood hero Michael Schumacher, who took five of his seven titles with the Maranello-based team.
(Bloomberg) -- Tesla Inc. asserts that restarting its operations in the midst of the coronavirus pandemic doesn’t make the company an outlier, nor is it going against the grain.But its chief executive officer’s handling of the health crisis has been anything but ordinary. Tesla sued the county blocking its car plant from reopening, with Elon Musk calling the local health officer -- a former infectious diseases professor with a master’s degree in public health -- “unelected & ignorant.” He threatened to move Tesla’s headquarters out of California, warning that all its manufacturing may leave the state, too.The weekend flare-up was without precedent in the three months since the first confirmed Covid-19 death in the U.S. -- a resident of Santa Clara County, home to Tesla’s headquarters and neighbor to its factory in Fremont, California. As the nation’s death toll approaches 80,000, Musk has emerged as arguably the loudest voice in corporate America advocating for the economy to reopen.“I’m not messing around,” the 48-year-old billionaire tweeted after Tesla filed its lawsuit against Alameda County. “Absurd & medically irrational behavior in violation of constitutional civil liberties, moreover by *unelected* county officials with no accountability, needs to stop.”Tesla shares fell 2.7% as of 7:20 a.m. Monday in New York, before the start of regular trading. The stock has soared 96% this year.Auto RestartTesla does have a case to make for being unexceptional within the auto industry. Ford Motor Co., Fiat Chrysler Automobiles NV, Toyota Motor Corp. and others also have set dates for restarting their operations, only to then call off those plans due to shutdown orders.Daimler AG has reopened a Mercedes-Benz plant in Alabama, as has its German peer BMW AG in South Carolina. Toyota and Honda Motor Co. will resume work at U.S. factories this week, followed by General Motors Co., Ford and Fiat Chrysler on May 18.But no carmaker other than Tesla has publicly attacked local health officials or threatened states over shelter-in-place measures that virtually wiped out North American vehicle production for more than a month.Read more: What you need to know about the U.S. auto industry’s restartDuring GM’s first-quarter earnings call on May 6, CEO Mary Barra said the automaker was having “very constructive” conversations with government officials.“We’re in a good position as we talk to country leaders and state leaders,” she said. “We’ll continue to have dialogue with our unions, as well as with the government leaders, to do the right thing.”Bay Area ExceptionTesla’s handling of the health crisis also has been unique among companies in the San Francisco Bay area. Ajay Shah, the CEO of Smart Global Holdings Inc., last month credited Alameda for allowing the manufacturer of memory modules to continue operating.“We’ve had discussions with the Alameda County health authorities and show them exactly what we’re doing and they’ve been satisfied with it,” Shah said on an April 7 earnings call.Earlier: Tesla’s drive to stay open irked officials who saw health riskFaceboook Inc. CEO Mark Zuckerberg, whose staff can more easily work from home than Musk’s manufacturing employees, has voiced his concern about lifting stay-home measures too soon.“While there are massive societal costs from the current shelter in place restrictions, I worry that reopening certain places too quickly before infection rates have been reduced to very minimal levels will almost guarantee future outbreaks and worse longer-term health and economic outcomes,” Zuckerberg said during Facebook’s April 29 earnings call.Back to WorkOn the same day, Musk called shutdown orders “fascist” and unconstitutional, likening them to forcible imprisonment and saying they were “breaking people’s freedoms in ways that are horrible and wrong.” His comments were embraced by some Silicon Valley venture capitalists and political conservatives.Tesla released a 38-page “Return to Work Playbook” late Saturday laying out the safety protocols it will adopt at all of its facilities. While the company will disinfect work areas, enforce social-distancing precautions and provide personal-protective equipment, among other measures, the document doesn’t include any plans to test workers other than by checking their temperatures.Alameda officials have said more testing needs to come online and that Covid-19 case counts need to drop before they’ll feel comfortable moving to the next phase of reopening.Tesla has signaled it may disregard Alameda’s order, saying in a blog post Saturday that it had “started the process of resuming operations.” Several Fremont workers shared text messages with Bloomberg News in which supervisors were calling them back to the factory.“Our employees are excited to get back to work, and we’re doing so with their health and safety in mind,” the company said.(Updates with pre-market trading in the fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
World stock markets rose sharply on Wednesday following encouraging news for an experimental COVID-19 treatment and some positive earnings reports, while beaten-up oil prices soared. A top U.S. health official said Gilead Sciences Inc's antiviral drug remdesivir is likely to become the standard of care for COVID-19 after early results from a clinical trial showed it helped certain patients recover more quickly from the illness caused by the coronavirus.
World stock markets surged on Wednesday following encouraging news for an experimental COVID-19 treatment and some positive earnings reports, while beaten-up oil prices surged. Gilead Sciences Inc said that in a clinical trial, its experimental antiviral drug remdesivir helped improve outcomes for patients with COVID-19, the disease caused by the coronavirus.