|Bid||167.70 x 0|
|Ask||185.15 x 0|
|Day's range||174.00 - 176.55|
|52-week range||134.90 - 182.50|
|Beta (3Y monthly)||N/A|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
GUANGZHOU, China/SHANGHAI (Reuters) - Volkswagen AG , the top foreign automaker in China, said on Thursday it expects the world's biggest passenger car market to stabilize next year with low growth levels likely for three to four years. Hit by a slowing economy, the U.S.-China trade war and chaotic implementation of new emission rules, China's vehicle sales are expected to slide some 8% this year after a 2.8% fall last year to 28.1 million - the first decline since the 1990s. "Next year we predict a stable total market environment, maybe moderate small growth," VW Group China CEO Stephan Woellenstein told Reuters at the Guangzhou autoshow.
(Bloomberg) -- U.S. Federal Communications Commission Chairman Ajit Pai proposed reallocating to mobile devices airwaves long assigned to vehicle safety while preserving some of the spectrum for carmakers planning to deploy new technology.“We want to move on from something we’ve tried for a long time that wasn’t working, and open the door to new and exciting opportunities,” Pai said in a speech at a Washington event. “After 20 years of seeing these prime airwaves go largely unused, the time has come for the FCC to take a fresh look.”Auto industry reaction highlighted a division between companies such as Toyota Motor Corp. that have already invested in the old technology and a growing number of others, including Ford Motor Co., that back the newer system that they say performs better.Pai set a Dec. 12 vote on his proposal, which would commence a months-long comment period on giving Wi-Fi gadgets access to 60% of the airwaves reserved for auto safety in 1999. Automakers would retain use of the remainder.The change wouldn’t be final until another vote by the FCC, which under Pai has worked to free airwaves bands for new uses. Because Pai leads a Republican majority, his proposals usually pass.In 1999, the frequencies were reserved by the FCC to link cars, roadside beacons and traffic lights into a seamless wireless communication web to help avoid collisions and alert drivers to road hazards, among other uses.In a concession to carmakers, Pai’s plan would devote most of their remaining portion of the spectrum to the new cellular-based safety technology that several have recently embraced. A thin remaining slice would be used for either the new system or for an older accident-avoidance technology foreseen two decades ago but is little used today.Ford announced earlier this year that it would outfit all its new U.S. models starting in 2022 with newer cellular vehicle-to-everything technology. Toyota, meanwhile, halted in April plans to deploy the older systems in 2021 citing dwindling support from regulators and other carmakers.However, Toyota said in a statement on Wednesday that it remains committed to the older technology and that the entire spectrum band currently allocated for auto safety should remain available to them.General Motors Co. deferred comment to the Alliance of Automobile Manufacturers, which, along with several groups, including the American Automobile Association, urged caution.‘Harmful Interference’The groups issued a joint statement asking the FCC to refrain from sharing the frequencies with non-safety devices “until test results clearly indicate that sharing with unlicensed devices can occur without harmful interference.”The U.S. Transportation Department said it hadn’t changed its position that the entire airwaves swath needs to be retained for auto safety. The government has spent hundreds of millions on the older, competing technology called dedicated short-range communications.“We’re hoping to preserve that 75 megahertz because it is now time, the technology is now there, that we can start deploying this potentially life-saving technology,” James Owens, acting administrator of the National Highway Traffic Safety Administration, said in a Senate hearing.The 5G Automotive Association, a group that backs the new cellular safety system, applauded Pai’s proposal.Public Safety“Extensive crash avoidance testing continues to demonstrate that C-V2X technology will deliver safety benefits to the American public,” said the group. It represents most major automakers including Ford Motor Co., Volkswagen AG and Honda Motor Co., in addition to wireless companies such as Verizon Communications Inc. and gear makers Samsung Electronics Co. and Qualcomm Inc.“This visionary FCC proposal will enable us to bring the tremendous, unmatched safety benefits from C-V2X to US drivers, passengers, and pedestrians,” Dean Brenner, Qualcomm’s senior vice president of spectrum strategy and technology, said in a statement.The Intelligent Transportation Society of America, an advocacy group with members including GM and several states that have deployed safety equipment that works off the older technology said the “FCC is prepared to trade safer roads for more connectivity.”“In a country that reels from nearly 36,000 roadway deaths every year, it is unfathomable that the United States would literally give away our top safety tool -- and with it, our best chance to save tens of thousands of lives,” ITS America president Shailen Bhatt said in the group’s emailed statement.Cable providers that offer Wi-Fi for customers’ wireless use welcomed Pai’s move. Charter Communications Inc. said it was “thrilled” and Comcast Corp. said the “spectrum is too valuable a national resource to lie fallow any longer.”The airwaves could be used for fast communications including machine-to-machine links, and smart city applications such as smart cameras, traffic monitoring and security sensors, NCTA-The Internet & Television Association, a trade group for companies including Comcast and Charter the FCC in a Sept. 25 filing.\--With assistance from Keith Naughton.To contact the reporters on this story: Todd Shields in Washington at firstname.lastname@example.org;Ryan Beene in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, John Harney, Todd ShieldsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Volkswagen AG’s chief executive officer, who’s grown increasingly chummy with Tesla Inc.’s Elon Musk, said the electric-vehicle maker may find Germany a more accommodating place for manufacturing than its home state of California.“What Tesla probably is looking for is the environment, the infrastructure, to build high-quality cars, which is probably much more the case here in Germany than on the West Coast of the United States,” VW CEO Herbert Diess told analysts and investors on a call Monday. Musk announced last week that Tesla will build a vehicle and battery factory on the outskirts of Berlin, plus an engineering and design center within the city limits. While the plant will be the second to assemble Teslas outside the U.S. -- one near Shanghai is on the verge of making cars for sale -- the company’s massive facility in Fremont, California, isn’t going anywhere. Preparations are underway for Model Y crossover production to start next summer.Tesla hasn’t yet said where it will build a new electric pickup that Musk, 48, plans to unveil in Los Angeles later this week.\--With assistance from Christoph Rauwald.To contact the reporter on this story: Craig Trudell in New York at email@example.comTo contact the editors responsible for this story: Craig Trudell at firstname.lastname@example.org, Chester DawsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The lawsuit said that Volkswagen had extracted written agreements from suppliers not to sell to Prevent, which amounted to anti-competitive behaviour. Prevent said it a statement it was seeking damages in excess of $750 million, alleging Volkswagen used its market power to squeeze smaller suppliers who had to comply with "unfair terms and prices" or face bankruptcy. In 2016 https://reut.rs/2OnW5fN, Volkswagen and two of its suppliers, one which was part of Prevent, resolved a contract dispute that had hit output at more than half of the automaker's German plants.
German carmaker Volkswagen cut its forecasts for operating profit and sales growth on Monday due to a downturn in demand for passenger cars, while keeping profit margin targets. "It is fair to say that the very best of the party is over," Chief Financial Officer Frank Witter told analysts in a call to discuss the company's outlook. Volkswagen joins a string of automakers and suppliers including Ford and Continental in warning of tough times for an industry facing higher investments into cleaner and self-driving technologies at a time when a trade war between Washington and Beijing is curbing global growth.
Volkswagen's new ID.3 electric vehicle will be 40% cheaper to build than the electric version of its Golf model, Chief Executive Herbert Diess told investors on Monday. The battery in the new ID.3 can be used to add structural rigidity to the body and the modular layout of the battery allows for advantages in packaging and economies of scale. "If you focus on an electric platform, all in all it accounts for a 40% reduction against the predecessor electric Golf," Diess said.
(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 email@example.comTo contact the editor responsible for this story: Tobin Harshaw at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Volkswagen AG will ramp up spending on electric vehicles, automated driving and other new technology by 36% as the world’s largest automaker challenges rivals to keep pace with an aggressive shift into the post-combustion era.The new five-year budget for investment in hybridization, electric mobility and digitalization totals 60 billion euros ($66 billion), compared with 44 billion euros previously, the Wolfsburg-based manufacturer said Friday. The spending amounts to 12 billion euros a year.“We are resolutely pressing ahead with the transformation of the Volkswagen Group and focusing our investments on the future of mobility,” Chairman Hans Dieter Poetsch said in a statement after the supervisory board approved the plan.The sharp increase in spending after just one year reflects the increasing pressure on automakers amid the disruptive technology shift and the strains to meet increasingly stringent pollution regulations. Slowing markets make financing the investment tougher.“The idea of growing out of problems only grows the problem,” Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note. VW’s approach is a contrast to “peers who are tightening their belts in light of tougher end markets and increasing variable costs.”Volkswagen lowered its global vehicle delivery forecast last month as demand waned in key markets including China, its biggest sales region. The manufacturer had reduced output plans by 900,000 cars and is prepared to cut further to avoid bloated inventories.“In light of the worsening economic situation, we are also working on increasing our productivity, our efficiency and our cost base,” Chief Executive Officer Herbert Diess said in the statement. “We intend to take advantage of economies of scale and achieve maximum synergies.”Looking ahead, 2020 is shaping up to be “an extremely challenging year,” Diess said at a later press conference, adding that VW’s financial targets can still be reached.These include reaching an operating profit margin of between 6.5% and 7.5% excluding special items and net cash flow of at least 10 billion euros. Diess will host a briefing for analysts and investors on Monday morning.Volkswagen shares close 1.3% higher in Frankfurt, boosting gains for the year to 31% and valuing the company at 91 billion euros.The German auto giant has been under pressure since the 2015 emissions-cheating scandal. The aftershocks continued Friday, with the company naming Markus Duesmann as head of the Audi brand. He will replace Bram Schot, who took over following the arrest of Rupert Stadler amid an ongoing German investigation into Audi’s past rigging of diesel-engine software.Since the diesel crisis, Volkswagen has accelerated its development of electric cars. The spending budget includes a 10% increase in investment for battery-powered vehicles to 33 billion euros.Tesla Inc. added urgency this week by announcing plans to build a factory on VW’s home turf. Diess welcomed the investment and said Tesla’s speed and agility in developing technology provides a role model for VW.Through 2029, Volkswagen plans to introduce as many as 75 all-electric models, up from a previous forecast of about 70. The company now expects to produce about 26 million e-vehicles over the next 10 years, compared with an earlier target of 22 million.German rival Daimler AG warned this week that there’s no quick fix to reviving profit margins while making the costly switch to electric and self-driving cars. The company’s new CEO laid out a plan to cut jobs and cap development spending.“We will step up the pace again in the coming years with our investments,” said Diess. “Hybridization, electrification and digitalization of our fleet are becoming an increasingly important area of focus.”(Updates with CEO comments from eighth paragraph.)\--With assistance from Chiara Remondini.To contact the reporter on this story: Christoph Rauwald in Frankfurt at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Chris Reiter, Tara PatelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- If the U.S. is going to make a big dent in income inequality and raise living standards for the middle class, it’s going to need a multipronged approach. Higher taxes and more spending on health care will help. Minimum-wage laws can raise pay for workers at the bottom without reducing employment much, but they only benefit a relatively small slice of the workforce. But something else is needed.One big idea is to bring back unions and collective bargaining. Several teams of economists have examined the historical record and concluded that unions were important in reducing inequality. But although unions are still important in the public sector, in the private sector they’ve been almost wiped out.People argue about the cause of the decline. Some blame weak enforcement of labor laws or the rise of state right-to-work laws. Others blame global competition and technology. But Martin Manley, an entrepreneur who previously served as assistant secretary of the Labor Department under President Bill Clinton, thinks he has the answer. In a new book titled “A Better Bargain: Organizing Employers and Workers to Grow America’s Middle Class,” Manley argues that the U.S. union system was doomed from the start.Before 1935, Manley notes, there were several types of collective bargaining in the U.S. But the one that ended up being enshrined in law, in the National Labor Relations Act, was called enterprise bargaining. Under that law, workers at each workplace have to vote to unionize; if they do, all workers at that workplace are covered by the union contract. If they reject the union down, however, there’s no collective bargaining.This system has a huge downside: competition. Suppose the workers at a McDonald’s want to form a union. The managers know that if the workers unionize, wages will go up and prices for hamburgers at that McDonald’s will rise. That will put the restaurant at a competitive disadvantage versus the non-unionized Burger King down the street, eventually resulting in layoffs. The managers will make this argument to the workers, who probably will find it convincing.If both the McDonald’s and the Burger King could coordinate and unionize together, competition would be no problem; wages would rise and the profits of the two giant corporations might fall while consumers paid higher prices for burgers. But because U.S. labor law forces each workplace to act independently on unionization, they can’t effectively coordinate. The situation is even worse for companies such as General Motors that face international competition because there’s no way for GM workers to coordinate with Volkswagen workers in Europe or Toyota workers in Asia.Manley has a two-pronged solution to this problem. Both pieces would require a major rewrite of U.S. labor law. And both would involve a shift from enterprise-level bargaining to sectoral bargaining, with negotiations taking place in an entire industry, not individual workplaces or companies.The first piece is industry associations — groups of companies in the same industry and region that bargain collectively with their workers all at once. Though it might seem counterintuitive to let employers collaborate like this, it would remove the competitive threat that unions represent, because the resulting agreements would constrain all businesses equally. Manley suggests that industry associations could also collaborate to create more efficient and flexible labor markets by providing worker training, sharing knowledge about workers across company lines and so on.Second, Manley would make unions nonexclusive. Under his preferred system, an industry association would bargain simultaneously with all the organizations that workers in that industry belonged to, be they unions, worker co-ops, professional associations or advocacy groups. The various worker groups would be awarded representation at the negotiating table proportional to their membership (which could overlap). Manley envisions various worker groups competing with each other for members by offering services other than wage bargaining.These are good ideas. To really be effective, they’ll require one crucial element: that workers who don’t belong to any organization are all covered by the contracts that result from sector-level labor negotiations. A law like this is the reason that the French and German workforces are still mostly covered by collective bargaining, despite falling unionization:If combined with Manley’s idea for competing labor organizations and proportional representation in negotiations, sectoral bargaining would undo the decades-long decline in private-sector collective bargaining almost overnight. It wouldn’t require unions to rebuild their membership; all it would need is a few worker organizations to pop up and start bargaining on behalf of everyone. At first, these early movers would get almost all the seats at the negotiating table, which would induce other workers to form other organizations to get a piece of the action.Presidential candidates such as Pete Buttigieg and Elizabeth Warren have backed sectoral bargaining, showing that the idea is catching on. Innovative ideas like Manley’s could allow sectoral bargaining to take root even faster and to be carried out in a way that many employers would embrace. Ultimately, a more cooperative relationship between workers and management would result in a more sustainable system for supporting the middle class.To contact the author of this story: Noah Smith at email@example.comTo contact the editor responsible for this story: James Greiff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Volkswagen on Friday installed former BMW executive Markus Duesmann to reinvent Audi after the German premium brand lost key engineering know-how and influence in the wake of the 2015 diesel-cheating scandal. Duesmann will become chief executive of Audi as well as take on board level responsibility for research and development at Volkswagen Group on April 1 next year, the Wolfsburg-based multi-brand group said on Friday.
Volkswagen will invest 60 billion euros ($66.12 billion) by 2024 to develop electric and hybrid cars as well as digital technologies, the multi-brand car and truckmaking group said on Friday. Volkswagen plans to build 75 variants of electric car and around 60 hybrid vehicle models, it said. Volkswagen plans to retool its plant in Emden, Germany to build an electric sports utility vehicle (SUV) from 2022 onwards, and a decision on where to locate a new factory will be taken by year-end, the carmaker said.
(Bloomberg Opinion) -- If you’ve dropped the kids off at school in London or the New York suburbs recently, the idea that Jaguar Land Rover Automotive Plc is struggling must seem far-fetched. The British carmaker’s Range Rover SUVs have become a common feature of the upper-middle class lifestyle. How else would one get to brunch and the gym?Yet a decade after India’s Tata Group acquired and dramatically reinvigorated these famous old brands, JLR is back on the ropes. The unit lost an eye-peeling 3.3 billion pounds ($4.2 billion) in the fiscal year to March and burned through 1.3 billion pounds of cash. No wonder Tata is casting around for help.JLR’s cost-base has become bloated, its sales in China have collapsed and its big bet on Jaguar saloon (sedan) models has failed to pay off. Selling SUVs to Brits and Americans has prevented its fall from being even more dramatic. However, new gasoline and diesel cars are going to be banned in the U.K. and elsewhere by 2040 and the climate crisis could trigger a backlash against gas-guzzlers well before then. Either way, refashioning the company for a zero-emissions future will be very expensive.Tata insists JLR is not for sale but that doesn’t mean it wants to continue this journey alone. The unit had about 2.2 billion pounds of net debt at the end of September.The Indian parent has approached fellow automakers including China’s Zhejiang Geely Holding Group Co. and Germany’s BMW AG, about forging partnerships to help JLR save money, Bloomberg reported this week. These would supplement existing collaborations with BMW on electric drive systems and with Waymo on autonomous vehicles.This hunt for allies makes sense because JLR’s business model is looking shaky. More than 80% of the vehicles that it sold in Europe last year run on diesel, a technology that’s been undermined by Volkswagen AG’s emissions cheating and the threat of bans in many cities.SUVs make up an even higher percentage of sales. The boom in these vehicles has contributed to a rise in average carbon emissions from carmakers over the past year or two. No wonder they’re in the cross-hairs of climate campaigners. Last month JLR listed “increasing environmental activism” among its biggest challenges.The Extinction Rebellion crowd has a point here. A top-specification Range Rover can weigh more than 5,700 lbs (2,585kg), which is why the company’s vehicles tend to spew out more CO2 than peers.Because it sells less than 300,000 cars annually in Europe, JLR has special dispensation from Brussels to pollute more.(1) However, these lenient fleet emission targets expire in 2028, so the company needs to change its ways sharpish.It says it’s on track to cut emissions by 45% in 2020 compared to 2007 levels, as required by regulators. From next year there will be a hybrid or electric variant of all of its models; and Jaguar’s all-electric I-Pace compact SUV deservedly won car of the year. Creating zero emissions versions of the group’s biggest SUVS will be more difficult, though, because of their hefty weight and poor aerodynamics.Footing the bill will be a stretch too. The company has to manage a 4 billion pound yearly investment budget while selling far fewer cars than its bigger rivals: JLR sold less than 600,000 vehicles last year, about 5% of Volkswagen’s haul. Lackluster sales have left it with unused production capacity.Its attention to detail in manufacturing has also been found wanting. The Jaguar and Land Rover brands came bottom in J.D. Power’s U.S. new vehicle quality rankings, and high warranty costs are an unwelcome feature of its earnings. All of this means JLR’s profit margins are thinner than you might expect given the $210,000 price tag of a high-spec Range Rover.Even as far out as 2023, JLR anticipates an operating return on sales of 6% at most. This is similar to Daimler AG’s 2022 target for Mercedes-Benz, but is way below the margins of French mass-market carmaker Peugeot SA.Thanks to progress on cost-cutting and signs that plunging China sales have bottomed out, investors have become more confident in Tata’s ability to turn JLR around. It returned to profit in the second quarter, prompting a rally in Tata Motors’ shares and JLR’s beaten up bonds. President Donald Trump’s threat of a 25% U.S. tariff on imported vehicles appears to have receded somewhat, as has the likelihood of a no-deal Brexit that would have been ruinous for carmakers.Might this moment of calm tempt a buyer of the company out of the shadows? Tata’s reluctance to sell isn’t the only barrier. Peugeot was rumored to be keen but its chief executive officer Carlos Tavares has found another merger partner in Fiat Chrysler Automobiles NV. Bernstein analyst Max Warburton says BMW would fit but the Bavarians lost a lot of money when they owned Rover in the 1990s.There are also politics to consider. The backlash against SUVs, many built by BMW, is acute in Germany. Doubling down on gas-guzzling urban tractors might harm BMW’s emissions footprint.(2) It might also be viewed poorly by the Berlin government, which boosted electric vehicle subsidies recently.While SUVs can carry lots of baggage, increasingly it’s the wrong kind.(1) JLR's new cars must have average emissions of about 130 g/km of CO2 by 2021, compared to an industry average of 95g.(2) Depending on what happened to JLR's emissions derogationTo contact the author of this story: Chris Bryant at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Hyundai Motor Co. is entering the U.S. pickup market by building a new vehicle at an existing plant in Alabama, betting it can better appeal to American consumers ditching sedans for trucks and SUVs.The South Korean company said Wednesday it will invest $410 million at Hyundai Motor Manufacturing Alabama, its factory in Montgomery, adding 200 jobs to start making the vehicle in 2021. While Hyundai has billed the model, called Santa Cruz, a “compact utility vehicle,” it features an open truck bed.The U.S. manufacturing announcement is the second of the day by a major international automaker: Volkswagen AG broke ground Wednesday on a previously announced $800 million expansion of its production complex in Chattanooga, Tennessee. Perhaps not coincidentally, President Donald Trump gave himself a mid-November deadline to decide whether to put tariffs on impose levies on imported cars and auto parts. His administration is expected to delay a decision another six months.“Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary” to put levies into effect, Commerce Secretary Wilbur Ross told Bloomberg Television earlier this month. “We’ve had very good conversations with our European friends, with our Japanese friends, with our Korean friends.”Hyundai debuted the Santa Cruz as a concept nearly five years ago and has hinted in recent months it planned to produce the vehicle in the U.S. The Alabama plant, which started producing cars in 2005, employs roughly 3,000 workers making Santa Fe SUVs and the Elantra and Sonata sedans.Adding the Santa Cruz could help make up for slack demand for the cars built in Montgomery. While sales have risen 11% for the Santa Fe this year, deliveries have dropped 16% for both the Elantra and Sonata.(Updates with trade background in the third paragraph)To contact the reporter on this story: Chester Dawson in Southfield at email@example.comTo contact the editors responsible for this story: Craig Trudell at firstname.lastname@example.org, Kevin MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- When Elon Musk tweeted last year that Germany was a front-runner for Tesla Inc.’s first European car factory, it sent politicians into a frenzy to win over the billionaire.Berlin’s economy minister, Ramona Pop, responded with a two-page letter that waxed lyrical about Musk as a pioneer and visionary and offered financial sweeteners to attract him to a city bustling with a vibrant tech scene and a network of auto research institutes. She even floated access to a nearby race track where Tesla could take its cars for a spin.As the beauty contest gained momentum, it turned into a battle. Two federal states that border France also touted their virtues. Musk already had a connection with that part of Germany from his purchase of an automation company there a few years ago. There’s also Berlin’s patchy track record shouldering large infrastructure projects -- its new airport remains a mothballed mess, years behind schedule and massively over budget.Yet when Musk’s Gulfstream jet touched down in the German capital early this week, his mind was made up: the European gigafactory would sit on the outskirts of Berlin, with an additional engineering and design center within the city limits. Musk casually dropped the news at a red-carpet award populated by the top brass of Germany’s car industry, including the CEOs of BMW AG and Volkswagen AG, two companies pushing hard into an electric future.“There was very intense competition in recent months among different European nations,” Economy Minister Peter Altmaier told reporters on Wednesday in Berlin. “It’s an important and positive development that Germany was chosen.”Mounting PressureMusk is taking his fight for the future of transport into the heartland of the combustion engine, where the established players long laughed off Tesla as an upstart on feeble financial footing that couldn’t compete with their rich engineering heritage. But Musk has captured the imagination of the think-different consumer, putting pressure on the Germans to respond. Volkswagen has pulled out all the stops, earmarking more than 30 billion euros ($33 billion) to develop the industry’s largest fleet of electric cars.The choice of Berlin and its surrounding area hands Musk several advantages, not least free money in form of subsidies. There’s the proximity to a government keen to sponsor the industry’s transformation. Labor costs in eastern Germany are generally lower than in the traditional engineering hubs in the southern part of the country. And Berlin, where new startups are founded each day, is an attractive place to live for the tech workers Tesla would seek to attract for its design center.The area where Tesla plans to put the factory, called Gruenheide just east of Berlin in the state of Brandenburg, provides quick access via the Autobahn and a link to public transport. It’s a site that BMW had considered before choosing the city of Leipzig a few hours south for a new factory in 2001, the last time a car company built a major new facility in Germany.Roller-CoasterThe government in Brandenburg, one of five federal states in the former communist east, also lobbied hard to win over Musk, offering at least 100 million euros in aid. The state’s negotiators kept up the pressure in the past months, touting Brandenburg’s proximity to Berlin, its skilled labor force and an abundance of clean-energy plants, Premier Dietmar Woidke said.“Berlin can do a lot that we aren’t able to, and we can do a lot that Berlin can’t,” Woidke told reporters in Potsdam. “Together, that’s an unbeatable mix.”Officials in Brandenburg described the negotiations with Musk as an emotional roller-coaster ride, with the politicians struggling to read the billionaire’s intentions. But by last week, things were looking up. After Musk arrived in Berlin, he toured the location where the factory would sit, and he took a local train back to central Berlin to try for himself how long the commute might take.Fresh from his experience building a factory in China, Musk had a demand that was as clear as it was hard to execute for notoriously bureaucratic Germans: to build the site as swiftly as the one in Shanghai, according to Brandenburg’s economy minister, Joerg Steinbach. That caused considerable consternation among officials still chafing from the new-airport debacle.Shanghai FactoryTesla long relied on a single assembly plant, based in Fremont, California, for its car production. The company is on the verge of starting sales of Model 3s produced at its latest facility, near Shanghai, which it erected in record time. Musk estimated earlier this year that Tesla’s European gigafactory probably won’t be operational until 2021.The factory will make batteries, powertrains and vehicles, beginning with the Model Y crossover unveiled earlier this year, he said in a tweet. It’s also expected to churn out the Model 3, which beat out BMW and Audi for the award Tuesday night.With Tesla adding as many as 10,000 jobs to Berlin and the region, according to Bild, it’s also a boon for the German capital and its burgeoning tech scene. Famously labeled “poor but sexy” by a former Berlin mayor, the city has thrived in recent years thanks to a steady influx of young entrepreneurs and IT professionals attracted by the capital’s mix of affordable housing (the city just announced a rent freeze), top-notch universities, and homegrown tech successes including fashion retailer Zalando SE and food delivery startup Delivery Hero SE.In the last five years, Berlin’s population has grown by almost 50,000 annually, underscoring its attraction that can’t be matched by cities like Stuttgart, home to Daimler AG and Porsche, or Wolfsburg, where Volkswagen is based. As a sweetener, the Berlin government offered locations including the site of the existing Tegel airport for Tesla’s design center.Tech HubsThe appeal of Berlin hasn’t been lost on Musk’s rivals. Virtually all the major German carmakers have created tech hubs, and dozens of local startups are active in fields including artificial intelligence, 3D printing and autonomous driving. Tesla will have to compete for local talent with U.S. tech giants including Apple Inc., Oracle Corp., Google and Amazon.com Inc., which is preparing to move into Berlin’s highest office building by 2023 in the rugged-yet-fashionable Friedrichshain-Kreuzberg district.“The Berlin location, home to an ever growing co-working, digitally focused, young programming demographic, has already proved why many German OEMs such as Volkswagen, Porsche, BMW and Daimler are opening digital offices on the Spree” river, said Matthias Schmidt, an independent automotive analyst in Berlin.All the jubilation notwithstanding, Berlin and Brandenburg have their work cut out to build a new home for Tesla. The region lost most of its heavy industry during World War II, and much of what remained after the war was ground up by the country’s separation. Siemens AG is the only global company with a sizable manufacturing footprint in Berlin.And the sprawling new airport, still under construction, is a massive blemish on the region’s record of getting big projects off the ground. It’s an ignominy that was on the U.S. billionaire’s mind when he followed his announcement with an appeal to get the job done.“We definitely need to move faster than the airport,” Musk said.\--With assistance from Iain Rogers, Oliver Sachgau, Christoph Rauwald and Chris Reiter.To contact the reporters on this story: Stefan Nicola in Berlin at email@example.com;Birgit Jennen in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Elon Musk’s announcement that Tesla Inc. will build a factory and a research center near Berlin makes perfect sense as a loud statement. Berlin isn’t known as a car city but it does have a vigorous tech scene and Tesla isn’t so much a car company as a tech one. But it’s also reasonable from other points of view.Musk, who has spent some time deciding on a European factory location, has decided on Gruenheide in Brandenburg, the German state that surrounds Berlin, and the research facility is to be located near Berlin’s yet-to-open new international airport.That the new factory should be in Germany is logical. Germany is Europe’s biggest market for electric vehicles and the one with the biggest potential. Germany is Europe’s most populous country, Germans are in love with cars and worried about the environment, as evidenced by the recent electoral successes of the Greens.It also matters that Germany is a country with some of Europe’s strongest incentives for electric car buyers. It recently decided to increase the maximum subsidy for buyers of battery vehicles to 6,000 euros ($6,600) from 4,000 euros and extend it until 2025. France, Italy and Slovenia offer roughly as much. One could regard Musk’s move as a cheeky foray into the land of its top competitors. Volkswagen AG has launched an all-out electrification strategy that pits it directly against Musk’s mass-market hope, the Model 3 (which apparently won’t be made at the new Berlin factory, at least to start with). In September, the German giant launched the ID.3, the first car on its new platform meant for electric vehicles. Berlin is flooded with electric Golfs that VW made available this year for WeShare, the company’s nascent car-sharing operation. And even before VW starts turning out tens of thousands of cars especially developed as EVs, the e-Golf is already among the Model 3’s strong competitors in Germany, along with Bayerische Motorenwerke AG’s somewhat clunkier i3 and some other European electric cars.But then, it makes sense to keep close to the competition, work with the same suppliers and be able to poach star managers, engineers and designers. Tesla isn’t the cheeky challenger here — the German automakers are, when it comes to EVs. Musk, in a sense, is buying insurance against being overtaken technologically. That could even justify the large differential in workers’ wages: While the average Tesla assembly worker at in California makes $18 per hour, the lowest-paid German auto worker makes about 27 euros per hour, almost $30. There’s also some symbolism to Tesla’s move into Berlin in particular. The capital city was the first German location for Ford, which started assembling Model T’s there in 1926, not fearing competition from German automakers who were slower to catch on to mass production. And yet Berlin and its surrounding area aren’t obvious locations for an auto industry operation. Though BMW makes motorcycles in Berlin, Daimler AG has production sites both in and outside the city and VW has a design center in Potsdam, most of Germany’s car production, engineering and design take place elsewhere. Instead, Berlin has a flourishing startup culture. According to Deutscher Startup Monitor, 16% of Germany’s startup companies are located in Berlin. Only the country’s most populous state, North Rhein-Westphalia, has a bigger share. And when it comes to the number of tech workers, Berlin has more of them per 100,000 residents than any German state except Hamburg and Hesse. Arguably, as a European tech hub the German capital ranks second only to London and possibly Paris. Musk said Brexit ruled out the U.K. as a potential site, and France has such restrictive labor laws that it’s difficult to imagine Tesla opening a 10,000-job operation there when there are other choices.“Berlin rocks,” Musk said as he announced Tesla’s plans.On the other hand, it could be argued that the heart of the automotive industry is shifting east, and it won’t be beating too far from Berlin in the near future. Zwickau in Saxony, three hours’ drive from the capital, is where VW has started production of the ID.3. Saxony is an emerging auto-industry hub that includes BMW and Porsche factories; IG Metall, the labor union that represents many auto workers, counts Saxony as part of the same area as Berlin and Brandenburg. In other words, Musk’s choice of Tesla’s next production and development site is a considered one, even if an impulse to take the battle to Tesla’s deep-pocketed German challengers on their home turf has played an obvious role.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Jonathan Landman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
German prosecutors on Tuesday sought charges against a current Volkswagen manager as well as a former manager and two former board members, accusing them of awarding works council members inflated salaries. A court must now decide whether the accusations, made by the prosecutor's office in Braunschweig, near where Volkswagen is headquartered, will be brought before a judge. A spokesman for Volkswagen on Tuesday said that there had been no misconduct in relation to deciding appropriate salary levels for works council representatives.
German prosecutors on Tuesday sought charges against a current Volkswagen manager as well as a former manager and two former board members, accusing them of awarding works council members inflated salaries. A court must now decide whether the accusations, made by the prosecutor's office in Braunschweig, near where Volkswagen is headquartered, will be brought before a judge. A spokesman for Volkswagen on Tuesday said that there had been no misconduct in relation to deciding appropriate salary levels for works council representatives.
(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 firstname.lastname@example.org;Eyk Henning in Frankfurt at email@example.com;Richard Weiss in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Chad Thomas at email@example.com, Chris Reiter, Andrew BlackmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Vietnam will inspect all phones imported from China, such as Huawei and Xiaomi models, the Tuoi Tre newspaper reports citing Nguyen Hung Anh, head of Vietnam Customs’ anti-smuggling and investigation department.At issue is whether the Chinese-made phones come with preinstalled navigation apps that use maps reflecting Chinese territorial claims rejected by Hanoi, such as the expansive nine-dash line claims in the South China Sea that overlap resource-rich maritime areas Vietnam says are within in its exclusive economic waters. The U.S. has said the area under dispute could contain oil and gas reserves worth $2.5 trillion.Vietnam has been the most aggressive Southeast Asian nation pushing back on Chinese maritime claims. Its ships directly confront Chinese vessels off its coast in disputed territorial waters and the government bans and removes products that reference China’s controversial claims to large swaths of the South China Sea, from T-shirts worn by tourists to Hollywood movies.Vietnam last week seized all seven car models from China’s Hanteng Autos for using the China’s disputed map, the newspaper reported yesterday, citing Vietnam Customs Head Nguyen Van Can. Earlier, Vietnam said it would penalize Volkswagen AG’s local distributor and an importer for displaying a Touareg CR745J car at a motor show last month that featured the nine-dash line in the navigation map.The country also recently blocked screening of a Dreamworks Animation movie “Abominable,” co-produced with a Chinese company, that included a scene showing the nine-dash line.Vietnam Customs will send instructions to its local branches soon, the newspaper said. The agency, which typically responds only to formal requests made on paper, did not immediately respond to a request for comment via phone.(Updates with additional details of Vietnamese response, starting in third paragraph.)To contact the reporter on this story: Mai Ngoc Chau in Ho Chi Minh City at firstname.lastname@example.orgTo contact the editors responsible for this story: Chua Baizhen at email@example.com, Derek Wallbank, John BoudreauFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.The European Commission cut its euro-area growth and inflation outlook amid global trade tensions and policy uncertainty, warning that the bloc’s economic resilience won’t last forever.The EU’s executive arm sees economic momentum remaining muted through 2021, forecasting an expansion of 1.2% for that year. At 1.3%, inflation is projected to remain well below the European Central Bank goal of just below 2% over the medium term.The updated projections, which put the Commission broadly in line with the consensus view among economists, reflect more pronounced weakness in the region, which has stumbled along with the world economy as tariffs disputes hit manufacturers and dent broader confidence. The institution warned that risks, which include the possibility of a disorderly Brexit, remain “decidedly to the downside.”“Adding to domestic economic shocks and policy uncertainty, the slowdown in global demand and weak trade has hit the European economy hard,” EU chief economist Marco Buti wrote in the report.While the strength of the labor market and the resilience of the services sector have so far prevented a more broad-based deterioration of momentum, Buti warned that “this resilience cannot endure indefinitely.”“Economic activity now looks set to slow down in a number of member states, which at first appeared immune,” he added.Manufacturers across the region have lowered their outlooks in recent weeks. Rheinmetall cut its full-year forecast citing a downturn in global automotive production, Siemens said weakness in the car and factory-equipment industries will lead to a decline in some business volumes next year, and Volkswagen’s finance chief warned of two tough years ahead for industry.The EU’s latest warning comes despite recent economic data suggesting the region’s manufacturing slump may be bottoming out. Progress in U.S.-China trade talks has also sparked cautious optimism that economic prospects would stop deteriorating.What Bloomberg’s Economists Say“Uncertainty has been a key factor in pushing growth below potential and forcing the ECB into a fresh round of easing. A return of uncertainty toward the pre-trade war level would help stabilize the 2020 outlook.”\--David Powell and Dan Hanson. Read the EURO-AREA INSIGHTMomentum in France proved more resilient than expected in the third quarter, and the Spanish economy maintained its pace of robust growth.At the same time, Germany probably slipped into a technical recession, with the Commission predicting only “muted growth” through 2021. Italy “still shows no signs of a meaningful recovery.”The Commission’s projections come with a call on countries including Germany to spend more.“Using available fiscal space actively would allow member states not only to provide a fiscal stimulus amid the sharp slowdown in manufacturing that threatens to spill over to the labor market, but also to refresh and modernize the public capital stock, thereby boosting potential growth,” the report said.That echoes demands by the ECB, which deployed fresh monetary stimulus in September in a package aimed at bolstering the economy in the face of global trade tensions. Outgoing chief Mario Draghi warned that euro-area governments should do more to support the central bank’s efforts with fiscal spending -- a message his successor Christine Lagarde has also pushed.So far, the message has fallen on deaf ears. German Finance Minister Olaf Scholz argued Thursday the country is in a “stable economic situation.”“We will have more growth in the next years,” he told reporters in Brussels. “If the trade tensions worldwide will be reduced, this will have a real impact on better growth.”(Updates with companies in seventh paragraph, Scholz in penultimate two.)\--With assistance from Nikos Chrysoloras and Zoe Schneeweiss.To contact the reporter on this story: Viktoria Dendrinou in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Ben Sills at email@example.com, Jana Randow, Paul GordonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.