|Day's range||637.70 - 637.70|
(Bloomberg) -- Tesla Inc. shares resumed their steep ascent pre-market Tuesday, after two prominent Wall Street analysts raised their price targets on the electric vehicle maker.The company’s potential to become a key battery supplier for electric vehicles prompted Morgan Stanley’s Adam Jonas to nearly double his bull case for the shares.Jonas increased his most optimistic projection for Tesla to $1,200 a share from $650. That’s about 50% above the U.S. company’s $800.03 closing price Friday and would give Tesla a market capitalization of $220 billion. Jonas raised his base case target to $500 a share from $360 but reiterated his sell-equivalent recommendation.The new bull scenario is based on an “aggressive assumption” that Tesla could win 30% of the global electric-vehicle market, Jonas wrote in a report to clients. This would include 4 million car deliveries by 2030 plus the potential for Tesla to supply powertrains, including batteries and electric motors, to other auto manufacturers. In 2019, the company handed over 367,500 vehicles to customers.Separately, Sanford C Bernstein analyst Toni Sacconaghi raised his price target to $730 from $325, saying that while it is difficult to justify the company’s current share price, investors now feel much better about its ability to be sustainably profitable. The analyst also noted that Tesla’s Model 3 demand remained healthy, gross margin and operating expense were both poised to materially improve, competition was sputtering and product and production pipelines were robust.“Tesla is the ultimate ‘possibility’ stock,” Sacconaghi wrote in a note to clients, adding that the company’s core addressable market was likely to grow more than 30-times over the next 20 years, implying that even if Tesla’s current market share gets cut by half, it would still grow 15-times during the period. The analyst maintained his hold-equivalent rating.Tesla shares have had a wild ride this year. The stock is up 91% in 2020, a jump variously attributed to good results, a short squeeze, the opening of a key new factory in China or an extreme case of investor FOMO -- or all of the above. The surge cooled before the Palo Alto, California-based company undertook a $2 billion share offering Friday, priced at the steepest discount the carmaker has ever given to its investors.Analysts either have yet to adjust to the gain or remain highly skeptical. The average share-price target among analysts tracked by Bloomberg is $489.47, or 39% below the current level.Morgan Stanley’s bear case for the stock is now $220. While that’s a 91% improvement from the broker’s most recent worst-price scenario, Jonas is sticking to his recommendation against buying the stock, saying the risk-reward balance on the manufacturer continues to be “unfavorable.”Tesla shares were up 4.9% in pre-market trading.(Adds stock move, Bernstein comments)\--With assistance from Lisa Pham and Catherine Larkin.To contact the reporters on this story: Sam Unsted in London at email@example.com;Esha Dey in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Beth Mellor at email@example.com, Tom Lavell, Scott SchnipperFor 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) -- Bill Gates paid Tesla Inc. a compliment for coaxing the car industry to go electric. If he was expecting kind words in return from Elon Musk, he apparently shouldn’t have spoken about challenges that still lie ahead -- or about his new Porsche.Gates, the billionaire co-founder of Microsoft Corp., spoke with a YouTube influencer last week about the challenges of reducing emissions to slow climate change. He called the passenger-car industry “one of the most hopeful” sectors taking action in this regard.“And certainly Tesla, if you had to name one company that’s helped drive that, it’s them,” Gates told YouTuber Marques Brownlee.Then Gates discussed recently buying a Porsche Taycan. While he called the electric sports car “very, very cool,” he acknowledged its premium price -- the initial Turbo S models start at $185,000 -- and said consumers still have to overcome anxieties about EVs offering limited range and taking longer to recharge. Gasoline-powered cars travel longer between quick refuels at stations that outnumber charging points.When a Tesla enthusiast posted about being disappointed in Gates’s decision to buy a Taycan instead of a Tesla and his comments about range anxiety, Musk replied: “My conversations with Gates have been underwhelming tbh.”Musk, 48, is of course no stranger to tweeting dismissively about fellow billionaires. The Tesla chief executive officer questioned Facebook Inc. CEO Mark Zuckerberg’s understanding of artificial intelligence risks in 2017. Last year, he called Jeff Bezos a copycat after the Amazon.com Inc. CEO embarked on an internet-satellite project that could rival one that Musk’s closely held company SpaceX is pursuing.The Tesla CEO’s commentary on Porsche’s Taycan has been mixed. After chiding the sports car brand for using internal combustion engine nomenclature for the high-end version of its debut electric vehicle, he tweeted in September that it “does seem like a good car.”(Updates with Musk’s tweets on Taycan in last paragraph)To contact the reporter on this story: Craig Trudell in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Craig Trudell at email@example.com, Will DaviesFor 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.
The wealthy city-state of 5.7 million, which is hiking investment in flood defences, joins Norway, Britain and others in setting a target to cut the use of vehicles with combustion engines. "Our vision is to phase out ICE (internal combustion engine) vehicles and have all vehicles run on cleaner energy by 2040," Finance Minister Heng Swee Keat said in his budget speech. Singapore, which has been criticised by Tesla CEO Elon Musk as not being supportive of electric vehicles, is one of the most expensive places in the world to buy a car and there are few electric vehicles on the roads.
(Bloomberg Opinion) -- Who is Cathie Wood?She’s already in the pantheon of top money handlers over any period in the past five years, and has been the most persuasive — and so far prescient — champion of Tesla Inc.Her actively managed Ark Innovation ETF is the best performer among 584 funds with at least $1 billion of assets in the global equity market, crushing the likes of BlackRock with a return of 165% (income plus appreciation) the past three years, and she beat 99% of them since Ark Investment Management LLC became a registered investment adviser in January 2014, according to data compiled by Bloomberg.For all of her success picking winners, the 64-year-old Wood has received relatively little notice during the past three years, aside from being an occasional outlier among investors on CNBC. You won’t find her at the Barron’s Roundtable, which “gathers some of Wall Street’s best minds.” She was included in the Bloomberg 50: The People Who Defined Global Business in 2018. Her focus on innovation, “centered around genome sequencing, robotics, artificial intelligence, energy storage and blockchain technology,” enabled Ark Innovation ETF to increase 127 times, to $2.4 billion from its $15 million grubstake in 2017. In the process, the Ark ETF rewarded its shareholders with more than three times the return of the S&P 500 Index and more than twice the Nasdaq’s bounty. Since its inception, Ark has earned almost 2.4 times more than the S&P 500 and 1.7 times the Nasdaq, according to data compiled by Bloomberg.At a point when money management mostly is a passive, index-driven business, Wood is a discerning stock picker with about $11 billion of assets. Her selection of health-care juggernauts Juno Therapeutics Inc., based in Seattle, and Invitae Corp., in San Francisco, returned 286% and 173%, respectively, in the past three years. Choosing Palo Alto-based Tesla and Buenos Aires-based MercadoLibre Inc. among consumer discretionary companies netted 185% and 269% in her fund, according to data compiled by Bloomberg.“We’re all about finding the next big thing,” said Wood during an initial interview with David Westin on Bloomberg Wall Street Week earlier this month. “Anyone hewing to the benchmarks, which are backwards looking, they’re not about the future. They are about what has worked. We’re all about what is going to work.”Since she graduated summa cum laude in finance and economics from the University of Southern California in 1981, Wood has been assistant economist at the Capital Group; chief economist, analyst, portfolio manager and director at Jennison Associates; co-founder of the hedge fund Tupelo Capital Management, and chief investment officer of global thematic strategies at AllianceBernstein, where she managed more than $5 billion. Her favorite innovator is Copernicus, the Renaissance man who located the sun rather than the Earth at the center of the universe.Soon after launching Ark in 2014, Wood made Tesla her fifth-largest holding. In 2018, she increased it to No. 1, or 10% of the fund, as most analysts soured on the maker of zero-emission, battery-electric vehicles.In 2016, when Tesla plummeted 11%, and 75% of the analyst recommendations opposed any purchases, Wood almost tripled her Tesla position to 5,072 shares. The following year, after Tesla appreciated 46%, and 68% of the analysts remained bearish, she enlarged her stake more than 13 times to 67,653 shares, according to data compiled by Bloomberg. When Tesla rallied 26% last year amid tepid recommendations from 70% of the analysts, she almost doubled her stake to 471,594 shares.Tesla continued climbing this year — 91%, the best performer in the Nasdaq 100 index and No. 1 among the 500 most highly capitalized U.S. companies. Wood was a consistent seller during the rally — reducing her holding to 292,000 shares — solely to keep her Tesla stake at the designated maximum 10% of her fund.“If we hadn’t sold, Tesla would probably be well north of 20% in the portfolio,” she said during a phone interview last week. “Last year, we were buying aggressively when analysts were saying Tesla was going to run out of cash and go bankrupt.” Tesla still is “incredibly undervalued,” she said.That’s an opinion considered absurd by most analysts, who insist nothing justifies Tesla’s valuation at almost $150 billion, or 58% more than the market capitalization of global sales leader Volkswagen AG.On the contrary, says Wood, Tesla’s share of EV sales increased a percentage point to 18% when the so-called Tesla killers — from BYD Co. Ltd and BAIC Motor Corp. in China to Nissan Motor Co. in Japan and Volkswagen, Bayerische Motoren Werke AG and Daimler AG in Germany and General Motors Co. and Ford Motor Co. in the U.S — started selling their own battery-electric vehicles. Wood believes the legacy automakers will lose money on their EVs, while Tesla becomes increasingly profitable and remains years ahead of its rivals in battery and chip technology.The company also has 14 billion miles of real-world driving data. Its closest competitor, Waymo, has data on 20 million miles.The investors who have been Tesla naysayers have gotten far more attention than Wood. News articles about Tesla short sellers, including David Einhorn’s Greenlight Capital LLC and Jim Chanos of Kynikos Associates Ltd., are far more numerous on the Bloomberg system. More than 100 stories showcased Einhorn’s disdain for Tesla, and more than 40 similarly featured Chanos, while there were around 20 for Wood during the same period.Investors were similarly dubious about Amazon.com, which appreciated 1,029% during its first five years after the initial public offering in 1997 and 228% during its second five-year period. Tesla has gained 1,018% during the five years after its 2010 IPO and appreciated 206% since 2015, according to data compiled by Bloomberg. “It’s the same idea that analysts hated Amazon during that entire period – not on the bubble but after the tech and telecom bust,” Wood said.In her latest assessment last month, she wrote: “Based on our updated expectations for electric vehicle (EV) cost declines and demand, as well as our estimates for the potential profitability of robotaxis, our 2024 expected value per share for TSLA is $7,000.”That’s a far cry from the $340 in August 2018, when Chief Executive Officer Elon Musk tweeted: “Am considering taking Tesla private at $420. Funding secured.”Musk subsequently received a letter from Wood urging him not to take the company private because she saw Tesla rallying to $4,000 in five years. Before the month ended, he said his plan to take Tesla private wasn’t “the better path.” Even Musk seemed impressed by Wood’s judgment. “The letter was to him and the board, and he did say that he and the board took the letter into consideration and it did influence them,” she said.Tesla said last week that it will sell about $2 billion of new shares and that Musk would purchase as much as $10 million of the offering.“I’m not going to tell you we were the reason,” Wood said. “We were a little peapod back then, and we’re still a little peapod in the scheme of the asset management world.” But, she said, “I think our research is the best in the world on Tesla.”So far at least, she’s been right on the money.\-- With assistance from Shin PeiTo contact the author of this story: Matthew A. Winkler at firstname.lastname@example.orgTo contact the editor responsible for this story: Katy Roberts at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Matthew A. Winkler is Co-founder of Bloomberg News (1990) and Editor-in-Chief Emeritus; Bloomberg Opinion Columnist since 2015; Co-founder of Bloomberg Business Journalism Diversity Program in 2017. During his 25 years as Editor-in-Chief, Bloomberg News was a three-time finalist and winner of the Pulitzer Prize for Explanatory Reporting and received numerous George Polk, Gerald Loeb, Overseas Press Club and Society of Professional Journalists and Editors (Sabew) awards.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.
Tesla is in advanced stages of talks to use batteries from CATL that contain no cobalt - one of the most expensive metals in electric vehicle (EV) batteries - in cars made at its China plant, people familiar with the matter said. Adoption would mark the first time for the U.S. automaker to include so-called lithium iron phosphate (LFP) batteries in its lineup, as it seeks to lower production costs amid faltering overall EV sales in China. Tesla has been talking to the Chinese manufacturer for more than a year to supply LFP batteries that will be cheaper than its existing batteries by a "double-digit percent," said a person directly involved in the matter, who was not authorised to speak with media and so declined to be identified.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Elon Musk’s first electric car plant in Europe is facing legal delays that could set the project back by several months after a court halted work on clearing a forest for the new Tesla Inc. factory near Berlin while it considers a challenge by environmentalists.The Berlin-Brandenburg higher administrative court issued a temporary injunction against further logging, overturning a lower court ruling that had rejected a request by environmental group Gruene Liga Brandenburg. The court said it will make a final decision on the complaint in the coming days.Tesla and the government of Brandenburg, where the plant is located, have until mid-day on Tuesday to respond to the court and will meet that deadline, Joerg Steinbach, Brandenburg’s economy minister, said on Twitter, adding that they will then “rely on the prompt decision” by the court.If Tesla doesn’t clear the trees by mid-March before the wildlife breeding period, construction could be delayed by six to nine months, local officials have warned. They’ve argued the site is an “inferior” pine forest that was planted to be harvested in the first place. Gruene Liga Brandenburg didn’t immediately respond to a request for comment.The injunction threatens Tesla’s ambitious timetable of having the plant up and running from mid-2021. If it does clear Germany’s red tape, the site could churn out as many as 500,000 cars a year, employ 12,000 people and pose a serious challenge to Volkswagen AG, Daimler AG and BMW AG. Musk recently tried to ease local concerns about water usage for the plant, which would border a nature reserve.The factory will be designed with “sustainability and the environment in mind,” Musk said last month on Twitter, adding Tesla will plant three new trees for every tree cut.Workers have already scoured the equivalent of about 150 soccer fields of forest and removed most of the errant World War II ammunition found there. Logging started last week after Brandenburg’s environment ministry granted Tesla preliminary approval to begin works.The project’s environmental stipulations include scaring off or relocating wolves, bats, snakes and lizards until construction is over. Under German regulations, the project in the small town of Gruenheide must consider the breeding period for local wildlife in spring.(Adds detail on project in fourth paragraph)\--With assistance from Karin Matussek.To contact the reporters on this story: Stefan Nicola in Berlin at firstname.lastname@example.org;Richard Weiss in Frankfurt at email@example.comTo contact the editors responsible for this story: Daniel Schaefer at firstname.lastname@example.org, Chris Reiter, Anthony PalazzoFor 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.
A German court on Sunday ordered Tesla Inc to stop clearing forest land near the capital Berlin to build its first European car and battery factory, a victory for local environmental activists. The U.S. electric carmaker announced plans last November to build a Gigafactory in Gruenheide in the eastern state of Brandenburg. The court ruling, by the higher administrative court of the states of Berlin and Brandenburg, comes after the state environmental office gave a green light to clear 92 hectares of forest for the plant.
Billionaire Ray Dalio's Bridgewater Associates, Viking Global Investors, and Granite Point Capital were among prominent hedge funds placing new bets on electric carmaker Tesla Inc in the fourth quarter, positioning them to gain from its nearly 100% rally over the first six weeks of the year. The positions were revealed in 13F filings with the U.S. Securities and Exchange Commission released on Thursday and Friday, which are one of the few public ways of tracking what hedge fund managers are selling and buying. If each hedge fund had held on to its stake, Bridgewater's purchase of nearly 45,000 shares would be worth approximately $36 million (£27 million), while Viking's purchase of nearly 52,000 shares would be would be worth slightly more than $42 million.
Yahoo Finance is maintaining a working list companies that have been affected by the outbreak, and are expected to feel the effects through the first half of the year.
China’s electric vehicle manufacturers posted significant losses last month, as steep cuts in government subsidies continued to weigh on the sector. But a top executive at the country’s largest EV maker BYD says, Chinese carmakers need to “build more competitive cars” to reduce their reliance on government policies.
(Bloomberg) -- Elon Musk dreams big dreams. Tesla Inc. taps Wall Street for funds to turn them into reality. Banks pocket millions in fees. And rather than punish the company for diluting its shareholders, the market applauds.The virtuous circle has enabled Tesla to raise about $14 billion over the last decade, supporting the electric-car maker through countless ups and downs. News of the latest offering -- which priced at $767 a share, according to a regulatory filing -- boosted Tesla’s market capitalization to almost $146 billion, behind only Toyota Motor Corp. among the world’s most valuable auto manufacturers.While Tesla watchers have seen this movie before, the latest script was full of twists and turns. Musk, 48, said during an earnings call two weeks ago that it didn’t make sense for the company to raise capital again. The maker of the Model 3 sedan has been spending money sensibly, he said, without holding back expenditures that would inhibit progress.But the ascent Tesla’s stock has been on in recent months evidently changed the chief executive officer’s mind. Tesla will use the $2 billion proceeds from the offering to shore up its balance sheet and help fund Musk’s seemingly endless aspirations.After Musk and Chief Financial Officer Zach Kirkhorn demurred weeks ago when asked how much spending Tesla had planned for this year, the company disclosed Thursday that its budget will be as much as $3.5 billion, more than double last year’s.Chinese banks are footing much of the bill for the factory Musk just opened near Shanghai, but he’s also already planning to build his next one near Berlin and teasing the possibility of another one going up in Texas.Tesla is no longer a tiny niche player that makes cool-but-expensive cars only in high-cost California, but getting to this point required taking on about $12.5 billion of debt, double the amount of cash and equivalents it had at year end.“Musk had previously assured investors that he did not plan to raise additional capital,” Gene Munster, managing partner of Loup Ventures, said in a report. “However, while Elon backpedaling on his promises is a common criticism of Tesla, the company’s balance sheet is a much more common (and valid) criticism.”Tesla shares rose as much as 0.7% to $809.50 as of 10 a.m. Friday in New York. The stock rose 4.8% Thursday after the offering was announced, running counter to the usual beating companies take when they issue new shares.The stock has more than tripled since the company released the first of two positive quarterly earnings reports. Musk has accelerated the production schedule for the Model Y, the crossover SUV that he sees becoming the company’s new top seller.But the Model Y isn’t expected to contribute significantly to deliveries in the first few months of the year, and Kirkhorn has cautioned that first-quarter sales probably will slow down because of seasonality. Production in China also was temporarily halted due to the coronavirus, and ramping up output of Model 3s there and Model Ys in California is expected to pinch profit margins.Tesla managed to time its latest offering before any of those risks weighed on the stock ahead of its next earnings report.With all that Musk has planned -- eventually rolling out the Semi, Roadster and Cybertruck models and recommitting to a foundering rooftop-solar business -- some investors and analysts think the company should try to raise enough money so that it’s really done needing to seek more from now on.While the amount the company has taken in during the last decade is significant, it’s not unprecedented. Netflix Inc. raised about $15 billion in the same span, almost entirely from debt offerings, according to data compiled by Bloomberg.“We have long wanted Tesla to raise a large amount of cash via stock issuance due to its lofty valuation and then perhaps never need to raise capital again,” David Whiston, a Morningstar Inc. analyst, said in a note. “We’d like to see more consistency between the company’s actions and the words of CEO Elon Musk.”\--With assistance from Brandon Kochkodin and Drew Singer.To contact the reporters on this story: Dana Hull in San Francisco at email@example.com;Gabrielle Coppola in Detroit at firstname.lastname@example.orgTo contact the editors responsible for this story: Craig Trudell at email@example.com, Melinda GrenierFor 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) -- Tesla Inc. investors who got in on Thursday’s share sale received the steepest discount the electric-car maker has offered in its 10-year history as a public company.Tesla’s $2 billion secondary offering priced at $767 per share, 4.60% below Thursday’s closing price. That discount is over 10 times larger than Tesla’s last secondary offering in May, and quintuples the average discount given across its seven prior share sales.Read more: Tesla Money Raise Keeps $14 Billion Virtuous Circle RollingAn 83% run-up this year before the offering launched might have contributed to the more buyer-friendly pricing terms, not to mention fresh regulatory scrutiny. But Elon Musk probably isn’t losing any sleep over the matter, as the price per share was still more than double any of the company’s prior equity raises.Six of Tesla’s previous secondary offerings -- conducted between 2011 and 2019 -- priced at discounts below 1.0%. The bullish bidding helped Tesla fuel a decade of unparalleled price appreciation.Shares fell 3% in pre-market trading to about $780, above Thursday’s offering price.To contact the reporter on this story: Drew Singer in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, Courtney DentchFor 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) -- Tesla Inc. needs to hire about 360 more workers at its massive solar factory in Western New York if the company is going to meet a state employment quota and avoid paying a penalty.There are more than 1,100 workers at the plant in Buffalo, according to the city’s mayor and a member of the state Assembly who recently toured the state-subsidized complex. The company’s deal with New York includes an April deadline to hire 1,460 workers or pay a $41.2 million penalty.It’s a goal that Buffalo Mayor Byron Brown still thinks is attainable. “From the tour I took, it certainly looked like Tesla was in a position to honor its commitment,” he said in a phone interview Thursday.The success of the plant, called Gigafactory New York, is crucial to the future of Tesla’s solar business. The sleek photovoltaic shingles it produces to form solar rooftops were a key piece of Chief Executive Officer Elon Musk’s push to acquire debt-ridden SolarCity Corp. in 2016. But the factory has been slow to ramp up since output began in late 2017, with just a single production line running a year later.In early 2019, Musk announced the plant was moving toward mass production, saying that it would be the “year of the solar roof.” But the glass tiles have yet to capture a significant piece of the market.New York bet heavily on Tesla’s factory, committing $750 million to build the 1.2-million-square-foot plant. When Assemblyman Sean Ryan, whose district includes Buffalo, toured it about 15 months ago, there was so much vacant space that “you could’ve played tennis,” he said.Now that’s changing.“It’s an amazingly different visual now,” said Ryan, referring to the ramp-up in manufacturing that has occurred inside the plant. In addition to solar roof tiles, the factory produces energy-storage and supercharger components.Tesla didn’t respond to a request for comment. In a filing Thursday, the company said it is anticipating “meeting the remaining obligations through our operations at this facility and other operations within the State of New York.”(Adds details about factory output in penultimate paragraph)\--With assistance from Dana Hull.To contact the reporter on this story: Brian Eckhouse in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Joe Ryan at email@example.com, Reg GaleFor 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) -- On one side of the Atlantic, Tesla Inc. is capitalizing on its soaring share price by selling $2 billion in stock so it can build more electric vehicles. On the other, French manufacturer Renault SA has been forced to cut its dividend by 70% and announce a big reduction in fixed costs so it can afford to do the same.Dwindling profits and Renault’s drastic remedies were mirrored this week by its Japanese alliance partner Nissan Motor Co., as well at Daimler AG. (Renault has an engineering partnership with Daimler and owns a small stake in the German car and truck maker.) Their problems aren’t identical but all three had expanded their workforces in anticipation of demand that hasn’t materialized and now they have to tighten their belts to pay for expensive electric vehicles, for which demand remains uncertain. Renault’s shares are near their lowest level in eight years, which means the company is capitalized at barely 10 billion euros ($11 billion), a sum that includes the 43% stake Renault owns in Nissan. Needless to say, that’s a sliver of what Tesla is worth, even though the U.S. company’s annual output is still almost a rounding error for the Renault-Nissan alliance. This juxtaposition sends a crystal clear message: Carmakers that grew fat and happy producing combustion engine vehicles won’t get any help from the stock market now that they’ve decided to embrace an electric future. Instead the gasoline gang are going to fund these changes themselves and it’s going to be painful, for both employees and shareholders.Long-established automakers have decided that their salvation is to be found in alliances and partnerships, which spread the cost of developing expensive technology over a greater number of car sales. It’s why Renault tried to merge with Fiat Chrysler Automobiles NV, before Peugeot-owner PSA Group beat them to it. But in Renault’s case its links to other manufactures are amplifying its problems right now, not solving them. Relations with Nissan fell apart when former alliance boss Carlos Ghosn was arrested and remain fragile now that he’s free to settle scores. Both sides have since hired new CEOs but their shareholders aren’t yet ready to buy the story that harmony has been restored.With its own profits slumping, Nissan can’t afford to pay big dividends to Renault and the French are also earning less from the Daimler partnership. The upshot is that Renault is a bit squeezed for cash — net cash at the automotive unit dwindled to just 1.7 billion euros at the end of December (though gross liquidity, including available credit lines, was a more respectable 16 billion euros). One way Renault could free up some money would be to sell part of its Nissan stake, which might have the added benefit of helping to re-balance the alliance in Nissan’s favor, something the Japanese have long sought. The trouble is Nissan’s shares have halved in value over the last two years so selling now wouldn’t provide Renault with nearly as much as it once would. Interim CEO Clotilde Delbos all but ruled out such a move on Friday.So it’s no wonder that Renault has opted to drastically scale back its own dividend and will try to cut costs by 2 billion euros in the next three years. Delbos, who’s also the chief financial officer, didn’t go into much detail about how those savings will be delivered but the company plans to review its “industrial footprint,” which suggests plant closures are a possibility. (Alliance partner Nissan has already announced 12,500 job cuts, while Daimler is targeting at least 10,000.)Lowering costs won’t be straight forward. New Renault CEO Luca de Meo, a former Volkswagen AG executive, doesn’t start until July and French unions aren’t known for championing efforts to slash jobs. In the near term, restructuring costs will also put further pressure on Renault’s cash flow and the coronavirus could yet create unexpected problems. But unlike at Tesla, Renault doesn’t have a queue of wealthy supporters clamoring to help fund this epochal clean-vehicle transition. One way or other, employees and existing shareholders will end up paying.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: Melissa Pozsgay at email@example.comThis column does not necessarily reflect the opinion of 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.