VOW3.DE - Volkswagen Aktiengesellschaft
| Previous close | 170.18 |
| Open | 165.20 |
| Bid | 0.00 x 207000 |
| Ask | 0.00 x 63200 |
| Day's range | 164.10 - 169.92 |
| 52-week range | 131.44 - 173.30 |
| Volume | 1,437,938 |
| Avg. volume | 1,037,733 |
| Market cap | 86.923B |
| Beta (3Y monthly) | 0.77 |
| PE ratio (TTM) | 6.93 |
| EPS (TTM) | 24.44 |
| Earnings date | 30 Oct 2018 |
| Forward dividend & yield | 4.86 (2.86%) |
| Ex-dividend date | 2019-05-15 |
| 1y target est | 198.76 |
- Reuters
Ford partners with Volkswagen, Amazon to build charging network for cars
The network of charging stations will be the largest in North America with 12,000 locations and more than 35,000 charge plugs, Ford said. The network will give Ford car owners access to fast charging station sites that will be set up by Volkswagen's Electrify America. Ford is also working with Amazon for installation of home charging setups.
- Reuters
Volkswagen gets more time from U.S., auditor to comply with diesel settlement terms
Volkswagen said on Thursday it has been granted an additional 90 days to test its compliance programs required under a criminal plea agreement with the U.S. government following its emissions cheating scandal. The extension means that an independent compliance auditor, Larry Thompson, will monitor Volkswagen until September 2020. Thompson, a former deputy U.S. attorney general, was installed in 2017 after VW was caught manipulating pollution tests.
- Bloomberg
Volvo Foots Bill for Battery Charges in Bid to Curb Emissions
(Bloomberg) -- Volvo Cars isn’t just electrifying its lineup to cut carbon emissions. Now the Swedish automaker says it will pay customers to make sure they plug in.Volvo is tying the launch of its first all-electric vehicle -- the XC40 Recharge crossover -- to a broader plan for shrinking the carbon footprint of its models by 40% through 2025. And it’s backing that pledge with a promise to pay the first year’s worth of charging costs for owners of its plug-in hybrids, starting with the 2021 model year.Volvo placed itself at the forefront of electric car hype in 2017 when it vowed to rid its lineup of cars running purely on fossil fuels by 2025. To get there, it’s going to roll out a new battery-electric model every year until 2025, starting with its XC SUVs, Chief Executive Officer Hakan Samuelsson said. Those will join a growing range of hybrid models.“We believe we should treat sustainability as as much of an integrated part of our business as safety, not just something we do as an add-on,” Samuelsson said in a phone interview. “We’re making it part of our product offering.”Model 3 RivalBuyers of 2021 model year hybrids will be able to claim a refund for their electricity costs during the first year of ownership based on power consumption data extracted from Volvo’s app for Apple and Android smartphones. Volvo plug-in hybrid owners drive in electric mode only about 40% of the time, Samuelsson said in an interview with Bloomberg Television.The XC40, which Volvo unveiled earlier today in Los Angeles, will have 200 miles of range in the U.S., 402 horsepower and take 40 minutes to get to 80% battery capacity on a fast-charging system, the company said. That compares to the 240-mile range of Tesla Inc.’s Model 3 sedan.Samuelsson said Volvo will start producing its first EV late next year and price it to compete with the Model 3, which starts at about $39,000 but has been selling on average for roughly $50,000.“It’s affordable for a much broader range of people” than higher-priced luxury brand electric cars, said Volvo’s Chief Technology Officer Henrik Green. The XC40 is “more like a $50,000 car than a $100,000 car,” he said.The electric XC40 will join a wave of new EVs debuting to keep up with tightening emissions regulations in China and Europe. While uptake remains slow, carmakers including Volkswagen AG and Daimler AG have launched new models like the Audi e-tron and Mercedes EQC to chase after Tesla.Volvo is pushing ahead with its electric ambitions as others in the space struggle. NIO Inc., China’s would-be Tesla competitor, is running short of cash. Jia Yueting, founder of electric vehicle start-up Faraday & Future Inc., filed for bankruptcy. And Dyson Ltd., the famed maker of vacuum cleaners, pulled the plug on its battery-powered car project.‘Midterm’ Profitability GoalVolvo would not be making a fully electric XC40 if it wasn’t “absolutely sure” the car will be profitable, Samuelsson said.“It might be lower profit margin initially, but what counts is more midterm” profitability goals, he said.The bet on electrics comes at a time when the carmaker is coping with a global sales slowdown and tariffs that led to a 30% drop in first-half operating income. To cut costs, the company plans to merge engine operations with Chinese parent Geely.Samuelsson said Volvo wants to increase the appeal of electrified vehicles so they sell without government subsidies -- and incentives like free charging for the first year. “Long term, if this is really going to do something to the climate or the environment, the cars need to be attractive and need to be bought by customers with their own money,” he said.(Adds CTO comment in eighth paragraph.)\--With assistance from Shery Ahn and Amanda Lang.To contact the reporters on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net;Ed Ludlow in San Francisco at eludlow2@bloomberg.netTo contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Gabrielle Coppola, Chester DawsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Bulgaria ready to sweeten its bid to win Volkswagen plant - lobby group
Bulgaria is ready to offer more incentives to Volkswagen to build a new plant in the country after the carmaker postponed a decision on building it in Turkey amid criticism of Ankara's offensive in Syria. Sofia is ready to boost its offer and double the subsidies available to Volkswagen to 260 million euros from an initial 135 million, Rosen Plevneliev, a board member of the non-governmental Bulgarian Automotive Cluster, told Bulgaria's BNR public radio on Wednesday. The Balkan country has been in Volkswagen's shortlist for the new plant and the announcement regarding Turkey, has raised its hopes.
- Reuters
Bulgaria ready to sweeten its bid to win Volkswagen plant: lobby group
Bulgaria is ready to offer more incentives to Volkswagen to build a new plant in the country after the carmaker postponed a decision on building it in Turkey amid criticism of Ankara's offensive in Syria. Sofia is ready to boost its offer and double the subsidies available to Volkswagen to 260 million euros from an initial 135 million, Rosen Plevneliev, a board member of the non-governmental Bulgarian Automotive Cluster, told Bulgaria's BNR public radio on Wednesday. The Balkan country has been in Volkswagen's shortlist for the new plant and the announcement regarding Turkey, has raised its hopes.
- The Guardian
Volkswagen's $75m fine over diesel emissions scandal rejected by judge
Judge questioned the imputation that the top layers of the corporation would not have known about the emissions software. A $75m fine negotiated between Volkswagen and the consumer watchdog over the diesel emissions scandal could be increased by the federal court, after a judge reportedly rejected the deal as “outrageous.” The Australian Competition and Consumer Commission (ACCC) and the German car company presented the negotiated penalty along with a statement of agreed facts to the federal court in Sydney on Wednesday. It comes one month after Volkswagen settled a class action for between $87m and $127m with owners of some of the 100,000 cars that were affected by the emissions test cheating and subsequent global recall in Australia. Volkswagen has been fined more than €30bn ($49bn) worldwide since the scandal first came to light in 2015. This month, a class action with 470,000 owners of Volkswagen, Skoda, Audi and Seat began in Germany. The ACCC has been pursuing Volkswagen Aktiengesellschaft (VWAG) and its Australian subsidiary Volkswagen Group Australia through the courts since 2016 over “false or misleading conduct” involving the use of software which prompted diesel vehicles to produce lower-emissions fuels under test conditions. About 11 million cars worldwide were sold as producing significantly lower emissions than they did under normal driving conditions. Related proceedings against Audi AG and Audi Australia, subsidiaries of VWAG, were filed by the ACCC in 2017. Volkswagen made no admissions in the agreed facts with regard to environmental or health impacts caused by higher emissions, and no admissions regarding the knowledge of its board. It accepted the $75m penalty, which is three times higher than the record $26.5m penalty in an ACCC case levied against training college Empower Institute last month. But federal court justice Lindsay Foster rejected the statement, saying, according to a report in the Australian Financial Review: “I don’t accept the submission, it’s outrageous.” Foster questioned the imputation that the top layers of the corporation would not have known about the emissions software. The ACCC declined to comment on the hearing beyond confirming it had submitted a statement of agreed facts and proposed orders to the federal court. “The proposed orders include a penalty of $75m but it is ultimately for the court to decide the appropriateness of the penalty,” a spokeswoman said. The decision has been reserved.
- Reuters - UK Focus
UPDATE 2-European shares pause as Brexit deal reports swirl
European stocks pulled back slightly on Wednesday from their strongest closing high in more than a year as clashing headlines on Britain's last-minute efforts to forge a divorce deal with the European Union left investors hanging on the outcome. Hopes of a breakthrough took the pan-European STOXX 600 to its highest close since May 2018 on Tuesday, but the index closed down 0.1% with London's exporter-laden FTSE 100 , which tends to fall when the pound gains, lagging the most with a 0.6% decline. A report that the main stumbling block to a deal had been removed to news that the talks had hit a "standstill" made for a choppy trading session, but expectations of a no-deal Brexit faded.
- Bloomberg
Resolution in U.S. Congress Opposes Trump’s Action: Syria Update
(Bloomberg) -- Forces loyal to Syrian President Bashar al-Assad took control of the strategic town of Manbij near the Turkish border as pressure mounted on Ankara to end an offensive that has drawn U.S. and European sanctions and accusations of war crimes.Washington’s decision to abandon its Kurdish partners in the face of Turkey’s attack has upended old alliances and opened up a new and unpredictable phase in Syria’s eight-year-old civil war.Kurdish-led forces, who fought with U.S. backing to defeat Islamic State, have been forced to turn to Assad for help, pulling back from the border area as Syrian government troops march in. The main Kurdish militia has warned they may not be able to secure camps and prisons holding thousands of Islamic State jihadists, including Europeans whose home countries don’t want them back.In its strongest comments yet, Russia said the offensive was “unacceptable” and it was opposed to the presence of Turkish forces inside Syria, where years of Russian aerial support helped turn the tide of the war in favor of Assad. A top aide to Vladimir Putin said Moscow was mediating between the two sides and would not allow them to clash.Turkey says its offensive aims to push back Kurdish militants it considers a national security threat and resettle refugees, but the costs of the operation could begin to mount.In the clearest sign that the offensive could have an economic fallout, Volkswagen AG delayed a final decision on a 1.3 billion-euro ($1.4 billion) car plant investment in Turkey.That followed Donald Trump’s announcement on Monday that the U.S. would impose sanctions on members of Turkey’s cabinet. European countries have also agreed to restrict arms sales to Turkey.The lira rallied on Tuesday, however, as markets were apparently bracing for stronger measures.Here’s a rundown of major events in Turkish local time.Key DevelopmentsU.S. imposes sanctions on Turkey and calls for cease-fire in northeast Syria.Volkswagen is having second-thoughts on its earlier plans for a major plant investment in Turkey amid the political chaos ensuing Ankara’s decision to send troops across the border.Russia says it is opposes to the presence of Turkish forces inside Syrian territory and won’t allow the two armies to clashU.S.-led coalition against Islamic State confirms its forces have left Manbij: Sky News ArabiaTurkish army penetrated 30-35 kilometers into Syria, reaching the southern most point set as target by policy makers.Resolution in U.S. Congress Opposes Trump’s Action (1:24 a.m.)U.S. House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer said a bipartisan resolution has been introduced opposing the U.S. pullout from northeast Syria, calling on Turkish President Recep Tayyip Ergodan to end unilateral military action in the area and urging the U.S. to continue supporting Kurdish communities in Syria.“President Trump’s action not only risks regional security, it risks security in our homeland because ISIS is resurging,” the two Democratic leaders said in a statement.The resolution also called on the U.S. to present a clear plan for the “enduring defeat of ISIS.”Second-ranking House Democrat Steny Hoyer said on Twitter that the chamber will vote on the resolution Wednesday.Ex-Pentagon Chief Says Islamic State Will Rebound (8:33 p.m.)Former U.S. Defense Secretary Ash Carter said Islamic State will rebound now that the U.S. has backed off its support of Kurdish militias in northern Turkey that had helped defeat the terror group’s so-called caliphate.“They’ll try to come back and we’re going to have to defend ourselves all over again but next time nobody will help us,” Carter said in an interview Tuesday on Bloomberg Television. “We’ll have to do it all by ourselves.”Carter called Trump’s decision to pull troops back in Syria, exposing the Kurds to Turkish fire, “inexplicable.” He went on to express doubts about whether Turkey will be able to effectively defend the “safe zone” it’s trying to build in northern Syria.U.K. Blocks Arms Exports to Turkey for Syria Use During Review (3:59 p.m.)The U.K. blocked licenses for the export of arms to Turkey that could be used in Syria pending a review of sales to the country, Prime Minister Boris Johnson’s spokesman James Slack tells reporters.Germany’s Merkel Calls on Turkey to End Its Offensive in Syria (3:36 p.m.)Chancellor Angela Merkel said Turkey‘s offensive in Syria needs to be stopped because it risks lives and destabilizes the region.“This military action should be stopped, and there should be a return to negotiations,” Merkel said at a briefing alongside Norwegian Prime Minister Erna Solberg.U.S.-Led Coalition Confirms its Forces Left Syrian Town of Manbij (3:14 p.m.)The U.S.-led coalition against Islamic State has left the Turkish border town of Manbij, Sky News Arabia reported, as Assad forces took control of the area.Russia Says Turkish Offensive is “Unacceptable” and Won’t Permit Clashes with Assad’s Forces (2:20 p.m.)Russia branded the Turkish offensive in Syria “unacceptable,” in its strongest criticism yet of the week-old military operation. The Kremlin’s special envoy for Syria, Alexander Lavrentiev, said that troops loyal to Damascus must control the country’s borders and the Kremlin opposes the presence of Turkish forces inside Syrian territory. Russia won’t permit any clashes between Turkish and Syrian forces, he told reporters in Abu Dhabi, where he’s n a visit with President Vladimir Putin.“We have always called on Turkey to exercise restraint and considered any military operation in Syria unacceptable,” Lavrentiev said. “Security along the Turkish-Syrian border must be ensured by the deployment of government troops along the whole length.”UN Urges Turkey to Investigate Allegations of War Crimes (12:18 p.m.)UN High Commissioner for Human Rights Rupert Colville called on Turkish authorities to launch an urgent investigation into videos that appeared to show Turkish-backed Syrian rebels carrying out executions during the offensive in Syria.Colville said in a statement that the UN had viewed two separate videos that appear to show fighters capturing and executing three Kurdish men near the M4 highway in northern Syria.“On the same day, we received reports indicating that a well-known Kurdish female politician, Hevrin Khalaf, was also executed on the same highway,” Colville said in a statement. “We are continuing to gather information about both these serious violations, and we urge the Turkish authorities to immediately launch an impartial, transparent and independent investigation into both incidents, and to apprehend those responsible, some of whom should be easily identifiable from the video footage they themselves shared on social media.”Syrian Government Forces Taking Over Manbij (12:14 p.m.)Syrian government forces expanded their hold over the city of Manbij and continues to deploy on the western bank of the Euphrates river in northern Syria as the U.S.-led coalition forces withdraw, according to the U.K.-based Syrian Observatory for Human Rights reports.Russia’s Defense Ministry said Tuesday the Syrian army had taken control of Manbij, official news agencies reported. They also said Syrian forces took Dadat and Umm-Miyal.Russian military police are patrolling the northeast border of Manbij province “along the line of contact between the armed forces of the Syrian Arab Republic and those of Turkey.”The U.S.-backed forces are still stationed on a bridge leading to the key Syrian town of Kobani near the Turkish border, preventing regime forces from advancing toward the area, the monitoring group said.Turkey’s Albayrak Not Attending IMF Annual Meetings in U.S. (10:27 a.m.)Treasury and Finance Minister Berat Albayrak won’t attend this year’s World Bank Group and the International Monetary Fund meetings in Washington D.C., according to a Treasury official who spoke on condition of anonymity.Volkswagen Postpones Decision on $1.4 Billion Turkey Car Plant (10:19 a.m.)Volkswagen AG decided to delay a decision on a 1.3 billion-euro ($1.4 billion) car plant in Turkey due to the political upheaval caused by the country’s military action in northern Syria.“The decision on building a new plant was postponed by the board of management,” VW said Tuesday. “We’re closely monitoring the situation and are concerned about the current developments.”Kurdish Militants Regain Control of Key Areas in Syria, Monitoring Group Says (9:59 a.m.)Kurdish-led Syrian Democratic Forces (SDF) launched an offensive overnight Monday and regained control of Ras al-Ayn and Tal Haref, according to the Syrian Observatory for Human Rights. It was not possible to independently verify the statement.Qatar Defends Turkish Offensive in Syria (09:01 a.m.)Qatar defended Turkey’s military offensive in northern Syria, sticking up for an ally that’s helped the Gulf emirate weather the impact of a boycott by its neighbors.Turkey’s military incursion isn’t expansionist because it faced an “imminent threat” from Kurdish groups on its Syrian border, Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said in Doha.The comments are Qatar’s first on Turkey’s controversial military operation to build what it called a “safe zone” within its neighbor and push back Kurdish groups at its southern border.U.S. Urges Immediate Cease-Fire in Syria as It Sanctions Turkey (03:04 a.m.)The Trump administration called on Turkey for “an immediate cease-fire” in Syria on Monday as it announced sanctions on three senior Turkish officials and sharply increased tariffs on steel in response to the military operation launched by Ankara last week.Vice President Mike Pence, speaking to reporters, said that he would lead a delegation to Turkey at Trump’s request in an effort to stop the military advance. Pence said the U.S. wanted the two sides to negotiate a long-term peace, but he didn’t call for Turkey to pull out of Syria.U.S. Sanctions Three Turkish Ministers, Mnuchin Says (01:10 a.m.)The U.S. has sanctioned Turkish ministers of defense, interior and energy over Turkey’s military operation in Syria, Treasury Secretary Steven Mnuchin said.\--With assistance from David Westin.To contact the reporters on this story: Onur Ant in Istanbul at oant@bloomberg.net;Andrey Biryukov in Moscow at abiryukov5@bloomberg.net;Dana Khraiche in Beirut at dkhraiche@bloomberg.netTo contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Bill Faries, Larry LiebertFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Yahoo Finance
Stock market news: October 15, 2019
Stocks rose Tuesday as some of the first major corporate names began delivering third-quarter results. Meanwhile, investors continued to monitor signs that President Donald Trump’s “phase one” trade deal with China would materialize.
- Bloomberg
U.S. Urges Immediate Cease-Fire in Syria as It Sanctions Turkey
(Bloomberg) -- The Trump administration called for “an immediate cease-fire” in Syria on Monday as it announced sanctions in response to the military offensive launched by Turkey last week.Vice President Mike Pence said he would lead a delegation to Turkey at President Donald Trump’s request in an effort to stop the advance. Pence said the U.S. wanted the two sides to negotiate a long-term peace, but he didn’t call for Turkey to pull out of Syria.Pressure also intensified on Turkey with an announcement by Volkswagen AG on Tuesday that it would delay a decision on giving the go-ahead for a 1.3 billion-euro ($1.4 billion) car plant, which the German carmaker linked to the political upheaval wrought by developments in Syria.“President Trump made it very clear that the United States is going to continue to take actions against Turkey’s economy until they bring the violence to an end,” Pence said. “We want an immediate ceasefire and we want to begin negotiations between Turkey and Syrian defense forces.”The penalties imposed by the administration late Monday fell short of what was demanded by U.S. lawmakers of both parties, highlighting the restraint the president has shown to his Turkish counterpart, Recep Tayyip Erdogan.The lira added 0.8% against the dollar to 5.8854 as of 9:36 a.m. in Istanbul on relief that sanctions were less onerous than many investors had feared. The currency weakened about 4% this month amid speculation Washington would announce penalties that could hit Turkey’s financial system.Trump’s order to sanction three members of Turkey’s cabinet and raise tariffs on steel imports from the country -- already at a 19-year low -- make for a milder punishment than expected. The administration’s language on how best to cease hostilities with Kurdish forces also offers Erdogan a way out without withdrawing his troops from northeast Syria.Damage ControlThe two leaders spoke before Trump signed an executive order imposing the sanctions on Monday, Pence said.The announcement is an effort to contain the damage from Trump’s decision to stand aside if Turkey entered northern Syria, which essentially gave Erdogan a green light to carry out the operation. Erdogan says the offensive is necessary to push back Kurdish militants and resettle refugees, but the rapid advance into Syria has drawn international condemnation and accusations of war crimes.The penalties would raise steel tariffs on Turkey to 50%, the level they were at before a reduction in May, Trump said in a statement. The U.S. would also halt negotiations over a pact aimed at raising bilateral trade to an annual $100 billion. The administration also sanctioned the Turkish ministers of defense, energy and the interior, U.S. Treasury Secretary Steven Mnuchin said.Experts on sanctions say the administration could have imposed restrictions last week if they had wanted to, and that Trump’s talk of future sanctions is more messaging to satisfy frustrated lawmakers who may have a veto-proof majority to pass legislation and force the president’s hand.Kaylin Minton, a spokeswoman for Representative Michael McCaul, a Texas Republican and the ranking member of the House Foreign Affairs Committee, said in a statement: “We appreciate the administration’s planned sanctions, but it does not go far enough to punish Turkey for its egregious offenses in Syria.” The statement added that steeper penalties will be pursued.House Speaker Nancy Pelosi has been working with Senator Lindsey Graham, a South Carolina Republican and Trump ally, to pass legislation that would put harsh restrictions on the country.“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” Trump said in the statement.“If they knew what they wanted to do, they would have done it already,” said Brian O’Toole, a senior fellow at the Atlantic Council who previously worked in the Treasury Department’s sanctions unit. He called Trump’s announcement “weak” and expects Congress to pass tougher legislation.Steel TariffsLast year, Trump increased steel tariffs on Turkish imports and then cut them in May to 25%. Despite that reduction, imports from Turkey to the U.S. haven’t recovered. U.S. imports of Turkish steel touched 12,749 metric tons in August, down 88% from the same month a year ago, according to Census Bureau data. Turkey accounted for 1.1% of all U.S. steel imports so far this year.Turkish data show exports of steel and related products to the U.S. stood at just over $120 million during the first eight months of the year, the lowest level since 2000.Volkswagen’s decision, however, may deal a severe blow. The world’s biggest carmaker had established a Turkish unit in the western city of Manisa early October, paving the way to start making cars in Turkey.“The decision on building a new plant was postponed by the board of management,” VW said Tuesday. “We’re closely monitoring the situation and are concerned about the current developments.”Trump also said he would halt trade negotiations with Turkey, which Commerce Secretary Wilbur Ross announced in a speech in Ankara last month. The deal was to include the furniture, marble, autos and civil aviation industries.Trade TalksTrump’s decision on troop withdrawal exposed American-allied Kurdish militias to attack, risking a resurgence of Islamic State and a slaughter of the Kurds. Kurdish forces that previously fought alongside the U.S. have warned they may no longer be able to secure camps and prisons holding Islamic State jihadists, including Europeans whose home countries don’t want them back.Before the Trump administration’s announcement, Graham sought help from Pelosi to impose sanctions on Turkey. The pair was concerned Trump wouldn’t impose strong enough penalties.“As we find ourselves in a situation where the president gave a green light to the Turks to bomb and effectively unleashed ISIS, we must have a stronger sanctions package than what the White House is suggesting,” Pelosi tweeted Monday.Trump said the U.S. won’t tolerate the “indiscriminate targeting of civilians, destruction of civilian infrastructure, and targeting of ethnic or religious minorities.”The president said “a small footprint” of U.S. forces will remain at Al-Tanf Garrison in southern Syria to fight Islamic State.(Updates with Volkswagen’s announcement, more context on expected sanctions, data on steel trade.)\--With assistance from Joe Deaux, Mark Niquette, Nick Wadhams, Shawn Donnan, Elisabeth Behrmann, Taylan Bilgic and Onur Ant.To contact the reporters on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net;Jennifer Jacobs in Washington at jjacobs68@bloomberg.net;Ryan Beene in Washington at rbeene@bloomberg.netTo contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, Paul AbelskyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Volkswagen postpones final decision on Turkey plant
FRANKFURT/HANOVER (Reuters) - Volkswagen has postponed the final decision whether to build a car plant in Turkey, the company said, amid international criticism of the country's military operation in Syria and concerns about potential reputational fallout. "We are carefully monitoring the current situation and look with concern at current developments," a company spokesman said on Tuesday. Earlier this month, Volkswagen established a subsidiary in Turkey's western Manisa province, while the company said that it was still in the final stages of negotiation and that it had not made a final decision on the factory.
- Bloomberg
Surging SUV Demand Is Spooking German Workers Building Sedans
(Bloomberg) -- Germany’s car industry built its world-class reputation on sedans like the Audi A4, the BMW 5-Series and the Volkswagen Passat, reliable models that look good in the family driveway or company lot. But a shift in consumer taste to more hulking vehicles is coming at the worst possible time.Demand for sport utility vehicles that initially took hold in America has spread across the globe, dramatically changing the product mix of carmakers along with their production footprint. Higher sales of the lucrative vehicles, while good for German manufacturers overall, threatens to hurt the workforce in factories at home that are heavily geared toward traditional sedans and hatchbacks.At BMW AG, sales of SUVs made mostly in the U.S. account for 44% of all global deliveries, up from 24% a decade ago -- with a corresponding drop for models like the bread-and-butter 5-Series made at the Dingolfing plant near Munich. The trend is similar at Audi, which churns out SUVs mainly in Mexico, Hungary and Slovakia, and Mercedes, whose workers in Tuscaloosa, Alabama, can’t make the massive GLE fast enough to satisfy demand.Recession, Trade WarsGermany’s automotive industry, the largest employer with about 830,000 workers, is already straining under the biggest production drop in nearly a decade. That has helped push Europe’s largest economy closer to recession. The decline, led by trade tensions and a slowing global economy, comes at a delicate time for an industry already facing a future when fewer hands will be needed to assemble battery-powered vehicles.A car’s combustion engine alone counts more than 1,000 parts, compared with just a couple of dozen components in an electric motor that doesn’t require an exhaust, transmission or fuel tank. The repercussions from the simpler setup cascade through the making of an electric car, with fewer people involved in development, testing, parts purchasing and service.“The SUV trend will certainly have implications for production structures,” said Rolf Janssen, a partner at Roland Berger consultancy. “For workers, this adds additional pressure to the overall transformation trend.”Like the pick-up truck, a model that’s popular in the U.S. but largely absent from European roads, SUVs were a fringe phenomenon on the continent two decades ago. Instead, motorists aspired to own an Audi A3 or the Mercedes C-Class, while their larger luxury siblings chauffeured around captains of industry and politicians.Mercedes set up shop in Alabama in 1995, making SUVs near consumers in a key market, while BMW’s sprawling Spartanburg plant in South Carolina, its biggest globally, churns out X3 through X7 models. VW manufactures its T-Roc crossover, credited with lifting results in its most recent quarter, in Portugal, while the Audi Q7 and Q8 takes form in Slovakia and the Q3 in Hungary.Forecaster LMC Automotive expects domestic German car production to sag to a 10-year low this year, with the export market in particular facing trouble. Justin Cox, director for global production at LMC, singled out Audi’s Neckarsulm plant in Baden-Wuerttemberg, the Passat factory in Emden in northern Germany and VW’s massive Wolfsburg site as vulnerable.“The sedan localization issue isn’t helping Germany,” Cox said.Factory OutputFactory staff are starting to push back. In June, Neckarsulm worker representatives estimated the site’s utilization rate at a woeful 60%, despite model revamps for A6, A7 and A8 sedans. The factory, which employs almost 17,000, is missing out on the SUV sales boom and lacks firm commitments to assemble upcoming electric models, the powerful works council said, vowing to not budge on concessions as Audi seeks talks to cut costs.Since 2009, sales of A6 sedans and hatchbacks have sagged to make up 12% of the total, down from 20%, while the A4 made at the Ingolstadt headquarters has declined to 18% from 31%.“We urgently need plan to improve capacity utilization now and a medium-term solution for the future,” Neckarsulm labor head Juergen Mews said in a statement.Audi said its German sites remained the backbone of its global production network. In Ingolstadt, which already makes the Q2 compact SUV alongside sedans, the brand is in the midst of construction work to make the plant more flexible, a spokeswoman said. Talks with the labor council on future allocation plans are ongoing, she said.Volkswagen’s factory in Emden has likewise faced problems as SUVs like the T-Roc cannibalize the trusty but staid Passat. Falling demand for the former drawing card has forced VW to put some 10,000 staff at Emden on reduced working hours and cut temporary employees.The world’s biggest carmaker is shifting the Passat to Czech Republic and will retool Emden to make only electric vehicles by 2023 -- a move VW has said will require still fewer workers.Plant RebalancingEven VW’s headquarters plant in Wolfsburg, the world’s largest single car-manufacturing complex, faces risky times. The ubiquitous Golf, the car that brought VW back from the brink in the 1970s and set the tone for compact city hoppers, has struggled to maintain its allure amid mushrooming offerings of popular compact crossovers.As an offset, the 20,000-worker plant also makes the popular Tiguan SUV, and should get a boost from Golf production being moved from Puebla in Mexico, Cox said. SUVs make up 42% of production at Wolfsburg with the Tiguan and Seat Tarraco, and VW plans to build compact electric SUVs in Germany, a spokeswoman said. SUV sales should account for half of VW brand deliveries by 2025 and the group will step up bundling similar products across its 12 automotive brands to boost efficencies, according to the company.BMW has also sought to balance its SUV footprint, adding the X1 entry-size model to its Regensburg site in Bavaria. BMW said its global production network was able to react to changes in demand and customer behavior, while utilization at its eight German plants was “good.”German SUVsMercedes began German production of the GLA compact crossover at Rastatt in 2013 and Sindelfingen last year, in addition to the mid-size GLC SUV in Bremen. But its lucrative GLE and GLS vehicles are still made in Tuscaloosa, and the top-priced G-Wagon is largely hand-built in Austria at contract manufacturer Magna International Inc. Mercedes upgraded its facilities early to quickly react to changes in demand, a spokeswoman said, as demand for Mercedes SUV models has increased every year since 2009.Switching production to new models is difficult, expensive and time-consuming. Roland Berger estimates that it can take as long as a year to retool a plant to start making SUVs alongside sedans -- provided the legwork to accommodate the bigger and heavier vehicles has already been done.BMW’s Dingolfing factory, its biggest in Europe, last year made 330,000 sedans, from the entry-level 3-Series all the way up to the top-range 8-Series coupe. The facility’s hopes now lie partly on the iNext crossover, a technology flagship in the mold of the i3 electric car and the i8 sports car, which use a carbon fiber chassis, that will go on production in 2021.“Some of the juggernaut or brownfield plants with deeply ingrained structures will face a tougher task,” said Roland Berger’s Janssen.To contact the reporter on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Lamborghini Looks at Some Ferrari-Style Engineering
(Bloomberg Opinion) -- At various times during his 14-year tenure as chief executive officer of Fiat Chrysler Automobiles NV, the late Sergio Marchionne held takeover talks with Volkswagen AG.The news that VW is considering a stock-market listing of its Lamborghini supercar division suggests Marchionne continues to influence the German carmaking giant. By spinning off high-value operations such as trucks and sports cars, VW’s boss Herbert Diess would be imitating his Italian peer’s successful approach to creating shareholder value. But Diess is struggling to be as daring, which will make it harder to achieve his goals.When Marchionne took the helm at Italy’s Fiat SpA in 2004, its market capitalization was a pitiful 5.3 billion euros ($5.9 billion). During his reign, he merged Fiat with America’s Chrysler and spun off Ferrari NV and Fiat’s trucks and agriculture machinery business (CNH) into separate companies. When he died last year, the combined equity value of Ferrari, Fiat Chrysler and CNH Industrial NV was 57 billion euros. His successor then completed the 6.2 billion-euro sale of the Magneti Marelli SpA auto parts division.Diess wants VW to hit a market value of 200 billion euros — up from 80 billion euros now, Bloomberg News reported as it broke the news about Lamborghini, adding that a sale of the brand is also under consideration. (VW says there are “no plans for a sale or public offering of Lamborghini”). Including all of Volkswagen’s 12 brands, its financial services arm and its Chinese joint ventures, the company’s sum-of-the-parts valuation could top 215 billion euros, Bloomberg Intelligence analyst Michael Dean estimated in August.In an attempt to realize that value, Diess has started off by following the Marchionne playbook. Fiat began by spinning off CNH in 2012. Diess also kicked off with a June listing of VW’s trucks arm, Traton SE.Marchionne followed the CNH divestment with the listing of Ferrari in 2016, and now it looks like Diess’s next step might be his own supercar brand. A sale of Volkswagen’s industrial machinery operations Renk AG and MAN Energy Solutions, which is being considered, would be akin to the Magneti Marelli sale. Analysts have even speculated that VW’s alliance with Ford Motor Co. could evolve into a merger, similar to the Fiat-Chrysler deal.Yet there’s a difference between the boldness of the two companies. Fiat spun out CNH by distributing the stock to existing shareholders, and it did the same with what was left of Ferrari’s equity after selling 20% of the company in an initial public offering in New York. Volkswagen, by contrast, sold just 11.5% of Traton to new investors in an IPO and then kept the rest of the stock for itself. In fairness, Diess has to manage a difficult set of stakeholders. The Porsche-Piech family controls VW, while the German state of Lower Saxony has 20% of the voting shares. He also has employee representatives on the board. The Agnelli family, which controls Fiat, backed Marchionne’s ambitions — and became significantly wealthier.Because of its arcane multiple voting-class structure, most Volkswagen shareholders have no say in the running of the company. That might explain why Diess opted for an IPO of Traton rather than a spin-off: Replicating the current VW voting arrangements in a new company wouldn’t have been attractive for new investors. But the listing was so small as not to give new investors any real say in the company’s running anyway. If the Porsche-Piech dynasty really want Diess to increase their riches, they should encourage offerings that unpick some of their own control.To contact the author of this story: Alex Webb at awebb25@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Lamborghini Review Marks Step in VW’s March to $220 Billion
(Bloomberg) -- Volkswagen AG’s plan to review options for its Lamborghini supercar division marks a further step in Chief Executive Officer Herbert Diess’s campaign to transform the world’s biggest automaker and more than double its market value.The German manufacturer is weighing a potential sale or stock listing for the Italian brand, according to people familiar with the matter, as Diess channels resources to the main VW, Porsche and Audi units. No decision has been made and an earlier plan to move Lamborghini from under the Audi umbrella to Porsche remains an option, they said.Structural change is always a challenge at Volkswagen because of the multiple power bases that play a role in major decisions. Diess has been sounding out support for ideas to reshape Volkswagen as part of a broad strategy review ahead of an expected industry shakeout. His goal is to reach a market value of 200 billion euros ($220 billion), the people said.The company has started preparations to fold Lamborghini into a separate legal entity and the process might conclude toward the end of next year, the people said, asking not to be identified because the deliberations are confidential.Restructuring the super-luxury brand would fit with Diess’s goal to channel resources more efficiently and avoid duplicated efforts. VW signaled on Sunday that any decision is likely a ways off, saying it has no plans for a Lamborghini sale or IPO.Diess, 60, has been pushing an overhaul of Volkswagen since he became CEO 18 months ago -- investing billions in electrification, selling a stake in truckmaker Traton SE, and putting industrial-transmission and diesel-engine units up for sale. He’s also forged an alliance with Ford Motor Co. to share the costs of developing commercial vans, e-cars and autonomous driving.“We shouldn’t spread ourselves too thin,” Diess said in an interview published over the weekend in Germany’s Sueddeutsche Zeitung newspaper. “That might be hard in some cases, but it’s the only viable way.”SZ also reported on a possible sale or IPO of Lamborghini, without saying where it got the information, as VW drafts a revamp of its 12 automotive brands.Such a move would allow VW to focus on VW’s brands that are global household names, and allocate funds to the highest-returning brands, potentially at the expense of nameplates like the mass-market Skoda and Seat. Analysts have urged VW to consider deep changes including an initial public offering of Porsche to unlock value. The sports-car unit is VW group’s most profitable division while Audi contributes the biggest share of earnings.A higher valuation would let Diess use VW’s stock as currency for partnerships and consolidation opportunities. Despite robust operating results, VW shares are down by more than one-third from highs set before the 2015 diesel-cheating crisis. VW’s current market value is about 81 billion euros.Progress in restructuring has been hampered by convoluted governance at Volkswagen. Unions, politicians and the powerful Porsche-Piech ownership clan each have a say in big decisions.An asset review that began in 2016 has so far led to an aborted attempt to sell the Ducati motorcycle brand, and the ill-timed Traton IPO that was almost derailed by internal wrangling. Diess mapped out a plan last year to shift Lamborghini away from its home within Audi and tie it to sister brand Porsche.The potential payoff for Volkswagen is massive. Ferrari NV, once part of Fiat Chrysler Automobiles NV, is now valued at about $30 billion. VW declined as much as 1.2% in Frankfurt during early trading, after Chinese auto deliveries fell in September for the 15th month in 16 to extend an unprecedented slump.Success with its Urus sport utility vehicles has probably boosted Lamborghini’s valuation to about $11 billion, analysts at Bloomberg Intelligence estimated in August.Top management decided earlier this year against pursuing the sale of units like Bugatti for now, partly because it was unclear if sub-scale assets could be divested without paying cash on top, according to one person. Still, smaller nameplates might face reshuffling going forward.Other automakers face similar pressures to VW. Investors are pessimistic traditional players will be able to manage such an expensive technology shift amid trade wars and a global demand slump.Daimler AG Chief Executive Officer Ola Kallenius, who has acknowledged that the “future is electric,” hasn’t said how and when he plans to restore operating profit margins to the targeted 8% to 10% margin corridor. He’s scheduled to give investors a full download on Nov. 14 in London and in New York the day after.The industry’s transformation has already started to claim casualties. China’s Nio Inc. is staring into the abyss, Dyson Ltd. mothballed its electric-car project and market leader Tesla Inc. is struggling to turn profitable even as it made the biggest strides in the still nascent field. The status of Apple Inc.’s electric-car ambitions remains unclear.“The truth is, barriers to entry in autos remain high. Making cars is hard,” Sanford C. Bernstein analyst Max Warburton said in a note. “The move to electric vehicles will be expensive, but will probably be led by traditional manufacturers. There will be less disruption than feared.”(Updates with share move in 13th paragraph.)\--With assistance from Eyk Henning.To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Kenneth WongFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Volkswagen CEO says electric car shift won't hurt margins: paper
Volkswagen does not expect the shift in production toward electric cars aimed at averting billions of euros in European pollution fines to hurt its profit margins, Chief Executive Herbert Diess said in a newspaper report on Monday. Diess said the German car maker expected to sell nearly 20,000 Audi e-Tron in 2019, adding the first year's production of the electric Porsche Taycan was already sold out. Orders for the VW ID.3, the group's recently unveiled compact electric model, are already covering the production planned until mid-2020, Diess said.
- Bloomberg
Volkswagen Is Said to Consider Options for Lamborghini
(Bloomberg) -- Volkswagen AG is weighing options for its Lamborghini supercar brand, as the German manufacturer moves ahead with an overhaul aimed at more than doubling its market value and getting ahead of an industry shakeout, according to people familiar with the matter.The options VW is mulling include a sale or stock listing, said the people, who asked not to be named because the deliberations are confidential and no decisions have been made. VW has started preparations to fold Lamborghini into a separate legal entity and the process might conclude toward the end of next year, the people said.Chief Executive Officer Herbert Diess wants to focus future expansion on the group’s main global brands -- VW, Porsche and Audi -- in a push to channel resources more efficiently and avoid duplicated efforts. VW is drafting a revamp of its sprawling stable of 12 automotive brands, Sueddeutsche Zeitung reported over the weekend, citing an interview with Diess.“We shouldn’t spread ourselves too thin,” Diess told the newspaper. “That might be hard in some cases, but it’s the only viable way.”Volkswagen signaled on Sunday that any decision on the Lamborghini brand is likely a ways off, saying it has no plans for a sale or IPO. A company representative had earlier declined to comment.The German automaker’s American depositary receipts climbed 4.8% to $17.68 in New York trading Friday.Lamborghini’s stretch from supercars to roomier sport utility vehicles probably has helped boost its valuation to about $11 billion, making it a viable candidate for an initial public offering, analysts at Bloomberg Intelligence estimated in August. Sales of the Urus SUV have soared since its introduction in mid-2018. A redesigned Aventador and new hybrid supercar slated to hit the market next year may help boost margins beyond 30%, BI’s Michael Dean and Gillian Davis wrote in a report.Diess’s TargetInvestors have long urged Volkswagen, the world’s biggest automaker, to free up assets whose value is subsumed within a cumbersome structure that includes everything from Italian supercars to motorcycles and heavy trucks. While Ferrari NV, once part of Fiat Chrysler, is now worth about $30 billion, VW’s key stakeholders have stood in the way of similar moves in Germany.Diess, who took the helm in April 2018, has shown some success, completing an IPO of the Traton truck unit earlier this year. He has also started a review of units that make large diesel engines and transmissions, and has forged a broad alliance with Ford Motor Co. on commercial vehicles and electric-car and self-driving technology.The 60-year-old CEO often emphasizes the urgency of maximizing VW’s value as it contends with a costly technology transition, and recently key members of VW’s founding Porsche-Piech clan have voiced support. He’s targeting a market value for Volkswagen of 200 billion euros ($220 billion), the people said, from about 81 billion euros now. His efforts are aimed at helping VW defy the auto industry’s current gloom and keep both existing peers and new rivals from the technology industry at bay.In intense debates earlier this year, VW’s top management decided against pursuing the sale of units like Bugatti for now, partly because it was unclear if sub-scale assets could be divested without paying cash on top, according to one person. Still, smaller nameplates might face reshuffling going forward.(Updates with CEO interview with Sueddeutsche Zeitung in third paragraph.)\--With assistance from Eyk Henning.To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Craig Trudell, Kenneth WongFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
VW Says No Plans for Sale or IPO of Lamborghini
(Bloomberg) -- Volkswagen AG said there are no plans for a sale or public offering of Lamborghini.“The speculations are unfounded,” VW said in an emailed statement.Bloomberg News reported Friday that Volkswagen is preparing an overhaul to focus on three main global brands of VW, Porsche and Audi, and that it’s mulling strategic options including an IPO of Lamborghini.\--With assistance from David Verbeek.To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.netTo contact the editors responsible for this story: Andrew Davis at abdavis@bloomberg.net, Sara Marley, Matthew G. MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Volkswagen mulling sale or stock listing for Lamborghini: Bloomberg
Chief Executive Herbert Diess in March said Volkswagen was reviewing its portfolio of brands, which also include Ducati and Bentley, and whether to divest some non-core businesses. Volkswagen is readying to fold Lamborghini into a separate legal entity, in a process that may wind up toward the end of next year, Bloomberg reported, citing sources.
- Bloomberg
Dyson Becomes Latest Sign That Electric-Car Bubble Is Bursting
(Bloomberg) -- Dyson Ltd.’s sudden decision to scrap its $2.5 billion electric-vehicle ambitions is the latest reality check creeping into the once soaring EV industry.The famed maker of vacuum cleaners and hair dryers couldn’t find a way of making the project commercially viable, billionaire James Dyson said in a letter to staff Thursday. The announcement came about two years after the company first disclosed its plans to jump into car manufacturing.Dyson represents one of the most high-profile players to pull out of a sector that’s attracted hundreds of start-ups in recent years seeking to become the next Tesla Inc. But there are mounting signs that the bubble is bursting as China scales back handouts in the sector and competition heats up. Sanford C. Bernstein estimates that global EV sales fell for the first time ever in July and dropped by a record 23% in August.“Tesla’s future remains uncertain. Almost all the EV start-ups trying to follow look challenged,” Bernstein analysts, including Max Warburton and Robin Zhu, said in a report that cited the Dyson decision as a worrisome development in the industry. “Most of these start-ups will likely fold. The truth is barriers to entry in autos remain high. Making cars is hard. The move to EVs will be expensive.”Take the case of China’s NIO Inc., one of the most prominent electric-car makers in a country that makes about half of the world’s EVs. Last month it reported a wider-than-expected quarterly loss, leading the stock to tumble to a record low and prompting analysts to openly question the company’s viability. The shares jumped on Tuesday after NIO reported third-quarter deliveries exceeded the company’s forecast, but the stock has since erased all those gains.Elsewhere in China, Lifan Industry Group Co. and Zotye Automobile Co. have had to issue statements denying speculation that they’re planning to file for bankruptcy, though the former conceded it’s under liquidity pressure.The competition is also getting tougher. Besides Tesla, traditional automakers such as General Motors Co. and Volkswagen AG are throwing massive resources into electrification. VW has vowed a $33 billion push to bring battery-powered autos to the masses. Apple Inc. has had an automotive project since about 2016, although it is said to have scaled back its ambitions.There are growing concerns that the ample supply of cheap funding for new-age carmakers is about to dry up, according to Bernstein.As to Dyson, the company said it plans to continue its 2.5 billion-pound ($3.1 billion) investment program into new technology, and will concentrate on manufacturing solid-state batteries and other technologies including machine learning and robotics.“Singapore will play an important role in Dyson’s growth plans,” Tan Kong Hwee, assistant managing director at Singapore’s Economic Development Board, said in an emailed statement Friday. Despite Dyson’s decision, Singapore “remains interested in advanced manufacturing activities, including for EVs,” he said.Experts had questioned the company’s costly plans to build an electric car plant in Singapore, where average salaries are among the highest in the world. Ford Motor Co. closed its factory in the city-state about 40 years ago, effectively ending car production on the island.“If everybody else is building a plant in China at a fraction of the cost in terms of labor, it didn’t make a lot of sense for anybody to build that size of a manufacturing facility over there,” said Steve Man, an analyst at Bloomberg Intelligence in Hong Kong. “I hope Singapore wasn’t expecting much from this.”Still, Singapore has much riding on Dyson in its efforts to attract start-ups and advanced technology companies. Dyson became one of the biggest global industry names to ever relocate there.There’s another sector Dyson is looking to invest in Singapore. The family office of James Dyson has incorporated in the city state and is in the process of hiring IT and finance-service staff, according to job advertisements posted on Dyson’s website. The family office was established in 2013 and employs around 55 people globally.“It would have been nice to have but the reality is OK, it’s not going to work let’s look at something else,” said Song Seng Wun, an economist at CIMB Private Banking in Singapore. “It’s still about making money.”\--With assistance from Craig Trudell.To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net;Molly Schuetz in New York at mschuetz9@bloomberg.net;Yoolim Lee in Singapore at yoolim@bloomberg.netTo contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, ;Jillian Ward at jward56@bloomberg.net, Will DaviesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
James Dyson Shows It's Too Easy to Make Electric Cars
(Bloomberg Opinion) -- The reason it was even conceivable for Dyson Ltd. to make an electric car may also have been why its project was doomed to fail: They’re simply too easy to make. The British company, best known for its expensive vacuum cleaners, has now abandoned its 2 billion-pound ($2.5 billion) plan to branch out and take on the likes of Tesla Inc. and Volkswagen AG. Whereas cars with a combustion engine need about 30,000 components, an electric vehicle needs just 11,000 parts, according to research from Goldman Sachs Group Inc. That reduction in complexity has lowered the barriers to entry for the automotive market, and caused a surge in the number of new carmakers.Dozens of startups have entered the fray over the past few years, from Tesla and Lucid Motors Inc. in the U.S., to Byton Ltd. and NIO Inc. in China. Since 2011, electric vehicle startups have raised $18 billion in funding, and announced 43 models and the capacity to make 3.9 million vehicles a year, according to Bloomberg New Energy Finance. That’s a lot of competition.While Dyson’s 1.1 billion pounds of Ebitda in 2018 gave the relatively small British manufacturer some money to play with, standing out from the electric vehicle crowd would have been quite the challenge.And those earnings are a drop in the ocean compared to the wealth of the automotive giants who are waking up to the epochal shift away from dirty combustion engines. Volkswagen alone has announced plans to invest $52 billion in electrification as it targets production of at least 2 million electric vehicles a year by 2025. Its existing network of dealerships in 153 countries will make it considerably easier to sell those cars.Dyson would also have needed a faster return on its investment than the established carmakers to keep the project going. The small size and embryonic nature of this market would have made that difficult. Just 575,000 electric vehicles were sold globally in the three months through June. That’s 3.7% of the overall automotive market.The ambitions of the British company, controlled by the billionaire inventor James Dyson, won’t be the last to fall by the wayside. Others are struggling. Shares in NIO, a Shanghai-based firm backed by Tencent Holdings Ltd. and Baidu Inc., have fallen 86% from a post-IPO peak last year as its losses have deepened. Faraday Future, a Chinese-backed, U.S.-based rival, teetered on the brink of insolvency before clawing itself back from the edge.Given the brutal environment, Dyson’s retreat looks wise. Such projects often have a detrimental effect on the rest of the business, which in Dyson’s case includes hand- and hairdryers. After Apple Inc. started its own project to build a car back in 2015, it had to carefully control how many software engineers moved from its iOS team (which makes the all-important operating system for iPhones and iPads) to join the secretive project.For Dyson, the car risked becoming a similar distraction. In a letter to employees, he admitted he saw no way to make a car “commercially viable.” Better to concentrate resources on his core competencies. A failure at a later date would have been much more painful, and potentially ruinous. To contact the author of this story: Alex Webb at awebb25@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Reuters - UK Focus
VW increases stockpiles of cars in Britain ahead of Brexit
Volkswagen has increased stockpiles of cars in Britain, it said on Wednesday, as politicians struggle to nail down the terms of the country's departure from the European Union ahead of an Oct. 31 deadline. "We have optimised inventory levels upwards to delay the impact of potential import tariffs for a while, but there are limits to what can be done," Juergen Stackmann, management board member of the VW passenger cars brand with responsibility for sales and marketing, told Reuters.
