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Tag: Ford Motor Co.

  • UAW strike countdown: Union president says targeted strike possible at all Big Three automakers

    UAW strike countdown: Union president says targeted strike possible at all Big Three automakers

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    United Auto Workers President Shawn Fain said Wednesday that autoworkers and the Big Three automakers are still far apart, although negotiations continue, and that the union may strike all of the Big Three at once.

    “We’re keeping all of our options open. An all-out strike is still a possibility,” Fain said during a webcast with members.

    The UAW and Ford Motor Co.
    F,
    +1.53%
    ,
    General Motors Co.
    GM,
    +0.57%

    and Stellantis NV
    STLA,
    -0.42%

    have made progress during their talks but were still far apart on the union’s key priorities, though negotiations will continue until the deadline of 11:59 p.m. Eastern on Thursday, Fain said.

    “For the first time in our history, we may strike all of the Big Three at once,” Fain said, adding that he looked at this time as “our defining moment.”

    He said if no deal is reached, there’s also the possibility of doing “standup strikes” at certain plants, designed to keep the companies guessing. These could escalate and spread elsewhere in order to give the union leverage in bargaining. He told UAW members that they should not strike unless their local is called to do so.

    A targeted strike helps the UAW avoid distributing strike pay, set recently at $500 a week per member, to all 150,000 of its members. But it could have a broader effect.

    “It is possible for strikes at critical parts plants to have much wider implications,” Marick Masters, a business professor at Wayne State University in Detroit, said in an interview with MarketWatch on Wednesday. 

    He noted that the 1998 strike against GM, a work stoppage by 9,200 workers at two of that company’s plants in Flint, Mich., resulted in shutdowns that affected more than 150,000 workers. 

    See: These Ford, GM plants are the most likely strike targets

    Jody Calemine, a senior fellow and director of labor and employment policy at the Century Foundation, a progressive think tank, said Wednesday that the union is employing an interesting strategy.

    “It will turn the screws slowly and probe for weaknesses, and try to get as much movement out of companies as possible while keeping the options to escalate,” he said.

    Calemine said Fain has done a “masterful job” of painting the fight as a “real showdown” between working families and the companies. But he added that “the principal danger for the union would be losing the narrative. Other places would continue to work, or get laid off or locked out.”

    That’s reflected in some of the online comments by UAW members who watched Fain’s update. One worker said on Facebook: “Strike us all or none at all.”

    The UAW president quoted scripture, repeated his calls for unity and said the “strike plan is driven by faith that together we can and will move mountains.”

    Fain said the companies have revised some of their offers: On wages, Ford has put forward a 20% increase over the life of the four-year contract, up from its previous offer of 9%, while GM’s latest offer is 18% and Stellantis’s offer is 17.5%. That’s compared to a wage increase of 40% — or 46% when compounded annually — that the union sought originally and later revised to 36%.

    “Their proposals don’t reflect the massive profits that we’ve generated for these companies,” Fain said.

    The union has pointed out that while the Big Three’s profit has risen 65% over the past four years, and the pay of each of the companies’ chief executives have risen 40%, the UAW top wage rate has risen 6% over that time.

    See: Why United Auto Workers are fighting to end a two-tier system for wages and benefits

    A GM spokesperson said Wednesday that the company continues to bargain in good faith and sent a statement that reads in part: “We are making progress in key areas that we believe are most important to our represented team members. This includes historic guaranteed annual wage increases, investments in our U.S. manufacturing plants to provide opportunities for all, and shortening the time for in-progression employees to reach maximum wages.”

    Ford and Stellantis did not immediately return a request for comment.

    The most recent U.S. autoworkers’ strike was at GM in 2019, which lasted for nearly six weeks and involved about 50,000 workers.

    See: Would a United Auto Workers strike provide an opportunity for Tesla — and push up used-car prices?

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  • VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker

    VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker

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    Electric-vehicle startup VinFast Auto Ltd. has seen its market capitalization fall more than $140 billion in less than two weeks, weighed down by a six-day losing streak for the company’s stock.  

    Shares of VinFast
    VFS,
    -2.72%

    soared last month after the company went public through a special-purpose acquisition company deal, taking its market cap to an eye-watering $231.3 billion on Aug. 25 — easily surpassing established automakers such as Ford Motor Co.
    F,
    +0.57%

    and General Motors Co.
    GM,
    +0.09%
    .

    VinFast is on pace to extend its losing streak to seven days. Shares of the low-float company fell 26.3% Thursday, taking VinFast’s market cap to $85 billion, according to FactSet data. Ford’s market cap is $47.7 billion and GM’s is $44.5 billion, FactSet data show.

    Related: This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

    The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

    About 99% of VinFast shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

    Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

    VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The startup says the plant will eventually have the capacity to make 150,000 vehicles a year.

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  • Chinese electric carmakers ramp up push overseas, setting up clash with U.S., European auto giants

    Chinese electric carmakers ramp up push overseas, setting up clash with U.S., European auto giants

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    BYD launched the BYD Seal in Europe at the IAA auto show in Munich, Germany. The electric sedan has a starting price of 44,900 euros ($48,479).

    Arjun Kharpal | CNBC

    Munich, GERMANY — The IAA in Munich, Germany is one of Europe’s most high-profile auto shows. And it was dominated by Chinese electric car firms looking to expand their presence on the continent and challenge incumbents from BMW to Ford in the new era of battery-powered vehicles.

    Chinese start-ups and players had some of the biggest stands at the event with high-profile press conferences and vehicle launches, underscoring their intention to make a splash in the European market.

    China, the world’s largest EV market, has seen a tidal wave of electric car companies pop up in the last few years, driven by government subsidies and venture capital funding. But a slowing market at home, due to tepid consumer spending after Covid-19 restrictions were lifted, coupled with an attractive market in Europe, has seen Chinese firms launch cars abroad and expand their footprint.

    “Europe is one of the largest (second after China) mass market vehicle markets … If the Chinese EV makers want to secure a growth path beyond their local market, its very logical to look at Europe,” Daniel Roeska, senior research analyst at Bernstein Research, told CNBC via email.

    Roeska added that Europe, with its “stringent de-facto” ban on combustion engine cars in 2035, “is pushing the market faster towards EVs at a time when most EU brands … do not have a perfect offering yet, making market share gains easier.”

    Many of the European carmakers have been seen lagging in their push into EVs at a time when Chinese players have launched dozens of new vehicles.

    China makes mark in Munich

    The ambitions of Chinese EV firms were on display at the IAA.

    On the morning of the first day, Leapmotor, a Chinese firm headquartered in Hangzhou, announced plans to bring its C10 sports utility vehicle, or SUV, to European markets next year. In the next two years, the company said it plans to introduce five “globally-oriented” products across the world.

    “All of Leapmotor’s subsequent products will be designed and developed with a global mindset and adhere to global standards,” Leapmotor CEO Zhu Jiangming said at a press conference on Monday.

    Chinese EV maker Leapmotor launched its first car for the international markets called the C10.

    Arjun Kharpal | CNBC

    Meanwhile, BYD, the carmaker backed by Warren Buffett, launched its Seal electric sedan for Europe on Monday, starting at 44,900 euros ($48,479). For comparison, in Germany, Tesla’s Model 3, starts at 42,990 euros.

    And there were more announcements about continued expansion into new territories.

    Xpeng said Monday it will expand sales of its cars into the German market in 2024. The company currently sells its P7 sedan and G9 SUV in Norway, Sweden, Denmark and the Netherlands. And Brian Gu, president of Xpeng, said the company plans to bring its latest car, the G6, to Europe next year, underscoring the Guangzhou-headquartered firm’s global push.

    “We recognise Germany is the most important and the highest standard market for all” carmakers, Gu told CNBC in an interview Monday.

    “And to be able to be here and then really made our make our product available to the customers in this market, really will help us further penetrate the continental European market. We have ambitions for broader market coverage internationally.”

    The entrance of Chinese firms into Europe is seen as a threat to big automakers who have been perceived to be moving too slow on EVs.

    Analysts at Bernstein said in a note published in June that if Chinese carmakers enter the market “as per normal,” then incumbents may concede up to 5% market share by 2030. But these new entrants could grab up to 20% market share if their entrance into Europe is more aggressive than expected, they added.

    Price war and rising competition

    But the Chinese companies themselves face rising competition from within, but also outside of their home market. Tesla sparked a price war earlier this year which has put pressure on profits and margins of some of China’s smaller players like Xpeng.

    Meanwhile, to fend of rising competition and catch up with Tesla, BMW and Mercedes both launched a dedicated electric car platform that will underpin their vehicles for the coming years, adding further potential headwinds that are not lost on these Chinese challengers.

    “Well, it is definitely not easy,” Xpeng’s Gu said of the push from traditional carmakers into EVs.

    “I think as a young company, we also are trying to learn from … each step that we take, as well as learn from the competition, the partners that we have. But we have confidence in our technology, we have confidence in our product,” Gu added.

    Chinese automaker BYD had one of the biggest stands at the IAA show in Munich, Germany in 2023.

    Arjun Kharpal | CNBC

    Another challenge for the Chinese firms is building brand recognition, an exercise that could stretch marketing budgets and take a long time to do.

    “Brand is a sizeable issue, but not insurmountable if they can invest for the long-term,” Peter Richardson, vice president at Counterpoint Technology Research, told CNBC via email.

    Richardson said Korean firms Hyundai and Kia were “relatively unknown” in Europe 30 years ago, but “both brands have risen to be significant players.”

    “It takes time and dedication,” Richardson added.

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  • UAW president says union has filed unfair labor practice charges against GM, Stellantis over contract talks

    UAW president says union has filed unfair labor practice charges against GM, Stellantis over contract talks

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    UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

    Michael Wayland / CNBC

    DETROIT – The United Auto Workers has filed unfair labor practice charges against automakers General Motors and Stellantis to the National Labor Relations Board for not bargaining with the union in good faith or a timely manner, UAW President Shawn Fain said Thursday night.

    The Thursday filings followed the companies not responding to the union’s demands in a timely matter, Fain said. The union did not file a complaint against Ford Motor, as Fain said the company responded to the UAW’s demands with a counterproposal.

    However, Fain heavily criticized Ford’s proposal that he said included a 9% wage increase over the four-year term of the deal; one-time lump-sum bonuses; and unlimited use of temporary workers who are paid less and don’t have the same benefits. The company also rejected “all of the” union’s job security proposals and “quality of life proposals” such as additional paid holidays and a shorter work week, Fain said.

    Spokespeople with the automakers did not immediately respond for comment. The union and NLRB also did not immediately respond for additional details of the filings.

    This is breaking news. Please check back for additional updates.

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  • This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

    This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

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    Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.

    Shares of low-float company VinFast
    VFS,
    +40.35%

    rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
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    +1.36%

    market cap is $47 billion and GM’s
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    +0.21%

    is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
    RIVN,
    +2.19%

    has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
    TSLA,
    +3.72%

    $730.2 billion market cap.

    In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.

    Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

    “What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”


    Uncredited

    In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.

    “From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.

    Related: Rivian, Lucid and XPeng make the list of 20 EV companies expected to grow sales most quickly through 2025

    The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

    About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

    Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”

    Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year

    VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.

    Claudia Assis contributed.

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  • Automaker Stellantis has discussed moving pickup truck production from the U.S. to Mexico, union leader says

    Automaker Stellantis has discussed moving pickup truck production from the U.S. to Mexico, union leader says

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    UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

    Michael Wayland / CNBC

    WARREN, Mich. – Automaker Stellantis has threatened to move production of the current Ram 1500 pickup truck from a factory in suburban Detroit to Mexico, a union leader said Sunday.

    United Auto Workers Vice President Rich Boyer, who heads the union’s Stellantis unit, said the automaker has discussed the move during ongoing contract negotiations that are occurring simultaneously but separately between the UAW and General Motors, Stellantis and Ford Motor.

    Boyer said the company’s plans would include producing a new all-electric Ram pickup truck at the Sterling Heights Assembly Plant, which currently produces most of the Ram light-duty pickups.

    Such a move would likely receive some political pushback. It also would potentially impact the union’s membership, as EVs require fewer workers to produce them. There’s also no guarantee that an all-electric pickup would be as successful as the current internal combustion engine (ICE) model, meaning less job security for members.

    Boyer, speaking to hundreds of union members during a “Sunday Solidarity” rally, didn’t hold back his displeasure about the potential plans, calling out Stellantis CEO Carlos Tavares for not caring about U.S. auto workers.

    “He don’t give a s*** about the American auto worker,” Boyer said wearing a red UAW shirt with “UNITED WE STAND DIVIDED WE FALL.” “They have said they want to take the Ram 1500 ICE and send it to Mexico.”

    Workers build 2019 Ram pickup trucks on ‘Vertical Adjusting Carriers’ at the Fiat Chrysler Automobiles (FCA) Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.

    Rebecca Cook | Reuters

    Stellantis, which already produces some Ram pickups in Mexico, did not confirm nor deny the potential move, saying in a statement: “Product allocation for our U.S. plants will depend on the outcome of these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.

    “As these decisions are fluid and part of the discussions at the bargaining table, we will not comment further.”

    UAW President Shawn Fain said he believes relocating the truck production would “be a huge mistake on the part of Stellantis to try it.”

    “Those are our jobs and that’s our vehicle. We expect to keep that work,” he said.

    Speaking with CNBC after the event, UAW’s Boyer described the ongoing negotiations with Stellantis as “slow and confrontational.”

    Fain, who began leading the union earlier this year and has taken a more confrontational tone with the negotiations, said he would like to reach tentative agreements with the companies in the coming weeks ahead of the deals expiring at 11:59 p.m. ET, Sept. 14.

    UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

    Michael Wayland / CNBC

    ‘When Labor Day hits, we better have agreements. If we don’t, there’s going to be problems,” Fain said, declining to predict the likelihood of a strike against one or all three of the automakers. “We’re not married to anything right now.”

    Fain earlier this month publicly threw a recent proposal from Stellantis into a trash bin during a Facebook Live event with members.

    Contract talks between the union and automakers usually begin in earnest in July ahead of mid-September expirations of the previous four-year agreements. Typically, one of the three automakers is the lead, or target, company that the union selects to negotiate with first and the others extend their deadlines. However, Fain has said this year may be different, without going into specific details.

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  • How much would a strike cost the Big Three automakers? Wall Street thinks it has an answer.

    How much would a strike cost the Big Three automakers? Wall Street thinks it has an answer.

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    Wall Street got busy Monday calculating the impact of a strike on the Big Three automakers amid increasingly fraught labor negotiations between union workers and companies, and a  “greater likelihood” of a walkout next month.

    Also on Monday, President Joe Biden weighed in, urging the United Auto Workers and Ford Motor Co.
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    ,
    General Motors Co.
    GM,
    +0.53%

    and Stellantis NV
    STLA,

    to “to work together to forge a fair agreement.”

    Negotiations so far have been tense, and the contract expires in one month.

    Citi analyst Itay Michaeli estimated that a strike at GM lasting about two weeks impacting roughly about 100,000 vehicles would result in an impact of around $1.3 billion before interest and taxes; a five-week one, impacting about 280,000 vehicles, would result in a $3.4 billion impact EBIT. That would be a similar hit as GM’s 2019 strike, he said.

    Recent headlines are “pointing to increasingly challenging labor negotiations and a greater likelihood of a strike next month,” Michaeli said.

    A longer stoppage would result in shrinking dealer inventory and possibly start to impact sales sometime during the second half of October.

    For Ford, Michaeli calculated an impact of about $1.6 billion EBIT for a two-week strike affecting about 130,000 Ford vehicles, growing to $4 billion in the case of a five-week strike affecting 330,000 Ford cars and trucks. Like GM, sales would be hobbled roughly by mid-October in the case of a longer strike.

    “For both companies, the exact volume impact will in part depend on the extent of any Canada/Mexico downtime, and to that, GM appears somewhat better positioned than Ford due to GM’s higher exposure to Mexico production (including for pickup trucks) and other supply-chain considerations,” the analyst said in his note Monday.

    Both companies likely can keep their guidance intact in the case of a brief, one-week strike, but a strike beyond the two-week mark “likely triggers a [fiscal-year guidance] cut, though it would set 2024 up with reduced inventory and greater volume/price recovery prospects,” Michaeli said.

    A big question is whether a strike targets one specific automaker, as it was the case with GM in 2019, or all three at the same time — with more industry volume loss but also potentially a shorter strike, Michaeli said.

    “To that, Ford is generally viewed to be the least likely to be selected as a target,” he said.

    Deutsche Bank analyst Emmanuel Rosner said in his note Monday that he estimates an impact on earnings of about $400 million to $500 million for every week of production for each automaker, for a total of about $1.4 billion.

    GM’s 2019 strike lasted almost six weeks, with a loss of about $3.6 billion EBIT; GM North America lowered revenue estimates as nearly 300,000 fewer vehicles were delivered.

    Extrapolating the same $13,000 per unit in EBIT hit, Ford, GM and Stellantis could see [$550 million, $480 million, and $400 million] in weekly profit impact, reaching that $1.4 billion-a-week estimate, Rosner said.

    “In a bad-case scenario with 8 weeks of strike against all 3 automakers, which would bring the UAW strike fund to very low levels, this could cause $11.2 billion in lost profits for the [Detroit 3],” Rosner said. “While this is considerable, it would still be considerably less than the impact from the lifetime of the 4-year contract,” which would create “a permanent raise in the OEMs’ cost,” he said.

    The analyst also quantified the cost of UAW’s demands, focusing on the union’s “higher-probability asks” such as converting temporary employees into full-time workers, the elimination of a tiered-wage system, and about 40% base wage increase over the four years of the life of the contract. He left out “unlikely” to be met demands around pensions and post-retirement healthcare benefits.

    “Our analysis suggests accommodating these demands would likely constitute a large but not destructive headwind to OEMs’ earnings in year 1, with incremental costs stepping up even further in subsequent years,” Rosner said in the note.

    If these demands are granted with cost-of-living raises on top, Rosner estimated costs to all three automakers around $3.6 billion in the first year of the contract, amounting to $23 billion in total for the four years, “with highest hit to Stellantis, followed by GM and then Ford.”

    “Specifically, we estimate that the conversion of temporary employees to full-time workers would cost D3 a total of $1.4 billion, not yet factoring in wage increases, with the highest impact to Stellantis given the higher [percentage] of temporary employees used currently relative” to GM and Ford, the analyst said.

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  • Ford is going all in on hybrids. Here’s why.

    Ford is going all in on hybrids. Here’s why.

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    Ford Motor Co. is betting that hybrid vehicles will be the bridge toward an all-electric-vehicle future for perhaps longer than most people expect. It’s a cautious strategy that has its admirers on Wall Street.

    Ford
    F,
    -4.48%

    is not thinking about “extremes” between hybrids and EVs, company Chief Executive Jim Farley said recently. The automaker decided to keep investing in heavy-duty hybrid vehicles and has been surprised by their popularity, he said.

    That’s a “subtle shift of strategy” for Ford, but one that makes sense in the current reality, said Garrett Nelson, an analyst with CFRA.

    On the call with analysts following Ford’s quarterly results last month, Farley noted that Ford’s hybrid offerings are extremely popular. About 10% of F-150 pickup trucks and 56% of smaller Maverick pickup trucks being sold in the U.S. are hybrids, he said.

    “We are adding hybrid options across our [internal-combustion-engine] lineup,” he said. “And we expect to quadruple our hybrid sales in the next five years, and we were already No. 2 in the market last year.”

    The pure-battery EV market has become saturated, and Ford is indicating that it is willing to be flexible, CFRA’s Nelson said.

    “Bottom line, aside from Tesla
    TSLA,
    +1.30%

    EVs, the vast majority of other EV models have sold very poorly,” Nelson said, adding that although many people are not interested in EVs, hybrids could be an easier sell.

    Related: Electric vehicles vs. gas-powered cars: Which one is cheaper to buy and own?

    “Consumers are becoming much more educated,” he said. “You can in a lot of cases go on pure battery power and not even use any fuel with these hybrids.”

    Japanese carmakers such Toyota Motor Corp.
    7203,
    +1.40%

    TM,
    +0.26%

    and Honda Motor Co.
    7267,
    +5.87%

    HMC,
    -0.09%

    have taken that approach from the start, making much bigger bets on hybrids, and “in hindsight that appears to have paid off,” Nelson said.

    Indeed, “hybrids are a much easier purchase in today’s environment,” said Karl Brauer, an analyst with iSeeCars.com.

    “They cost less than electric vehicles, they don’t involve range anxiety, and Ford has managed to make them quite practical in how it pairs the technology with the F-150,” Brauer said.

    Hybrids are more expensive to buy than internal-combustion-engine vehicles, but they are cheaper than electric vehicles because their batteries are significantly smaller — even those in plug-in hybrids, which are capable of driving several dozen miles solely on an electric charge. About a third of the cost of an EV is the cost of the battery.

    Hybrids have one more critical advantage over EVs, Brauer said — they can be produced and sold for a profit.

    Ford’s strategy contrasts with a more aggressive EV push by General Motors Co.
    GM,
    -5.79%
    ,
    Nelson said.

    GM late Wednesday unveiled its Cadillac Escalade IQ, a luxury EV that starts at around $130,000 and has 450 miles of range. GM expects to begin making the vehicle in the summer of 2024, with sales beginning in late 2024.

    GM’s future lineup includes a number new EV models as well as electric versions of popular vehicles that were previously available only as gas-powered models. That includes an electric Chevy Equinox for next year and a return of the Chevy Bolt, among the cheapest EVs available in the U.S.

    See also: GM is bringing back the Bolt. What do we know so far about the updated EV?

    GM will cease production of the Bolt later this year but has promised to bring it back using the company’s new shared EV platform. Observers expect the new Bolt to be available around 2025.

    GM’s EV strategy is generally viewed as more risky.

    Tesla started a price war earlier this year, cutting prices of its EVs several times. Ford also cut prices, most notably on the F-150 Lightning, the electric version of a pickup truck that’s been the best-selling vehicle in the U.S. since the 1980s.

    Hybrids also do away with so-called charge anxiety, because their gas-powered engines kick in when needed.

    Related: EVs zoomed ahead with a 8.2% slice of auto financing pie in second quarter

    According to a Consumer Reports survey in June, about 6 in 10 respondents said that concerns about charging were holding them back from purchasing an EV, and about 5 in 10 cited range as a reason they wouldn’t buy one just yet.

    Tesla has made its fast-charging ports the de facto standard in the U.S., and several automakers, including Ford and GM, have inked deals to allow their EV owners to power up at Tesla’s Supercharger network, which has charging stations located near major highways.

    An often-cited 2022 study about the reliability of public, open-to-all fast-charging stations in nine counties in the San Francisco Bay Area found a range of issues with the stations, from charging and payment failures to annoyances such as spaces being occupied by gas-powered vehicles or EVs that are not actively charging.

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  • UAW seeks double-digit pay hikes in Detroit Three auto contract talks

    UAW seeks double-digit pay hikes in Detroit Three auto contract talks

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    UAW President Shawn Fain chairs the 2023 Special Elections Collective Bargaining Convention in Detroit, March 27, 2023.

    Rebecca Cook | Reuters

    United Auto Workers (UAW) President Shawn Fain said on Tuesday the union was seeking ambitious benefit increases in contract talks with the Detroit Three automakers, including double-digit pay rises and defined-benefit pensions for all workers.

    The UAW presented its economic demands to Chrysler-parent Stellantis on Tuesday and will make presentations to General Motors (GM) Wednesday and Ford Thursday ahead of the Sept. 14 expiration of the current four-year contracts, Fain said.

    They include proposing to make all temporary workers at the U.S. automakers permanent, placing new strict limits on the use of temporary workers and increasing paid time off.

    Fain also wants increases in pension benefits for current retirees and to ensure all workers get defined-benefit pensions.

    The union leader, in Facebook Live remarks, called the demands “the most audacious and ambitious list of proposals they’ve seen in decades.”

    Fain said the CEOs of the Detroit Three saw their pay rise by 40% on average over the last four years.

    He singled out GM CEO Mary Barra, who received $29 million of compensation in 2022, and said it would take an entry level worker at a GM joint venture battery plant 16 years to earn as much as she made in a week.

    Fain listed numerous demands, including restoring retiree health care benefits and cost of living adjustments. He also said the UAW was proposing to have the right to strike over plant closures and to eliminate the two-tier wage system under which new hires earn 25% or more less than veteran employees.

    He noted the Teamsters recently won an end to two-tiered wages in a new contract with UPS. “It’s wrong to make any worker a second class-worker. We can’t allow it any longer,” Fain said of the demand for the same at the Detroit Three.

    Stellantis said it had a “very productive meeting” with Fain and the bargaining committee and would review the union requests to understand how they aligned with company proposals and where common ground could be found.

    “We are not seeking a concessionary agreement,” Stellantis said.

    GM said it would review the demands once they were received from the UAW on Wednesday.

    Ford said it looked “forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.”

    Fain also said the Detroit Three need to pay better wages for workers at battery joint venture plants and praised Democratic senators last week for urging the companies to include those workers under the master agreements.

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  • As Ford loses billions on EVs, the company embraces hybrids

    As Ford loses billions on EVs, the company embraces hybrids

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    Ford Motor Co. displays a new 2021 Ford F-150 pickup truck at the Rouge Complex in Dearborn, Michigan, September 17, 2020.

    Rebecca Cook | Reuters

    Heads up, hybrid fans: Ford Motor is working on a whole bunch of new hybrid models.

    “You’re going to see a lot more hybrid systems from us,” CEO Jim Farley said Thursday after the company reported second-quarter earnings that revealed widening losses on its electric vehicles unit.

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    The comments run slightly counter to recent messaging from the Detroit automakers, which have touted the performance and popularity of all-electric favorites as the industry moves to meet EV targets. The hybrid hype, however, falls more closely in line with global hybrid leader Toyota, which has faced criticism for what some saw as resistance to the EV transition.

    To be clear, Ford isn’t turning away from its much-touted EV push, though it said Thursday that its EV ramp-up may take longer than it had previously anticipated.

    But even as it spends billions to ramp up EV production, it’s planning to bring more hybrid options to market – driven by the success of its current gasoline-electric options.

    “We have been surprised, frankly, at the popularity of hybrid systems for F-150,” Farley said during Ford’s second-quarter earnings call. More than 10% of F-150 pickup customers are opting for the hybrid model, Farley said – and that percentage has been increasing.

    Ford also offers a hybrid version of its small Maverick pickup. That has been an even greater success, Farley said, with more than half of Maverick buyers — 56% — choosing the $1,500 optional hybrid powertrain over the standard four-cylinder engine.

    But why double down on hybrids just as the industry is making a big push toward pure EVs?

    “What the customer really likes is when we take a hybrid system that’s more efficient for certain duty cycles and then we add new capabilities because of the batteries,” Farley said.

    Among those new capabilities: Ford’s “Pro Power Onboard” system, which gives customers the ability to tap the truck’s electricity via outlets in the pickup bed to power tools at a job site — or a refrigerator at a tailgate party — eliminating the need to carry a separate generator.

    An available 7.2-kilowatt onboard generator that Ford is calling the “Pro Power Onboard” features four 120V 20A outlets and one NEMA L14-30R 240V 30A on the 2021 Ford F-150. The truck is available with three levels of electrical output depending on engine choice.

    Ford

    “We’re seeing a lot of customers like that combination of using the batteries for something beyond just moving the vehicle,” Farley said. “And so we’re just listening to the market.”

    Ford has heavily promoted the capabilities of its battery-electric F-150 Lightning pickup, which offers the ability to power an entire house for several days.

    It may be that in hearing from customers, Ford has determined the popularity of that capability is outrunning the willingness to go all-electric. As executives noted Thursday, EV adoption is moving more slowly than expected.

    So in the meantime, Ford can offer power-hungry but EV-wary drivers an in-between option, with hybrid options across its internal-combustion lineup.

    “But don’t think of them in the traditional sense of an Escape hybrid or a [Toyota] Prius,” Farley said. “They’re probably going to come to light differently than most people think.”

    “And customers like that.”

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  • Stocks making the biggest moves premarket: Intel, Roku, Procter & Gamble and more

    Stocks making the biggest moves premarket: Intel, Roku, Procter & Gamble and more

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    Signage outside Intel headquarters in Santa Clara, California, on Monday, Jan. 30, 2023.

    David Paul Morris | Bloomberg | Getty Images

    Check out the companies making headlines before the bell.

    Intel — Shares popped 6.7% after the chipmaker posted better-than-expected second-quarter results and a return to profitability after two consecutive losing periods. Intel’s forecast for the third quarter also came in above analyst expectations. The company reported adjusted earnings of 13 cents a share on revenues of $12.95 billion.

    Roku — The streaming stock rallied nearly 10% after reporting a narrower-than-expected loss for the second quarter. Roku reported a loss of 76 cents a share and revenues of $847 million. Analysts polled by Refinitiv had anticipated a loss of $1.26 per share and $775 million in revenue.

    Biogen — Biogen shares moved slightly lower after the biotechnology company said it’s acquiring Reata Pharmaceuticals for $172.50 per share, in a cash deal valued at about $7.3 billion. Shares of Reata soared more than 51% on the news.

    Procter & Gamble — The consumer giant saw shares rise more than 1% in premarket trading after the company reported quarterly earnings and revenue that beat analysts’ expectations. However, P&G released a gloomy outlook for its fiscal 2024 sales that fell short of Wall Street’s estimates.

    Exxon Mobil — Shares moved slightly lower after the oil stock posted mixed second-quarter results. The company reported earnings of $1.94 a share, excluding items, that fell short of the $2.01 expected by analysts, per Refinitiv. Revenues came in at $82.91 billion, above the expected $80.19 billion.

    Chevron — The oil stock lost nearly 1% even after reporting a beat on the top and bottom lines for the second quarter. Earnings fell from a year ago due to a drop in oil prices.

    First Solar – Shares soared 12% after the solar company posted earnings per share of $1.59 on revenue of $811 million for the second quarter. Those results beat Wall Street expectations of 96 cents per share on revenue of $721 million, according to Refinitiv. The company also announced plans to invest up to $1.1 billion to build a fifth manufacturing facility in the United States.

    Enphase Energy – Shares of Enphase dropped more than 15% after the company posted second-quarter revenue Thursday of $711 million that fell short of analyst estimates of $722 million, according to Refinitiv. The stock also faced a wave of downgrades Friday morning from Deutsche Bank, Wells Fargo and Roth MKM.

    Sweetgreen – Shares of the salad chain slid more than 13% after the company posted weak sales that missed Wall Street expectations in the second quarter and a net loss of $27.3 million, or 24 cents per share. Sweetgreen did say it’s aiming to turn a profit for the first time by 2024.

    Ford Motor – The automaker said adoption of electric vehicles is going more slowly than the company forecast and that it expects to lose $4.5 billion on the EV business this year, widening losses from roughly $3 billion a year earlier. Otherwise, Ford posted strong quarterly earnings that beat Wall Street expectations and raised its full-year guidance. Shares were flat in premarket trading.

    Juniper Networks — Shares of the technology company fell 8% after Juniper’s third-quarter guidance came in lighter than expected. The company said it expects earnings per share between 49 cents and 59 cents, with revenue between $1.34 billion and $1.44 billion. Analysts had penciled in 62 cents per share and $1.48 billion of revenue. The company’s second-quarter results did come in slightly above expectations.

    AstraZeneca — U.S. listed shares of the drugmaker added more than 5% before the bell. The U.K.-based company reported second-quarter earnings of $2.15 per share on $11.42 billion in revenue. That surpassed the EPS of $1.95 expected by analysts polled by Refinitiv on revenues of $11.03 billion. AstraZeneca also said it would buy a portfolio of preclinical rare disease gene therapies from Pfizer for up to $1 billion.

    Xpeng — The Chinese electric vehicle stock jumped more than 6% in the premarket. Jefferies upgraded shares to a buy from a hold, citing Xpeng’s joint development plan with Volkswagen

    New York Community Bancorp — The regional bank stock rose about 2% before the bell after JPMorgan upgraded New York Community Bancorp to an overweight rating from neutral. The Wall Street firm called the company a “massive market share taker” in its upgrade.

    Mondelez International — Mondelez International added 2.7% before the bell on strong second-quarter results. The snack maker on Thursday reported earnings of 76 cents a share, excluding items, on $8.51 billion in revenue. Analysts polled by Refinitiv had estimated EPS of 69 cents and revenues of $8.21 billion.

    — CNBC’s Tanaya Macheel, Yun Li and Jesse Pound contributed reporting

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  • Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

    Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

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    Ford Motor Co. late Thursday reported quarterly profit that was about three times higher than last year’s and a 12% increase in its revenue, moving it to raise its outlook for 2023, but the beat-and-raise was overshadowed by a delay in EV production goals.

    Ford stock
    F,
    +0.44%

    initially rose about 3% after the positive results, with Chief Executive Jim Farley telling investors that the company’s goal is to match an “exciting, long-term vision” of itself with “boringly predictable execution quarter after quarter, year after year.”

    Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.

    The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.

    Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.

    Ford earned $1.9 billion, or 47 cents a share, in the second quarter, nearly three times higher than in the year-ago period and a 4% margin, the company said. Adjusted for one-time items, the automaker earned 72 cents a share.

    Revenue rose 12% to $45 billion, Ford said, and its cash and liquidity are “persistently strong.” The revenue increase included a 39% rise for Ford’s EV business.

    Analysts polled by FactSet expected Ford to report adjusted earnings of 54 cents a share on sales of $43.17 billion.

    Supply-chain “disruptions” have persisted but are now easing, and Ford has “more work to do” to streamline its systems, reduce costs and improve quality, Farley said in the call.

    EV adoption is still in the upswing, Farley said, but the number of companies entering the market is growing even at the higher end of the market. With its varied offers, though, Ford is building EV “loyalists” to its brand, Farley said.

    Ford lifted its EBIT guidance range for the full year to between $11 billion and $12 billion. It also adjusted upward its expectations for 2023 adjusted free cash flow to between $6.5 billion and $7 billion. Capital expenditures would be between $8 billion and $9 billion, the automaker said.

    The guidance presumes “headwinds” including “global economic uncertainty and inflationary pressures, higher industrywide customer incentives and continued EV pricing pressure,” Ford said, as well as increased warranty costs and costs associated with union contract negotiations.

    On the positive side, “tailwinds” accounted for in the guidance included “improved” supply chain, higher industry volumes, upside from the its all-new Ford Super Duty truck and lower commodity costs, Ford said.

    Ford earlier this month surprised Wall Street by cutting the price of its sought-after electric pickup truck, the F-150 Lightning.

    Ford earnings close the cycle for major U.S. automakers, as Tesla Inc.
    TSLA,
    -3.27%

    reported second-quarter earnings last week and General Motors Co.
    GM,
    +1.78%

    earlier this week.

    Shares of Ford have gained 19% so far this year, matching the advance for the S&P 500 index
    SPX,
    -0.64%
    .
    The stock holds an outperformance, however, in the past three months, up 19% to the S&P’s 11%.

    See also: GM, Hyundai and other car manufacturers to build 30,000 fast EV chargers in challenge to Tesla

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  • General Motors raises full-year guidance, announces deeper cost-cutting

    General Motors raises full-year guidance, announces deeper cost-cutting

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    Mary Barra, CEO, GM at the NYSE, November 17, 2022.

    Source: NYSE

    DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.

    The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.

    GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.

    GM shares were initially up in premarket trading following the results but were down nearly 3% just after the market opening.

    Here’s what GM reported for its second quarter:

    • Adjusted earnings per share: $1.91. (This is not comparable to $1.85 analysts expected due to one-time items.)
    • Revenue: $44.75 billion vs. $42.64 billion expected, according to Refinitiv consensus estimates

    GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing expenses with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.

    Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.

    On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.

    Revenue during the quarter jumped 25% compared with $35.76 billion a year earlier.

    For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion to $14 billion, up from a previous range of $11 billion to $13 billion. GM also increased expectations for adjusted automotive free cash flow to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.

    Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.

    However, the guidance increase is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.

    “We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”

    A work stoppage would add to the auto industry’s yearslong production problems resulting from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.

    During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.

    For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”

    He said the automaker will disclose more about the slow production of its new EVs during an analyst call Tuesday.

    Before reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.

    Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February.

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  • A key bank stock soars, but Cramer sticks to his discipline

    A key bank stock soars, but Cramer sticks to his discipline

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  • EV sales stall as, aside from Tesla and BYD, there’s a ‘step back from euphoria’

    EV sales stall as, aside from Tesla and BYD, there’s a ‘step back from euphoria’

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    For the first time in recent years, sales of electric vehicles didn’t grow as fast as market observers expected, creating what Barclays analysts characterized Wednesday as a “step back from EV euphoria” for companies that are not Tesla Inc. or BYD Co.

    The analysts, led by Dan Levy, said that in 2020 and 2021, Wall Street was “willing to look past EV losses,” betting that demand was “unlimited.”

    “We’ve now seen a market where demand is constrained, capital has been tighter, and there is less tolerance for EV related losses,” the analysts said in a note.

    “Moreover, going a layer deeper, we find that while [Tesla
    TSLA,
    +0.82%

    ] and [China’s BYD
    002594,
    -1.38%

    BYDDY,
    +0.50%

    ] have continued to grow, … growth for the rest of the industry has been less robust in Europe and China,” they wrote.

    Don’t miss: Tesla is looking at its best sales quarter ever

    Global EV penetration volumes have tracked below expectations so far this year, at 13.5% through May, up 50 basis points, or 0.5%, from 2022 and “well below” estimates from BNEF of just under 18%. It is “likely marking the first time in recent years that EV penetration has disappointed,” the Barclays analysts said.

    In comparison, penetration topped 16% for several months in the second half of 2022. While the second half of this year is likely to bring some improvement, it is possible that it will still fall short of expectations.

    Aside from Tesla and BYD, growth has been modest, the analysts said. For Ford Motor Co.
    F,
    -0.07%

    and General Motors Co.
    GM,
    +1.09%
    ,
    there are “shades of softness in EV sales,” the Barclays analysts said.

    There are concerns about weak U.S. EV sales and also reports of “sharply rising EV inventory,” the analysts said.

    Citing data from Wards, Barclays pointed at EV inventory of 95,000 vehicles by the end of June, the highest ever, with the highest amount of stock for Ford’s electric Mustang Mach-E SUV, at about 16,000 vehicles in inventory, and Volkswagen’s ID.4, also an SUV, at 14,000 vehicles in inventory.

    GM is not off the hook, either: Despite the company’s increase in EV sales and “robust” market-share gain, much of that came from its Chevy Bolt models, which are nearing the end of production, the analysts said.

    GM announced in April it was phasing out the Bolt and the bigger Bolt EUV, underscoring the challenges in making a profit on EVs despite soaring new-vehicle prices and as several automakers throw all their weight toward a full transition to EVs.

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  • Toyota’s stock rises after U.S. sales rise 15%, and EV sales were 26% of total sales

    Toyota’s stock rises after U.S. sales rise 15%, and EV sales were 26% of total sales

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    The U.S.-listed shares of Toyota Motor Corp. TM JP:7203 rose 0.8% in morning trading Wednesday, said U.S. sales in June rose 14.9% from a year ago. The Japan-based automaker’s North America division (TMNA) reported it sold 195,448 vehicles in the U.S. in June, on a volume and daily-selling rate (DSR) versus June 2022, as Toyota-brand sales rose 1.4% to 168,680 vehicles and Lexus-brand sales jumped 18.1% to 26,768 vehicles. Sales of electrified vehicles total 51,535, or 26.4% of total monthly sales. For the first half of 2023, U.S. sales fell 0.7% to 1,038,520 vehicles, with electrified vehicle sales representing 26.0%…

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  • Driverless cars are driving San Francisco crazy — ‘They are not ready for prime time’

    Driverless cars are driving San Francisco crazy — ‘They are not ready for prime time’

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    A street was blocked for road work in my San Francisco neighborhood this month, with a worker holding a large STOP sign to direct traffic.

    A white car did as instructed, stopping in the middle of the intersection and blocking traffic at the four way intersection. No one was in the driver’s seat and there were no passengers, nor any training drivers — it was a Cruise driverless car, one of many that have flooded streets in the city in the last two years.

    The public works employee holding the sign was flummoxed as how to get the car to move away. After several minutes, the car slowly backed its way out and crossed the street, but ended up on the wrong side. After another 10 minutes, it managed to pull itself together, get in the right lane and drive down the hill.

    Most San Francisco residents can tell a similar story. The growing driverless car fleets in San Francisco are both a fascinating glimpse of science fiction come to life and a scary example of how Big Tech and auto companies have run roughshod over a congested city, with technology that really isn’t ready yet and little regulation to keep it at bay.

    Now, the problem is coming to a head. San Francisco public officials have had enough, and are speaking out about safety threats ahead of a hearing next month that could let companies expand into larger fleets of fare-generating robotaxis.

    “They are not ready for prime time,” San Francisco Fire Chief Jeanine Nicholson told MarketWatch in an interview.

    “They have run over our hoses, they have blocked our fire engines from going on calls, they have just blocked our vehicles from getting down streets where there is a possible fire. They have just done a multitude of things. We had to break the window of one once because we could not get its attention,” Nicholson said.

    While the average citizen can laugh at the stalled cars in city streets, the vehicles represent a major impediment for first responders. The San Francisco fire chief believes they put the city’s firefighters and residents at risk.

    “Response time matters — a fire can double in size in a minute,” she said.

    Aaron Peskin, president of the city’s Board of Supervisors, said there have been 66 incidents in which driverless cars interfered with first responders this year. But the city has little control over the cars operated by Cruise, a unit of General Motors Co.
    GM,
    +1.04%
    ,
    and Waymo LLC, a subsidiary of Google parent Alphabet Inc.
    GOOG,
    -0.34%

    GOOGL,
    +0.17%

    Both companies already have Department of Motor Vehicle permits to deploy a driverless passenger taxi service, a process Peskin described as “Kafka-esque.”

    “You have this thing where the DMV colluded with the industry to redact information that otherwise was public,” he said, referring to the result of a lawsuit Waymo filed last year against the DMV to keep its crash data private, arguing that it held trade secrets. “The funny thing is it’s not like San Francisco is trying to say ‘let’s put the genie back in the bottle.’ We are trying to ensure that our streets are safe. They have become too congested.”

    Both companies are seeking to expand their operations into fare-generating robotaxis in San Francisco, leading to a crucial meeting of California’s Public Utility Commission now slated for July. Waymo is seeking to begin passenger robo-taxi service in the city, while Cruise is seeking to expand its passenger robo-taxi service to the entire city, 24 hours a day, and remove exclusions of steep hills and roundabouts, deploying 100 vehicles. Helpfully for the companies, one PUC commissioner appointed by Gov. Gavin Newsom in 2021 is John Reynolds, who was managing counsel of Cruise until 2019.

    Resistance is building locally and nationally. Cathy Chase, president of Advocates for Highway and Auto Safety, a nonprofit in Washington seeking more regulation and data transparency on autonomous vehicles as part of its mission for more highway and road safety, said it was “illogical and irresponsible at best, and dangerous and deadly at worst, to go forward with any expansion until the significant problems have been resolved.”

    The San Francisco Municipal Transportation Authority (SFMTA) wrote letters of protest to both company’s applications. In May, the SFMTA said that since it wrote its first letter in January, “new hazards from driverless AV operations in San Francisco have been reported, and general public complaints about driverless AV operations have increased significantly.”

    In May, a Waymo vehicle hit and killed a small dog that was off leash, while a test driver was at the wheel, in what the company said was an unavoidable accident. In June, a Cruise vehicle with no driver started to enter a mass shooting scene in the Mission District, and a video on Twitter showed a police officer yelling to get the car removed. Cruise said a lane was open for emergency vehicles and that its car did a U-turn and pulled over. In April, five Waymo cars stopped and blocked traffic in the Balboa Terrace area, in dense fog, a big problem for the vision systems.

    The letters note that both Waymo and Cruise have “committed numerous violations that would preclude any teenager from getting a California’s Driver’s License.” The SFMTA also calls out the PUC for relying on the DMV for approvals, saying that its draft resolution to approve expansions of both companies is an attempt to “deflect rather than exercise the Commission’s duty to protect public safety.”

    Waymo said it has been working with public safety officials and provides them a phone number to reach Waymo directly in the event that one of its cars stop. Cruise said it is proud of its safety record “which is publicly reported and includes millions of miles driven in an extremely complex urban environment.” Both companies have over 30 letters of support for their plans, from a range of groups including many representing the disabled, such as the National Federation of the Blind of California.

    “It’s because of the donations,” Peskin said.

    But the city’s fire chief Nicholson said there needs to be more from the companies than PR statements and lessons on how to stop their vehicles.

    “They really need to sit down with us and figure out a solution,” she said, adding that when the fire department is in the middle of putting out a fire or rescuing victims or dealing with a health emergency, “to have to handle one of their vehicles, it’s just ridiculous.”

    As is the case with many new technologies, history does tend to repeat itself.

    Chris Gerdes, a professor of mechanical engineering at Stanford University and co-director of the Center for Automotive Research at Stanford (CARS) said that as part of work he has been doing with Ford Motor Co.
    F,
    +0.73%
    ,
    he has been researching ethical and legal issues associated with automated vehicles. These same issues came up when the first automobiles started to arrive on public streets at the turn of the 20th century, clashing with horses and buggies.

    “You go back and look at the debates when the car came out,” Gerdes said, and “there were a lot of debates around should these things be allowed on the road, should they be allowed everywhere? These questions that are coming now were asked about cars back in the day. They can block the road, they can scare horses. Is this something we want to have on the roads? Is it even legal for them to be on the roads?”

    But there is a need to demonstrate that driverless cars are compatible with existing laws and the uses of the roads, he said. “The question becomes at what point do these isolated incidents add to up to danger, to what extent do these compromise the city’s priorities or mobility and traffic flow.” He said they need to compare the autonomous-vehicle data with that from human drivers.

    The SFMTA provided comparison data in its letters of protest. According to the SFMTA, based on data filed with the NHTSA, Cruise’s injury crash rate is estimated to have been 506 injury crashes per 100 million vehicle miles traveled (VMT) between June and November, 2022—approximately 6.3 times the 2021 national average, which is 80 injury crashes per 100 million VMT. Waymo’s injury crash rate is estimated to be 104 injuries per 100 million VMT, approximately 1.3 times the national average, the SFMTA said, when looking at the same period.

    “The collision rate from that small fraction of Cruise driverless operations appears to exceed the collision rate for human drivers,” the SFMTA said in its Cruise letter. For Waymo, the agency said it recommends the commission expand on the findings with a more thorough analysis. “Within the complex driving environment of San Francisco city streets, we must conclude that the technology is still under development and has not reached this goal,” the SFMTA said in its Waymo letter.

    Some in San Francisco are hopeful the delay of the PUC meeting to July 13 is a good sign that the commission is listening to more input from city officials. In its letters, the SFMTA and the San Francisco City Attorney hint at the next step they could take, noting that the PUC “must conduct an environmental review” of Cruise’s and Waymo’s expansion plans, because its actions could cause environmental impacts. What goes unsaid is that the city could seek to compel such a review with a lawsuit.

    Peskin said he has received letters from former employees of the companies saying that autonomous robotaxis are, as the fire chief said, “not ready for prime time.” The workers said they had signed nondisclosure agreements that kept them from saying so publicly. Peskin suggested it could end up like the tobacco industry’s whistleblower case.

    “We would rather work with them than waste taxpayers’ money on lawsuits,” Peskin said, adding that the companies could continue to test their cars with test drivers — an option that is not likely to be acceptable by the companies seeking to make money from their big investment.

    “San Francisco is the perfect place to test them,” he said. “But they still haven’t worked these kinks out.”

    The city of San Francisco is beaten down at the moment, thanks in part to its past close relationship with tech. As the downtown core suffers from the departure of the tech workers that defined it for the past decade, city officials are doing what they can to ensure that the technology some of them created does not become the next hated addition to the city.

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  • Tesla beats 2nd quarter estimates with deliveries of 466,000 vehicles

    Tesla beats 2nd quarter estimates with deliveries of 466,000 vehicles

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    Tesla Inc. delivered a record number of vehicles in the second quarter, beating market estimates after the electric carmaker increased discounts and incentives, the company reported on Sunday.

    The Elon Musk-led electric vehicle manufacturer delivered 466,140 vehicles in the three months ended June 30 and produced 479,700 vehicles. The second quarter of 2023 marked the fifth period in a row when Tesla reported a higher level of vehicles produced compared to deliveries.

    Analysts on average had expected Tesla to deliver 445,000 cars, according to analysts polled by Refinitiv.

    Tesla delivered 254,695 vehicles in the year-ago quarter.

    Deliveries are a carefully watched number by Tesla shareholders and are the closest approximation of sales disclosed by the company.

    Tesla said total production rose 85.5% to nearly 480,000 vehicles in the three months ended June 30, from a year earlier.

    The company delivered 446,915 Model 3 compact cars and Model Y sport-utility vehicle, as well as 19,225 of its Model S and Model X premium vehicles.

    Tesla increased discounts for vehicles to a $1,600-to-$7,500 range and made all of its Model 3s eligible for full federal credits of $7,500 starting in June in the United States.

    Earlier this year, Tesla cut prices globally by as much as 20% after missing Wall Street delivery estimates for 2022.

    Tesla is expected to achieve record sales yet again in China, its second-largest market after North America, despite competition from market leader BYD.

    The company said it will post financial results for the second quarter after the market close on Wednesday, July 19, 2023. 

    Earlier this year Ford Motor
    F,
    +1.20%

    and General Motors
    GM,
    +0.94%
    ,
    as well as fast-charging equipment makers agreeing to adopt Tesla’s North American Charging Standard (NACS).

    Tesla
    TSLA,
    +1.66%

    shares closed at $261.77 on Friday ahead of the second-quarter deliveries report.

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  • Toyota stock having best week since 2009 after annual meeting, new EV goals

    Toyota stock having best week since 2009 after annual meeting, new EV goals

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    Akio Toyoda, Chairman of Toyota Motor Corp.

    Yoshikazu Tsuno | Gamma-rapho | Getty Images

    DETROIT – Toyota Motor’s stock is having its best week since 2009 following the company disclosing plans for its next-generation electric vehicles and shareholders voting in favor of its new leadership, including former CEO Akio Toyoda as chairman.

    Shares of Toyota on the New York Stock Exchange on Thursday achieved a new 52-week high before closing at $168.18 per share, up 1.6% during intraday trading and roughly 13% this week.

    If shares can retain their current momentum, it would be the stock’s best week since April 2009 when they increased 14.5%. It would also mark only the third double-digit weekly gain in more than two decades.

    The notable increase in the relatively mundane stock follows additional details about the company’s EV strategy, which has previously been criticized by some for not being aggressive enough.

    Ahead of its annual meeting Wednesday, Toyota outlined plans for a new generation of EVs to rival industry leaders Tesla and China-based BYD. The company said it plans to launch its next-generation EVs starting in 2026, including vehicles with highly touted “solid-state batteries” by 2027 or 2028.

    Solid-state batteries can be lighter, with greater energy density and provide more range at a lower cost than today’s EVs with lithium-ion batteries.

    People arrive to attend an annual shareholders’ meeting for Toyota Motor in the city of Toyota, Aichi Prefecture on June 14, 2023. Toyota is under pressure from large institutional investors for chairman Akio Toyoda to step down over his lukewarm embrace of electric vehicles.

    Str | Afp | Getty Images

    Takero Kato, president of BEV Factory, said that Toyota is targeting a driving range of 1,000 kilometers (620 miles) for its EVs. BEV Factory aims to produce about 1.7 million vehicles by 2030, he said.

    “Proactive disclosure of a new tech strategy featuring next-gen batteries and giga casting delivered a riposte to the view that it is lagging in BEVs. We await quantitative disclosure on BEV profit ahead,” Morgan Stanley analyst Shinji Kakiuchi said Wednesday in an investor note.

    Following the announcements, Toyota shareholders Wednesday aligned their voting with company recommendations, including leadership approval and voting down a shareholder proposal requiring Toyota to review its climate-related lobbying activities.

    Shareholders also approved the company’s new leadership and board, including the appointment of CEO Koji Sato as a director and Toyoda – grandson of automaker’s founder – as chairman.

    Shares of Toyota on the NYSE are up about 23% this year, as the auto industry continues to recover from the coronavirus pandemic and supply chain issues that led to record low vehicle inventory levels.

    Toyota’s gains put it in the middle of Japanese automaker stocks, ahead or in-line with the Detroit automakers and behind shares of Tesla, which have more than doubled in 2023.

    Here’s how other automaker stocks have performed this year compared to Toyota:

    Auto stocks so far this year

    *Shares of these companies are traded in the U.S. as American depositary receipts.

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  • U.S. stocks close sharply higher, with tech shares rallying on hopes for debt-ceiling deal

    U.S. stocks close sharply higher, with tech shares rallying on hopes for debt-ceiling deal

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    U.S. stocks ended sharply higher Friday, with the technology-heavy Nasdaq Composite leading the way up, as hopes rose for a debt-ceiling deal in Congress.

    The Nasdaq and S&P 500 also closed at their highest levels since August 2022.

    How stock indexes traded

    • The Dow Jones Industrial Average
      DJIA,
      +1.00%

      rose 328.69 points, or 1%, to close at 33,093.34, snapping a five-day losing streak.

    • The S&P 500
      SPX,
      +1.30%

      gained 54.17 points, or 1.3%, to finish at 4,205.45.

    • The Nasdaq Composite
      COMP,
      +2.19%

      jumped 277.59 points, or 2.2%, to end at 12,975.69.

    For the week, the Dow fell 1%, while the S&P 500 edged up 0.3% and the Nasdaq advanced 2.5%. The tech-heavy Nasdaq booked a fifth straight week of gains for its longest win streak since the stretch ending in early February, according to Dow Jones Market Data.

    What drove markets

    Stocks rose ahead of Memorial-Day weekend as investors were encouraged by reports suggesting that Congress was close to a deal to raise the U.S. debt ceiling.

    “It’s a little bit of a relief rally on the debt ceiling,” said Ryan Belanger, founder and managing principal at Claro Advisors, in a phone interview Friday.

    While Treasury Secretary Janet Yellen says the U.S. could run out of money as soon as June 1 if the debt ceiling is not raised, other projections estimate the federal government may have until the middle of the month.

    “I think we’ll all be able to exhale by mid-June, although it will likely be an increasingly volatile market environment between now and then,” said Kristina Hooper, chief global market strategist at Invesco. “Once that drama recedes, I think all eyes will be back on central banks.”

    Belanger said that he’s expecting the Federal Reserve may raise its benchmark interest rate by another quarter percentage point in June to battle high inflation.

    The Bureau of Economic Analysis said Friday that the personal-consumption-expenditures-price index showed core inflation, which excludes food and energy, rose 0.4% in April. That’s more than the 0.3% increase that economists had expected, as core inflation rose 4.7% year over year from a rate of 4.6% in March.

    Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said inflation appeared to be moving “in the wrong direction” at the start of the second quarter.

    Fed-funds-futures traders now see a 65.9% chance of the Fed hiking its rate by a quarter percentage point in June, and a 34.1% probability of a pause, according to the CME’s FedWatch Tool, at last check. In the bond market, two-year Treasury yields
    TMUBMUSD02Y,
    4.563%

    rose 7.9 basis points Friday to 4.587%, according to Dow Jones Market Data.

    PCE data also showed consumer spending sprang back to life in April, rising 0.8%, the largest gain in three months to surpass expectations, as Americans bought more cars and spent more on services.

    “The consumer is hanging in there,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments, in a phone interview Friday. “I don’t think we want to underestimate the ability of the consumer to continue spending, even if they’re spending a little bit less.”

    Meanwhile, the U.S. Census Bureau said Friday that orders for manufactured durable goods in the U.S. jumped 1.1% in April. The gain was largely driven by military spending, but business investment rose sharply as well.

    Updated GDP data released earlier this week showed the U.S. economy grew at annual pace of 1.3% during the first quarter, above previous estimates.

    For now, debt-ceiling optimism and enthusiasm surrounding artificial intelligence are outweighing concerns about the potential for another Fed rate hike, according to Fernandez. “I just don’t think there is the demand destruction that the Fed is looking for at this point in time,” she said, as the unemployment rate remains low.

    Fernandez said she anticipates the Fed could pause its interest-rate hikes in June to asses the economy before potentially raising its policy rate again in July.

    Technology stocks have helped propel gains this week in the U.S. equities markets, with Nvidia’s stock
    NVDA,
    +2.54%

    surging Thursday on optimism surrounding its AI-fueled outlook for sales in the second quarter.

    The tech-heavy Nasdaq Composite has soared 24% this year through Friday. “I would be taking profits on the Nasdaq,” said Belanger, suggesting some stocks in the index have become frothy amid the AI buzz.

    Companies in focus

    —Steve Goldstein contributed to this report.

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