Tag: Motor Vehicles

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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September 13, 2023

The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

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Stock investors are showing some hesitancy for Tuesday, with big signals on the economy coming this week via consumer prices and retail sales. Ahead of that, Apple is expected to tempt consumers with yet another new iPhone on Tuesday.

How much should investors be worrying right now? Our call of the day from Pershing Square Capital Management manager Bill Ackman says that in the near term, we can relax a little, but it isn’t all roses.

Read: Hedge funds have bailed on the U.S. consumer in a big way, Goldman Sachs data finds

He told the Julia La Roche Show in an interview where he felt like he had a “crystal ball of what was going to happen,” starting in January 2020 with the COVID-19 outbreak, and that carried on through interest rates and the economy. Indeed, the manager reportedly made nearly $4 billion on a couple of pandemic-related bets.

“I would say the crystal ball has clouded a bit in the last period. I think these are unusual economic times and perhaps we always say that, but I don’t think this is a pattern that has been repeated…or it hasn’t been for more than 100 years,” he said.

But he remains near-term upbeat. “For two years, people have been saying that recession’s around the corner and you know we’ve had a very different view, and continue to have this view that I think people are coming around to, that the economy is actually still quite strong,” he said.

And while those on lower-income rungs have burned through a lot of COVID savings, he thinks the economy has yet to really see impact from the big fiscal stimulus seen in recent years.

Looking down the road though, Ackman has got a stack of concerns over the economy. He sees about a third of federal debt due to get repriced meaning that over a relatively short period of time, “interest expense will become a much bigger part of the deficit that is not going to be a contributor to the economy.”

And while higher interest rates do help savers, ultimately that will be a big drag on the economy, he said, adding that rising inflation, mortgage rates, car payments and credit card rates, are all set to slow the economy.

“We’re still in the midst of a war and there’s political uncertainty you know with an upcoming election,” he said. That partly explains Pershing Square’s hedge via a short position on the 30-year Treasury bond
BX:TMUBMUSD30Y
that he laid out in a tweet in early August.

For roughly a year, long-term Treasury yields have been trading below short-dated ones, which is known as an inverted yield curve, a phenomenon that’s often seen as a precursor to recession.

“I don’t see inflation getting back to 2% so quickly, if at all, and if in fact we’re in a world of persistent 3% inflation, you know it doesn’t make sense to have a 4.3%, 4.25% Treasury yield,” he said.

Other risks? Ackman remains worried about regional banks following the spring crisis, as many have big fixed-rate portfolios of assets that have gotten less and less valuable as rates rise. “I would say the commercial real estate picture has not gotten better, if anything, you know, you’re going to start seeing real defaults, particularly with office assets,” he said.

“Regional banks have the most exposure to construction loans so they are going to be a lot of construction loans that won’t be able to repaid. There will be a lot of restructurings, so either the investors groups are gonna have to put in a lot more equity or the banks are going to start taking some losses,” he said.

Ackman says investors also face a presidential campaign that could add some stress. The hedge-fund manager said he’s surprised there have not been “more and better alternative candidates” for the 2024 campaign over President Joe Biden and former President Donald Trump.

He’d like to see JPMorgan Chase & Co. CEO Jamie Dimon toss his hat in the ring and believes Biden is “beatable,” by a strong candidate.

Ackman himself said it’s “possible,” he himself could run someday, but he’s more focused on having a better investment track record over Berkshire Hathaway Chairman and CEO Warren Buffett — and needs some 30 years to match the Oracle of Omaha.

Read: Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

The markets

Stock futures
ES00,
-0.36%

NQ00,
-0.45%
are tilting south, led by tech, with Treasury yields
BX:TMUBMUSD02Y

BX:TMUBMUSD10Y
steady to a touch lower and the dollar
DXY
recovering some ground.

Read: Watch this ‘canary in the coal mine’ for signs of trouble in markets, Neuberger Berman CIO says

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Oracle shares
ORCL,
+0.31%
are down 10% in premarket trading after disappointing guidance from the cloud database group.

Apple’s
AAPL,
+0.66%
big event kicks off at 1 p.m. Eastern, with the launch of the pricier iPhone 15 expected to be on the agenda.

Hot ticket. Arm Holdings’ IPO is already 10 times oversubscribed and bankers will stop taking orders by Tuesday afternoon, Bloomberg reports, citing sources.

Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

Upbeat results are boosting shares of convenience-store operator Casey’s General Stores
CASY,
-1.02%.

Packaging giant WestRock
WRK,
-1.48%
and rival Smurfit Kappa
SK3,
-8.87%
have announced a stock and cash tie up. WestRock shares are up 8% in premarket.

Read: U.S. budget deficit will double this year to $2 trillion, excluding student loans

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The chart

Bank of America’s global fund manager survey for September sees investors still bearish, but no longer on the extreme side. Here’s the chart:

Read: Fund managers just made their biggest shift ever into U.S. stocks — and out of emerging markets

The tickers

These were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern:

Ticker	Security name
TSLA, +10.09%	Tesla
AMC, +2.23%	AMC Entertainment
CGC, +81.37%	Canopy Growth
NVDA, -0.86%	Nvidia
GME, -3.90%	GameStop
AAPL, +0.66%	Apple
ACB, +72.17%	Aurora Cannabis
NIO, +2.89%	Nio
MULN, +5.77%	Mullen Automotive
AMZN, +3.52%	Amazon

Random reads

“Worst investment ever.” Brady Bunch fan buys original house for cut-price $3.2 million.

And the house from the “Halloween” slasher films just sold for $1.8 million.

China may ban clothes that hurt people’s feelings.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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September 12, 2023

Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

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Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?

Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.

The Magnificent Seven are Apple Inc.
AAPL,
+0.16%,
Microsoft Corp.
MSFT,
+0.72%,
Nvidia Corp.
NVDA,
-2.03%,
Amazon.com Inc.
AMZN,
+2.17%,
Alphabet Inc.
GOOGL,
-0.27%

GOOG,
-0.32%,
Tesla Inc.
TSLA,
+9.37%
and Meta Platforms Inc.
META,
+1.67%.
We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
SPY,
which tracks the S&P 500
SPX.
The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
COMP
and the Russell indexes.

SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.

Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.

Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
QQQ,
which tracks the Nasdaq-100 Index
NDX
and the Invesco S&P 500 Top 50 ETF
XLG
:

Company	Ticker	% of SPY	% of QQQ	% of XLG
Apple Inc.	AAPL, +0.16%	7.05%	10.85%	12.46%
Microsoft Cor.	MSFT, +0.72%	6.65%	9.53%	11.76%
Amazon.com Inc.	AMZN, +2.17%	3.30%	5.50%	5.84%
Nvidia Corp.	NVDA, -2.03%	3.02%	4.44%	5.33%
Alphabet Inc. Class A	GOOGL, -0.27%	2.17%	3.12%	3.83%
Alphabet Inc. Class C	GOOG, -0.32%	1.88%	3.11%	3.32%
Tesla Inc.	TSLA, +9.37%	1.79%	3.10%	3.17%
Meta Platforms Inc. Class A	META, +1.67%	1.77%	3.60%	3.12%
Totals		27.63%	43.25%	48.83%
Sources: Invesco Ltd., State Street Corp.

The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.

Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.

FactSet

QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
COMP,
+0.45%.

Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
BRK.B,
+0.77%,
Johnson & Johnson
JNJ,
+0.79%,
Procter & Gamble Co.
PG,
+0.94%,
Home Depot Inc.
HD,
-0.12%
and Nike Inc.
NKE,
-0.42%.

Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:

ETF	3 Years	5 Years	10 Years	15 Years	20 Years
SPDR S&P 500 ETF Trust SPY	40%	69%	223%	370%	531%
Invesco QQQ Trust QQQ	41%	113%	430%	882%	1,158%
Invesco S&P 500 Top 50 ETF XLG	41%	85%	262%	404%	N/A
Source: FactSet

Click on the tickers for more about each ETF, company or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

There is no 20-year return for XLG because this ETF was established in 2005.

For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.

Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.

For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.

Here’s a look at the average annual returns for the three ETFs:

ETF	3 years	5 years	10 years	15 years	20 years
SPDR S&P 500 ETF Trust SPY	11.8%	11.0%	12.4%	10.9%	9.6%
Invesco QQQ Trust QQQ	12.0%	16.3%	18.2%	16.4%	13.5%
Invesco S&P 500 Top 50 ETF XLG	12.2%	13.1%	13.7%	11.4%	N/A
Source: FactSet

So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.

Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “

Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”

“[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.

Don’t miss: These four Dow stocks take top prizes for dividend growth

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September 11, 2023

Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.

That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.

“I…

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September 7, 2023
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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September 7, 2023
Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion

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Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion

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September 5, 2023
XPeng Stock Surges on Plan to Buy DiDi’s Smart Vehicle Unit
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/xpeng-hong-kong-stock-price-didi-evs-ca20a71d
Updated Aug. 28, 2023 9:00 am ET / Original Aug. 28, 2023 6:36 am ET

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A lot is going on inside

XPeng

these days. Investors have appeared to like it all.
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August 28, 2023
U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

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U.S. stocks ended higher Friday after Federal Reserve Chairman Jerome Powell warned the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that monetary policy would proceed cautiously.

How stock indexes traded

For the week, the Dow fell 0.4%, the S&P 500 gained 0.8% and the Nasdaq climbed 2.3%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses, while the S&P 500 and technology-heavy Nasdaq Composite each…

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August 25, 2023
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
F,
+1.36%
market cap is $47 billion and GM’s
GM,
+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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August 25, 2023

Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

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Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
SPX
and Nasdaq Composite
COMP.
That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.

Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.

Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.

“We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.

Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
NVDA,
-0.49%,
Microsoft
MSFT,
+0.94%
or Meta
META,
+0.51%.

Goldman Sachs Investment Research

“The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.

While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.

Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”

Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.

“For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.

Here is a taster of their long-term AI beneficiaries basket:

And a few more:

Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn

The markets

U.S. stocks
SPX

COMP
are trading mixed. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
is steady at 4.33%.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Microsoft
MSFT,
+0.94%
has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
ATVI,
+1.09%
buyout. Activision shares and Ubisoft
UBI,
+9.93%
surged in Paris.

On the heels of a 7% surge, EV-maker Tesla
TSLA,
+2.77%
is up 1.8%.

Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat

Lowe’s shares
LOW,
+3.34%
are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.

Among Monday’s late earnings news: Fabrinet
FN,
+27.25%
is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
ZM,
-4.15%
is up 4% after reporting an earnings jump and guidance.

Read: Why Amazon is this analyst’s top internet stock pick

The world’s biggest miner BHP
BHP,
-0.98%
reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.

Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.

Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.

Best of the web

‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

New video shows the day police raided 98-year old Kansas newspaper owner’s home.

Hitler’s birth house in Austria will be turned into a police station with a human rights training center.

The tickers

These were the top tickers on MarketWatch as of 6 a.m.:

Ticker	Security name
TSLA, +2.77%	Tesla
NVDA, -0.49%	Nvidia
AMC, -17.31%	AMC Entertainment
NIO, -1.87%	Nio
APE, -11.32%	AMC Entertainment Holdings preferred shares
TTOO, -6.13%	T2 Biosystems
GME, -3.63%	GameStop
AAPL, +0.63%	Apple
MULN, -19.19%	Mullen Automotive
AMZN, +0.15%	Amazon.com

The chart

Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
XLK
:

“It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report.

Random reads

“We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.

No, Tropical Storm Hilary didn’t flood Dodger Stadium.

These thirsty beer-drinking thieves are raccoons.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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August 22, 2023

U.S. Steel Takeover Talk Rattles Manufacturers

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U.S. Steel Takeover Talk Rattles Manufacturers

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August 15, 2023
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.
F,
+0.49%,
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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August 14, 2023
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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August 10, 2023
Rivian’s stock flat after EV maker raises production guidance

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This update corrects EPS numbers for Rivian.

Rivian Automotive Inc. shares were flat in the extended session Tuesday after the EV maker reported a narrower-than-expected quarterly loss, revenue that beat Wall Street expectations, and called for higher production numbers this year.

Rivian
RIVN,
+2.14%
stock had dropped immediately after the results but turned direction as company executives spoke on a call with analysts, and closed the after-hours session at $24.80, even with where they ended the regular trading day.

They highlighted Rivian’s cost-savings steps and the goal of turning a gross profit next year, reassured investors about continued demand for their pricey EVs, and highlighted the higher production outlook for the year. At last check, the stock was up 1% after hours.

Rivian “achieved meaningful reductions” in its vehicles, including its last-mile electric delivery van, “across key components, including material costs, manufacturing labor, overhead and logistics,” Rivian’s Chief Executive RJ Scaringe said during the call.

“Maintaining our cost-reduction efforts through consistent focus and collaboration across all levels of the company is a core part of the culture we’re building,” he said.

Rivian lost $1.2 billion, or $1.88 a share, in the second quarter, compared with a loss of $1.7 billion, or $1.89 a share, a year ago. Adjusted for one-time items, Rivian lost $1.08 a share.

Revenue rose to $1.12 billion thanks to quarterly sales that exceeded expectations, the company said.

FactSet consensus called for a loss of $1.43 a share for Rivian on sales of $1.02 billion.

Rivian bumped its 2023 production outlook to 52,000 vehicles, from a previous expectations of 50,000 vehicles.

The results were “all-around strong,” Truist Securities analyst Jordan Levy said in a note Tuesday.

Rivian saw improvements in gross margins, thanks to its production and cost-saving initiatives and that appears “to be driving margin improvements faster than our prior expectations,” Levy said.

Rivian surprised Wall Street last month by announcing second-quarter deliveries that nearly tripled, and production data that more than tripled from a year ago.

See also: Rivian’s stock has been rocketing, and this analyst now urges a pause

Rivian shares have gained 36% so far this year, compared with an advance of about 17% for the S&P 500 index
SPX.

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August 8, 2023
Tesla Is Now Less Profitable Than This Chinese EV Maker
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https://www.barrons.com/articles/li-auto-earnings-stock-price-7ca16378
Updated Aug. 8, 2023 7:34 am ET / Original Aug. 7, 2023 4:35 pm ET

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Second-quarter results from Chinese electric-vehicle maker

Li Auto

topped Wall Street Expectations. What’s more, profit margins topped EV leader

Tesla
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August 8, 2023
Lucid’s stock rises after EV maker keeps 2023 production guidance intact

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Lucid Group Inc. shares rallied in the extended session Monday after the luxury EV maker kept unchanged its 2023 production outlook despite weaker quarterly sales.

“We’re on track toward achieving our 2023 production target of more than 10,000 vehicles, but we recognize we still have work to do to grow our customer base,” Chief Executive Peter Rawlinson said in a statement.

Shares rose about 3% in after-hours trading.

Lucid
LCID,
-3.17%
lost $764 million, or 40 cents a share, in the second quarter, compared with a loss of $220 million, or 33 cents a share, in the year-ago period.

Revenue rose to $150.9 million, from $97 million a year ago.

Analysts polled by FactSet expected Lucid to post an adjusted loss of 34 cents a share on sales of $181.6 million.

Lucid in July reported production and delivery numbers that disappointed Wall Street, and all eyes were on the yearly guidance.

Lucid, whose largest shareholder is Saudi Arabia’s sovereign wealth fund, said it ended the quarter with about $6.25 billion in total liquidity, “which is expected to fund the company into 2025.”

Lucid raised $3 billion in capital in the quarter, including $1.8 billion from the Saudi fund, the company said.

Read also: Tesla’s stock drops as CFO steps down

Lucid earlier Monday slashed prices on its EVs by up to 11.5%

The price-cut news came “as a surprise to us,” because Lucid didn’t seem to have much room to drop prices amid negative gross margins, Cantor Fitzgerald analyst Andres Sheppard said.

Lucid shares have dropped about 6% this year, compared with gains of around 18% for the S&P 500 index
SPX.

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August 7, 2023
Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

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All eyes have been on shares of Tupperware Brands Corp. and Yellow Corp. in recent days as the stocks have soared despite a dearth of fresh news in the case of the former, and negative news in the case of the latter.

Shares of the beleaguered maker of iconic food-storage containers enjoyed a record 434% gain in July on no apparent news. Yellow’s stock
YELL,
-26.15%
has also skyrocketed, despite reports that the trucking company is facing bankruptcy.

Over the weekend the Wall Street Journal reported that the less-than-truckload company has shut down operations as it prepares for bankruptcy. On Monday the International Brotherhood of Teamsters said it was served legal notice that Yellow was “ceasing operations and filing for bankruptcy.” MarketWatch has reached out to Yellow with a request for comment.

Related: How ‘left-for-dead’ Tupperware became a buzzy trading play

Set against this backdrop, the surging share prices for Tupperware
TUP,
-25.99%
and Yellow have sparked comparisons with the meme stock phenomenon, where discussions on social media can send share prices surging. This trend turned companies such as AMC Entertainment Holdings Inc.
AMC,
-3.45%
and GameStop Corp.
GME,
-4.42%
into meme stock “darlings” in recent years. But Samantha LaDuc, founder of LaDucTrading.com, says there’s a different explanation for what’s been happening to shares of Tupperware and Yellow.

“Literally, it’s short covering, as the paired trade of long quality, short junk unwinds,” she told MarketWatch, via email. “And it typically always precedes volatility.”

Short selling of a stock occurs when an investor borrows shares and sells them immediately expecting the price to drop. The shares can then be repurchased and returned to the lender, with the investor pocketing the difference. Although sometimes vilified, short sellers are actually misunderstood, Robert Sloan, managing partner at financial analytics firm S3 Partners and author of “Don’t Blame the Shorts,” recently told MarketWatch.

Related: Short selling stocks — and trying to play short squeezes — can be very dangerous

In a letter to investors this week, Dan Loeb, the chief executive of the hedge-fund firm Third Point, explained that short selling is much more challenging today than it has been historically.

“Fundamental analysis is increasingly taking a back seat to monitoring daily option expiries and Reddit message boards, as evidenced by the numerous short squeezes and manipulations of heavily shorted stocks such as AMC and GameStop in 2021 and others this year,” he wrote. “While we have not abandoned short selling, we continue to reduce our single-name short exposure in favor of market hedges and short baskets.”

LaDuc explained that in June and July hedge funds aggressively covered shorts in global equities, and also noted the trend of FOMO, or fear of missing out.

“We have had the largest six-month increase in leverage on record (according to Goldman), with a clear case of FOMO-the-MOMO [momentum] chase in full view as concentration risk in megacap tech forced a NASDAQ “SPECIAL REBALANCE” to ‘down-weight’ AAPL, MSFT, GOOGL etc.”

Related: Short sellers are not evil, but they are misunderstood

Short covering occurs when a person with a short position buys back the shares, ending the short trade, and returns the shares to the seller. With this strategy, the short seller aims to cover after the share price falls and make a profit. They may also cover if the price goes up to limit their losses.

Last week LaDuc told MarketWatch how she was able to anticipate a Tupperware stock spike despite a dearth of traditional market-moving news around the name.

Tupperware’s stock has continued its upward trajectory, rocketing again on Tuesday. The stock eventually ended Tuesday’s session up 26% at $5.38, with LaDuc warning her clients of the risks involved in a parabolic rally. “I suggested to clients it was likely done and to be very cautious if still long because ‘Parabolas are trapped longs that can trigger volatility which can trigger a liquidation event’.”

Related: Yellow’s stock quadruples in 2 days even after reports that bankruptcy is coming

Shares of Tupperware are down 23.2% Wednesday. Yellow Corp.’s stock, which ended Tuesday’s session up 121.6%, is down 17.3% Wednesday.

With regard to Yellow Corp. LaDuc attributes its recent stock movements to insider and Wall Street manipulation. “Low priced, low-float stocks are VERY easy to push around,” she told MarketWatch.

Bankrupt companies such as Bed Bath & Beyond Inc.
BBBYQ,
+1.46%
have even proven attractive to some investors recently, sparking comparisons with the meme stock phenomenon.

“They are clearly retail investors, largely on the Robinhood
HOOD,
-4.16%
platform, that are readers of Reddit,” Howard Ehrenberg, a bankruptcy and reorganization practice partner at law firm Greenspoon Marder, told MarketWatch last month. “They are people buying on rumor and hoping that by participating in a mass purchase binge, they will make money.”

Related: Tupperware stock skyrockets to a record 434% gain in July

Hertz Global Holdings Inc.
HTZ,
-1.73%,
which filed for bankruptcy protection in 2020 and exited bankruptcy the following year, also fueled meme-stock comparisons, when mostly retail investors piled into the stock during the bankruptcy process.

Typically in a bankruptcy, shareholders are wiped out as creditors take control of the remaining assets. But those investors were rewarded when the company got a big capital injection and was able to resume trading on an exchange.

The investor behavior around these types of stocks has caught the attention of academics. Victor Ricciardi, visiting finance faculty at Tennessee Tech University and co-author of the new book “Advanced Introduction to Behavioral Finance,” recently described some of the behaviors that can prompt investors to purchase bankrupt stocks.

“Representativeness bias refers to when past performance influences how an individual perceives an investment,” Ricciardi told MarketWatch via email last month. “In particular, a person makes a general assumption about a small sample of information or experience.”

Related: Why investors gamble on shares of bankrupt companies — Bed Bath & Beyond, for example

So, for example, if a person made a substantial gain from a previous bankrupt stock they might conclude that all bankrupt stocks result in investment gains, according to Ricciardi. There are also parallels with gambling.

“The notion of the long shot bias is based on the tendency for people to overweight the probability of a long shot bet paying off, especially in horse racing and lotteries,” Ricciardi added. “This is driven by overconfident behavior and dreams of becoming a millionaire overnight.”

Tupperware’s stock has risen 250.6% in the last three months, while Yellow shares have climbed 84.3%.

Tomi Kilgore and Phil van Doorn contributed to this report.

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August 2, 2023
GM’s Cruise slashed fleet of robotaxis by 50% in San Francisco after collisions | CNN Business

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CNN
—

California authorities have asked General Motors to “immediately” take some of its Cruse robotaxis off the road after autonomous vehicles were involved in two collisions – including one with an active fire truck – last week in San Francisco.

California’s Department of Motor Vehicles confirmed to CNN that it is investigating “recent concerning incidents involving Cruise vehicles in San Francisco.”

“The DMV is in contact with Cruise and law enforcement officials to determine the facts and requested Cruise to immediately reduce its active fleet of operating vehicles by 50% until the investigation is complete and Cruise takes appropriate corrective actions to improve road safety,” the department said in a statement.

That means Cruise, which is the self-driving subsidiary of General Motors, can have no more than 50 driverless cars in operation during the day, and 150 in operation at night, according to the department.

The California DMV said that Cruise has agreed to the request, and a spokesperson from Cruise told CNN that the company is investigating the firetruck crash as well.

The accidents come less than two weeks after California regulators officially gave the green light for Cruise and competitor Waymo to charge money for robotaxi trips around San Francisco at any time of day. Prior to the approval, Cruise was only authorized to offer fared passenger service from driverless cars overnight from 10 pm to 6 am, when there are fewer pedestrians or traffic that could confuse the autonomous vehicle’s software.

The collisions, which both occurred on Thursday, reveal potential risks of driverless technology.

In a blog post, Cruise’s general manager for San Francisco said the firetruck crash occurred when an emergency vehicle that appeared to be en route to an emergency scene moved into an oncoming lane of traffic to bypass a red light. Cruise’s driverless car identified the risk, the blog post said, but it “was ultimately unable to avoid the collision.”

That crash resulted in one passenger being taken to the hospital via ambulance for seemingly minor injuries, according to the company.

Cruise told CNN the other crash on Thursday took place when another car ran a red light “at a high rate of speed.”

“The AV detected the vehicle and braked but the other vehicle made contact with our AV. There were no passengers in our AV and the driver of the other vehicle was treated and released at the scene,” Hannah Lindow, a Cruise spokesperson, told CNN.

It is unclear whether the two accidents would have been avoided had there been a human driver rather than an autonomous vehicle (AV) involved – but the crashes were not the only two incidents involving Cruise’s driverless cars in San Francisco last week.

On Tuesday, Cruise confirmed on X, formerly known as Twitter, that one of its driverless taxis drove into a construction area and stopped in wet concrete.

“This vehicle has already been recovered and we’re in communication with the city about this,” the company said.

The recent events underscore the challenges of creating safe, fully driverless passenger vehicles.

General Motors acquired Cruise Automation in 2016 for $1 billion, solidifying its place in the autonomous vehicles race, but many companies have since scaled back, or abandoned their driverless car ambitions. The endeavor has proven costly, and mastering all situations that humans might face behind the wheel is difficult and time-consuming.

Ridesharing giants Uber and Lyft have both sold autonomous vehicle units in recent years. Even Tesla CEO Elon Musk, who has been optimistic about autonomous vehicle technology, has yet to fully deliver on his promise.

Tesla vehicles now come with the option to add a “full self-driving” feature in beta-testing for $15,000, but drivers must agree to “stay alert, keep your hands on the steering wheel at all times and maintain control of your car.”

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August 2, 2023
Stellantis to put second battery plant in town where EVs threaten current jobs | CNN Business

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New York
CNN
—

Stellantis and Samsung plan to build a second EV battery plant in Kokomo, Indiana, a town where many current Stellantis workers see such plants as a threat to their current jobs.

EV battery plants are a critical part of the plans of traditional automakers to transition from gasoline-powered cars to electric vehicles in coming decades. But they could be a threat to existing jobs building engines and transmissions, which are not needed in an EV. Stellantis has four plants in Kokomo alone building engines and transmissions, employing more than 5,000 hourly workers between them.

Stellantis, which builds cars under the Jeep, Ram, Dodge and Chrysler brands, along with unionized rivals General Motors and Ford, are now in the fourth week of a strike by the United Auto Workers union, and the future of jobs building EVs are a central issue in the strike.

While the four Kokomo plants are not on strike, the union is on strike at Stellantis’ assembly complex in Toledo, Ohio, as well as at 20 parts and distribution centers spread across 14 states.

All the automakers are in the process of building EV battery plants, and all of them are using joint ventures with battery manufacturers such as Samsung to build and run the plants. They have all insisted that will make the employees of the plants employees of the joint ventures, not the automakers themselves. And the pay at US EV battery plants that have opened so far is a fraction of what UAW members get when working for the automakers.

UAW President Shawn Fain announced Friday that GM had agreed to a key union demand that employees at its EV battery plants will be part of the company’s national master labor agreement with the UAW. GM has not confirmed that agreement, and details of how much those workers would be paid and if they’ll be considered GM employees or covered in the agreement as employees of separate companies is not yet known.

But Fain hailed that agreement as a major win for the union and said it would now press Ford and Stellantis to agree to similar terms if they want to end the strike.

Samsung and Stellantis announced plans for its latest battery plant in the wake of that announcement.

The two companies announced Wednesday that they are investing more than $3.2 billion to build the new plant, which will open in early 2027 and have an annual capacity of 34 gigawatt hours. Its opening will bring about 1,400 new jobs to Kokomo, located an hour north of Indianapolis.

StarPlus Energy, the joint venture formed by Samsung and Stellantis, previously chose Kokomo for its first gigafactory that’s currently under construction and scheduled to open in 2025.

In total, the two factories will produce 67 gigawatt hours annually. “Indiana’s economy is on a roll,” said Indiana Governor Eric Holcomb in a press release, adding that the second plant means the companies are doubling their capital investment and the amount of new jobs being created.

The factories will help Stellantis meet its goal for battery electric passenger cars to make up 100% of its sales in Europe, and 50% of its sales in the US, by 2030. Stellantis announced in 2021 an “aggressive” investment of $35 billion for electric vehicle production and needs 400 gigawatt hours annually to meet its 2030 goal.

Stellantis was created in 2021 through the merger of Fiat Chrysler and PSA Group, maker of Peugeot, Citroën, Opel and Vauxhall cars in Europe. Shares rose nearly 2% in premarket trading.

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August 2, 2023
Taiwan’s Foxconn to build ‘AI factories’ with Nvidia | CNN Business

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Taipei
CNN
—

Taiwan’s Foxconn says it plans to build artificial intelligence (AI) data factories with technology from American chip giant Nvidia, as the electronics maker ramps up efforts to become a major global player in electric car manufacturing.

Foxconn Chairman Young Liu and Nvidia CEO Jensen Huang jointly announced the plans on Wednesday in Taipei. The duo said the new facilities using Nvidia’s chips and software will enable Foxconn to better utilize AI in its electric vehicles (EV).

“We are at the beginning of a new computing revolution,” Huang said. “This is the beginning of a brand new way of doing software — using computers to write software that no humans can.”

Large computing systems powered by advanced chips will be able to develop software platforms for the next generation of EVs by learning from everyday interactions, they said.

“Foxconn is turning from a manufacturing service company into a platform solution company,” Liu said. “In three short years, Foxconn has displayed a remarkable range of high-end sedan, passenger crossover, SUV, compact pick-up, commercial bus and commercial van.”

Best known as the assembler of Apple’s iPhones, Foxconn envisages a similar business model for EVs. It doesn’t sell the vehicles under its own brand. Instead, it will build them for clients in Taiwan and globally.

In 2021, Foxconn unveiled three EV models, including two passenger cars and a bus, for the first time. They were followed by additional models last year and two new ones — Model N, a cargo van, and Model B, a compact SUV — during Foxconn’s tech day on Wednesday.

Its electric buses started running in the southern Taiwanese city of Kaohsiung last year, while its first electric car, sold under the N7 brand by Taiwanese automaker Luxgen, is expected to begin deliveries on the island from January 2024.

Foxconn has entered a competitive industry.

Global sales of EVs, including purely battery powered vehicles and hybrids, exceeded 10 million units last year, up 55% from 2021, according to the International Energy Agency. Nearly 14 million electric cars will be sold in 2023, it projected.

Foxconn, which is officially known as the Hon Hai Technology Group, has been expanding its business by entering new industries such as EVs, digital health and robotics.

Analysts say its entry into the EV space is a “logical diversification.”

Smartphones are “a very saturated market already, and the room to grow in the … industry is getting [smaller],” said Kylie Huang, a Taipei-based analyst at Daiwa. “If they can really tap into the EV business, I do think that [they] could become influential in the next couple of years.”

During last year’s tech day, Liu told reporters that the company hoped to build 5% of the world’s electric cars by 2025. It aims to eventually produce up to 40% to 45% of EVs around the world.

But its foray into the industry hasn’t been entirely smooth.

Last year, Foxconn bought a factory from Lordstown Motors in Ohio that used to make small cars for General Motors. That partnership ended in June, with the American car company filing for bankruptcy protection and announcing a lawsuit against Foxconn.

Lordstown Motors accused Foxconn of “fraud” and failing to follow through on investment promises, while Foxconn dismissed the suit as “meritless” and criticized the company for making “false comments and malicious attacks.”

Still, it’s clear Foxconn is leaning into its expanded ambitions, including hiring two new chief strategy officers for its EV and chips businesses.

Chiang Shang-yi is a Taiwanese semiconductor industry veteran who helped TSMC become a global foundry powerhouse, while Jun Seki, a former vice chief operating officer at Nissan Motor, leads the EV unit.

In May, Foxconn announced a new partnership with Infineon Technologies, a German company that specializes in automotive semiconductor chips, to establish a new research center in Taiwan.

Bill Russo, founder of Shanghai-based consulting firm Automobility, said Foxconn has the advantage of coming from a consumer electronics background, which could allow it to come up with more innovative EV products compared with traditional automakers.

“The biggest problem with legacy automakers is that they have so much sunk investment in a carryover platform, that they typically want to start not with a clean sheet of paper, but with a highly constrained set of requirements,” he said. “Those carryover technologies bring constraints to how you think about vehicles.”

“When Tesla started, it started by saying, ‘I’m going to challenge all of that, I’m going to blow up the basic architecture of a car and simplify it greatly,’” he added.

“I think that’s the advantage that a technology company has … And I think that’s the way Foxconn will come at this.”

Hanna Ziady contributed to this report.

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August 2, 2023

Tag: Motor Vehicles

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