Electric car makers woo Chinese buyers with range, features

BMW X7 (R) and 7-Series cars are displayed at the China launch of the X7 a day before the opening of the Shanghai Auto Show in Shanghai on April 15, 2019. (AFP / GREG BAKER)
Updated 16 April 2019

Electric car makers woo Chinese buyers with range, features

SHANGHAI: Automakers are showcasing electric SUVs and sedans with more driving range and luxury features at the Shanghai auto show, trying to appeal to Chinese buyers in their biggest market as Beijing slashes subsidies that have propelled demand.
Communist leaders wanting China to lead in electric vehicles have imposed sales targets. That requires brands to pour money into creating models to compete with gasoline-powered vehicles on price, looks and performance at a time when they are struggling with a Chinese sales slump.
General Motors, Volkswagen, China’s Geely and other brands on Tuesday displayed dozens of models, from luxury SUVs to compacts priced under $10,000, at Auto Shanghai 2019. The show, the global industry’s biggest marketing event of the year, opens to the public Saturday following a preview for reporters.
On Monday, GM unveiled Buick’s first all-electric model for China. GM says the four-door Velite 6 can travel 301 kilometers (185 miles) before the battery needs charging.
VW showed off a concept electric SUV, the whimsically named ID. ROOMZZ, designed to travel 450 kilometers (280 miles) on one charge. Features include seats that rotate 25 degrees to create a lounge-like atmosphere.
Communist leaders have promoted “new energy vehicles” for 15 years with subsidies to developers and buyers. That, along with support including orders to state-owned utilities to blanket China with charging stations, is helping to transform the technology into a mainstream product.
“People’s mindset and governmental policies are more encouraging toward e-cars than in any other country,” said VW CEO Herbert Diess.
Electric vehicles play a key role in the ruling Communist Party’s plans for government-led development of Chinese global competitors in technologies from robotics to biotech.
Those ambitions set off Beijing’s tariff war with President Donald Trump. Washington, Europe and other trading partners complain Chinese subsidies to technology developers and pressure on foreign companies to share know-how violate its market-opening commitments.
Electric car subsidies end next year, replaced by sales quotas. Automakers that fall short can buy credits from competitors that exceed their targets or face possible fines.
“Most of the traditional car makers are under huge pressure to launch NEVs,” said industry analyst John Zeng of LMC Automotive.
Last year’s Chinese sales of pure-electric and hybrid sedans and SUVs soared 60% over 2017 to 1.3 million, or half the global total. At the same time, industry revenue was squeezed by a 4.1% fall in total Chinese auto sales to 23.7 million vehicles.
That skid that worsened this year. First-quarter sales fell 13.7% from a year ago.
Still, China is a top market for global automakers, giving them an incentive to go along with Beijing’s electric ambitions. Total annual sales are expected eventually to reach 30 million, nearly double last year’s US level of 17 million.
Under Beijing’s new rules, automakers must earn credits for sales of electrics equal to at least 10% of purchases this year and 12% in 2020. Longer-range vehicles can earn double credits. That means some brands can fill their quota if electrics make up as little as 5% of sales.
Also Tuesday, Nissan Motor Co. and its Chinese partner displayed the Sylphy Zero Emission, an all-electric model designed for China. Based on Nissan’s Leaf, the lower-priced Sylphy went on sale in August.
Mercedes Benz displayed its first all-electric model in China, the EQC 400 SUV. The Germany automaker says it can travel 400 kilometers (280 miles) on one charge and can go from zero to 100 kph (62 mph) in 5.2 seconds.
Mercedes plans to release 10 electrified models worldwide, with most built in China, according to Hubertus Troska, its board member for China.
Some Chinese rivals have been selling low-priced electrics for a decade or more.
China’s BYD Auto, the biggest global electric brand by sales volume, unveiled three new pure-electric models last month. All promise ranges of more than 400 kilometers (280 miles) on one charge.
Last week, Geely Auto unveiled a sedan under its new electric brand, Geometry, with an advertised range of up to 500 kilometers (320 miles) on one charge.
Geely’s parent, Geely Holding, launched a joint venture with Mercedes parent Daimler AG in March to develop electrics under the smart brand. Geely Holding is Daimler’s biggest shareholder and also owns Sweden’s Volvo Cars.
Beijing wants to force automakers to speed up innovation and squeeze out producers that rely too heavily on subsidies. But the technology minister acknowledged in January that China faces a difficult transition as that spending is ending.
Keeping development on track “will be a challenge,” said Miao Wei, according to a transcript on his ministry’s website.
The shift creates an opportunity for fledgling Chinese automakers that lag global rivals in gasoline technology. They have just 10% of the global market for gasoline-powered vehicles but account for 50% of electric sales.
The end of subsidies should lead to dramatic changes, said Zeng of LMC Automotive. He said longer-range, feature-rich models from global majors will replace small producers that cannot survive without subsidies.
Electric vehicles “will be much more competitive,” said Zeng.
As the cost of batteries and other components falls, industry analysts say electrics in China could match gasoline vehicles in price and become profitable for manufacturers in less than five years.
EVs carry a higher sticker price in China than gasoline models. But industry analysts say owners who drive at least 16,000 kilometers (10,000 miles) a year save money in the long run, because maintenance and charging cost less.


NYSE begins move to delist Chinese state oil producer CNOOC

Updated 39 min 27 sec ago

NYSE begins move to delist Chinese state oil producer CNOOC

  • The Trump administration had last year moved against certain Chinese companies that Washington said were owned or controlled by the Chinese military in an effort to ramp up pressure on Beijing

The New York Stock Exchange on Friday decided to begin formal delisting of Chinese state oil giant CNOOC Ltd. based on an update to an executive order signed by former US President Donald Trump in November last year.
Prohibitions on CNOOC will take effect on March 9, 60 days after the company was added to the list that prohibits US investments, according to a guidance issued by the Treasury Department on Jan. 27.
However, the exchange did not disclose a target date for the completion of the delisting.
The Trump administration had last year moved against certain Chinese companies that Washington said were owned or controlled by the Chinese military in an effort to ramp up pressure on Beijing.
The NYSE said CNOOC has the right to appeal the delisting decision. The exchange will include any appeal it receives in its application to the US Securities and Exchange Commission, which will be submitted on completion of all procedures.
CNOOC could not be immediately reached for comment.


McDonald’s considers selling part of digital startup Dynamic Yield

Updated 54 min 13 sec ago

McDonald’s considers selling part of digital startup Dynamic Yield

  • Dynamic Yield is run as a standalone company within McDonald’s
  • The startup, whose customers include IKEA and Lacoste, has businesses with more than 300 brands globally

McDonald’s Corp. is exploring selling part of Israeli artificial intelligence startup Dynamic Yield Ltd, which it acquired two years ago in an attempt to boost online marketing efforts, the company said on Friday.
Dynamic Yield, run as a standalone company within McDonald’s, personalizes customers’ experience by changing offerings on the chain’s Drive Thru menu displays, according to time of day, weather, customer traffic and trending choices.
The startup, whose customers include IKEA and Lacoste, has businesses with more than 300 brands globally.
“The potential sale of the non-McDonald’s part of our business has been discussed from the outset and now feels like the right time to explore that possibility,” its chief executive, Liad Agmon, said in a statement.
The Chicago-based hamburger chain said it was considering a sale of only the part of Dynamic Yield that works with other companies with no timeline set for the deal.
McDonald’s said Dynamic Yield’s technology was used across many markets, adding, “We’re continuing to deploy to more.”


SoftBank says deal reached with WeWork founder, directors

Updated 27 February 2021

SoftBank says deal reached with WeWork founder, directors

  • Tokyo-based SoftBank is a majority shareholder in WeWork, whose bumpy results, especially amid the coronavirus pandemic, has dented SoftBank’s financial results
  • SoftBank says WeWork holds potential, especially in markets like Japan

TOKYO: SoftBank Group Corp. has reached a settlement in a US legal dispute with directors of office space-sharing venture WeWork Inc. and its founder Adam Neumann, the Japanese technology company said Saturday.
The terms of the settlement in the Delaware Court of Chancery were not disclosed. The statement said the agreement was not yet final. Other details were not immediately available.
The wrangling began more than a year ago after SoftBank acquired shares in WeWork, which was suffering after its failed IPO. But some investors and Neumann were not satisfied with the monetary deals offered by SoftBank.
“With this litigation behind us, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space around the world,” said Marcelo Claure, executive chairman of WeWork and SoftBank Group International chief executive.
Tokyo-based SoftBank is a majority shareholder in WeWork, whose bumpy results, especially amid the coronavirus pandemic, has dented SoftBank’s financial results.
SoftBank says WeWork holds potential, especially in markets like Japan, where office space is costly and workers’ commutes tend to be long. SoftBank also invests in artificial intelligence, Internet services, sustainable energy and IoT.


Investors weigh new stock leadership as broader market wobbles

Updated 27 February 2021

Investors weigh new stock leadership as broader market wobbles

  • Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer”

NEW YORK: A shakeup in stocks accelerated by the past week’s surge in Treasury yields has investors weighing how far a recent leadership rotation in the US equity market can run, and its implications for the broader S&P 500 index.
Moves this week further spurred a shift that has seen months-long outperformance for energy, financial and other shares expected to benefit from an economic recovery, while a climb in Treasury yields weighed on the technology stocks that have led markets higher for years.
The two-track market left the benchmark S&P 500 down for the week, and sparked questions about whether it could sustain gains going forward if the tech and growth stocks that account for the biggest weights in the index struggle.
So far this year, the S&P 500, which gives more influence to stocks with larger market values, is up 1.5 percent, while a version of the index that weights stocks equally is up 5 percent.
“That just tells us the gains are less narrow, more companies are participating, and I think that’s healthy,” said James Ragan, director of wealth management research at D.A. Davidson.
The focus on market leadership comes as investors are weighing whether the S&P 500 is due for a significant pullback after a 70 percent run since March, with the rise in long-dormant yields the latest sign of trouble for equities as it means bonds are more serious investment competition. The yield on the 10-year US Treasury note this week jumped to a one-year peak of 1.6 percent before pulling back.
Economic improvement will be in focus in the coming weeks, including the monthly US jobs report due next Friday, as will the country’s ability to ensure widespread coronavirus vaccinations, especially as new variants emerge.
Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Now it seems with the vaccines, the stimulus and the prospect of reopening that we are looking out toward a recovery phase.”
The shift in the market this week is building on one that was fueled in early November, when Pfizer’s breakthrough COVID-19 vaccine news generated broad bets on an economic rebound in 2021.
Among the moves since that point: the S&P 500 financial and energy sectors are up 29 percent and 65 percent, respectively, against a nearly 9% rise for the benchmark index and 7 percent rise for the tech sector. The Russell 1000 value index has gained 16.5 percent against a 4.3 percent climb for its growth counterpart, while the smallcap Russell 2000 is up 34 percent.
“You definitely are seeing the reopening trade that has pretty much come alive here,” said Gary Bradshaw, portfolio manager of Hodges Capital Management.
Despite the gains, there remains “plenty of room for the reflation trade to run from a valuation perspective,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said in a report this week. RBC is “overweight” the financials, materials and energy sectors.
Rising rates tend to be favorable for more cyclical sectors, David Lefkowitz, head of Americas equities at UBS Global Wealth Management, said in a note, with financials, energy, industrials and materials showing the strongest positive correlations among sectors with 10-year Treasury yields.
Still, how long the market’s reopening trade lasts remains to be seen. Investors may be reluctant to stray from tech and growth stocks, especially with many of the companies expected to put up strong profits for years.
Any setbacks with the economy or with efforts to quell the coronavirus could revive the stay-at-home stocks that thrived for most of 2020.
And with a GameStop-fueled retail-trading frenzy taking hold this year, banks and other stocks in the reopening trade may fail to draw the same attention from amateur investors as stocks such as Tesla, said Rick Meckler, partner at Cherry Lane Investments.
“There isn’t the pizzazz to those stocks,” Meckler said. “There rarely is a potential for stocks to make the kind of moves that big tech growth stocks have made.”


IMF urges Tunisia to cut wage bill and energy subsidies

Updated 27 February 2021

IMF urges Tunisia to cut wage bill and energy subsidies

  • The IMF said in statement that monetary policy should focus on inflation by steering short term interest rates, while preserving exchange rate flexibility

TUNIS: The International Monetary Fund urged Tunisia on Friday to cut its wage bill and limit energy subsidies to reduce a fiscal deficit, putting more pressure on the fragile government amid a severe financial and political crisis.
With the coronavirus pandemic, political infighting and protests since last month over social inequality, it is a time of unprecedented economic hardship in the North Africa country that ran a fiscal deficit of 11.5 percent of GDP in 2020.
The IMF said in statement that monetary policy should focus on inflation by steering short term interest rates, while preserving exchange rate flexibility.
Tunisia’s 2021 budget forecasts borrowing needs $7.2 billion including about $5 billion in foreign loans. It puts debt repayments due this year at 16 billion dinars, up from 11 billion dinars in 2020.
The IMF said the service salary bill is about 17.6% of GDP, among the highest in the world.