Car makers close to the edge in electrification race

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Herbert Diess, chief executive of Volkswagen, said the company’s bet on expanding its electric car output was justified. (AFP)
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Mercedes’ EQ Silver Arrow electric concept car on show at Frankfurt, as automakers display their new technology. (AFP)
Updated 11 September 2019

Car makers close to the edge in electrification race

  • Manufacturers hope new models on display in Frankfurt will cut CO2 emissions

FRANKFURT: Time is running out for European car makers, which have waited until the last minute to try to meet ambitious EU emissions targets and face billions in fines if they fail to comply. Manufacturers from PSA Group to Volkswagen will use this week’s Frankfurt auto show to reveal the new models and strategies they hope can slash carbon dioxide emissions within months.
But it is a challenge fraught with danger, as the cost of pushing pricey technology on unconvinced consumers could hurt profits in an industry already suffering a downturn in sales.
“You have cars that cost an extra €10,000 ($11,000) to build, fleet-emissions targets requiring a certain sales volume and consumers who may or may not want them,” said one PSA executive. “All the ingredients are there for a powerful explosive.”
By next year, CO2 must be cut to 95 grams per kilometer for 95 percent of cars from the current 120.5g average — a figure that has risen as consumers spurn fuel-efficient diesels and embrace SUVs. All new cars in the EU must be compliant in 2021.
Another 37.5 percent cut in CO2 fumes is required between 2021 and 2030 in addition to the 40 percent cut in emissions between 2007 and 2021.
The timing could hardly be worse, with the world’s main auto markets in decline and the sector braced for a chaotic British exit from the EU, as well as a protracted U.S-China trade war.
The industry has long since given up pushing for the goals to be relaxed — a political impossibility underlined by a resurgent climate protest movement that has added the Frankfurt show to its target list.
Volkswagen’s chief executive, Herbert Diess, said the regulatory crunch and growing support for green causes proves that his company’s €80 billion bet on becoming the world’s largest manufacturer of electric cars is right.
“Even Toyota and some other competitors, which were slow to bring EV’s, are now also betting on electric. So we are right,” Diess said.
New electric cars wheeled out at the show on Tuesday include PSA Group’s Opel Corsa-e mini and the ID.3 compact from Volkswagen. The German car maker is also making hybrid power standard-issue in its Golf bestseller.


• EU goals require massive CO2 cut within months. • Vast product overhaul will weaken profitability.

• Fallout seen increasing threat to auto jobs.

Fiat Chrysler, which lacks adequate green technology, has agreed to pay Tesla hundreds of millions of euros to pool emissions scores with its electric cars and escape penalties.
For years, image-conscious mass automakers have placed electrified models at the center of their show stands but near the margins of their commercial offerings. Only now will they be forced to sell them in large numbers, challenging profitability.
To meet the targets, sales of electric cars would need to triple to 6 pecent of the market by 2021, and rechargeable hybrids surge fivefold to a 5 percent market share, German engineering firm FEV Consulting estimates. In the first half of 2019, combined sales of plug-in cars rose 35 percent year-on-year.
Fines of €95 per car, per excess gram of CO2 quickly add up to hundreds of millions of euros.
“Market acceptance of a lot of this tech and exactly what people are willing to pay remains very, very unclear,” said Max Warburton, an analyst at brokerage Sanford C. Bernstein.
“It’s going to require the industry to force quite a lot of cars into the market,” he said in a recent note, predicting that car makers will lean on heavily discounted sales to fleet customers and even their own employees.
Rather than incur fines that could total €25 billion in 2021 if current lineups were left unchanged, car makers are engaged in a huge product overhaul likely to wipe more than half that amount from combined profits, Bernstein projects.
Many electrified offerings are arriving just in time — or in many cases too late — for deliveries to begin in January, when less efficient models will also become more scarce.
Hard on the heels of VW’s electric ID.3, the Golf 8 to be unveiled next month heralds a mass deployment of 48-volt hybrid technology at the very heart of Europe’s auto market.
Such mild hybrids add less cost, starting at €500 per car, but bring more modest emissions cuts than plug-in hybrids or pure electrics costing an extra €5,000-€10,000, by comparison with an equivalent gasoline model.
French car makers face a bigger hit to margins than German rivals, analysts say, because they lack significant US and Chinese earnings to soften the blow.
Renault, heavily reliant on its aging Zoe electric car, is rushing to add hybrid versions of its Clio and Captur subcompacts now expected in the second quarter of 2020.
PSA, whose 48-volt hybrids arrive two years later, is counting on pricier plug-ins and electric versions of its DS3, Peugeot 208 and Opel Corsa to claim 7 percent of its total sales.
The group has scrapped several less-efficient Opel cars and is preparing to halt sportier model versions including the Peugeot 208 GTi and 308 GT.
Industry executives expect the cull to be replicated by other car makers, hitting European automotive jobs already threatened by the shift to electrification.
“It will cost them less to stop selling some vehicles than to sell them and pay the fines,” said Georgeric Legros, Paris-based director at consulting firm AlixPartners. “During the year we’re likely to see models dropped and some layoffs.”
With regulatory softening off- limits, the downturn and jobs threat may instead prompt new government sales incentives to limit losses and help steer demand to greener cars, some executives believe.
“The move to new energy vehicles compounded by a difficult market will undoubtedly hit bottom lines,” said Andy Palmer, chief executive of Aston Martin, which is exempt from the EU goals as a low-volume sports car maker.
“As industry profits get tight, you start to lose people,” Palmer told Reuters. “And that’s when governments begin thinking about ways to stimulate the market.”

Big banks see more than half of staff in office in Q3

Updated 26 February 2021

Big banks see more than half of staff in office in Q3

COPENHAGEN: Global financial institutions plan to have more than half of staff back in offices during the third quarter, up from 10 percent-15 percent now, but none are envisaging a full return anytime soon, the head of Danish services group ISS said on Thursday.

ISS provides services ranging from call centers to office cleaning, catering and security to more than 200,000 companies in 60 countries, including UBS and Deutsche Telekom.

“Many of our customers in banking, consulting and service industries are now very eager to get employees back to the office,” Chief Executive Jacob Aarup-Andersen said in an interview.

“They tell us about lack of innovation, less engagement among employees working from home and the corporate culture suffering,” he said.

But while global banking customers in general expect to have more than 50 percent of employees back on site during the third quarter, none of ISS’ customers are yet speaking about returning 100 percent of the workforce to offices, Aarup-Andersen said.

HSBC said this week it planned to nearly halve its office space globally in a sign the pandemic could mean permanent changes to working patterns, as companies prepare to reduce office space and allow employees more flexibility in working from home.

Aarup-Andersen said earlier he expected office space globally to shrink by 10 percent-15 percent over the next three years.

ISS on Thursday said sales fell 10 percent last year to 69.8 billion Danish crowns ($11.5 billion), hit by weakness in catering, retail and hotel services.


Aston Martin says it is back on the road to profitability

Updated 26 February 2021

Aston Martin says it is back on the road to profitability

  • British carmaker expects ‘to see the first steps toward improved profitability’

LONDON: Aston Martin expects to almost double sales and move back toward profitability this year after sinking deeper into the red in 2020, when the luxury carmaker was hit by the pandemic, changed its boss and was forced to raise cash.

The British company’s shares jumped 9 percent in early Thursday trading after it kept a forecast for around 6,000 sales to dealers this year as new management turns around its performance.

The carmaker of choice for fictional secret agent James Bond has had a tough time since floating in 2018, as it failed to meet expectations and burned through cash, prompting it to seek fresh investment from billionaire Executive Chairman Lawrence Stroll.

The firm made a 466-million pound ($660 million) loss last year, compared with a 120 million pound loss in 2019, as sales to dealers fell by 42 percent to 3,394 vehicles, hit by the closure of showrooms and factories due to COVID-19.


Aston said demand for its first sport utility vehicle, the DBX, which rolled off the production line at its Welsh plant in 2020, was strong in a lucrative segment of the market it entered to widen its appeal.

For 2021, it expects “to see the first steps toward improved profitability” but is still likely to post a pre-tax loss, the carmaker said.

“I am extremely pleased with the progress to date despite operating in these most challenging of times,” Stroll said.

Aston said demand for its first sport utility vehicle, the DBX, which rolled off the production line at its Welsh plant in 2020, was strong in a lucrative segment of the market it entered to widen its appeal.

The model accounted for 1,516 of deliveries to dealers last year and the company expects further growth in its first full-year of sales, including in the key market of China, where rivals such as Bentley are also seeing high demand.

“We had not even a half-year DBX production in wholesome so probably we are going to see over-proportional growth in China,” Chief Executive Tobias Moers, who took over in August, told Reuters.

Diamond tycoon Modi loses bid to avoid extradition to India

Updated 26 February 2021

Diamond tycoon Modi loses bid to avoid extradition to India

  • District Judge Samuel Goozee ruled in London that the fugitive jeweler has a case to answer before the Indian courts

LONDON: Diamond tycoon Nirav Modi lost his bid Thursday to avoid extradition from Britain to India to face allegations he was involved in a $1.8 billion bank fraud.

District Judge Samuel Goozee ruled in London that the fugitive jeweler has a case to answer before the Indian courts. Modi, whose jewels once adorned stars from Bollywood to Hollywood, has been held without bail in London since he was arrested in the capital in 2019.

Goozee ruled that there was enough evidence to prosecute him in his homeland, and dismissed Modi’s argument that he would not be treated fairly in India.

Indian authorities have sought Modi’s arrest since February 2018, when they alleged companies he controlled defrauded the state-owned Punjab National Bank by using fake financial documents to get loans to buy and import jewels.

Modi is also accused of witness intimidation and destroying evidence. Police in India later raided the homes and offices of Modi and business partner Mehul Choksi, seizing nearly $800 million in jewels and gold.

Modi, 49, has refused to submit to extradition to India and denies the fraud allegations. He sought political asylum in the UK

The extradition matter now goes to the UK Home Office, which will make the final decision. Modi has 14 days from that decision to appeal.

Modi, who wore a dark suit for Thursday’s hearing, showed little emotion as he appeared by video link from Wandsworth Prison in southwest London.

Amit Malviya, a spokesman for India’s governing Bharatiya Janata Party, said Thursday’s ruling was “a shot in the arm for the agencies pursuing the fugitive,” adding that the Indian government is committed to “bring all economic offenders to book.”

The son of a diamond merchant, Modi built an international jewelry empire that stretched from India to New York and Hong Kong. Bollywood star Priyanka Chopra became the face of his eponymous brand and Hollywood actress Naomi Watts appeared with Modi at the opening of his first US boutique in 2015.

Forbes magazine estimated Modi’s wealth at $1.8 billion in 2017, but he was removed from the publication’s billionaires’ list after the fraud allegations.

Oil hovers near 13-month highs as storm dents US output

Updated 26 February 2021

Oil hovers near 13-month highs as storm dents US output

  • Severe winter storm in Texas caused US crude production to drop by more than 10 percent

LONDON: Oil prices extended gains for a fourth session on Thursday to reach the highest levels in more than 13 months, underpinned by an assurance that US interest rates will stay low, and a sharp drop in US crude output last week due to the storm in Texas.

Brent crude futures for April gained 33 cents, 0.49 percent, to $67.37 a barrel by 0925 GMT, while US West Texas Intermediate crude for April was at $63.45 a barrel, up 23 cents, 0.36 percent.

Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at $67.70 and WTI at $63.79. The April Brent contract expires on Friday.

An assurance from the US Federal Reserve that interest rates would stay low for a while weakened the US dollar, while boosting investors’ risk appetite and global equity markets.

A severe winter storm in Texas has caused US crude production to drop by more than 10 percent, or 1 million barrels per day (bpd) last week, the Energy Information Administration said on Wednesday.

“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.

Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher.

Jeffrey Halle, senior market analyst at OANDA

Fuel supplies in the world’s largest oil consumer could also tighten as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.

ING analysts said US crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.

Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weaker-than-expected supply response by US tight oil operators to higher prices.

“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said.

The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet on March 4.

The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.

Experts discuss WhatsApp’s new privacy update

Updated 26 February 2021

Experts discuss WhatsApp’s new privacy update

  • “People have made this into a bigger issue than it really is”: cybersecurity expert

JEDDAH: As WhatsApp launches a new in-app banner in response to the backlash over its privacy issue, Saudi experts and users weigh in on the company’s strategy.

“Harvesting user data is part of Facebook’s strategy,” Abdullah Al-Gumaijan, cybersecurity expert, told Arab News.

“It seems this will never change, even if it costs them millions of users, like what happened to WhatsApp last month when they updated their policy,” he said. “Today, WhatsApp will force their users to accept a similar policy. However, this time around they made it very clear they will not share users’ actual conversations.”

As long as WhatsApp remains a free app, he added, Facebook will make sure to get what it can from its users’ data.

Fahd Naseem, a WhatsApp user, said: “People have made this into a bigger issue than it really is. Facebook and other social media platforms are already using the data; there’s nothing wrong in WhatsApp using it too.”

He told Arab News that this data helps the apps deliver better and more personalized ads to their users.

Fatimah Al-Maddah, owner of Labothecaire, said that the privacy issue does not concern her and her team. “We use services like Dropbox for sensitive matters, and if we need to discuss something, we normally call. So, we don’t risk our information to begin with.”

WhatsApp will allow users to review its privacy policy, and users will have to agree to the new terms or risk losing access to the app. The firm said that it was facing issues because of “misinformation” regarding the changes, which led users to believe that their information was accessible by WhatsApp’s parent firm, Facebook.

However, WhatsApp said that it would never allow that to happen and that its end-to-end encryption ensures that people on both ends of the conversation are the only ones who can read those texts; not even the company has the access to them.

In a blog post, the company clarified that it would be working hard to clear up confusion and that it would be sharing the updated plan for how it will ask users to review the terms of service and privacy policy.

“In the coming weeks, we’ll display a banner in WhatsApp providing more information that people can read at their own pace,” the blog post read.

The company also faced backlash because of the poorly worded terms in the previous update, which caused confusion and concern and resulted in users abandoning the app entirely and moving onto other platforms.