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+++ Last year, a document released by ASTON MARTIN pointed to the automaker having already sold the tooling and design drawings for its Vanquish sports car, with Morgan suspected to be the potential buyer. However, a more recent report indicates that the British luxury carmaker has written off €22 million, as this sale actually fell through. In the end, the buyer was never named, although a source told that they were based in China. “The commercial position on this contract has deteriorated with significant doubt remaining over the outstanding receivable”, said Aston Martin in a statement, without naming the Vanquish. Still, a company spokesman confirmed that the contract was for the sale of “legacy IP (intellectual property)”. Failing to secure this new income is yet another blow for Aston Martin, who was recently forced to downgrade its predictions for the number of deliveries to its dealers this year (from 7,100 to 6,300 units) blaming the current state of the car industry in Europe. The automaker’s next step is to improve its efficiency and reduce the cost base. Its upcoming DBX crossover should prove vital to the company’s success: Aston Martin will begin taking orders for its first ever SUV at Pebble Beach next month, while production is scheduled to begin in Q2 of 2020. As for the Vanquish, it stood as the brand’s high-performance V12 Coupe and Convertible, as the second-gen model was produced between 2012 and 2018. Last year, it was replaced by the more potent DBS Superleggera. +++ 

+++ Despite recent engine trends pointing to downsizing and electrification, AUDI ’s 5-cylinder turbocharged engine is in no immediate danger, as the company is already working on making it friendlier to the environment. Audi Sport’s chief Oliver Hoffmann admitted that the turbo-5 is still a big part of the brand’s future plans and it will soon meet Euro 7 emission standards. “It is more difficult, but it’s not just a question of how difficult it is”, said Hoffmann. “For EU7, we have concepts for all our engines, but it’s just a matter of how much money I have to spend to reach those targets. For the 5-cylinder, we have a very, very good concept to reach those standards”. Hoffmann’s ambitions have been confirmed by Audi Sport product planner Annette Mollhoff, who added: “It’s our number one USP (unique selling proposition) in those models, and every time we launch a new model with the 5-cylinder, we get the feedback that ‘we are so happy you stick to that engine and don’t downgrade to the four-cylinder’ ”. Helping the 5-banger meet new emissions rules could be done in a number of different ways. One scenario sees it working alongisde a mild-hybrid system, which is already becoming a norm in the industry. Also, the mill could get belt-driven starter/generators and cylinder deactivation technology. Audi’s 5-cylinder power unit, which can trace its roots all the way back to the legendary Quattro, is currently being used in the RS3 Sportback, RS3 Sedan and TT RS, with 2.5 liters in displacement. It’s also expected to power the new RS Q3 and first-ever RS Q3 Sportback, which is in development. Some think that the next-generation Volkswagen Golf R might get the same engine, but there’s no official word on that yet. +++ 

+++ New information has surfaced about a BUGATTI that will allegedly be revealed during the Monterey Car Week next month. Rumors about a new Bugatti launching in August first surfaced 4 weeks ago and the company’s head of communications, Tim Bravo, swiftly confirmed that the French automaker would indeed have a premiere at the Monterey Car Week, but wouldn’t elaborate. Now, it is being reported that the new Bugatti in question will be inspired by the iconic EB 110 SS from the early 1990s. As we are unable to substantiate this report, we recommend you take it with a grain of salt, but we certainly wouldn’t be surprised if it were true. The report states that Molsheim will build just 10 examples of its EB 110 SS-inspired hypercar, each priced at an eye-watering €8 million. That would make it about $3 million more expensive than the Divo, which was presented at last year’s Monterey event, and second only to the $19 million commanded by the one-off La Voiture Noire presented earlier this year. Whatever Bugatti is cooking up, we know that it will be based on the Chiron, meaning it will feature a quad-turbocharged 8.0-liter W16 engine with at least 1500 hp. It is possible this figure could go up for this limited-edition model, but we think it’s more likely that most of the modifications will be visual. Some have called the frequent launch of Chiron-based models the ‘Stephan Winkelmann effect’, as the former chief executive of Lamborghini (and current Bugatti boss) made a name for himself for giving the go-ahead to limited-run Aventador-based models such as the Veneno and Centenario. +++ 

+++ CHINA ’s biggest auto industry association has cut its sales forecast for this year due to slowing economic growth, and now expects sales to fall for the second year running. China’s Association of Automobile Manufacturers said it expected auto sales to fall 5% year-on-year to 26.68 million vehicles this year. That compares with its previous forecast for zero growth and last year’s decline of 2.8 %. Sales of new energy vehicles are still expected to increase, but at a slower pace to 1.5 million, down from previous forecast of 1.6 million. The more pessimistic forecasts come after a spate of downgrades by industry experts and criticism that the fast-tracking of new emissions rules in China have been poorly managed, hitting sales. China’s auto sales have contracted for 12 straight months and saw their first annual drop in 2 decades in 2018 amid slowing economic growth and a trade war with the United States, which has hit consumer confidence. Policymakers have vowed to boost the economy, but measures to spur car sales have failed to meet market expectations as controls over the issuance of new licenses for traditional-fuel cars in major cities remained tight. +++

+++ They may or may not have something to do with the fact that the CORVETTE never featured the Chevrolet bowtie logo, but rumors about the sports car evolving into a separate brand have long circulated. With the launch of the all-new, radically different Corvette Stingray, they seem to resurface again. American media report that the Corvette will become a standalone brand that will offer a sedan and an SUV or crossover. It’s easy to dismiss this as just a rumor, but the media claim they got the information from unnamed GM insiders. The report says General Motors intends to use the hype around the new Corvette Stingray to launch the Corvette brand which would bring it way more benefits than the mid-engine sports car can bring on its own. That’s because the new brand would offer more lucrative vehicles such as a sedan and a crossover or SUV from 2023. According to the same sources, the Corvette brand would also be responsible for launching the Corvette C8-based Cadillac sports car. Cadillac’s version of the C8 would be the second Corvette-based model after the Cadillac XLR which was based on the Corvette C6. The Cadillac-badged C8 could get the Blackwing V8 engine introduced in the CT6-V. In the performance sedan, the 4.2-liter twin-turbo unit makes 550 hp and 850 Nm. That’s significantly more than the LT2 makes in the new Corvette Stingray: 495 hp and 637 Nm with the Z51 package. It’s worth noting that both the Corvette brand and the Cadillac C8 are still in the planning stages, according to the GM insiders, and could easily be canceled if market conditions become unfavorable. Interestingly, at the 2020 Corvette Stingray launch last week, GM executives did not comment on the rumors but did not strongly deny them either. “I can’t say anything one way or the other”, Jim Campbell, GM vice-president of performance vehicles and motorsports said when asked about the alleged Corvette brand and Cadillac C8 plans. “Probably not going to see that”, GM president Mark Reuss replied. +++ 

+++ FORD reported a lower-than-expected profit, weighed down by charges to restructure its units in Europe and South America, and the automaker gave a full-year earnings forecast that fell short of analysts’ expectations. Virtually all of Ford’s second-quarter pre-tax profit came from North America (its most lucrative market) where highly-profitable pickups drive margins for the Dearborn based automaker and its Detroit rivals, General Motors and Fiat Chrysler Automobiles. The automaker also posted a small profit in Europe and a far smaller loss in China compared with the second quarter of 2018 as better pricing and new luxury models helped offset a poor performance in that market. Ford’s second-quarter sales in China slid 21.7 % in the second quarter after a first-quarter drop of 35.8 %. In April, Ford said it planned to launch more than 30 new models over the next 3 years to overhaul its vehicle lineup in China. The automaker’s ongoing restructuring includes cutting costs and overhauling its product lineup in key global markets like China and Europe. The company said it had so far only recorded $2.2 billion of the projected $11 billion in charges it previously said it would take for the global restructuring. Last month, Ford said it would cut 12,000 jobs, close 5 plants and cut shifts at other factories in Europe by the end of 2020 in an effort to return that region to profitability. In May, the company said it would eliminate about 10 % of its global salaried workforce, cutting about 7,000 jobs by the end of August. Earlier this month, Ford and Volkswagen said they will spend billions of dollars to jointly develop electric and self-driving vehicles, deepening a global alliance to slash development and manufacturing costs. The size and timing of the payoff from that alliance remain unclear. Ford had previously not provided an earnings forecast for this year. Chief financial officer Tim Stone said the company now expects adjusted 2019 pre-tax profit of up to $7.5 billion, compared with $7 billion in 2018. “We have a long way to go to execute on our redesign”, Stone said. “We have a lot of work to do”. For the first half of the year, Ford reported a pre-tax profit of $4.1 billion, meaning that the automaker will, at best, deliver a weaker pre-tax profit of $3.4 billion for the second half of 2019. The No. 2 U.S. automaker posted a second-quarter net profit of $148 million, down from $1.1 billion a year earlier. Revenue was flat at $38.9 billion, above the $35.07 billion expected. +++ 

+++ INDONESIA says it will start producing electric vehicles in 2022 following investments in the country from a number of companies. Car manufacturers including Toyota and Hyundai have expressed interest in building electric vehicle plants in the Southeast Asian country. Indonesia’s Industry Ministry is pushing for the development of electric vehicle and battery production facilities to create a downstream industry that will make good use of the nation’s huge supplies of nickel laterite ore used in the creation of lithium-ion batteries. According to director general of metal, machinery, transportation and electronics at the Indonesian Industry Ministry, minister Harjanto, the government wants electric vehicles to reach a 20 % share of national car production by the year 2025. In a bid to encourage car manufacturers to start building EVs locally, the Indonesian government is finalizing the revision of a luxury car tax scheme which will reward automakers for building vehicles with low carbon emissions. “Recently there were a few battery companies which met the industry minister, but it is still an initial intention”, minister Harjanto said. “They see Indonesia has big potential to develop electric-based products due to the availability of raw material”. Toyota has already committed to invest $2 billion in Indonesia over the next 5 years, part of which will be funneled towards the local production of electric vehicles. Hyundai will invest $2.8 billion in Indonesia and hopes to begin manufacturing vehicles locally in 2021 with SUVs, hatchbacks, sedans, and then electric vehicles. +++ 

+++ JAGUAR LAND ROVER recorded a £395 million loss in the last 3 months, due to declining sales and the impact of a planned Brexit shutdown, but company boss Ralf Speth insists the firm is on track to deliver “sustainable profitable growth” in the future. The British firm sold 128,615 vehicles in the first 3 months of the 2019/2020 financial year running from April until June; a 11.6 % year-on-year decline. Those sales results in Jaguar Land Rover achieving £5.07 billion of revenue, down 2.8 % year-on-year. The pre-tax loss of £395 million compared to £264 million in the same period last year. As well as declining sales, Jaguar Land Rover’s profits were also affected by it shutting its factories in April as a contingency to coincide with the original planned date of Britain’s exit from the European Union. The results were in line with the company’s outlook for the quarter. There were some positives, with UK sales for the period up 2.6 % year-on-year, while the firm also says that sales in China (where Jaguar Land Rover has struggled in a declining market) rose in June compared with the previous month. Jaguar Land Rover also said that sales of the I-Pace and Range Rover Evoque were up year-on-year, and says the recent arrival of facelifted versions of the Range Rover Discovery Sport and XE should help. The company is undergoing a major £2.5 billion cost-cutting project in a bid to boost profitability, and Jaguar Land Rover claims it has already delivered £100 million in savings. Speth said that the firm was “in a period of major transformation”, adding: “We will build on our strong foundations and increased operating efficiency to return to profit this fiscal year”. Speth added that the firm was creating a “more robust and resilient business”, and said that new products, including the forthcoming Defender, “will pave the way for sustainable profitable growth”. +++ 

+++ The only LANCIA currently on the market is the absolutely hideous Ypsilon yet somehow, the dated hatchback is actually out-selling Alfa Romeo’s family of models across the European Union. Sales figures reveal that a total of 34,691 Ypsilons have been sold in the first half of the year. By comparison, Alfa Romeo only managed to sell 27,702 of its vehicles in the EU in the same time period. What makes sales of the Ypsilon all the more surprising is that it is only available in its home country of Italy. Alfa Romeo currently sells the Giulia, Stelvio, 4C, MiTo and Giulietta across Europe and each of these vehicles have their own appeal and charm. By comparison, the Ypsilon is a car that many people scoff at and use an example of what happens when an iconic car manufacturer loses its way. Lancia has been selling the Ypsilon in its current form since 2011 and has recently seen its sales bolstered by the introduction of generous rebates to entice buyers. Buyers in Italy looking to pick up a Ypsilon have a number of different powertrain options available, including 2 petrol engines and 1 diesel powertrain. Both petrol engines displace 1.2-liters and the entry-level model delivers 69 hp with a manual transmission while the higher-spec model has 85 hp and an automatic. The diesel is the most powerful of the trio with 95 hp. +++ 

+++ MITSUBISHI reported an 86 % tumble in operating profit in the latest quarter as falling revenue, foreign exchange losses and rising r&d costs undercut earnings. Mitsubishi’s operating profit plunged to 3.9 billion yen ($36.2 million) in the fiscal first quarter ended June 30, the Japanese automaker said in its quarterly report. Operating profit margin shriveled to a paltry 0.7 % in the period, from 5 % a year earlier. Net income dropped 67 % to 9.3 billion yen ($86.2 million). Revenue declined 4 % to 536.2 billion yen ($4.97 billion), as worldwide retail sales added 2 % to 298,000 units, gaining ground in Japan, China and Southeast Asia. Mitsubishi partly cited falling wholesale deliveries and deteriorating model mix for the falling quarterly profits. Wholesale volume dropped 2.1 % to 329,000 units in the quarter as Mitsubishi worked to rein in bloated inventories worldwide, including in the U.S. The Japanese yen’s appreciation against the euro and Thai baht also hit results. Finally, Mitsubishi said rising outlays for r&d and labor expenses further depressed earnings. Mitsubishi boosted r&d spending by 15 % in the first quarter, compared with the year before. It wants to increase that investment 13 % for the entire fiscal year. North America’s regional operating loss widened to 5.1 billion yen ($47.3 million) in the April-June period, from a loss of 2.7 billion yen ($25.0 million) the year before. North American sales retreated 6.7 % to 42,000 units. Sales in Europe rose 5.5 % to 58,000 units in the quarter, but Europe fell to an operating loss of 2.4 billion yen ($22.3 million) from a profit of 2.5 billion yen ($23.2 million) a year earlier. Mitsubishi kept its previously announced earnings outlook for operating profit to decline 19 % in the current fiscal year ending March 31, 2020, with net income dropping 51 %. Net income will fall more dramatically when compared to results that were bolstered in the just-ended fiscal year by a windfall U.S. income-tax gain, the company said. Results will also be hit by unfavorable foreign exchange rates and rising r&d outlays. +++ 

+++ NISSAN will reduce its production capacity and model range, and axe around 12500 jobs worldwide, in a bid to turn its fortunes around. In the 3 month period running from April to June, Nissan’s net income was down 94.5 % year-on-year, with sales down in several key markets. The car maker announced 4800 job cuts earlier this year, having suffered its lowest profits for almost 10 years. The 12500 job losses (around 9 % of the firm’s global workforce) include 6400 the firm has already made. They come as a result of moves by Nissan to reduce its global production capacity by around 10 %. There is no word yet on which of the firm’s plants will be affected. Nissan also says it will reduce the size of its product line-up by around 10 % by the end of 2022, and will “focus investment on global core models and strategic regional models”. According to Nissan boss Hiroto Saikawa, the models affected are likely to include compact cars and those from its Datsun sub-brand. As with many car firms, Nissan will spend heavily on future technologies, and says it will invest heavily in its ProPilot driver assistance system. It is also plotting further investment in electirifed vehicles, including battery electric models. It will also investigate new business models, including ride-sharing mobility services. Multiple reasons have been cited as reasons for Nissan’s profits slump, including global sales stagnation in the US and Europe, falls in Asia, political uncertainty, tariffs, the need to invest in electrification and autonomy, and a part-ageing product line-up, including its successful Qashqai and Juke. Greater competition from rival manufacturers in the SUV segment is also a factor. The dismal quarter will pile pressure on chief executive Hiroto Saikawa, who has been tasked with shoring up the automaker’s performance at a time when the industry is struggling worldwide. China’s slowing economy, further depressed by a trade war with the United States, has hit demand, even as American consumer confidence has faltered. Tougher emission regulation has taken as toll on diesel-car sales in Europe, and an increase in electric vehicle sales and ride-sharing has worsened a drop in sales at the world’s biggest car makers. Nissan will reduce at least 12500 positions globally by March 2023 (its deepest job cuts since 2009) and slash production capacity, mainly of compact cars at underutilized plants abroad. The move will shrink its product line-up by about 10 %, Saikawa said. “We are mainly targeting sites where we made investments to produce compact cars under the Power 88 plan”, Saikawa told, referring to an aggressive growth strategy spearheaded by Ghosn in 2011 to grab 8 % global market share and an 8 % operating margin. Saikawa said a total of 14 facilities would be affected. Nissan’s job cuts expand on redundancies initially announced in May, which affected 8 facilities including in Spain (where pickups and vans are made) and Indonesia, where the March subcompact hatchback and Datsun models are manufactured. Nissan also produces compact car models at facilities including in Mexico, Russia, France, and Thailand. Roughly half the announced job cuts so far have cost the company around 40 billion yen, and further layoffs could cost about the same, chief financial officer Hiroshi Karube said. Years of heavy discounting and fleet sales, particularly in the United States, has left Nissan with a cheapened brand image and low vehicle resale values, and also hit profits. Nissan’s first-quarter operating profit plunged 98.5 % to 1.6 billion yen ($14.80 million), its worst performance since a loss in the March 2008 quarter. “Profitability is very poor at the moment”, Saikawa said, but added that the company was pushing to achieve its revenue target of 14.5 trillion yen and operating margin of 6 % through the end of fiscal 2022. The automaker said global vehicle production will fall 10 % through the year to March 2023 while global sales till then will increase modestly to 6.0 million units annually from the current 5.5 million. The company maintained its profit forecast of 230 billion yen for the year ending March 2020; a 28 % drop from last year and its weakest in more than a decade. +++ 

+++ J.D. Power has released its latest Automotive Performance, Execution and Layout study which found that consumers are increasingly satisfied with their new vehicle. The study examines how new vehicle owners assess their purchase after 90 days of ownership. They’re asked to rate 90 vehicle attributes in 10 different categories that include everything from driving dynamics to the how well the infotainment system works. This year’s study found that the average satisfaction level was 823 on a 1,000 point scale. That’s a slight increase from last year’s 820, but it’s worth noting that 22 of the 32 brands in the study saw improvements from 2018. Getting straight to the winners, PORSCHE was the top rated brand as the company had an overall score of 891. BMW and Genesis tied for second at 868, while they were followed by Audi (867) and Volvo (863). Ram was the most-improved brand and its 26 point swing from 2018 enabled them to claim the title as top mass market brand with a score of 851. They were followed by Dodge (848), Mini (835), Volkswagen (829) and Ford (828). At the other end of the spectrum, Mitsubishi came dead last with a score of 773. This put them behind Buick (800) and Subaru (807). The 3 lowest scoring luxury brands were Infiniti (828), Acura (832) and Jaguar (843). While there was a 118 difference between the highest and lowest rated brands, J.D. Power said gap between luxury and mass market brands narrowed to its lowest point in history. The difference between the two groups was 35 points and that’s down from 50 points 3 years ago. When it comes to models, the Audi A7 was the highest rated vehicle overall. It was 1 of 2 segment awards picked up by Volkswagen AG as the Porsche Cayenne was named the best mid-size premium SUV. Ford had the most segment wins as the Expedition, F-150, Ranger, Super Duty and Lincoln Navigator were all ranked best-in-class. They were closely followed by BMW which grabbed four wins for the 2-Series, X4, Mini Hatch and Mini Countryman. Other notable models include the Chevrolet Blazer, GMC Terrain, Honda Accord / Odyssey, Nissan Altima / Maxima and Toyota Camry / Yaris. Rounding out the list is the Mercedes C-Class, Dodge Challenger and Kia Forte. According to J.D. Power’s vice president of Global Automotive, Dave Sargent, “Satisfaction with new technology is improving, but infotainment remains an area where automakers can get better”. He also noted “Owners have higher satisfaction if their vehicle is equipped with safety features such as blind spot monitor, collision avoidance and lane departure warning. This should serve as a positive sign for manufacturers, as these features are some of the early building blocks for fully automated vehicles”. +++ 

+++ RENAULT is on a campaign of de-Ghosnification. Chairman Jean-Dominique Senard is axing advisers linked to the former chief executive, and recent Japanese jailhouse guest, Carlos Ghosn, helping Senard put a firmer personal stamp on the carmaker. But with a government shareholder still breathing down his neck, any hopes of reigniting merger talks could easily be dashed. Investors in the €16 billion French group are still rueing a collapsed deal with Fiat Chrysler Automobiles. The proposed combo promised about €5 billion of annual cost savings, Fiat reckoned, but fell apart in early June after the Italian-American carmaker decided “political conditions in France do not currently exist for such a combination to proceed”. So, Senard is clearing house. Renault is parting ways with Ghosn’s long-time financial advisers Ardea Partners, according to people familiar with the matter. The boutique, founded by former Goldman Sachs bankers, proved controversial in Paris because it was advising Renault on the Fiat deal while one of its top executives sat on Fiat’s board. Renault is also severing ties with Ghosn’s favoured communications shop Les Rois Mages, run by Claudine Pons, and security consultant Alain Bauer. Management changes within the company are also likely. It’s healthy to put some distance between the embattled carmaker and its former boss, who denies accusations of financial impropriety made by Renault’s alliance partner Nissan and prosecutors in Tokyo. The French group’s 15 % government shareholder might understandably balk at any association with the disgraced former executive. But shuffling around the advisory deckchairs does little to remove the primary roadblock to a merger with Nissan or Fiat, or both. The former deal would help solidify the alliance and eliminate the huge valuation discount investors apply to Renault’s 43 % stake in the Japanese group. The latter option would give Senard a larger fleet of cars over which he could spread the French group’s electric-vehicle technology, and the costs sunk to achieve it. The real obstacle is the French state, whose request to postpone Renault’s board meeting on the Fiat deal caused Senard’s opposite number, John Elkann, to pull the offer, and whose double voting rights understandably make Nissan wary of political meddling. Finding advisers clever enough to overcome that impediment will be a tougher call. +++ 

+++ Jaguar Land Rover owner TATA MOTORS reported a bigger-than-expected quarterly loss that nearly doubled, hit by an ongoing slump in car demands at home, as well as plant shutdowns and delays due to Britain’s planned exit from the European Union. Tata completed the $2.3 billion acquisition of Jaguar and Land Rover (JLR) in 2008, but the iconic British brand has been hit by a trend to move away from diesel cars towards cleaner fuels, as well as political and trade uncertainty related to Brexit. The Mumbai-based company plans to introduce electric variants for all of its JLR models by 2020. Tata Motors chief financial officer P.B. Balaji said during a conference call that the luxury car was seeing a pick up in sales in key market China and expected its sales to also improve in the U.K. as Brexit details got sorted. The company was “extremely happy there will be decisive action in the coming days”, Balaji said of the Brexit. The United Kingdom’s new prime minister Boris Johnson has promised to lead Britain out of the European Union on Oct. 31 with “no ifs or buts”. Back home, the company’s focus will be on retail sales as it expects market conditions to improve ahead of the festive season that begins next month, he added. The Indian auto sector has been plagued by slowing demand due to higher insurance costs and a credit squeeze in recent months, prompting many automakers such as the company’s rival, Maruti Suzuki to cut production on surging inventories. Passenger vehicle sales in June fell over 17 %, data released by the industry’s trade body earlier this month showed, resulting in an 18.4 % fall for the first quarter as a whole. Tata Motors lost 36.98 billion rupees ($535.93 million) in the quarter ended June 30, compared to a loss of 19.02 billion rupees a year ago. Revenue fell 7.7% to 608.30 billion rupees. Analysts on an average expected the company to report a loss of 19.38 billion rupees in the quarter, according to Refinitiv data. Revenue from Jaguar Land Rover, the company’s biggest unit, fell 2.8 % to 5.07 billion pounds ($6.34 billion). +++ 

+++ TESLA has posted its Q2 financial results, reporting a $408 million net loss on $6.45 billion in revenue. The company generated $614 million in free cash flow for Q2. Combined with a public offering of equity and convertible bonds worth $2.4 billion, the automaker is now sitting on $5.0 billion of cash and cash equivalents as it enters the third quarter. “This level of liquidity puts us in a comfortable position as we prepare to launch Model 3 production in China and Model Y production in the US”, Tesla wrote in its letter to investors. “As a result of our strong deliveries and continued progress on cost efficiencies, our net loss declined significantly compared to Q1”. The Shanghai Gigafactory is said to be on track to launch by the end of the year, while the Model Y is on target to begin production by fall 2020. Tesla pushed back its profit timeline once again after missing financial targets in the second quarter, while announcing that the pioneer of the company’s electric batteries, J.B. Straubel, was stepping down from his role as chief technology officer. The quarterly loss was deeper than expected, and despite record deliveries in the quarter, revenue came in lighter than analysts’ expectations. Moreover, margins (a focus of investors) narrowed in the quarter, adding to Tesla’s challenges in delivering profit going forward. Shares fell 11.5% after hours and extended losses after the announcement about Straubel, a founding engineer who will become a senior adviser. Under pressure to meet his repeated promises to make Tesla sustainably profitable, chief executive Elon Musk is trying to contain costs while still spending on major initiatives from a Shanghai factory and assembly-line to upcoming models such as the Model Y and the Semi commercial truck. Tesla initially promised to be profitable in the third quarter of 2018 and has now pushed back that target multiple times. Now profit is expected in the fourth quarter of 2019, with the current quarter to be break-even, Musk said. Tesla said it was focusing less on profit and more on volume growth, capacity expansion and cash generation. Musk said the company had grown to the point of “being self-funding”, indicating he might not need another cash infusion following a record-setting capital raising earlier this year. Tesla said it had trimmed its capital expenditure target for 2019 to $1.5 billion to $2.0 billion, from $2.0 billion to $2.5 billion. Investing analyst Clement Thibault told that Tesla’s results “will inevitably lead to more questions about its ability to stabilize and turn a profit”. Tasked with Tesla’s groundbreaking battery technology since Tesla’s early beginnings, Straubel directed the development of the audacious plan to make a sportscar powered by bundled laptop batteries. The quiet, retiring Straubel has been seen as a good partner for showy Musk. Straubel had been the last senior executive of long-standing at the very top rank of the company to remain at Tesla. Even while growing, Tesla has laid off workers and pledged to close some stores to lower costs. Facing increased competition from a slew of European rivals with electric offerings, it has also tinkered with its pricing. Most recently, it eliminated the least expensive versions of its Model S and Model X, while cutting the starting price of its Model 3 to $38,990. Tesla’s strong second-quarter deliveries assuaged doubts about demand for the Model 3, but concerns linger, especially since a federal tax credit was cut by half on July 1 and expires at the end of the year. Many analysts note that Tesla will be challenged not only to meet its deliveries target of 360,000 to 400,000 vehicles this year, but to keep profit margins from further eroding. Musk gave bold predictions for the long-term demand for the Model 3 and upcoming Model Y combined, saying that it could reach 2 million vehicles per year. The company repeated a target of producing 10,000 vehicles per week globally by the end of 2019. Chief financial officer Zachary Kirkhorn said orders in the current quarter were so far higher than those seen in the second quarter. A 58.7 % revenue rise to $6.35 billion in the quarter fell short of the $6.41 billion estimated by analysts, according to IBES data from Refinitiv and the loss was deeper than expected. +++ 

+++ TOYOTA said it will invest $600 million in Chinese ride-hailing giant Didi Chuxing as well as a new joint venture as the companies seek to develop connected and electric vehicle technologies in China. The move accelerates a trend in China which has seen automakers launch their own ride-hailing services, and ride-hailing firms such as Didi team with automakers to develop purpose-built cars for their services. It also comes as the auto and communications industries develop the next generation of connected vehicle technologies, including self-driving and so-called vehicle-to-everything technology, with the advancement of 5G network technology. Toyota said the new joint venture would include the Japanese automaker’s Chinese partnership with Guangzhou Automobile Group Co (GAC) and would see the companies combining services and technologies to work on fleet management, car maintenance and car rental services. That collaboration will utilize Toyota’s connected technologies and next-generation battery electric vehicles, Toyota’s Executive Vice President Shigeki Tomoyama said in a statement. Toyota, which has said it aims to get half of its global sales from electrified vehicles by 2025, has tapped Chinese battery makers including Contemporary Amperex Technology Ltd (CATL) and BYD to aid it in the shift to electricity-powered cars. The move is in line with global regulations and a push among automakers to develop the new-energy vehicle industry. It has also said it would set up a joint venture to develop connected vehicles with Japanese auto parts maker Denso. Toyota and Didi did not specify whether their collaboration will involve car design or manufacturing, which is part of Didi’s goal to ultimately develop purpose-built cars for its services. Toyota and Didi have previously teamed up on other vehicle projects and services for Didi drivers. Didi has also set up ventures with Volkswagen, BYD and BAIC’ new-energy vehicle unit. Sources told in June that Didi was in talks with Nissan and its China partner, Dongfeng Automobile, to form another fleet-management venture. A source familiar with the matter also told that Chinese electric vehicle maker Lixiang, previously known as CHJ, is working with Didi to build a car model for mobility services. +++ 

+++ 4 major automakers said they have reached a voluntary agreement with the state of California on fuel efficiency rules, bypassing a TRUMP administration effort to strip the state of the right to fight climate change by setting its own standards. California and other states had vowed to enforce stricter emissions standards put in place by the Obama administration after president Donald Trump proposed rolling back the federal rules. Automakers had worried that years of court battles between the state and federal governments could create uncertainty for manufacturers. The California compromise proposal is more stringent than Trump’s proposal but looser than the Obama-era rule. California, the most populous U.S. state, accounts for about 12 % of U.S. vehicle sales, and if the administration recognizes the deal it would allow automakers to operate under one set of national rules. “Ensuring that America’s vehicles are efficient, safe and affordable is a priority for us all”, said Ford, BMW Volkswagen and Honda in a joint statement. They said the accord could help maintain a nationwide set of fuel efficiency requirements. The automakers “didn’t want to face the expense, distraction and the bad publicity that comes from being part of a big rollback on clean cars”, Mary Nichols, who chairs the California Air Resources Board, told. +++ 

+++ VOLKSWAGEN Group’s second-quarter operating profit rose 30 % despite a drop in vehicle sales, helped by VW brand’s higher-margin SUVs and rising volumes at Porsche and Skoda. Operating profit rose to €5.13 billion, up from €3.94 billion in the second quarter last year, the automaker said. Vehicle sales fell 1.8 %. The operating profit jump was magnified by the absence of a diesel charge that VW booked in the year-earlier period. VW has been so far more resilient to industry turmoil that has hit automakers and their suppliers. Both BMW and Daimler scaled down their outlook this year as softening sales compounded a squeeze on profits from record spending to develop electric and self-driving cars. The 12-brand group, whose marques include Porsche, Audi and Bentley, is getting a boost from sharing components across nameplates. Its MQB architecture saves costs across its vast lineup of small and mid-size vehicles, Credit Suisse said in a note this week. VW reiterated it expects vehicle deliveries in 2019 to exceed a prior-year figure and for revenues in the passenger cars and commercial vehicles divisions to grow at least 5 %. The automaker said it continues to expect an operating return on sales in the passenger cars area between 6.5 and 7.5 %. Models such as the VW T-Roc and Skoda Karoq account for some 35 % of deliveries this year compared with 25 % last year; a turnaround after VW lagged rivals’ SUV lineups for years. VW expects the proportion of SUV sales to rise to 40 % by 2020. “Our model mix is improving and we’ve been successful with our pricing”, chief financial officer Frank Witter told. The second half will be “potentially difficult” in a “weaker market environment,” he said. VW remains on track to generate at least €9 billion in cash this year after first-half results offer “a stable basis”, Witter said. To counter declining demand, VW has scaled down production plans by some 450,000 cars for this year and will lower output further if necessary, Witter said. VW’s cut roughly equals the annual output of 1 its 122 factories worldwide. “VW may see fresh records on sales, revenue and operating results this year”, NordLB analyst Frank Schwope said in a note. “However, worsening trade conflicts and ongoing high investments in future technology for electric and self-driving cars will make for a volatile environment”. Evercore ISI analyst Arndt Ellinghorst said free cash flow of €6.9 billion in the first half is “almost double of what Daimler and BMW together will generate in all of 2019”. VW last month listed its heavy trucks business Traton, a significant move toward its goal of greater focus on the main car business. Investors expect an update on the next steps to streamline VW’s conglomerate structure, which might include selling industrial machinery units Renk and MAN Energy Solutions. Witter said VW’s management is “pushing hard” to lift the automaker’s low valuation, with the company exploring strategic options for Renk and MAN Energy Solutions. Analysts have urged VW to consider deeper changes including an initial public offering of the high-margin Porsche sports-car business to unlock value. A Porsche IPO “isn’t a priority” and there are currently no plans to sell the Ducati motorbike brand, Witter said, reiterating previous comments. But he left the door open to explore options at some point “down the road”. In the first half, VW Group’s operating return on sales rose to 7.2 %; up from 6.8 % in the year-earlier period. By contrast rival PSA Group yesterday said it had delivered an operating margin of 8.7 % in the first half. Among VW Group brands, Bentley swung to a profit in the first half, while Audi saw its profit decline. VW brand’s first-half operating profit before special items rose to €2.3 billion from €2.1 billion in the year earlier period, boosted by product mix improvements and price positioning. Audi’s operating profit fell to €2.3 billion from €2.8 billion; hit by model ramp-ups and phase-outs, and WLTP-related lower sales volumes. Profit was also impacted by higher upfront expenditure for new products and technologies, cost increases and exchange rate effects. Audi’s deliveries should pick up in the second half of the year, helped by an updated version of the popular A4, Witter said. Audi, VW’s biggest profit contributor, is currently is talks with labor unions over future production plans including on where to manufacture electric cars. Skoda’s rose by €3 million to €824 million. Higher vehicle sales compensated for negative exchange rate effects and cost increases. Seat boosted operating profit by 1.9 % to €216 million, helped by volume and mix improvements, which more than offset the negative impact of cost increases. Bentley swung to a €57 million operating profit from an €80 million loss a year earlier, boosted by high vehicles sales, cost savings as well as mix effects and positive exchange rate trends.
Porsche’s operating profit before special items rose by 2.5 % to €2.1 billion, primarily due to volume effects.
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