+++ ASTON MARTIN will see its borrowing costs jump after it raised $150 million in debt at 12 % interest to bolster its balance sheet for its DBX crossover launch next year, with the option for another $100 million. The British carmaker, known as James Bond’s favorite marque, has been hit by falling demand in Europe, the Middle East and Africa. It slumped to a first-half loss in July. Chief executive Andy Palmer said concerns around Brexit and U.S.-China trade relations were skewing the outlook to the downside, so it was prudent to address investor concerns about its balance sheet. “Taking this debt on, short-term debt, is we think the correct tool to completely remove that thesis that we don’t have sufficient liquidity”, he told. “In every substantial and material way, this ensures that we can get through to DBX in spite of what all of those global uncertainties might throw at us”. The main tranche comprises notes with an interest rate of 12 % due in 2022, while the additional notes could be issued under the same terms if permitted, or could be issued as unsecured notes with an interest rate of 15 %, Aston Martin said. Broker AJ Bell said Aston Martin was known for its high end prices and that situation now also applied to its debt. “These rates are very high and are a major red flag that investors consider the car company to be a high risk entity”, it said. Ratings agency S&P downgraded its issuer credit and issue ratings to CCC+ from B- with a negative outlook, saying it believed Aston Martin had reached the ceiling in terms of the amount of term debt and cash interest burden it could sustainably service. Analysts at Jefferies, who said they had expected the company to raise 200 million pounds at a rate of 10 %, said it was an “expensive short-term de-risking”. “Aston Martin’s debt raise feels a bit like kicking the can down the road but should de-stress liquidity”, they said. “It also provides needed breathing room to execute the DBX launch, although a high order rate should reduce the need to raise more debt”. Aston Martin said the DBX was on track for first deliveries at the end of the second quarter of next year. It will need to secure 1,400 orders for the SUV by the middle of next year to release the second tranche of debt at 12 %. If it misses the target, the tranche could be issued as unsecured notes, with a coupon of 15 %, it said. “We haven’t formally started trading the car yet, it hasn’t been unveiled, but with early indications with private viewings we think that eminently doable”, Palmer said of the target. Aston Martin said demand for its special vehicles remained strong, with the Valkyrie hypercar selling out and excess customer demand for the mid-engined Valhalla. As of 1 July 2019, the company had 806 orders in production. It said it expected to meet market consensus for 2019, despite continuing pressure on sales volumes, subject to the cost of servicing the new debt, which will incur an interest charge of about $5 million in 2019. Analysts expect net revenue of 1.1 billion pounds and adjusted core earnings of 208 million pounds, according to a company-compiled consensus dated Sept. 10. +++
+++ FERRARI ’s first SUV, developed under the code-name 175, is one of 15 Ferrari models scheduled to debut before 2023 that will be based on 2 distinct platforms. In an interview, Ferrari’s chief technical officer, Michael Leiters, said that one platform will be for midengine supercars such as the F8 Tributo, while the other will be for front- and midengine GT-style cars, which will include the new SUV, also known as Purosangue, Italian for thoroughbred. The SUV’s design has been approved internally. Both platforms will be able to support V6, V8 and V12 engines, with or without hybrid boost, and a variety of body styles and transmission positions. The SUV is expected to be a four-seater with high ground clearance. It will feature a height-adjustable suspension, focusing on on-road dynamics but permitting “some off-road ability”. +++
+++ South Korea’s Myongshin has agreed to build more than 50,000 electric vehicles a year for Chinese venture Future Mobility Corp ( FMC ) at a closed plant it bought from General Motors. A parts supplier to Hyundai and Tesla, Myongshin signed a deal to build the electric vehicles for FMC’s Byton brand beginning in 2021, the government of Jeonbuk province said in a statement. A Byton representative confirmed the company had signed a deal with Myongshin which would involve sales, production and investment. The deal comes as made-in-China vehicles exported to the United States are currently subject to tariffs. Sales of cars made in South Korea can avoid those tariffs. Myongshin bought a factory from GM’s local unit for 113 billion won ($94 million) in June after the U.S. carmaker closed 1 of its 4 South Korean plants last year. Myongshin will produce Byton’s M-Byte electric SUV in the factory in the southwestern city of Gunsan, the Jeonbuk provincial government said. The cars will be sold in South Korea and overseas, Park Ho-seok, vice president of Myongshin. The plant could allow FMC to take advantage of South Korea’s free trade deal with the United States and Europe, as well as the country’s electric car supply chain. Former BMW and Nissan Motor executives co-founded Chinese electric-car venture FMC, which in September 2017 named its brand Byton. FMC, the parent company, plans to launch the vehicles in the United States and Europe soon after starting sales in China in 2019. +++
+++ FORD and Mahindra are likely to sign a deal next week to form a joint venture in India, 2 sources told, in a move that will see the U.S. carmaker end most of its independent operations in the country. The 2 companies have for months been structuring the deal to create a new entity in which Ford will hold a 49 % stake, while Indian rival Mahindra will own 51 %. Under the deal, Ford will transfer most of its automotive assets and employees in India to the new company, but the carmaker will retain an engine plant in Sanand in the western state of Gujarat, according to the 2 sources. A Ford spokeswoman did not comment directly on the deal, but said the company was engaged with Mahindra “to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies”. By shifting to a joint venture, Ford is changing its decades-old India strategy focused on running an independent operation. Under pressure from shareholders to make profits, the U.S. carmaker has been globally restructuring its businesses with an aim to save $11 billion over the next few years. Ford’s decision is a setback for the country at a time when prime minister Narendra Modi’s administration is trying to boost local manufacturing by cutting corporate tax rates and offering cheap loans to push car sales. Sale of cars by manufacturers to dealers have fallen at their steepest pace in 2 decades. Ford’s 2 manufacturing plants (1 in Chennai in southern India and the other in Sanand which was inaugurated in 2015) will be moved to the new joint venture, but Ford will keep the engine plant at Sanand. Together, they have a maximum annual manufacturing capacity of 440,000 vehicles. Ford-brand cars will continue to be built and sold in India and exported by the new company, 1 of the sources said. Over `2 decades, Dearborn, Michigan-based Ford invested more than $2 billion in India but it has consistently struggled: it currently has a share of about 3 % in a market where Maruti Suzuki is the top player with a 50 % share. “The Mahindra deal is an opportunity for Ford to recover some of the money it has invested in India”, said one of the sources. In India, currently, Ford manufactures and sells its cars via its wholly owned subsidiary. In 2017 it formed a strategic alliance with Mahindra under which, among other things, they will develop new cars together, including SUVs and electric variants. +++
+++ The FRANKFURT auto show is doomed. It’s hard to come to any other conclusion after the number of visitors to this year’s event fell by nearly a third. Even before the event opened to the public on Sept. 12, the buzz surrounding it suggested things were grim. The absence of brands including Toyota, Renault, Peugeot, Nissan, Fiat and Ferrari was a serious blow for the organizers, the VDA, Germany’s auto industry association. On top of that, thousands of climate activists protested outside the entrance, highlighting the simmering tensions between the German car industry and the country’s environmentalists. Automakers demonstrating their growing commitment to decarbonizing their fleets with new electric models such as the Porsche Taycan, Opel Corsa-e and Volkswagen ID.3, failed to excite the public. This year’s show had 560,000 visitors, according to the VDA. This compares with 810,000 when the biennial event was last held in 2017 amid Volkswagen Group’s diesel crisis and talk of driving bans in polluted city centers. Already then there was a discussion about whether the show had right format because visitor numbers had fallen from 931,700 in 2015, the highest attendance in 8 years. Auto shows from Detroit to Paris are suffering declining interested as car companies focus their marketing efforts on livestreamed, standalone product debuts but Frankfurt was also unlucky this year because the global climate strike led by Sweden’s young activist Greta Thunberg fell by on the final day of the show. Remarking on the numbers of automakers who skipped the event, the decline in floor space rented and less ambitious stands, former Opel CEO Karl Thomas Neumann tweeted that this year’s show was a huge fail and “a sad shadow of what it used to be”. He predicted that there will not be a 2021 show. In future, event managers who pitch an expensive show presence to a marketing boss will have to work hard. The reason is something economists call the “network effect”. Large crowds attract more people while dwindling numbers discourage them. Whether it is digital platforms or physical marketplaces, this can be deadly when the trend is against you. In a statement, VDA president Bernhard Mattes said the association was very satisfied with the public interest in the show, saying the event attained “new dimensions” in videos on social media. “In the digital age, what counts is no longer solely the number of square meters covered, but relevance”, he said. Mattes said the association plans to rejuvenate the show’s format by giving it more of a theme park feeling and taking the concept of mobility from the trade fair grounds into the city to engage people in their daily lives. “Connected to this is the question of the location”, Mattes said in the statement. Mattes, who announced only hours after the show officially started that he would step down from his post at the end of the year, said Frankfurt was still in the running, along with other options. German media said a decision on the format and location will be made in the spring. Berlin, with its young tech-savvy population of 3.75 million and numerous mobility startups, could be the choice for the next show. That’s assuming there is a show in 2 years. +++
+++ HYUNDAI will invest $1.6 billion in a joint venture to develop self-driving vehicle technologies with Aptiv, the biggest overseas investment by the South Korean carmaker to catch up to rivals in the autonomous car market. Global carmakers and their suppliers are forging alliances to develop autonomous car technologies partly due to the need to share the huge financial and technical burdens. Hyundai has lagged global rivals who have invested heavily into developing new technologies for electrified and autonomous vehicles. For example, BMW and Daimler announced earlier this year that they would join forces on automated driving technology. Hyundai and Kia will collectively contribute $1.6 billion in cash and $400 million in research and development resources and others, valuing the joint venture $4 billion, the Hyundai Group and Aptiv said in a joint statement. Dublin-headquarterd Aptiv, which will own 50 % of the joint venture, will contribute its autonomous driving technology, intellectual property, and approximately 700 employees focused on the development of scalable autonomous driving solutions. The new firm will begin testing fully driverless systems in 2020 and have a production-ready autonomous driving platform available for robotaxi providers, fleet operators and automakers in 2022. Aptiv, which manufactures vehicle components and provides technology for self-driving cars, was formerly known as Delphi Automotive, which was split into Aptiv and Delphi Technologies in 2017. Market research firm Navigant Research Aptiv put Aptiv at No.4 among automated driving system companies, following Waymo, General Motors and Ford. Hyundai is not among the top 10 vendors, according to Navigant Research. Aptiv said in its 2018 annual report that Hyundai Mobis was one of its competitors in advanced safety and user experience segment, along with Bosch Group and Denso Corporation. Its major customers include GM, Volkswagen and Fiat, according to the annual report. Hyundai is also one of its customers. The latest investment is another sign that Hyundai has abandoned its strategy of developing technology in-house; a strategy which previously raised investor concerns that it may be left behind in the race for future mobility. Hyundai, along with affiliate Kia, ranks fifth in global sales, have joined rivals in making a series of investments in technology firms, including self-driving car tech startup Aurora, especially after heir apparent Euisun Chung was promoted a year ago. Hyundai said in February that it will invest 14.7 trillion won ($12.3 billion) in future technologies such as self-driving, connectivity and car sharing areas by 2023. In March, Hyundai and Kia announced a plan to invest $300 million in Indian ride-hailing platform Ola, following the the $275 million that the pair invested in Singapore-based ride-hailing firm Grab last year. In November, Hyundai invested $250 million in Singapore’s ride-hailing firm Grab, raising its stakes in growing Southeast Asian markets. The Aptiv venture will be headquartered in Boston, with technology centers across the United States and Asia, including South Korea. The transaction is subject to regulatory approval and is expected to close early in the second quarter of 2020. +++
+++ NISSAN and its former chief executive Carlos Ghosn have agreed to settle claims from the U.S. Securities and Exchange Commision over false financial disclosures related to Ghosn’s compensation, an SEC statement said. Nissan will pay $15 million, while Ghosn agreed to a $1 million civil penalty and a 10-year ban from serving as an officer or director of a publicly traded U.S. company, the SEC statement said. Ghosn was arrested in Japan and fired by Nissan last year. He is awaiting trial in Tokyo on financial misconduct charges that he denies. Ghosn’s legal team said in a statement they were “pleased to have resolved this matter in the U.S. with no findings or admission of wrongdoing. The SEC settlement expressly permits Mr. Ghosn to continue to contest and deny the factual and legal allegations against him in the criminal proceedings in Japan, and Mr. Ghosn fully intends to do so”. The team added “that, if given a fair trial, he will be acquitted of all charges and fully vindicated”. Former Nissan human resources official Gregory Kelly agreed to a $100,000 penalty and a 5-year officer and director ban. Nissan, Ghosn, and Kelly settled without admitting or denying the SEC’s allegations and findings. The SEC said in total Nissan in its financial disclosures omitted more than $140 million to be paid to Ghosn in retirement; a sum that ultimately was not paid. The SEC also accused Ghosn in a suit filed in New York that he engaged in a scheme to conceal more than $90 million of compensation. That suit is being settled as part of the agreement announced. Nissan confirmed it had settled the allegations and said it “is firmly committed to continuing to further cultivate robust corporate governance”. Nissan provided significant cooperation to the SEC, the agency said. The company now has a new governance structure with 3 statutory committees (audit, compensation and nomination) and has amended its securities reports for all relevant years. The SEC said beginning in 2004 Nissan’s board delegated to Ghosn the authority to set individual director and executive compensation levels, including his own. The SEC said “Ghosn and his subordinates, including Kelly, crafted various ways to structure payment of the undisclosed compensation after Ghosn’s retirement, such as entering into secret contracts, backdating letters to grant Ghosn interests in Nissan’s Long Term Incentive Plan, and changing the calculation of Ghosn’s pension allowance to provide more than $50 million in additional benefits”. “Investors are entitled to know how, and how much, a company compensates its top executives. Ghosn and Kelly went to great lengths to conceal this information from investors and the market”, said Stephanie Avakian, co-director of the SEC’s Division of Enforcement. Nissan said earlier this month CEO Hiroto Saikawa was stepping down after he admitted to being overpaid in breach of company rules. Renault has unsuccessfully sought a full-blown merger with its larger partner Nissan. Japan’s second-largest automaker is currently planning to cut around one-tenth of its global workforce (its deepest job cuts since 2009) and to slash production capacity while shuttering underutilized plants. +++
+++ POLESTAR ’s engineering and marketing teams know what’s at stake with the brand’s debut model. “It’s a halo product. If we don’t do this right”, Polestar 1 commercial project leader Sofia Bjornesson said without finishing the thought because she knows the ramifications. “But I’m not worried at all. We will make it”. The Polestar 1’s initial production run of 500 units will reach the Volvo subsidiary’s first customers later this year, which is why the brand’s chassis and development specialists have spent so much of this year fine-tuning the car at the Hallered Proving Grounds and on local roads near Gothenburg. When asked what she was happiest about as the car nears completion she pointed to the team’s relentless pursuit of performance. “They have never given up on tuning a great chassis. We are still working on that, tuning millimeters and micrometers. We want to have a car that defines what Polestar performance is all about”. To create that definition the team has had its share of tough decisions to make. “We initially planned to have electronically controlled dampers”, chassis specialist Roger Wallgren said of having an active damping system that could be adjusted from inside the car by choosing a setting on a touchscreen. “But it didn’t live up to our expectations. What we have is the more hardcore choice”. The Polestar 1 has a dual flow valve solution from Ohlins that makes it possible for the driver to adjust the dampers by plus or minus 20 % by turning a gold-colored knob that is under the hood of the car. “It was not an easy decision because there was a lot of market pressure” to have a solution that could be adjusted inside the car, Wallgren said. Another challenge came when picking the tires. Polestar 1 lead development engineer Joakim Rydholm worked with Pirelli on the specifications. Typically, it takes 2 rounds of work to get the compound, layers, tread, etc. to the point where the solution will work. Anything more than that gets very expensive. Rydholm said Polestar needed 4 rounds to get the tires exactly the way he wanted them. +++
+++ When Silicon Valley startup Phantom Auto was formed in 2017, it was one of many software suppliers hitching their fortunes to SELF-DRIVING CARS , confident that fleets of robotaxis would be using their technology within a few years. But with delays in the mass deployment of autonomous vehicles, Phantom is now finding new customers off the road: on the sidewalk with delivery robots. Phantom is not alone. Faced with the harsh reality that an autonomous future is further away than originally promised by global automakers and tech companies like General Motors, Uber Technologies and many others, smaller companies in the self-driving ecosystem are now pivoting to alternate uses for their technology. Some are turning to delivery robots, while others are helping deploy autonomous vehicles for farms, construction sites or airports. Robotaxis are still considered the industry’s “humongous opportunity”, in the words of Phantom co-founder Elliot Katz, but shifting to creative new ways to deploy the auxiliary technologies allows for immediate revenue during the long slog before autonomous vehicles hit the roads en masse. The widescale deployment of robotaxis, once pegged by industry analysts to be a $2 trillion industry by 2030, is now seen as further away due to a variety of hurdles, among them cost, complexity and unresolved legal and regulatory concerns. Meanwhile, more modest rollouts of self-driving vehicles are coming sooner in limited areas with defined borders. The shift in expectations is driving players large and small to rethink strategies and re-evaluate financial risk. In Phantom’s case, its remote operations technology, which allows a human operator miles away from an autonomous car to take over control when the car is confused, can be used for less safety-critical tasks. Postmates, a San Francisco-based goods delivery company, will use Phantom’s technology inside fleets of over a hundred sidewalk robots as they navigate sidewalks and crosswalks to deliver lunches, snacks, or other goods to customers, beginning next year. “We had to figure out where is autonomous technology deployable today”, Katz told. “It’s about handpicking the right opportunity for the immediate term, medium term and long term”. Egil Juliussen, research director for automotive technology at IHS Markit, said that using the same technology for non-automotive applications, like robots, is a simpler path to market that can still tap the startups’ artificial intelligence technology. French autonomous shuttle maker and operator Navya threw out its financial targets in July and unveiled a new strategy of selling its technology to others. The catalyst was the continued uncertainty over regulation that jeopardized anticipated fleet orders by customers last year, chief operating officer Jerome Rigaud told. That led to missed 2018 revenue projections and the removal of Navya’s founder and CEO. Navya still plans to test its self-driving shuttles without a safety driver by early next year, but it now sees new opportunities in areas where regulation is simpler: hauling goods at airports, industrial sites and construction areas at slow speeds in limited areas, and in agriculture, Rigaud said. Evangelos Simoudis, managing director of Silicon Valley venture capital firm Synapse Partners, which invests in autonomous technology startups, said VCs recognize that full self-driving will take much more money, as well as time, to recoup the 10x return on their investments of $5 million to $50 million; amounts that are typical in the sector. In the interim, smaller companies are on the line. “If they have flexibility they may pivot and go to something adjacent or radical in order to survive, but nonetheless there will be a period of significant change”, Simoudis said. “There will be quite a high mortality rate”. The sweet spot for companies searching for alternative ways to use self-driving technology is software related to simulation, data annotation and data management, Simoudis said. Companies making software are better positioned to pivot than those doing hardware, experts agree. There has already been some consolidation in the crowded field of lidar, a key hardware component using laser light pulses to help vehicles ‘see’, after some companies have struggled to raise new funds. Digital mapping is another area ripe for consolidation, Simoudis said. Automakers and others have snatched up these startups in recent years, including Strobe Lidar and Princeton Lightwave, which were acquired in 2017 by General Motors and Argo AI, respectively. Argo AI is majority-owned by Ford and Volkswagen. Earlier this year, self-driving startup Aurora bought Blackmore Lidar. Last month, food delivery company DoorDash bought startup Scotty Labs, a competitor to Phantom also involved in the remote control of autonomous vehicles. The loss of Scotty’s main customer, Voyage (which operates small fleets of self-driving vehicles in closed residential communities) and difficulties in raising funds led to its sale, 2 sources told. Executives at Ouster, a startup whose lidar technology is also found inside Postmates’ robots, said it was a conscious decision from the start to avoid focusing exclusively on automotive lidar. Instead of diversifying, too many companies have focused on the “pot of gold at the end of the rainbow”, said Raffi Mardirosian, Ouster’s vice president of corporate development, making them vulnerable to setbacks in the broad deployment of autonomous vehicles. “If you’re in these investor meetings like I am, they’re saying ‘Show me the contracts. Show me the monthly revenue’ ”, said Mardirosian. “The fact that we can point to that is something that will help us stay in business”. +++
+++ A Delaware judge ruled that TESLA ’s board of directors must defend at a trial chief executive Elon Musk’s multibillion dollar pay package, which a shareholder lawsuit said unjustly enriched the head of the electric vehicle company. Tesla estimated the 2018 compensation package was worth $2.6 billion when it received stockholder approval in March 2018, although stock analysts at the time said it could be worth up to $70 billion if the company (which has yet to post an annual profit) grew quickly. The compensation award includes no salary or cash bonus for the Silicon Valley billionaire Musk, but sets rewards based on Tesla’s market value rising to as much as $650 billion over the next decade. Vice chancellor Joseph Slights of the Delaware Court of Chancery ruled against Tesla’s request to dismiss the lawsuit by shareholder Richard Tornetta at an initial phase in the litigation because of the way the board approved the package. As a result, the board must now defend against allegations that it breached its fiduciary duty in approving the package, and that the package unfairly enriches Tesla’s CEO. The ruling opens the way for additional discovery into the decision-making process. Tornetta had asked that the pay package be rescinded and the board of Tesla be overhauled to better protect investors. The ruling turned on Tesla’s compensation committee, which the company conceded was not independent of Musk, according to Slight’s opinion. Had the package been negotiated by truly independent directors and approved by a majority of shareholders who were unaffiliated with Musk, Slights said he would have dismissed the lawsuit. “Plaintiff has well pled, however, that the board level review was not divorced from Musk’s influence”, Slights wrote. Musk’s compensation package passed shareholder approval with about 73 % of votes cast, excluding votes by Musk and his brother Kimbal. The vote result indicated some, but not all, big investors were prepared to support a large payout at the founder-led company, which has struggled to produce its electric vehicles efficiently and profitably. At the time, proxy advisory firm Institutional Shareholder Services recommended voting against the compensation, noting that if achieved Musk’s award would surpass anything previously granted to top U.S. executives. Under the award, which involves stock options that vest in 12 tranches, Tesla’s market value must increase to $100 billion for the first tranche to vest and rise in additional $50 billion increments for the remainder. The package does not require Tesla to hit profitability metrics. Musk does not hold a majority of the Tesla’s stock, but in a separate case, Slights determined that Musk’s sway over Tesla made him in effect a controller from a legal standpoint. As a controller, the board is subject to a higher standard of legal oversight for decisions it makes regarding its relationship with Musk. The judge did dismiss Tornetta’s claim that the package amounted to a waste of corporate assets. +++
+++ TOYOTA is preparing to launch the second generation of its Mirai fuel-cell car next year, chairman Takeshi Uchiyamada said. He was speaking at an international ministerial meeting on hydrogen energy in Tokyo. Toyota launched the first iteration of the Mirai in late 2014 as the first mass-market hydrogen fuel-cell car. +++
+++ A month before the UNITED KINGDOM is due to quit the European Union, the bloc’s car-makers have joined forces to warn of billions of euros in losses in the event of a no-deal Brexit with production stoppages costing €54,700 a minute in Britain alone. Britain is scheduled to quit the EU on October 31 but businesses have grown increasingly concerned at prime minister Boris Johnson’s apparent lack of progress toward a new withdrawal deal to replace the proposals of his predecessor Theresa May, which the British parliament rejected 3 times. In a statement, groups including the European Automobile Manufacturers’ Association, the European Association of Automotive Suppliers and 17 national groups warned of the impact of a no-deal on an industry which employs 13.8 million people in the European Union including Britain, or 6.1 % of the workforce. “The UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel”, they wrote in a statement. “The end of barrier-free trade could bring harmful disruption to the industry’s just-in-time operating model, with the cost of just one minute of production stoppage in the UK alone amounting to €54,700”. If the 2 sides revert to World Trade Organisation trading rules, the likely consequence of a disorderly Brexit, the groups warned that the necessary tariffs will add €5.7 billion to the EU-Britain car trade bill. The European car industry is dependent on heavily integrated cross-border supply chains, which rely for their effectiveness on a zero-tariff, almost border-free environment within the EU’s custom union. Britain’s car industry, which is almost entirely foreign-owned, is exceptionally vulnerable, as it is dominated by factories owned by German, French and Japanese auto makers. +++
+++ VOLKSWAGEN boss Herbert Diess welcomed a German government climate package that aims to reduce CO2 emissions with measures such as higher incentives for electric cars. The plan will increase incentives for EVs costing less than €40,000 starting in 2023 while conventional cars will become costlier to operate, with higher taxes for more polluting vehicles. Gasoline and diesel prices will rise. Diess said the package is a positive signal that confirmed the automaker’s own strategy. “We need a change in the system for electric mobility. The car will lose its negative characteristics in the years ahead. It will be quiet, safe and clean. The climate package contains important decisions on its expansion”, he said. Volkswagen’s 12-brand group plans to introduce almost 70 full-electric models globally by 2028, accounting for 22 million battery-powered vehicles. The automaker’s EV push started at this month’s Frankfurt auto show with the launch of the ID.3; the first of a new generation of mass-market battery-powered cars. Germany’s latest climate package comes after chancellor Angela Merkel has faced a series of protests this year demanding action to stem emissions. Germany’s Green party has surged in the polls as the impact of global warming becomes increasingly tangible, with forests fires more frequent and droughts causing the Rhine river to recede. The plan will add a little more than €1 euro to the cost of filling the average size tank, according to Bloomberg calculations based on European Union data. That cost will increase to a range between €4 and €6 starting in 2026. Diess said the government was right to increase prices for gasoline and diesel fuel slowly to protect low-income earners, commuters and small businesses. However Germany’s MWV oil lobby group registered its displeasure at the fuel price rises. The goal should be “to make fuels cleaner” rather than increasing pump prices. it said. The deal between the government’s coalition partners was reached after more than 16 hours of overnight negotiations. Germany’s leaders were under pressure to seal a deal, with the country falling far short of its climate goals. Tens of thousands of demonstrators gathered to march in Berlin, Hamburg, Munich and around 500 other locations across Germany as part of the Fridays for Future movement. Finance Minister Olaf Scholz said the demonstrations have been a “wake-up call”. Merkel said Germany will continue to evaluate the program to ensure the country meets its targets to reduce carbon-dioxide emissions. “We have created numerous incentives, so that people can behave in a more environmentally responsible way”, said Merkel. “We believe we can reach these targets”. Germany does not expect the plan to require the government to raise more debt. The costs for incentives such as promoting electric vehicles and upgrading older furnaces will be balanced by income from carbon-dioxide certificates. About 480,000 electric and hybrid vehicles are on the road in Germany, well short of the target of 6 million that Merkel has set for 2030. +++
