Tag Archives: Auto

US

Exclusive: Tesla’s Musk met top Biden officials on EVs in Washington Friday

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WASHINGTON, Jan 27 (Reuters) – Tesla (TSLA.O) Chief Executive Elon Musk met two top White House officials on Friday in Washington to discuss how the car maker and Democratic President Joe Biden could work together to advance electric vehicle production and speed electrification of U.S. vehicle networks.

Musk met John Podesta, a Democratic stalwart who serves as Biden’s senior advisor for clean energy innovation, and Mitch Landrieu, who oversees infrastructure spending, a White House spokesperson told Reuters.

“John Podesta and Mitch Landrieu met with Elon Musk to discuss shared goals around electrification and how the Bipartisan Infrastructure Law and Inflation Reduction Act can advance electric vehicle production and charging as well as the broader cause of electrification,” the White House spokesperson said.

Musk responded on Twitter to a link to an earlier version of this story with “True.”

A Reuters witness on Friday saw Podesta, Landrieu and Musk entering a downtown building that houses both Tesla’s Washington lobbying operation and the Center for American Progress, a think tank Podesta founded. Landrieu and Podesta left about half an hour later and did not answer questions.

Musk left about 45 minutes after Podesta and Landrieu. He too ignored questions from a Reuters reporter.

BIDEN, MUSK TENSIONS

Relations have often seemed antagonistic between Biden, who has pushed for companies to use union labor, and Musk, who has pushed to keep unions out of his factories.

Musk called Biden “a damp sock puppet in human form” last year after Biden highlighted EV production by GM and Ford in a tweet but left out Tesla.

Biden only publicly acknowledged the role of Tesla in U.S. electric vehicle manufacturing over a year after taking office, after Musk repeatedly complained about being ignored.

In June, Biden compared Tesla unfavorably to Ford and sarcastically wished Musk “lots of luck” on his “trip to the moon” after the billionaire expressed reservations about the economy.

Still, Musk has long-standing important relationships with the U.S. government, and those have continued under the Biden administration.

Tesla has benefited from tax subsidies given to buyers of its electric vehicles while SpaceX, Musk’s rocket company, has contracts worth billions of dollars to deliver astronauts and cargo to and from the International Space Station, and to build a moon lander.

U.S. consumers who bought Teslas became eligible again this month for up to $7,500 in consumer tax credits, under the $430 billion U.S. Inflation Reduction Act (IRA) passed last August. An earlier tax credit for Tesla buyers expired after the automaker sold its first 200,000 vehicles in the United States.

The law imposes requirements that EVs receiving the tax credits must be North American-made. There are also caps on vehicle prices and income for buyers who are eligible for the credits.

The law also sets new battery sourcing restrictions expected to take effect in March. It also includes new U.S. battery production credits that Musk said earlier this week could have significant benefits to the company.

Reporting by Nandita Bose, David Shepardson and Raphael Satter; Editing by Heather Timmons, David Gregorio and Rosalba O’Brien

Our Standards: The Thomson Reuters Trust Principles.

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Business

Musk bullish on Tesla sales as price cuts boost demand

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Jan 25 (Reuters) – Tesla Inc’s (TSLA.O) aggressive price cuts have ignited demand for its electric vehicles, Chief Executive Elon Musk said on Wednesday, playing down concerns that a weak economy would throttle buyers’ interest.

The company slightly beat Wall Street targets for fourth-quarter revenue and profit earlier on Wednesday despite a sharp decline in vehicle profit margins, and it sought to reassure investors that it can cut costs to cope with recession and as competition intensifies in the year ahead.

Deep price cuts this month have positioned Tesla as the initiator of a price war, but its forecast of a 37% rise in car volume for the year, to 1.8 million vehicles, was down from 2022’s pace.

However, Musk, who has missed his own ambitious sales targets for Tesla in recent years, said 2023 deliveries could hit 2 million vehicles, absent external disruption.

Tesla’s sales prospects, as it confronts a weaker economy, are a key focus for investors. The company said it maintains a long-term target of a compounded 50% annual rise in sales.

Musk addressed the issue at the start of a call with investors and analysts.

“These price changes really make a difference for the average consumer,” he said, adding that vehicle orders were roughly double production in January, leading the automaker to make small price increases for the Model Y SUV.

He said he expected a “pretty difficult recession this year,” but demand for Tesla vehicles “will be good despite probably a contraction in the automotive market as a whole.”

Shares rose 5.3% in extended trading.

CYBERTRUCK

The company is relying on older products and Musk said its Cybertruck, its next new electric pickup truck, would not begin volume production until next year. Reuters in November reported that the highly anticipated model would not be produced in volume until late this year.

Tesla will detail plans for a “next-generation vehicle platform” at its investor day in March.

Tesla’s vehicles “are all in desperate need of updates beyond software,” said Jessica Caldwell, Edmunds’ executive director of insights. She said Tesla will largely depend on the cheaper unit as well as Model 3 and Model Y to bring EVs to the masses.

“It’s unlikely that the Cybertruck will attempt to achieve mass-market volumes like the Detroit competitors.”

Reuters Graphics

[1/5] A Tesla supercharging station is seen in the early morning sun, in Kettleman City, California, U.S., January 25, 2023. REUTERS/Mike Blake

Reuters Graphics

Analysts said Tesla’s goal is bullish given the macroeconomic uncertainties.

“I think that you’re going to see some severe demand destruction across consumer spending and I think cars are going to take a big hit,” Edward Moya, senior market analyst at OANDA, said.

Tesla said it does not expect meaningful near-term volume growth from China, since its Shanghai factory was running near full capacity, rebounding from production challenges last year.

“Even a small cooling of demand will have significant implications for the bottom line,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.

Tesla said that its automotive gross margins, which dropped to a two-year low of 25.9% in the reported quarter, were pressured by the costs of ramping up battery production and new factories in Berlin and Texas, as well as higher raw material, commodity, logistics and warranty costs.

Tesla expected its automotive gross margin to remain above 20%.

Margins generally are expected to be under further pressure from its aggressive price cuts. Tesla, which had made a series of price increases since early 2021, reversed course and offered discounts in December in the United States, followed by price cuts of as much as 20% this month.

Analysts had said Tesla’s profitability gave it room to cut prices and pressure rivals. The company’s $9,000 in net profit per vehicle in the past quarter was more than seven times the comparable figure for Toyota Motor Corp (7203.T) in the third quarter. But it was down from almost $9,700 in the third quarter.

“In severe recessions, cash is king, big time,” Musk said, adding that Tesla is well positioned to cope with an economic downturn because of its $20 billion of cash.

The company’s stock posted its worst drop last year, hit by demand worries and Musk’s acquisition of Twitter, which fueled investor concerns he would be distracted from running Tesla.

Musk dismissed surveys that suggest his political comments on Twitter are damaging the Tesla brand. “I might not be popular” with some, he said, “but for the vast majority of people, my follow count speaks for itself.” He has 127 million followers.

Revenue was $24.32 billion for the three months ended Dec. 31, compared with analysts’ average estimate of $24.16 billion, according to IBES data from Refinitiv.

Tesla’s full-year earnings were bolstered by $1.78 billion in regulatory credits, up 21% from a year earlier.

Adjusted earnings per share of $1.19 topped the Wall Street analyst average of $1.13.

It ended the fourth quarter with 13 days’ worth of vehicles in inventory, more than four times higher than the start of 2022, and a record $12.8 billion in value.

Reporting by Hyunjoo Jin in San Francisco and Akash Sriram in Bengaluru, Additinoal reporting by Joe White and Ben Klayman in Detroit and Kevin Krolicki in Singapore
Writing by Peter Henderson
Editing by Sriraj Kalluvila, Matthew Lewis, Sam Holmes and David Goodman

Our Standards: The Thomson Reuters Trust Principles.

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Technology

Rockstar’s Grand Theft Auto Online Has a Serious Security Bug for PC Users

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Photo: Sergei Elagin (Shutterstock)

Reports indicate that a bug in Grand Theft Auto V Online is putting PC gamers’ gameplay—and even, potentially, hardware—at risk.

The bug is allegedly allowing cheaters and modders to hijack, edit, or corrupt PC gamers account information. Some players report having all of their gameplay and account data erased, while others have said that their in-game currency has been stolen. Worse, the bug allegedly allows for “partial remote code execution,” which could allow malicious users to edit players PC files. While GTA’s publisher, Rockstar Games, hasn’t officially commented on the situation yet, many commentators have encouraged PC players to refrain from playing the game until we all have a better picture of what’s going on.

News of the troubles first started popping up in various pockets of the internet over the weekend, with one particular observer, the twitter account Tez2 (which regularly updates about Rockstar news), posting extensively about the exploit. Complaints also exploded in Rockstar’s official support forums.

“Gta online on pc is currently unplayable due to severe exploits, this needs to be fixed,” one user posted.

“Scared to play online,” another commented. “Please fix this rockstar, I really like this game.”

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Another merely said: “GET YOUR *** TOGETHER ROCKSTAR!”

Meanwhile, a subreddit devoted to the game has called for players to avoid the game until further notice. “As we’ve learned it is not safe to play the game on PC right now due to a very dangerous exploit that has just come to light,” reads a pinned post shared in the subreddit. “We need to mass-report this to Rockstar so they can’t ignore it.”

On the same subreddit, users have expressed frustration that Rockstar hasn’t addressed—or even confirmed—the security issue yet: “Absolutely the most unforgivable element of this. R* is more concerned with bad press than telling people the extent to which their game has been breached and what danger it poses to their personal information,” commented one user. “It really makes me think the worst, if they can’t even come out and say X is safe for now.”

Tez2, which has been monitoring the situation, has written that “Rockstar is aware [of the problem] and have been logging any affected account before the first mod menu started abusing the new exploits.” However, the company itself hasn’t published an official statement on the issue yet.

BleepingComputer has reported that the vulnerability associated with the exploit has already accrued an official CVE designation and is being tracked as CVE-2023-24059. The CVE describes the bug as allowing a hacker to “achieve partial remote code execution or modify files on a PC.” There aren’t a whole lot of details available about how the exploit is supposed to work, however.

Gizmodo reached out to Rockstar for comment on the apparent security problems but have not heard back. We will update this story if they respond.

If the bug does turn out to be real, it would be far from the first bit of security trouble that Rockstar has been through lately. Last year, a cybercriminal managed to compromise the gaming giant’s systems and proceeded to steal (and later leak) source code to the upcoming GTA 6.



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Business

Wall Street surges, powered by tech rebound

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  • Baker Hughes falls on missing Q4 profit estimates
  • Activist investor Elliott Management takes stake in Salesforce
  • Chips on track for biggest daily gain since Nov
  • Indexes up: Dow 0.98%, S&P 1.41%, Nasdaq 2.09%,

NEW YORK, Jan 23 (Reuters) – Wall Street surged on Monday, led higher by technology stocks as investors embarked on an earnings-heavy week with a renewed enthusiasm for market leading momentum stocks that were battered last year.

All three major stock indexes extended Friday’s rally, gaining momentum as the day progressed. The tech-heavy Nasdaq was out front, boosted by a 4.9% jump in semiconductor shares (.SOX).

“This is a remarkable rally in many of the names that did badly last year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “No one wants to be watching from the sideline with a bunch a cash as the market gets away from them.”

The session marks a calm before the storm in a week jam-packed with high profile earnings reports and back-end loaded with crucial economic data.

Investors are all but certain the Federal Reserve implement a bite-sized interest rate hike next week even as the U.S. central bank remains committed to taming the hottest inflationary cycle in decades.

Financial markets have priced in a 99.8% likelihood of a 25 basis point hike to the Fed funds target rate at the conclusion of its two-day monetary policy meeting next Wednesday, according to CME’s FedWatch tool.

The Dow Jones Industrial Average (.DJI) rose 328.17 points, or 0.98%, to 33,703.66, the S&P 500 (.SPX) gained 55.93 points, or 1.41%, to 4,028.54 and the Nasdaq Composite (.IXIC) added 232.84 points, or 2.09%, to 11,373.28.

All 11 major sectors in the S&P 500 were higher, with tech (.SPLRCT) up the most, jumping 2.8%.

Fourth-quarter reporting season has shifted into overdrive, with 57 of the companies in the S&P 500 having posted results. Of those, 63% have delivered better than expected earnings, according to Refinitiv.

Analysts now see S&P 500 fourth quarter earnings, on aggregate, dropping 3% year-on-year, nearly twice as steep as the 1.6% annual drop seen at the beginning of the year, per Refinitiv.

This week, Microsoft Corp (MSFT.O) and Tesla Inc , along with a spate of heavy-hitting industrials including Boeing CO (BA.N), 3M Co (MMM.N), Union Pacific Corp (UNP.N) Dow Inc (DOW.N), Northrop Grumman Corp (NOC.N), are expected to post quarterly results.

Tesla Inc (TSLA.O) surged 7.8% as Chief Executive Elon Musk took the stand in his fraud trial related to a tweet saying he had backing to take the electric automaker private.

Baker Hughes Co (BKR.O) missed quarterly profit estimates due to inflation pressures and ongoing disruptions due to Russia’s war on Ukraine. The oilfield services company’s shares were off 0.9%.

Cloud-based software firm Salesforce Inc (CRM.N) jumped 3.1% following news that activist investor Elliot Management Corp has taken a multi-billion dollar stake in the company.

Spotify Technology SA (SPOT.N) joined the growing list of tech-related companies to announce impending job cuts, shedding 6% of its workforce as rising interest rates and the looming possibility of recession continue to pressure growth stocks. The music streaming company’s shares rose 2.1%.

On the economic front, the Commerce Department is expected to unveil its initial “advance” take on fourth-quarter GDP in Thursday, which analysts expect to land at 2.5%.

On Friday, the wide-ranging personal consumption expenditures (PCE) report is due to shed light on consumer spending, income growth, and crucially, inflation.

Advancing issues outnumbered declining ones on the NYSE by a 3.53-to-1 ratio; on Nasdaq, a 1.95-to-1 ratio favored advancers.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 66 new highs and 14 new lows.

Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru
Editing by Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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Business

New suppliers race to plug in to electric car market

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WOKING, England, Jan 23 (Reuters) – The global auto industry has committed $1.2 trillion to developing electric vehicles (EVs), providing a golden opportunity for new suppliers to grab contracts providing everything from battery packs to motors and inverters.

Startups specialising in batteries and coatings to protect EV parts, and suppliers traditionally focused on niche motorsports or Formula One (F1) racing, have been chasing EV contracts. Carmakers design platforms to last a decade, so high-volume models can generate large revenues for years.

The next generation of EVs is due to hit around 2025 and many carmakers have sought help plugging gaps in their expertise, providing a window of opportunity for new suppliers.

“We’ve gone back to the days of Henry Ford where everyone is asking ‘how do you make these things work properly?’,” says Nick Fry, CEO of F1 engineering and technology firm McLaren Applied.

“That’s a huge opportunity for companies like us.”

Bought from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an efficient inverter developed for F1 racing for EVs. An inverter helps control the flow of electricity to and from the battery pack.

The silicon carbide IPG5 inverter weighs just 5.5 kg (12 lb) and can extend an EV’s range by over 7%. Fry says McLaren Applied is working with around 20 carmakers and suppliers, and the inverter will appear in high-volume luxury EV models starting January 2025.

Mass-market carmakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.

“We just can’t afford to be reliant on third parties making those investments for us,” said Tim Slatter, head of Ford (F.N) in Britain.

Traditional suppliers, such as German heavyweights Bosch and Continental (CONG.DE), are also investing heavily in EVs and other technologies to stay ahead in a fast-changing industry.

But smaller companies say there are still opportunities, particularly with low-volume manufacturers that cannot afford huge EV investments, or luxury and high-performance carmakers seeking an edge.

Croatia’s Rimac, an electric hypercar maker part-owned by Germany’s Porsche AG (P911_p.DE) that also supplies battery systems and powertrain components to other automakers, says an undisclosed German carmaker will use a Rimac battery system in a high-performance model – with annual production of around 40,000 units – starting this year, with more signed up.

“We need to be 20%, 30% better than what they can do and then they work with us,” CEO Mate Rimac says. “If they can make a 100-kilowatt hour battery pack, we must make a 130-kilowatt pack in the same dimensions for the same cost.”

NO TIME TO LOSE

Some suppliers like Cambridge, Massachusetts-based Actnano have had long relationships with EV pioneer Tesla (TSLA.O). Actnano has developed a coating that protects EV parts from condensation and its business has spread to advanced driver-assistance systems (ADAS), as well as other carmakers including Volvo (VOLCARb.ST), Ford, BMW (BMWG.DE) and Porsche.

California-based startup CelLink has developed an entirely automated, flat and easy-to-install “flex harness”, instead of a wire harness to group and guide cables in a vehicle. CEO Kevin Coakley would not identify customers but said CelLink’s harnesses had been installed in around a million EVs. Only Tesla has that scale.

Coakley said CelLink was working with U.S. and European carmakers, and with a European battery maker on battery wiring.

Others are focused on low-volume manufacturers, like UK startup Ionetic, which develops battery packs that would be too expensive for smaller companies to make themselves.

“Currently it costs just too much to electrify, which is why you see some manufacturers delaying their electrification launch,” CEO James Eaton said.

Since 1971, Swindon Powertrain has developed powerful motorsports engines. But it has now also developed battery packs, electric powertrains, e-axles and is working with around 20 customers, including carmakers and an electric vertical take-off and landing (eVTOL) aircraft maker.

“I realized if we don’t embrace this, we’re going to end up working for museums,” said managing director Raphael Caille.

But time may be running out.

Mate Rimac says major carmakers scrambled in the last three years to roll out EVs and now have strategies largely in place.

“For those who haven’t signed projects, I’m not sure how long the window of opportunity will remain open,” he said.

($1 = 0.8226 pounds)

Reporting by Nick Carey
Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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Business

Exclusive: Geely plans to turn maker of London black cabs into EV powerhouse

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COVENTRY, England, Jan 23 (Reuters) – China’s Geely (0175.HK) is planning a big investment to turn the maker of London’s iconic black taxis into a high-volume, all-electric brand with a range of commercial and passenger vehicles, executives at the unit told Reuters.

London Electric Vehicle Company (LEVC) also aims to expand its suite of services, which include cars arranging their own maintenance and recognising their owner’s interests to help them book activities.

“We need a developed product portfolio. We need to make big investments in terms of the technology and infrastructure,” LEVC Chief Executive Alex Nan said at the taxi maker’s headquarters in Coventry, central England. “Geely will make consistent investments into LEVC because this is a very unique project.”

LEVC builds a hybrid taxi model that starts at around 66,000 pounds ($81,500), which has a battery providing 64 miles (103 km) of range and a petrol range-extender giving it a total range of over 300 miles. The company’s business was hit hard by the pandemic and it laid off 140 staff in October.

Nan said LEVC and Geely would seek to attract other investors to its zero-emission portfolio and would look to partner with other carmakers to develop new technology.

Executives said the size of Geely’s investment would be disclosed later. So far the Chinese group, which took full control of LEVC in 2013, has invested 500 million pounds in it.

“Geely fully supports the new transition strategy laid out by LEVC’s board and executive team,” Geely said in a statement.

In 2021, Geely launched a 2 billion pound investment in another unit, niche British luxury sports carmaker Lotus, to massively expand production of its sports cars and build high-end SUVs and sedans in Britain and China. Geely is following a similar path in its plans to grow LEVC, executives said.

Britain’s EV ambitions were dealt a blow last week when startup Britishvolt, which had planned to build a major battery factory in northeast England, filed for administration.

“We need to make sure the UK environment as a whole is competitive and has its position on the world stage,” said LEVC managing director Chris Allen.

READY TO ACCELERATE

Geely owns multiple brands including Volvo (VOLCARb.ST) and – via a joint venture with Volvo – Polestar . Zeekr, another brand in the group, filed for a U.S. initial public offering last month.

As such, Geely faces a complexity that larger EV makers BYD (002594.SZ) and Tesla (TSLA.O) have avoided.

Allen said LEVC was exploring a range of commercial and passenger car models on a common electric platform. It can lean on other group brands that already have EVs to “move forward in a fast, agile way”.

The company already uses an infotainment system and software developed by Volvo and a steering wheel from the Swedish carmaker, allowing it to cut costs, Allen said.

“There’s nothing we couldn’t deliver in a very short time period if we needed to, but it’s just a question of timing,” he said, adding LEVC could easily have a full range of EVs on the road within five years.

“But in two years time, is the industry going to be ready, is the charging infrastructure going to be there, is consumer confidence going to be there?”

LEVC currently has the capacity to build 3,000 taxis a year running on a single shift at its Coventry factory. Allen said that could easily be increased to 20,000 and the plant had room to expand. It could also lean on production in China as Lotus has, Allen said. A major car plant produces on average around 300,000 vehicles per year.

“There’s a huge amount of value in our product that hasn’t ever really been maximised,” Allen said. “This is about growing LEVC into a much more recognizable brand on a global scale and expanding our product offering into as many spaces as we can.”

($1 = 0.8095 pounds)

Reporting by Nick Carey, Additional reporting by Zoey Zhange in Shanghai and Norihiko Shirouzu in Beijing
Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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Business

Amazon’s AWS to invest $35 bln in Virginia

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WASHINGTON, Jan 20 (Reuters) – Amazon.com Inc’s (AMZN.O) cloud services division said Friday it plans to invest another $35 billion by 2040 to expand data centers in Virginia.

Amazon Web Services (AWS) said the new investment will create 1,000 jobs. Virginia Republican Governor Glenn Youngkin said AWS will establish multiple data center campuses across Virginia.

In 2021, AWS said from 2011 to 2020 it had invested $35 billion in data centers located in northern Virginia and had 3,500 full time employees at its data centers in the state.

Pending approval by state lawmakers, Virginia is developing a new “Mega Data Center Incentive Program,” which would allow the company to receive up to a 15-year extension of Data Center Sales and Use tax exemptions on equipment and software.

AWS also will be eligible to receive a state grant of up to $140 million “for site and infrastructure improvements, workforce development, and other project-related costs.”

Amazon shares closed up 3.8% Friday.

Amazon in 2018 after a long contest announced northern Virginia would be home to its second headquarters known as “HQ2” and eventually employ more than 25,000 employees. As of April, Amazon said its headcount assigned to the site was around 5,000.

Youngkin has faced some criticism for withdrawing from a competition to attract a new Ford Motor (F.N) battery plant expected to be built with China’s Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ), the world’s largest battery producer.

Youngkin defended his decision Friday, telling Bloomberg News that he looks “forward to bringing a great company there. It won’t be one that uses kind of a Trojan-horse relationship with the Chinese Communist Party in order to gain.”

A spokesperson for Youngkin has said that “while Ford is an iconic American company, it became clear that this proposal would serve as a front for the Chinese Communist party.”

Ford declined to comment on Youngkin’s decision to withdraw.

In July, Ford said it plans to localize 40 GWh of battery capacity in North America starting in 2026. It also announced CATL would provide battery packs for Mustang Mach-E models for North America starting in 2023 and would discuss cooperation for batteries in Ford vehicles around the world.

“Our talks with CATL continue – and we have nothing new to announce on either front,” Ford said.

Michigan is also a candidate for the Ford battery plant, sources said, and a decision could be made in the coming weeks.

Reporting by David Shepardson and Akash Sriram in Bengaluru; Editing by Aurora Ellis and Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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Business

Musk expected to take stand as trial resumes over Tesla tweet

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SAN FRANCISCO Jan 20 (Reuters) – Elon Musk, Tesla Inc’s (TSLA.O) chief executive, is likely to be called to testify on Friday in a jury trial over his 2018 Twitter post that he had “funding secured” to take the electric carmaker private, which shareholders allege cost them millions in trading losses.

The class action trial in San Francisco federal court resumed with investor Timothy Fries telling the jury how he lost $5,000 buying Tesla stock after Musk sent the tweet at the center of the lawsuit.

Musk, known for combative testimony, is expected to address why he has insisted he had Saudi investor backing for the deal, which never came together, and whether he knowingly made a materially misleading statement with his tweet.

The case is a rare securities class action trial and the plaintiffs have already cleared high legal hurdles, with U.S. Judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.

Shareholders alleged that Musk lied when he sent the tweet, costing investors.

Fries told the jury that funding secured meant to him that “there had been some vetting, some critical review of those funding sources.”

Musk’s attorney, Alex Spiro, told the jury in his opening statement Wednesday that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen. Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.

Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behavior in 2018 lacked the hallmarks of traditional corporate dealmaking by tweeting his interest in Tesla without proper financial or legal analysis.

“Compared to the standard template it’s an extreme outlier,” said Subramanian, who called Musk’s approach “unprecedented” and “incoherent.”

A jury of nine will decide whether the tweet artificially inflated Tesla’s share price by playing up the status of funding for the deal, and if so, by how much.

The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.

Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in San Francisco; Editing by Noeleen Walder, Peter Henderson, Matthew Lewis and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

Jody Godoy

Thomson Reuters

Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com

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Business

Wall St stumbles after weak data, hawkish Fed comments

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  • Fed’s Bullard, Mester back rate increases
  • U.S. retail sales drop in December
  • Indexes down: Dow 1.28%, S&P 1.07%, Nasdaq 0.78%

Jan 18 (Reuters) – Wall Street’s main indexes fell on Wednesday after weak economic data and hawkish comments from Federal Reserve officials sparked worries that the central bank may not pause interest rate hikes any time soon.

Before the market opened, U.S. economic data showed retail sales and producer prices declined more than expected in December. Also production at U.S. factories fell more than expected in December and output in the prior month was weaker than previously thought.

With Wall Street’s major averages showing gains so far for 2023, Sam Stovall, chief investment strategist at CFRA research, said some investors saw the week data as an opportunity to take profits while others worried about the prospects for a recession.

“The market was overbought. Today’s economic data served as a trigger to initiate a profit taking spell and the groups with most profits to take have been the ones that have done best last year,” said Stovall.

By 2:14PM ET, the Dow Jones Industrial Average (.DJI) fell 434.27 points, or 1.28%, to 33,476.58, the S&P 500 (.SPX) lost 42.57 points, or 1.07%, to 3,948.4 and the Nasdaq Composite (.IXIC) dropped 87.02 points, or 0.78%, to 11,008.10.

The weakest sectors on the day are the defensive consumer staples (.SPLRCD), down more than 2%, and utilities (.SPLRCU), which was last down 1.8%.

The benchmark S&P and the blue-chip Dow were both on track for their second straight day of losses, while the Nasdaq, if it ends lower, would snap a seven-day winning streak.

U.S. stocks had started 2023 on a strong footing, with the S&P having closed up almost 4% year-to-date on Tuesday, on hopes that a moderation in inflationary pressures could give the Fed cover to dial down the size of its interest rate hikes.

Roughly halfway through January, the S&P was up 2.7% for the month so far while the Nasdaq was up more than 5% and the Dow, the best performer of the three for 2022, was up 0.9%.

Earlier, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester stressed on the need to raise rates beyond 5% to bring inflation to heel.

The Fed commentary also highlighted the disparity between the U.S. central bank’s estimate of its terminal rate and market expectations, which were of the rate peaking at 4.88% by June. Traders are now betting on a 25-basis point rate hike in February.

“This market is very hopeful that we’re going to get a soft landing and every time you have hawkish comments from the Fed, it feels you’re not going to get that,” Dennis Dick, trader at Triple D Trading.

Investors are also focused on the fourth-quarter earnings season as a window into how corporate America is doing against the backdrop of higher interest rates.

Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.6% for the quarter, according to Refinitiv data, compared with a 1.6% decline in the beginning of the year.

IBM Corp (IBM.N) was down 2.6% after Morgan Stanley downgraded the company’s shares to “equal weight” from “overweight”.

Early gainers Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O) erased gains by late afternoon trading with Microsoft down 1.2% and Tesla off 2.7%.

Moderna Inc (MRNA.O) rose 3.6% after reporting data which demonstrated the effectiveness of its respiratory syncytial virus (RSV) vaccine.

PNC Financial Services Group Inc (PNC.N) was down 5.4% after the company missed estimates for fourth-quarter profit.

Declining issues outnumbered advancing ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.66-to-1 ratio favored decliners.

The S&P 500 posted 9 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 71 new highs and 14 new lows.

Reporting by Sinéad Carew in New York, Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Shubham Batra; Editing by Shounak Dasgupta and David Gregorio

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Tesla video promoting self-driving was staged, engineer testifies

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Jan 17 (Reuters) – A 2016 video that Tesla (TSLA.O) used to promote its self-driving technology was staged to show capabilities like stopping at a red light and accelerating at a green light that the system did not have, according to testimony by a senior engineer.

The video, which remains archived on Tesla’s website, was released in October 2016 and promoted on Twitter by Chief Executive Elon Musk as evidence that “Tesla drives itself.”

But the Model X was not driving itself with technology Tesla had deployed, Ashok Elluswamy, director of Autopilot software at Tesla, said in the transcript of a July deposition taken as evidence in a lawsuit against Tesla for a 2018 fatal crash involving a former Apple (AAPL.O) engineer.

The previously unreported testimony by Elluswamy represents the first time a Tesla employee has confirmed and detailed how the video was produced.

The video carries a tagline saying: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”

Elluswamy said Tesla’s Autopilot team set out to engineer and record a “demonstration of the system’s capabilities” at the request of Musk.

Elluswamy, Musk and Tesla did not respond to a request for comment. However, the company has warned drivers that they must keep their hands on the wheel and maintain control of their vehicles while using Autopilot.

The Tesla technology is designed to assist with steering, braking, speed and lane changes but its features “do not make the vehicle autonomous,” the company says on its website.

To create the video, the Tesla used 3D mapping on a predetermined route from a house in Menlo Park, California, to Tesla’s then-headquarters in Palo Alto, he said.

Drivers intervened to take control in test runs, he said. When trying to show the Model X could park itself with no driver, a test car crashed into a fence in Tesla’s parking lot, he said.

“The intent of the video was not to accurately portray what was available for customers in 2016. It was to portray what was possible to build into the system,” Elluswamy said, according to a transcript of his testimony seen by Reuters.

When Tesla released the video, Musk tweeted, “Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot.”

Tesla faces lawsuits and regulatory scrutiny over its driver assistance systems.

The U.S. Department of Justice began a criminal investigation into Tesla’s claims that its electric vehicles can drive themselves in 2021, after a number of crashes, some of them fatal, involving Autopilot, Reuters has reported.

The New York Times reported in 2021 that Tesla engineers had created the 2016 video to promote Autopilot without disclosing that the route had been mapped in advance or that a car had crashed in trying to complete the shoot, citing anonymous sources.

When asked if the 2016 video showed the performance of the Tesla Autopilot system available in a production car at the time, Elluswamy said, “It does not.”

Elluswamy was deposed in a lawsuit against Tesla over a 2018 crash in Mountain View, California, that killed Apple engineer Walter Huang.

Andrew McDevitt, the lawyer who represents Huang’s wife and who questioned Elluswamy’s in July, told Reuters it was “obviously misleading to feature that video without any disclaimer or asterisk.”

The National Transportation Safety Board concluded in 2020 that Huang’s fatal crash was likely caused by his distraction and the limitations of Autopilot. It said Tesla’s “ineffective monitoring of driver engagement” had contributed to the crash.

Elluswamy said drivers could “fool the system,” making a Tesla system believe that they were paying attention based on feedback from the steering wheel when they were not. But he said he saw no safety issue with Autopilot if drivers were paying attention.

Reporting by Hyunjoo Jin; Editing by Kevin Krolicki and Lisa Shumaker

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