Tag Archives: Automakers

Renault slashes Nissan stake as the automakers overhaul their decades-long alliance

Renault and Nissan automobile logos are pictured during the Brussels Motor Show on January 9, 2020 in Brussels. (Photo by KENZO TRIBOUILLARD/AFP via Getty Images)

Kenzo Tribouillard | Afp | Getty Images

Automobile giants Renault and Nissan on Monday agreed to restructure their decades-long alliance, in a move that would see Renault’s shareholdings in Nissan reduced from around 43% to 15%.

The deal, which still pends board approvals, would equalize the companies’ cross-shareholdings, with the carmakers now able to “freely exercise the voting rights attached to their 15% direct shareholdings, with a 15% cap,” the companies said.

The new structure would also see Renault transfer 28.4% of Nissan shares into a French trust.

Voting rights in the trust would be “‘neutralized’ for most of the decisions, but the economic rights (dividends and shares’ sale proceeds) would still entirely benefit to Renault until such shares are sold,” according to the Monday announcement.

Renault would instruct the trustee to sell those shares if “commercially reasonable” and as part of a “coordinated and orderly process.”

The carmakers first signed their coalition in March 1999, expanding it to include junior partner Mitsubishi Motors in 2016. The Monday deal comes after months of intense discussions over the restructure of the Franco-Japanese alliance.

As part of the agreement, Nissan would also invest in Ampere, Renault’s electric vehicle arm, while the two companies will embark on “high-value-creation operational projects” in Latin America, India and Europe.

Renault announced in November that it had signed a non-binding framework agreement with China’s Geely to establish a new company producing hybrid powertrains and “highly efficient ICE [internal combustion engine] powertrains.”

The French giant has also entered into a long-term strategic cooperation with U.S. chipmaker Qualcomm.

Renault shares dropped 1.4% in early trade in Europe, while Nissan shares were down by around 0.7% during Asian trading hours overnight.

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Elon Musk Hints At ‘Epic’ Q4 After Revenue Miss, GM’s Pricey Cadillac Celestiq Draws Flak, Automakers To Double Down On EV Spending And More: The Week’s Biggest EV Stories – Tesla (NASDAQ:TSLA)

As the market staged a rebound, helped by a positive start to the earnings season, most electric vehicle stocks advanced in the week ended Oct. 21.

The week’s EV news flow was headlined by market leader Tesla, Inc.’s TSLA earnings report.

Here are the key events to bring EV investors up to date: 

Tesla’s Present Tense, Future Perfect: Tesla’s third-quarter revenue and automotive gross margin came in shy of estimates, generating negative sentiment toward the stock.

CEO Elon Musk sounded upbeat on the earnings call. He suggested the fourth quarter will likely be “epic.” The Semi launch event will be held on Dec. 1, the billionaire confirmed. The company targets scaling up Semi manufacturing to 50,000 by 2024.

Tesla shared on its official Twitter account a link to vote for supercharger locations, and those with a Tesla account can cast their votes. The company said that in every three-month voting cycle, voters can cast multiple votes to help it decide on new locations for its superchargers.

Tulipshare, a retail shareholder platform, called upon Tesla to link executive pay to environmental, social and governance factors, Reuters reported. The group said it plans to submit a shareholder resolution on the matter during the EV maker’s annual meeting of stockholders in 2023. So far, CEO Musk’s compensation is tied to the company’s financial performance.

With the Twitter, Inc. TWTR deal deadline approaching, analysts, including Gary Black of Future Fund, expect Musk to offload more Tesla shares next week. Black predicts a rally in Tesla shares once the Twitter deal overhang lifts.

See also: Elon Musk Says This Is The ‘Closest We Have Been To’ World War 3 Since 1962 As He Warns Of A Global Recession Lasting Until Spring 2024

GM’s Cadillac Unveils $300,000 EV: General Motors Corporation’s GM Cadillac announced an ultra-luxury EV named Celestiq priced at a whopping $300,000-plus, which would go into production by the end of next year. Not many are confident that there will be takers for the pricier car and began drawing parallels with Apple, Inc.’s AAPL now-defunct 18K Gold Apple Watch Edition.

Automakers To Double Spending? Spending on EVs as well as batteries and battery materials is expected increase to $1.2 trillion through 2030, Reuters reported, citing public data and projections released by automakers.

Automakers are looking to build 54 million battery EVs by the same time frame, accounting for about 50% of total vehicle production, the report said.

Rivian Almost Through With Fixing Recalled Vehicles: Rivian Automotive, Inc. RIVN CEO R.J. Scaringe said at a TechCrunch conference that the company has fixed a significant majority of the more than 12,000 vehicles that it recalled this month.

The recall was initiated to fix a loose fastener connecting the front upper control arm and the steering knuckle.

He also suggested that Rivian is excited about the e-bike space. The CEO suggested it is going to play an important role in transportation, both for the movement of goods for commercial purposes and also for the movement of people.

Canoo’s Order Book Abounds: Canoo Inc. GOEV announced a binding order for 9,300 EVs from Kingbee, a van rental provider, with an option to increase to 18,600 vehicles. Kingbee will upfit, wrap and deliver Canoo vehicles as work-ready fleets solutions for enterprise and small- and medium-size business customers across the U.S.

Read Next: Best Electric Vehicle Stocks

EV Stock Performance For The Week:

The Cadillac Celestiq. Courtesy photo. 

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Elon Musk Hints At ‘Epic’ Q4 After Revenue Miss, GM’s Pricey Cadillac Celestiq Draws Flak, Automakers To Double Down On EV Spending And More: The Week’s Biggest EV Stories – Tesla (NASDAQ:TSLA)

As the market staged a rebound, helped by a positive start to the earnings season, most electric vehicle stocks advanced in the week ended Oct. 21.

The week’s EV news flow was headlined by market leader Tesla, Inc.’s TSLA earnings report.

Here are the key events to bring EV investors up to date: 

Tesla’s Present Tense, Future Perfect: Tesla’s third-quarter revenue and automotive gross margin came in shy of estimates, generating negative sentiment toward the stock.

CEO Elon Musk sounded upbeat on the earnings call. He suggested the fourth quarter will likely be “epic.” The Semi launch event will be held on Dec. 1, the billionaire confirmed. The company targets scaling up Semi manufacturing to 50,000 by 2024.

Tesla shared on its official Twitter account a link to vote for supercharger locations, and those with a Tesla account can cast their votes. The company said that in every three-month voting cycle, voters can cast multiple votes to help it decide on new locations for its superchargers.

Tulipshare, a retail shareholder platform, called upon Tesla to link executive pay to environmental, social and governance factors, Reuters reported. The group said it plans to submit a shareholder resolution on the matter during the EV maker’s annual meeting of stockholders in 2023. So far, CEO Musk’s compensation is tied to the company’s financial performance.

With the Twitter, Inc. TWTR deal deadline approaching, analysts, including Gary Black of Future Fund, expect Musk to offload more Tesla shares next week. Black predicts a rally in Tesla shares once the Twitter deal overhang lifts.

See also: Elon Musk Says This Is The ‘Closest We Have Been To’ World War 3 Since 1962 As He Warns Of A Global Recession Lasting Until Spring 2024

GM’s Cadillac Unveils $300,000 EV: General Motors Corporation’s GM Cadillac announced an ultra-luxury EV named Celestiq priced at a whopping $300,000-plus, which would go into production by the end of next year. Not many are confident that there will be takers for the pricier car and began drawing parallels with Apple, Inc.’s AAPL now-defunct 18K Gold Apple Watch Edition.

Automakers To Double Spending? Spending on EVs as well as batteries and battery materials is expected increase to $1.2 trillion through 2030, Reuters reported, citing public data and projections released by automakers.

Automakers are looking to build 54 million battery EVs by the same time frame, accounting for about 50% of total vehicle production, the report said.

Rivian Almost Through With Fixing Recalled Vehicles: Rivian Automotive, Inc. RIVN CEO R.J. Scaringe said at a TechCrunch conference that the company has fixed a significant majority of the more than 12,000 vehicles that it recalled this month.

The recall was initiated to fix a loose fastener connecting the front upper control arm and the steering knuckle.

He also suggested that Rivian is excited about the e-bike space. The CEO suggested it is going to play an important role in transportation, both for the movement of goods for commercial purposes and also for the movement of people.

Canoo’s Order Book Abounds: Canoo Inc. GOEV announced a binding order for 9,300 EVs from Kingbee, a van rental provider, with an option to increase to 18,600 vehicles. Kingbee will upfit, wrap and deliver Canoo vehicles as work-ready fleets solutions for enterprise and small- and medium-size business customers across the U.S.

Read Next: Best Electric Vehicle Stocks

EV Stock Performance For The Week:

The Cadillac Celestiq. Courtesy photo. 

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Plenty of roadblocks for automakers seeking EV success

BUILT-IN DEMAND

Automakers are on notice that “they are going to have to figure out how to put cars on the market”, said Jessica Caldwell, executive director of insights for the automotive research firm Edmunds.

“We used to say that the challenges for electric vehicles would be consumer acceptance and price,” she added.

With car buyers increasingly attuned to the environment and the woes of climate change, selling the concept of electric vehicles is no longer an issue.

In the United States, General Motors says it has more than 150,000 pre-orders for the electric version of its Silverado pickup truck, which will be available next year. The wait time for a Tesla these days is several months.

For Caldwell, the bigger issue now is whether automakers “can get the raw materials” they need to make the cars.

SCARCE RAW MATERIALS

Karl Brauer, an executive analyst for used car search engine iseecars.com, agrees, saying that no matter what government incentives are offered for would-be buyers of electric vehicles, the rare elements needed may simply be unavailable.

“Right now, we have a lack of palladium, and nickel, and lithium. Everything you need to build an electric car is harder to get than it was six or 12 months ago,” he told AFP.

The supply issue is linked partly to Russia’s invasion of Ukraine six months ago.

But Brauer said that “nobody, a year ago, would have predicted the kind of price escalation for those raw materials, and the difficulty of getting them”.

The situation “can change drastically” at any given moment, he added.

Automakers are determined to leave as little as possible to chance.

They are building their own factories to produce car batteries, setting up joint ventures with specialised parts makers and sealing partnerships with mining firms.

German auto manufacturers Volkswagen and Mercedes-Benz on Monday signed memorandums of understanding with the Canadian government to ensure their access to rare metals such as lithium, nickel and cobalt.

But, as with oil, the market for these raw materials is a global one, and the normal rules of economics apply, noted Brauer.

“If there is a certain amount of global demand for raw materials, if there is a certain amount of global supply for them, someone will always pay the price,” he said.

For Brauer, shifting production lines to accommodate electric vehicle components is, by comparison, quite easy, as the automakers “have control over that.”

HELP, BUT WITH CONDITIONS

Local regulations could make things more complicated for automakers.

In the United States, new legislation championed by the administration of President Joe Biden allots up to US$7,500 in tax credits to every American who buys an electric vehicle.

But there are conditions: for example, final assembly of those cars must take place within US borders.

The Alliance for Automotive Innovation, a US lobbying group, estimates that about 70 per cent of the 72 electric, plug-in hybrid or hydrogen-powered cars now on the market would not qualify for the tax credit.

For Garrett Nelson, an analyst for the CFRA research firm, the new law will clearly give Tesla, GM and Ford an advantage in the United States over their European and Asian rivals.

Following California’s announcement, the Alliance for Automotive Innovation said it would be “extremely challenging” to meet the sales requirements due to external factors such as inflation, supply chains and charging infrastructure.

The ongoing semiconductor shortage will also play a role, it said in a statement.

“These are complex, intertwined and global issues well beyond the control of authorities in California or the auto industry,” it warned.

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Automakers investing in the South as EVs change the auto industry

Jack Weaver, an 82-year-old retired dairy farmer whose house sits on a Civil War battlefield, lives near General Motors’ Spring Hill plant in Tennessee.

Michael Wayland / CNBC

SPRING HILL, Tenn. – Jack Weaver can point to a cannon on a Civil War battlefield from the comfort of a shaded bench in his backyard — a visible marker of his land’s rich past. As he speaks about his small town, it’s over the loud rumble of cars and trucks at the intersection in front of his farmhouse red home.

The 82-year-old retired dairy farmer has lived in Spring Hill nearly his entire life. He’s watched the once-quiet town in middle Tennessee grow into a burgeoning Nashville suburb. The evolution of Spring Hill has come in conjunction with a population boom in the state as well as the introduction of new industries — in particular, auto companies — that have poured billions of dollars in new investments into the state.

“It’s good and it’s bad,” says Weaver, who complains about cars hitting his fence and the traffic General Motors’ Spring Hill plant has brought since it opened in 1990. “I’m not against development at all. I’m not. I think a man outta do what he wants with his own land.”

Detroit is the city that “put the world on wheels,” but it’s towns like Spring Hill and others in neighboring states that are attracting the most investments from automakers in recent years, as production priorities shift to a battery-powered future with electric vehicles.

Companies more than ever want to build EVs where they sell them, because the vehicles are far heavier and more cumbersome to ship than traditional models with internal combustion engines. They also want facilities for battery production to be close by to avoid supply chain and logistics problems.

Among the first to invest in southern states was Ford Motor in the 1950s and 1960s in Kentucky, followed by foreign-based, or transplant, automakers starting with Nissan Motor, which established a plant in Smyrna, Tennessee, in 1983. Others such as General Motors, Subaru, Toyota Motor and BMW followed suit through the 1990s. More have followed since then, including recent announcements by Hyundai Motor and Rivian Automotive to build multibillion-dollar plants in Georgia.

As more companies look to the American South, the investments are changing the landscape of towns across the region and of the automotive industry’s workforce, supply chain and logistics. Companies first to set up shop in the South earn early advantages over their northern competitors, and future newcomers, according to officials.

Auto executives say they’re investing in the South for a combination of reasons: lower energy costs, available workforce and livability among them. Many southern states also come with other benefits, potentially controversial, such as all-in lower pay for workers, millions in tax breaks and a largely non-unionized workforce in many of the Republican-controlled, right-to-work states.

But the shift brings unique challenges, too. As the Motor City moves and expands south, it has to grapple with preservation of historic plantation farms, unearthing of slave burial grounds and pushback from citizens and local politicians who aren’t used to the traffic or industries.

Investments shifting

Automakers have announced $45.9 billion of investments in southern states since 2017, according to The Center for Automotive Research, a nonprofit think tank based in Ann Arbor, Michigan. That’s the first year the South outpaced the Midwest, or Great Lakes region, for announced investments since at least 2010.

Midwest states such as Michigan, Ohio and Indiana saw $39.9 billion in announced investments in that same timeframe.

Most of the money heading south – $34.2 billion, or 74% – has come in since last year from traditional automakers such as GM, Hyundai and Ford Motor as well as EV startup Rivian. Others such as Volkswagen and Nissan continue to invest and expand their operations in the South, largely for new electric vehicles.

“We are basically undergoing the single biggest industrial transformation, I would say, not to understate it, in the history of America,” Scott Keogh, CEO at Volkswagen of America, told CNBC in June at the automaker’s new battery lab in Chattanooga, Tennessee. “It’s happening right now in this area.”

Scott Keogh of Volkswagen of America at the VW plant in Chattanooga, TN, June 8, 2022.

Michael Wayland | CNBC

Keogh singled out energy capacity and costs as the top priority for the company’s investments in Tennessee, including the potential for new assembly and battery facilities that the company is “actively” scouting locations for. He and other executives have also cited incentives, tax support, labor and workforce training as other key elements.

Ford CEO Jim Farley put a similar emphasis on the cost and availability of energy in September, announcing an $11.4 billion investment in new vehicle and battery plants in Tennessee and Kentucky.

“We want to work with states who are really excited about doing that training and giving you access to that low energy cost,” Farley told the Associated Press then.

Tennessee has among the lowest electricity prices in the country, according to the most recent data from the U.S. Energy Information Administration. The state’s average industrial price of electricity per kilowatt-hour was 6.31 cents as of May. Michigan’s industrial energy cost was 8.72 cents per kilowatt-hour, and the national average was 8.35 cents.

Mississippi and South Carolina were under 7 cents, while Georgia was 9.05 cents – among the highest in area, according to the U.S. Energy Information Administration.

While those cost differences seem minimal, they add up quickly. Ford’s new battery plants will have an annual capacity for 43 megawatt-hours of production. There are 1,000 kilowatt-hours of electricity in a megawatt-hour, meaning tens of thousands of dollars in savings per year.

The expansion south is expected to continue for years to come, according to AlixPartners. The global consulting firm expects investments from automakers and suppliers in southern states such as Alabama, Georgia and Kentucky to total $58 billion for electric vehicles between 2022 and 2026. That’s nearly four times the $15 billion that’s expected in Midwest states, and $20 billion elsewhere in the country.

“It definitely will change but right now there’s a lot more interest and activity happening in the Southern states, particularly with all these automakers making investments on the EV front,” said Arun Kumar, a managing director in the automotive and industrial practice at AlixPartners.

Southern hospitality

State economic development officials from Tennessee and Georgia say their states have made the automotive industry a priority because of the supply chain jobs that typically follow. They also say electric vehicles have helped to level the playing field for new investments.

“This is almost like a seed field of opportunity, as this industry changes because we’re building the supply chain in the United States for electrification from scratch,” said Pat Wilson, commissioner of Georgia’s economic development unit. “There’s a huge amount of opportunity.”

As of July, EV-related projects contributed more than $12.6 billion in investments and more than 17,800 new jobs in Georgia since 2020, officials said.

Tennessee reports automotive companies have added more than 43,800 new jobs and invested $16.5 billion in private capital in the state since 2012, representing nearly 30% of private capital investments during that time.

Nissan’s Smyrna Vehicle Assembly Plant opened in 1983, marking Tennessee’s first major auto facility. The plant employs more than 7,000 people are produces a variety of vehicles, including the Leaf EV and Rogue crossover.

Michael Wayland / CNBC

With billions of dollars on the line and tens of thousands of new jobs, states have offered enormous incentive packages for the companies in the forms of land, tax abatements/incentives and other support such as installation of utilities and roadways.

For example, Tennessee approved an $884 million incentive package for Ford’s plans to spend $5.6 billion in the state, as well as in-kind services and a $2 million grant for training services. Ford’s investment includes a new electric truck plant and battery facility with supplier South Korea-based SK Innovation.

Bob Rolfe, who oversees The Volunteer State’s economic development, said such actions are needed to compete with others. He said to attract Ford last year the state spent years accumulating enough land for an “electric vehicle mega site” ahead of securing the automaker’s commitment.

“We tell our team every day to continue to recruit. Is enough, enough?” Lewis said ahead of a trip to Japan for automotive recruitment in June. “The more great companies that call Tennessee home, the softer the landing when we do hit the next wind shear that’s going to be developed around the next recession.”

Unique issues

But not all agree that the automotive industry should be expanding South into rural areas. Rivian has faced notable pushback since announcing plans last year to build a $5 billion plant about 45 miles east of Atlanta, Georgia.

While hailed by many politicians, including Gov. Brian Kemp, local news outlets report residents of the rural area are concerned with how it will impact their community. Others, including politicians, oppose a $1.5 billion in tax breaks and other incentives that state and local officials have offered Rivian.

Haynes Haven is a historic landmark in Spring Hill, Tennessee that has been maintained by GM since the automaker built an assembly plant near the site in the 1980s.

“[Union Army General] Sherman and his troops destroyed our community. Now this supposedly green company is coming to destroy it again,” JoEllen Artz told NBC News in May. Artz is president of the grassroots No2Rivian group, which says it has raised over $250,000 and hired Atlanta lawyers to fight the plant. “We want to keep it just like it is.”

Building massive assembly plants in traditionally rural areas can also involve a unique set of challenges.

Decades ago, when GM was building its Spring Hill plant, the company unearthed an unmarked slave graveyard. GM paid for the remains to be moved to a nearby burial site.

“When we invest in properties, we’re also investing in communities, their history and culture,” GM said in an emailed statement to CNBC. “With any building or renovation project, we expect to encounter the unexpected, and we try to work with community members to find solutions to fit the unique needs of each situation. In many cases, like in Spring Hill, the unexpected finds become intertwined in our own history, as well.”

It wasn’t the first time GM has operated around such a site. On the property of its Detroit-Hamtramck plant, there’s an active Jewish graveyard that the company agreed to build around when it built the plant in the 1980s.

And, Nissan is reported to have similarly moved a graveyard in Smyrna, Tennessee – located about 28 miles northeast of Spring Hill – when the automaker built its plant and railroads were installed there in the early 1980s. Nissan did not return request for comment.

GM maintained and updated a historic plantation in Spring Hill, Tenn. called Rippavilla as part of a deal for land to build an assembly plant in the city in the 1980s.

Michael Wayland / CNBC

Since GM’s Spring Hill Assembly plant was built, the company also has maintained two historic plantations as part of land deals struck during the construction. It still maintains one called Haynes Haven, whose historic horse stables were turned into a welcome center and used for other events. The surrounding area is currently being used for employee parking during construction of the company’s new $2.3 billion battery plant, next to the original plant.

The other site, called Rippavilla, sits across the street from the plant and was donated by the company to the city in 2016. It is now being run by a nonprofit organization, The Battle of Franklin Trust, committed to Civil War preservation and education.

“The last people that owned Rippavilla were pretty insistent that they wanted it to be a historic site. They did not want to happen to what happened to Haynes Haven, which Haven is owned by GM and able to use however they see fit,” said Eric Jacobson, CEO of the organization.

Jacobson credits GM with saving and maintaining the site in the form of $100,000 a year up until 2016, when a 10-year deal to maintain the property ended. GM said it continues to support the site.

Battling the union

While the automakers may have to navigate battlefields of the South, they don’t have to worry as much about battling unions.

The United Auto Workers has failed to successfully organize a non-Detroit automaker plant in the South, despite decades of attempts. The prominent union also now faces challenges of organizing joint venture battery plants from GM and Ford in the South.

“It’s a very critical time for the UAW,” Ray Curry, president of the union, told CNBC. “This transformation piece is about our future. It’s about 86-plus years of longstanding history.”

Ford’s more than $11.4 billion investment to build new U.S. facilities in Tennessee and Kentucky is expected to create nearly 11,000 jobs to produce electric vehicles and batteries.

Both GM and Ford officials have said the decision of whether to unionize at their U.S. battery plants, which are joint ventures, will be left to the workers.

While the labor cost gap has narrowed between the Detroit automakers and other non-unionized automotive plants, organized labor costs are higher for the companies.

At the end of a current four-year contract between the Detroit automakers and UAW in 2023, the Center for Automotive Research estimates average hourly labor costs per worker will be $71 for GM; $69 for Ford; and $66 for Stellantis, formerly Fiat Chrysler.

“There’s quite a bit of anti-union attitude that prevails in the international carmakers,” said James Rubenstein, a professor emeritus at the University of Miami Ohio, who specializes in the automotive industry. “It’s a little bit easier to do that down South, to keep the union out.”

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Automakers say 70% of EV models don’t qualify for tax credit under Senate bill

Buyers of a majority of electric-vehicle models would not qualify for a $7,500 tax credit under a Democratic proposal in the U.S. Senate.

That’s according to a group of major automakers.

Automakers have been privately concerned about the proposal’s requirements for vehicles’ batteries and critical-mineral contents to be sourced from the United States.

The July 27 proposal by Senators Chuck Schumer and Joe Manchin would make 70% of U.S. electric, plug-in hybrid and fuel-cell EVs ineligible upon passage, according to John Bozzella, heads of the Alliance for Automotive Innovation.

AMAZON, RIVIAN START ROLLING OUT ELECTRIC DELIVERY VANS

Senator Joe Manchin, a Democrat from West Virginia and Senate Majority Leader Chuck Schumer (D-NY). (Kent Nishimura / Los Angeles Times via Getty Images / Getty Images)

The group represents General Motors, Toyota Motor, and Ford Motor among others.

“None would qualify for the full credit when additional sourcing requirements go into effect,” he said.

Car makers want significant changes to the proposal, which is part of a larger drug pricing, energy and tax bill.

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, on March 16, 2021.  (REUTERS/Rebecca Cook / Reuters Photos)

Without the tax credit, the vehicles become more costly for American consumers.

President Biden has a target of having half of all new vehicles sold be electric or plug-in hybrid models by 2030.

ELECTRIC CAR COMPANY REVEALS WHY PEOPLE REALLY BUY ELECTRIC CARS

An analysis by the Congressional Budget Office on Wednesday suggested just 11,000 new EVs would use the credit in 2023.

Walmart and Electrify America announced more than 120 charging stations have been added to stores in 34 states. (Walmart)

Manchin and Schumer’s offices did not immediately comment. The Senate could vote as soon as Saturday on the bill.

The bill includes rising requirements for the percentage of battery components originating from North America based on value. After 2023, it would disallow batteries with any Chinese components.

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The group would rather see a more gradual phase-in of the battery component, critical mineral and final assembly requirements.

Reuters contributed to this report.

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U.S. automakers say 70% of EV models would not qualify for tax credit under Senate bill

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. REUTERS/Rebecca Cook

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WASHINGTON, Aug 5 (Reuters) – Most electric-vehicle models would be ineligible for a $7,500 tax credit for U.S. buyers under a Democratic proposal in the U.S. Senate, a group of major automakers said on Friday.

Automakers have been privately expressing concern about the proposal’s increasing requirements for vehicles’ batteries and critical-mineral contents to be sourced from the United States.

John Bozzella, heads of the Alliance for Automotive Innovation that represents General Motors (GM.N), Toyota Motor (7203.T), and Ford Motor among others, said a July 27 proposal by Senators Chuck Schumer and Joe Manchin would make 70% of 72 U.S. electric, plug-in hybrid and fuel-cell EVs ineligible upon passage.

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“None would qualify for the full credit when additional sourcing requirements go into effect,” he said.

Car makers want significant changes to the proposal, which is part of a larger drug pricing, energy and tax bill.

Without the tax credit, the vehicles become more costly for American consumers, and this could impact demand and sales. It could also slow progress toward President Joe Biden’s target to have half of all new vehicles sold be electric or plug-in hybrid models in 2030.

An analysis by the Congressional Budget Office on Wednesday suggested just 11,000 new EVs would use the credit in 2023. read more

Manchin and Schumer’s offices did not immediately comment. The Senate could vote as soon as Saturday on the bill.

“I don’t believe that we should be building a transportation mode on the backs of foreign supply chains,” Manchin said on Tuesday.

The bill includes rising requirements for the percentage of battery components originating from North America based on value. After 2023, it would disallow batteries with any Chinese components.

“A more gradual phase-in of the battery component, critical mineral and final assembly requirements – that better reflect current geopolitical, sourcing and mineral extraction realities – will preserve the credit for millions of Americans,” Bozzella wrote.

Automakers want to expand countries from which batteries, battery components and critical minerals can be sourced to include NATO members, Japan and others.

The new EV tax credits, which would expire at the end of 2032, would be limited to trucks, vans and SUVs with suggested retail prices of no more than $80,000 and to cars priced at no more than $55,000. They would be limited to families with adjusted gross incomes of up to $300,000 annually.

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Reporting by David Shepardson; Editing by Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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Automakers ask Congress to revive effort

Although an attempted expansion of the federal EV tax credit has failed—multiple times, in recent years—in a renewed effort, automakers are asking Congress to please try again.

In 2009, Congress set a 200,000-vehicle cap of qualifying vehicles—including plug-in hybrids—for each automaker, and the framework hasn’t changed since then. General Motors and Tesla have already reached that limit, and Toyota is close to it. Once automakers hit that cap, their eligibility for the credit is gradually phased out.

In a letter to Senate and House of Representatives leadership Monday, the CEOs of GM, Toyota, Ford, and Stellantis asked for tax credits to be extended to anyone buying a qualifying vehicle—until a sunset date for all EV products regardless of the automaker.

2022 Ford F-150 Lightning

Automakers reportedly don’t want the cap lifted until “the EV market is more mature,” but didn’t give a specific timeframe. The automakers summed that the credit has allowed companies to offer more affordable products in greater volume, spurring EV adoption. “However, recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles which, in turn, puts pressure on the price to consumers,” they argued.

In its current form, the tax credit awards up to $7,500 depending on the size of a vehicle’s battery pack. So in addition to all-electric vehicles, plug-in hybrids like the Toyota RAV4 Prime and Chrysler Pacifica Hybrid qualify.

But in the absence of a proposed revamped and renewed EV tax credit—offering up to $12,500 per vehicle—we’re left with the existing tax credit and its 200,000-unit cap for the foreseeable future. The second quarter after an automaker hits that cap, its tax credit is halved to $3,750, then drops to one-fourth of the full amount ($1,875) two quarters later. It remains at that level for two full calendar quarters after that before disappearing.

2023 Toyota bZ4X Limited AWD

A previous extension of the EV tax credit had bipartisan support but was reportedly cut out of spending bill as part of “extreme resistance” from then-President Trump.

Since then, the EV tax credit expansion has become more politically charged. A version proposed as part of last year’s infrastructure bill was pushed to a reconciliation spending bill that never happened—because of widespread resistance from Republicans and at least one Democratic Senator—West Virginia’s Joe Manchin.

Part of the pushback to that version—which also included a used EV tax credit—was a requirement that EVs be union-made to get the top credit amount. This was opposed by Tesla, Toyota, and Volkswagen, which build (or plan to build) EVs in non-union factories.

This is noteworthy as it represents an allied front that spans those companies that primarily use a unionized American workforce, including GM and Ford, with Toyota, which primarily uses a non-unionized domestic workforce. Will these bridges build an expanded credit? We’ll soon see.

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Automakers idle production following Russia’s invasion, other firms also scramble

Feb 25 (Reuters) – Several companies, including automakers Volkswagen (VOWG_p.DE) and Renault (RENA.PA) and tire maker Nokian Tyres (TYRES.HE), on Friday outlined plans to shut or shift manufacturing operations following Russia’s invasion of Ukraine.

After invading earlier this week, Russian forces pressed their advance on Friday as missiles pounded Kyiv and authorities said they were girding for an assault aimed at overthrowing the government. read more

The United States announced sweeping export restrictions against Russia on Thursday, hammering its access to global exports of goods ranging from commercial electronics and computers to semiconductors and aircraft parts. That could lead companies to alter manufacturing plans or seek alternative supply lines. read more

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The invasion was a factor in consulting firms J.D. Power and LMC Automotive slashing their 2022 global new-car sales outlook by 400,000 vehicles to 85.8 million units. The auto industry had already been dealing with a tight supply of vehicles due to the global semiconductor shortage. read more

“An already-tight supply of vehicles and high prices across the globe will be under added pressure based on the severity and duration of the conflict in Ukraine,” said Jeff Schuster, president of global vehicle forecasts at LMC.

“Rising oil and aluminum prices will likely affect consumers’ willingness and ability to purchase vehicles, even if inventory improves,” he added. “We have made significant downgrades to the Ukraine and Russia forecasts due to the escalating conflict between the two and the repercussions associated with sanctions against Russia.”

The conflict could boost oil prices above $100 a barrel, which would add inflationary pressure on European and American consumers, Wells Fargo analyst Colin Langan said in a research note. While consumers have been willing to pay above sticker price to get new vehicles, sustained higher gas prices could impact long-term recovery, he said.

Germany’s Volkswagen said it would halt production for a few days at two German factories after a delay in getting parts made in Ukraine. read more

France’s Renault said it would suspend some operations at its car assembly plants in Russia next week due to logistics bottlenecks caused by parts shortages. It did not specify whether its supply chain had been hit by the conflict, but a spokeswoman said the action was a consequence of reinforced borders between Russia and neighboring countries through which parts are carried by truck. read more

The carmaker is among Western companies most exposed to Russia, where it makes 8% of its core earnings according to Citibank.

“Interruptions are primarily caused by tighter border controls in transit countries and the forced need to change a number of established logistics routes,” the company’s Russian unit said, without naming any countries.

Russian carmaker Avtovaz (AVAZI_p.MM), controlled by Renault, also said it might suspend some assembly lines at a plant in central Russia for one day, on Monday, due to a persistent global shortage of electronic components. Avtovaz also did not mention the invasion in its statement. read more

Finnish tire maker Nokian said it was shifting production of some key product lines from Russia to Finland and the United States to prepare for possible further sanctions following the invasion. read more

MANAGING DISRUPTION

Aptiv Chief Executive Kevin Clark said on Thursday that over the last couple of months the American auto parts maker had swapped high-volume parts work out of Ukraine in favor of lower-volume products “so we were better-positioned to manage disruption.” read more

Japanese auto supplier Sumitomo Electric Industries , which employs some 6,000 people in Ukraine to make wire harnesses, said it suspended operations at its factories there and was talking to clients about potentially substituting supplies from other places. read more

Ford Motor Co (F.N) has a 50% joint venture in Ford Sollers, which has three assembly plants in Russia according to the Ford website. Ford said in a statement it was “deeply concerned” about the situation and would “manage any effects” on its business in real time.

The U.S. automaker also said it would follow any laws on trade sanctions, but declined to discuss whether the Sollers plants have been affected.

While French car parts maker Valeo (VLOF.PA) said the direct impact on the company is minimal, the invasion could drag down industry production volumes, and hike energy or raw material prices.

For automakers, one of the supply-chain concerns created by the Ukraine conflict centers on the metals palladium, platinum and rhodium used in exhaust-scrubbing catalytic converters.

Russia produces about 38% of the world’s palladium, excluding recycled material, said Mark Wakefield, co-leader of consulting firm AlixPartners global automotive practice.

“It’s hard to think of a global auto business that doesn’t have palladium coming from Russia,” he said.

Automakers should not face an immediate shortage of palladium, Wakefield said, because there are stocks of the metal in London. There is “a six-month journey before palladium finds its way into a car,” he said.

Aluminum prices had been rising before the Ukraine conflict, Wakefield said. A cutoff of Russian aluminum supplies would add to the cost pressures on automakers.

Japan’s biggest steelmaker, Nippon Steel Corp , said on Friday it would secure alternatives for a raw material it buys from Russia and Ukraine in the event of any supply disruptions.

Nippon Steel buys 14% of its iron ore pellets, small balls of iron ore powder used in steel production, from those countries. Officials said it switched sourcing to Brazil and Australia and the impact should be minimal.

Agricultural equipment maker Deere & Co (DE.N) said on Friday it had closed its Ukraine office in recent weeks as a precautionary measure. It employs about 40 people in Ukraine.

Meanwhile, Russia said it was partially limiting access to Meta Platforms Inc’s (FB.O) Facebook, accusing it of “censoring” Russian media. read more

Delta Air Lines Inc (DAL.N), which does not operate services to Ukraine or Russia, said on Friday it had suspended its codesharing service with Russian airline Aeroflot. (AFLT.MM) read more

Amazon.com Inc’s home security subsidiary, Ring, said it was coordinating closely with its partners at Squad in Ukraine “to support the safety and well-being of the team and their families.” According to LinkedIn data, Squad employs more than 700 people, some of whom worked for the research arm Ring Ukraine until about a year ago.

Amazon had no additional comment about its footprint in Ukraine or Russia, or on how U.S. trade actions would impact its business, if at all.

Toronto-based Kinross Gold Corp (K.TO) said its underground Kupol gold mine in Russia’s far northeast corner is operating normally. Nearly all of the company’s employees in the country are Russian, and Kupol has stored a full year’s worth of supplies on site, given that it operates in a cold region, the company said.

Kinross added it was reviewing the latest sanctions against Russia to see how they could affect operations.

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Reporting by Ben Klayman in Detroit, Additional reporting by Gilles Guillaume in Paris, Tom Sims in Frankfurt, Joseph White in Detroit, Ernest Scheyder in Houston and Jeffrey Dastin in San Francisco
Editing by Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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Canada trucker protest live: Automakers seek injunction to clear bridge as US warns of Super Bowl copycat

Aerial footage shows heavily congested Ambassador Bridge as truck convoy jams US-Canada border

Protesters in trucks opposed to Covid-19 restrictions continue to paralyse the centre of Ottawa as similar demonstrations have now spread beyond the Canadian capital to border crossing into the US. The Emerson Port of Entry in Manitoba is the latest to be blocked.

The Ambassador Bridge that connects Windsor, Ontario, with Detroit was first blockaded by trucks in both directions late on Monday, with the final access being shut off on Wednesday night.

As a crucial commercial link between the US and Canada it has quickly hit supply chains with car manufacturers including Toyota and Ford already announcing issues. The mayor of Windsor says protesters will be physically removed if necessary, and has been joined by auto parts manufacturers in seeking an injunction to clear the bridge.

In Ottawa, police have now threatened protesters with criminal charges. Approximately 20 trucks have been persuaded to leave and the police chief says they will be able to move more as extra resources become available.

Prime Minister Justin Trudeau has demanded the protesters go home, and the interim opposition leader Candice Bergen joined his call for an end to the stand off on Thursday morning, while also tabling a motion for the government to produce a timetable winding down pandemic mandates and policies.

In the US, the Biden administration is closely monitoring the situation, with a Department of Homeland Security bulletin warning of copycat protests hitting the Super Bowl in Los Angeles, and the State of the Union address in Washington, DC.

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US urges Canada to end truckers protest

The Biden administration has urged the Canadian government to use its federal powers to end the ongoing truckers protest against Covid-19 vaccine mandates.

Homeland security secretary Alejandro Mayorkas and Transportation secretary Pete Buttigieg spoke with their Canadian counterparts and urged them to help resolve the standoff, said the White House.

With the Ambassador Bridge closed for the fourth straight day, supplies have been hit on both sides of the border.

Several automakers including General Motors have been forced to shut their plants due to parts shortages as a fallout of the protests.

In a joint statement the US Chamber of Commerce and the National Association of Manufacturers and Business Roundtable urged the Canadian government to act swiftly, reported Associated Press.

“The disruptions we are seeing at the US-Canada border — at the Detroit-Windsor Ambassador Bridge and at other crossings — are adding to the significant supply chain strains on manufacturers and other businesses in the United States,” the statement said.

“We respectfully urge the Canadian government to act swiftly to address the disruption to the flow of trade and its impact on manufacturers and other businesses on both sides of the border.”

(FILE) Vehicles block the route leading from the Ambassador Bridge that links Detroit and Windsor

(REUTERS)

Sravasti Dasgupta11 February 2022 05:55

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‘Get off the bridge and let our people get back to work’

Linda Hasenfratz, CEO of Linamar, Canada’s second-largest automobile parts manufacturer, says they are watching the protest on the Ambassador Bridge “with concern” and call for the protestors to “get off the bridge”.

“We are watching with concern the situation at the border regarding the ongoing protest. The last thing any business needs right now is to be shut down yet again. Cutting Canada off from our biggest trading partner can ultimately have only one impact, reducing output.

“The last two years have been so disruptive to every one of us and our families with situations we can’t control; this one we can.”

She concludes: “To the protestors, please get off the bridge and let our people get back to work earning money for their families.”

Oliver O’Connell11 February 2022 05:32

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Canada Conservatives push government to present plan lifting federal Covid mandates

Canada’s Conservative party is pushing for the federal government under Prime Minister Justin Trudeau to present a plan to lift all federal Covid-19 mandates following a call to the trucker demonstrations to end their protests, CTV reports.

Interim Conservative Leader Candice Bergen tabled a motion asking the government to present such a plan by the end of the month as provinces across Canada have begun phasing out their own Covid regulations in the wake of the Omicron variant wave.

The Health Minister Jean-Yves Duclos acknowledged that while the country is in a much better place than two years ago thanks to the vaccines, there are still thousands of new Covid cases and hospital capacity remains stretched.

The Conservative motion will be voted on this coming Monday.

Oliver O’Connell11 February 2022 04:45

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Auto groups join legal action against bridge blockaders as mayor of Windsor says they will be physically removed

Auto-industry groups and the City of Windsor, Ontario, are seeking an injunction to end the blockade of the Ambassador Bridge.

Windsor Mayor Drew Dilkens told a news briefing on Thursday he hopes the injunction will be before a Superior Court of Justice judge later today, and the city “will work with police to enforce that injunction”.

He said of the protestors: “The individuals on site are trespassing on municipal roads and if need be will be removed to allow for the safe and efficient movement of goods across the border.”

Mr Dilkens said the main applicants for the injunction are the Automotive Parts Manufacturers’ Association and Canadian Vehicle Manufacturers’ Association, along with the City of Windsor and Chamber of Commerce “as supportive interveners”.

The mayor also expressed frustration that the protestors have no clear leadership and that the issues being protested over have diversified away from Covid vaccine mandates as the protest took on a life of its own.

“We can’t just let this lawlessness happen.”

Speaking to CNN he added: “[If] the protesters don’t leave, there will have to be a path forward. If that means physically removing them, that means physically removing them, and we’re prepared to do that.”

Oliver O’Connell11 February 2022 03:50

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Trucker protest disrupting Canadian car production

Toyota says it does not expect its auto plants in Ontario to produce vehicles for the rest of the week, because of supply problems stemming from the protests.

“Due to a number of supply chain, severe weather and COVID related challenges, Toyota continues to face shortages affecting production at our North American plants, including Toyota Motor Manufacturing Canada,” the company said.

Oliver O’Connell11 February 2022 03:00

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White House: Ambassador Bridge blockade ‘poses risk to supply chains’

Oliver O’Connell11 February 2022 02:15

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Ambassador Bridge owner says three ways to end blockade

Matt Moroun, chairman of the Detroit International Bridge Company, the owner of the Ambassador Bridge, says “we are only just beginning to feel the devastating impact” on the economy of the blockaded bridge.

“This cannot continue any longer,” he says on behalf of those whose livelihoods depend on the busy international trade route.

He suggests three options to end the standoff quickly:

1. End the protest by repealing the mandate and recognising that while the vast majority of truck drivers are vaccinated there are some who for many reasons are choosing not to get vaccinated but deserve to be respected and allowed to do their jobs and serve our countries with dignity.

2. Remove the vehicles blocking the Ambassador Bridge so commerce and trade can resume.

3. Do nothing and hope this ends on its own: an option that will mostly prolong the blockade, further crippling our economy and putting more jobs at risk.

He adds that the protest goes to show the importance of the bridge to international commerce between the US and Canada — once the crisis is resolved he would like recognition that such crossings are too important to be subjected to politics and short-term thinking that compromises commerce, jobs ,and the shared economy.

Oliver O’Connell11 February 2022 01:15

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Copycat ‘freedom convoy’ pushed by QAnon could target Super Bowl, US agency warns

President Joe Biden may be forced to tackle trucker protests similar to those seen in Canada, potentially targeting the Super Bowl, according to warnings from the Department of Homeland Security.

In a memo shared with police partners and reported by The Hill, the DHS wrote that it had “received reports of truck drivers potentially planning to block roads in major metropolitan cities in the United States in protest of, among other things, vaccine mandates”.

Oliver O’Connell11 February 2022 00:15

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New fronts open up in Ottawa protests

Frustrations and conflicts tied to the trucker convoy in Ottawa are spilling over onto new fronts Thursday, with police reporting “a concerted effort to flood” 911 lines, protesters mobilizing at the local airport and hackers taking aim at city council.

Earlier in the day, city officials had warned of traffic disruptions at the city’s international airport as the trucker convoy encamped across the city enters its 14th day, and some members appeared to be encircling the airport.

That now appears to have ended, but it remains unclear whether the group will move to a different site or return to the airport.

Ottawa police had told Global News they are “aware” of the convoy’s presence at the airport and shortly after, issued a tweet warning of attempts to target emergency lines.

“We are aware of a concerted effort to flood our 911 and non-emergency policing reporting line. This endangers lives and is completely unacceptable,” the police service said.

Oliver O’Connell10 February 2022 23:15

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Ottawa Police have provided an update on the ongoing efforts to combat disruption

“More resources means a faster set of results to end this unlawful demonstration,” says Police Chief Peter Sloly.

He says 12 trucks from the Coventry Road area have left, as have ten from Wellington Street. Firewood and fuel are being taken from protesters and charges made. To date, there have been 25 arrests and 1,550 tickets issued.

Mr Sloly says progress is being made but more resources are still needed.

To demonstrators thinking of coming to the city this weekend, Chief Sloly says: “Don’t. There will be accountability for any unlawful activity.”

Mr Sloly says more and more Royal Canadian Mounted Police officers are being brought in, and more Greater Toronto and Hamilton Area officers are coming in 24 to 48 hours to help.

Ontario Provincial Police officers are helping to triage resources in the city and across the province.

“Let me be clear, there is no reluctance to be involved in enforcement efforts. We’ve been enforcing the law from day one and we continue to so as more resources become available,.” says Chief Sloly.

Oliver O’Connell10 February 2022 22:30

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