Intel Corp. said it plans to invest at least $20 billion in new chip-making capacity in Ohio, bolstering the company’s semiconductor-production ambitions as greater demand for digital products and a global chip shortage have amplified the need for more manufacturing.
Intel said Friday it would invest in two new chip factories just outside Columbus, Ohio, to add to Intel’s effort to expand its chip-making business. The company has made more than $100 billion in investment pledges over the past year. Intel Chief Executive Pat Gelsinger said the site could eventually grow to accommodate eight chip factories, also known as FABs.
plans to invest more than $3 billion to make electric vehicles in Michigan, people familiar with the matter said, a potential win for the car maker’s home state after recent commitments of auto projects to Southern states.
GM is finalizing plans for two electric-vehicle projects in Michigan. One would convert its Orion Assembly plant in suburban Detroit to serve as its hub for production of electric pickup trucks, the people with knowledge of the plans said. The renovation would cost at least $2 billion and would be expected to create more than 1,500 jobs at the factory, which today is lightly used, the people said.
Also, the auto maker intends to build a battery-cell factory near one of its assembly plants in Lansing, Mich., the people said. That project, involving a 50-50 joint venture between GM and its battery partner, LG Energy Solutions, would split more than $2 billion between GM and LG and create around 1,200 jobs, the people said.
GM officials are in talks with local governments to secure tax abatements and other approvals for the projects, and the plans could fall through or be altered, the people said.
“GM is in the initial stages of developing a business case for a potential future investment at several locations, including the Orion Township area,” the Detroit-based company said in a statement Friday. “We are having discussions with the appropriate local officials on potential incentive opportunities.”
GM shares rose about 6% Friday, closing at $63.21.
Auto makers are rushing to secure future battery supplies as the industry prepares to roll out dozens of new plug-in models over the next few years. Electric vehicles accounted for only about 4% of U.S. vehicle sales this year through November, and about 8% of global sales, according to an investor note Friday from
Credit Suisse.
But sales are growing rapidly as auto makers introduce new models and governments around the world tighten restrictions on tailpipe emissions. Credit Suisse said it now expects electrics to account for 24% of new-vehicle sales globally by 2025, up from a previous forecast of 17%.
Toyota Motor Corp.
plans to spend $1.25 billion on a new battery plant in rural North Carolina, according to a public-incentives deal approved Monday.
Ford
Motor Co. in September said it would invest more than $11 billion to build three battery plants, two in Kentucky and one in Tennessee, near Memphis, along with an electric-truck plant, its first new U.S. assembly plant in decades.
The planned GM investments would be notable for Michigan, especially after
Gov. Gretchen Whitmer
expressed disappointment that the state wasn’t selected for Ford’s projects. Her office declined to comment on potential future projects.
General Motors plans to phase out nearly all of its gas and diesel vehicles by 2035. Leading that transition is the first fully electric Cadillac. WSJ’s Mike Colias visited a GM testing site for a ride and an exclusive interview with GM’s President Mark L. Reuss. Photo Illustration: Alexander Hotz
Much of the recent surge in electric-vehicle investment has gone to Southern and Western states, shifting the center of gravity away from the auto industry’s traditional stronghold in the Upper Midwest.
In addition to Toyota and Ford’s recent moves,
Volkswagen AG
has ramped up electric-vehicle production at its factory in Chattanooga, Tenn. Polestar, the electric-vehicle company owned by Chinese car maker Zhejiang Geely Holding Group Co., is making cars in South Carolina. Tesla has said it aims to begin producing vehicles at its new factory in the Austin, Texas, area by the end of the year.
Some high-profile electric-vehicle startups also are based outside the Midwest, including
Lucid Group Inc.,
which recently began making cars at its factory in Arizona.
GM’s investment would be part of its $35 billion spending spree on electric and autonomous vehicles through 2025. The auto maker has said it eventually wants to surpass market-leader Tesla in U.S. sales of electrics.
The battery factory planned for Michigan would be the third for GM’s joint venture with Korea’s LG. The joint-venture company has looked outside GM’s home state for the other factories: one in Ohio, set to open next year, and another under way in Tennessee.
GM, which has long had excess factory space in the U.S., plans to convert existing plants to build electrics instead of gas- or diesel-powered cars, though in some cases it will make both in the same facility, executives have said. The company has said it will save at least $10 billion through 2030 by revamping factories rather than building new ones.
“We can leverage and go faster because of the existing [factory] footprint that we have,” GM Chief Executive
Mary Barra
said Thursday during an event hosted by the Automotive Press Association.
Ford, which has less unused factory space in the U.S. than does GM, is taking a different approach with its plans to build electric-vehicle facilities from scratch.
It is building the factory near Memphis on a massive site that also will house a battery plant. It also recently built a smaller plant near its Dearborn, Mich., headquarters to make electric F-150 pickup trucks.
remade board of directors is debating whether to continue with several major oil and gas projects as the company reconsiders its investment strategy in a fast-changing energy landscape, according to people familiar with the matter.
Members of the board—which includes three directors successfully nominated by an activist investor in May and two other new members—have expressed concerns about certain projects, including a $30 billion liquefied natural gas development in Mozambique and another multibillion-dollar gas project in Vietnam, the people said.
Oil and gas prices are at multiyear highs, and the world is experiencing a shortage of fossil fuels as economies emerge from the pandemic. But it takes years for such energy megaprojects to produce additional supplies, and more years after that for the investments to pay off.
Exxon board members are weighing the fate of future projects as the company is facing pressure from investors to restrain fossil-fuel investment to limit carbon emissions and return more cash to shareholders. Environmentalists and some government officials are also pressuring the company to produce less oil and gas.
The discussions are taking place as part of a review of the oil company’s five-year spending plan, on which the board is set to vote at the end of this month, the people said. It isn’t clear whether the board will make a final call on the Mozambique or Vietnam projects during the current review, according to the people.
Both projects face potential political obstacles, and some Exxon board members have expressed concerns about whether they would return the billions in upfront investment they would require, some of the people said. The board meetings have been cordial, the people said.
Exxon said it doesn’t discuss internal board deliberations. “Any depiction of the board’s discussions as being less than constructive in tone or substance is wrong,” said Exxon spokesman Casey Norton.
As part of the review, Exxon is analyzing the expected carbon emissions from each project and how they would affect the company’s ability to meet pledges to reduce emissions, people familiar with the matter said. The annual projected emissions from the Mozambique and Vietnam projects were among the highest in Exxon’s planned pipeline of oil and gas projects, according to a pre-pandemic internal analysis by Exxon, which was reviewed by The Wall Street Journal.
A Swiss startup has created a giant vacuum cleaner to capture carbon dioxide from the air, helping companies offset their emissions. WSJ visits the facility to see how it traps the gas for sale to clients like Coca-Cola, which uses it in fizzy drinks. Composite: Clément Bürge
Mr. Norton said the analysis of projected carbon emissions the Journal reviewed was several years old and didn’t include the impact of Exxon’s most recent emission reduction plans and other post-Covid-19 changes.
The discussions over the projects represent a new dynamic for Exxon’s board, said people familiar with the matter.
Engine No. 1, the hedge fund that led a campaign that replaced three Exxon board members earlier this year, argued Exxon was investing in low-return projects and lacked a coherent strategy to chart a transition to lower-carbon fuels amid growing concerns about climate change.
The activist was successful in part because it was able to win support from some of the company’s largest investors, including
BlackRock Inc.
and Vanguard Group. The asset managers said one of the reasons they supported the Engine candidates was that Exxon’s board lacked energy expertise and independence.
Gregory Goff, participating in a 2017 conference, is among Exxon directors to question a large Mozambique project, according to people familiar with the matter.
Photo:
F. Carter Smith/Bloomberg News
Gregory Goff,
one of the Engine No. 1 nominees, is among the directors to raise doubts about the Mozambique project, people familiar with the matter said. Mr. Goff, the former chief executive of Andeavor, which was one the largest U.S. refiners before being purchased by
Marathon Petroleum Corp.
, has said that Exxon should consider more closely the risks presented by the project to assess whether it justifies investing, the people said.
The Mozambique project, called Rovuma, would tap vast reserves of natural gas off the coast of the southern African country, then chill them to a liquid state at an onshore plant to be exported around the world. It is one of the largest projects in Exxon’s portfolio, and its proximity to India could give Exxon an opportunity to export gas to a fast-growing market.
But Mozambique lacks infrastructure and is fighting an Islamic State-linked insurgency that has claimed more than 3,000 lives.
TotalEnergies
SE halted construction of a $20 billion gas project there in March after violence erupted near its construction site. Exxon spent $2.8 billion to acquire a stake in the Rovuma project but has delayed a final investment decision for several years. Exxon hasn’t disclosed an exact estimate of the project’s cost; Mozambique has estimated it at $27 billion to $33 billion.
In Vietnam, Exxon and its partners discovered a large gas field in 2011 in waters 50 miles off the coast but have yet to develop it. Gas from the field, known as Ca Voi Xanh or blue whale, would be sent through a pipeline to planned onshore power plants. Vietnamese officials have said the project would generate $20 billion in government revenue. The field is near contested waters claimed by China in the South China Sea, and analysts say China is actively disrupting Vietnam’s offshore oil-and-gas industry, adding geopolitical complications to the project.
Abandoning the projects would represent another setback to plans by Exxon Chief Executive
Darren Woods
to boost spending to increase production. Less than four years ago, Mr. Woods said the company would invest $230 billion to pump an additional one million barrels of oil and gas a day by 2025. Rovuma, in particular, was central to that strategy. The company has already pulled back parts of that strategy after the pandemic decimated demand for oil and gas last year, prompting it to undergo a belt tightening.
Exxon’s fortunes have improved this year along with rising oil and gas prices. Analysts expect Exxon to report more than $6 billion in quarterly profit later this month, after a loss of $680 million during the same period last year. The company has said it would give priority to using cash to pay down debt and fund dividends.
Exxon is planning to declare in coming weeks that it will increase its investment in a low-carbon unit it announced in February by billions of dollars, according to people familiar with the matter. It initially said it would invest $3 billion in the unit through 2025 to commercialize carbon capture and storage, hydrogen, biofuels and other technologies. Most of those businesses aren’t profitable, say analysts, and need significant public-policy support and technological advances to become so.
Exxon is also considering a pledge to reduce and offset the carbon emissions from its operations to zero by 2050, the Journal has reported. Mr. Woods previously called such net zero commitments a “beauty competition.”
Fossil-Fuel Challenges
WSJ coverage of the changing industry, selected by the editors
Write to Christopher M. Matthews at christopher.matthews@wsj.com and Emily Glazer at emily.glazer@wsj.com
Investors who bet against stocks are targeting special-purpose acquisition companies, one of the hottest growth areas on Wall Street. The dollar value of bearish bets against shares of SPACs has more than tripled to about $2.7 billion from $724 million at the start of the year, according to data from S3 Partners.
Some of the stocks under attack belong to large SPACs that surged in recent months, in part because they were backed by high-profile financiers. A blank-check company created by venture capitalist
Chamath Palihapitiya
that plans to merge with lending startup Social Finance Inc. is a popular target, with 19% of its shares outstanding sold short, according to data from S&P Global Market Intelligence. The short interest in
Churchill Capital Corp. IV,
a SPAC created by former investment banker
Michael Klein
that is merging with electric-vehicle startup Lucid, more than doubled in March to about 5%.
Others are wagering against companies after they combine with SPACs. Muddy Waters Capital LLC announced last week it was betting against
XL Fleet Corp.
, a fleet electrification company that went public in December after merging with a SPAC. XL has since said Muddy Waters’s report, which alleged XL inflated its sales pipeline and made misleading claims about its technology among other issues, had “numerous inaccuracies.”
XL’s stock price dropped the day Muddy Waters released its report by about 13%, to $13.86, from its prior close on March 2. Shares closed Friday at $12.79.
Shares of
Lordstown Motors Corp.
fell nearly 17% Friday after Hindenburg Research released a report saying the electric-truck startup had misled investors on its orders and production. The company, which merged with a SPAC in October, said the report contained half-truths and lies. The short interest in Lordstown shares rose to 5% from 3.4% in the week before the report’s publication, according to data from S&P.
“SPACs are an area of focus,” said Muddy Waters’s
Carson Block.
The veteran short seller said SPACs largely make up the universe of companies he views as both “abysmal” and relatively free from technical challenges, such as high short interest, which can make betting against them difficult.
SPACs are shell firms that raise capital by issuing stock with the sole purpose of buying or merging with a private company to take it public. They are dominating the market for new stock issues, becoming a status symbol for celebrities while pumping the value of acquisitions, like betting company
DraftKings Inc.,
into the tens of billions of dollars.
Hedge funds that buy into SPACs early see them as a way to make lofty returns without much risk. Individual investors are attracted by the chance to get positions in newly public companies that they could rarely purchase through traditional IPOs. The Securities and Exchange Commission issued a statement on Wednesday warning that it “is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it.”
A monthslong rally in the stocks lost steam recently amid a broad selloff in technology and high-growth companies. An index of SPAC stocks operated by Indxx fell about 17% from mid-February to March 10, while the Nasdaq Composite Index declined about 7.3% over the same period.
“These are all momentum stocks, and a lot of people want to short them,” said
Matthew Tuttle,
whose firm Tuttle Tactical Management runs an exchange-traded fund that allows investors to hold a portfolio of SPAC stocks. Mr. Tuttle is preparing to launch an ETF that bets against “de-SPAC” stocks of companies that have merged with a SPAC—like electric-truck manufacturer
Nikola Corp.
and baked-goods maker
Hostess Brands Inc.
—and a separate fund that invests in the stocks.
Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ
Postmerger companies are particularly attractive to short because they have larger market capitalizations, making their shares easier to borrow, and because early investors in the SPACs are eager to sell shares to lock in profits, analysts and fund managers said.
Short sellers borrow stocks they believe are overvalued and immediately sell them, hoping to repurchase the shares for a lower price when they need to be returned and to pocket the difference. The strategy proved dangerous in recent months when individual investors organized on social media to push up stocks like GameStop Corp., forcing short sellers to buy shares and cap their losses, helping to drive prices still higher.
Continued strong investor demand for SPACs could catch short sellers in a similar squeeze. Shorting SPACs can also be risky because their shares have a natural floor at $10, the price at which they can be redeemed before a merger, and because they are prone to sharp price moves, analysts said.
Still, the portion of shares sold short in SPACs and their acquisitions is climbing.
A blank-check company created by venture capitalist Chamath Palihapitiya that plans to merge with lending startup Social Finance Inc. is a popular target.
Photo:
Brendan McDermid/Reuters
Some are betting against stocks they believe rose too fast, to unsustainable valuations. The price of bioplastics company
Danimer Scientific Inc.
nearly tripled to $64 in the first six weeks of the year after it was bought by a SPAC. The short interest in Danimer stock has climbed to 8.5% from around 1% in January, and its share price has traded down to about $42, according to data from S&P.
Others are making bearish bets to hedge against potential losses in SPAC stocks they own.
Veteran short seller
Eduardo Marques
cited SPACs and their boosting the number of U.S.-listed stocks as a short-selling opportunity, according to a pitch for a stock-picking hedge fund called Pertento he plans to launch this year. America’s roster of public companies had shrunk from the mid-1990s onward, but that trend has recently reversed, partly because of SPACs.
Their popularity has helped spark new Wall Street offerings.
Goldman Sachs Group Inc.
this year started offering clients set baskets of similar stocks to short, pitching them as a way to hedge SPAC exposure, people who have seen the offering said. Clients typically customize the baskets Goldman offers, which are thematic and sector-focused, such as on bitcoin and electric vehicles.
Kerrisdale Capital founder
Sahm Adrangi
started shorting postmerger SPAC companies earlier than most, with a public bet in November against the stock of frozen-food maker
Tattooed Chef Inc.,
which still trades above its price at that time. But the stock has fallen about 13% during the recent market slump.
“We saw these stocks go up a lot and now that people are de-risking, these highflying SPACs are coming down to earth,” Mr. Adrangi said.
—Amrith Ramkumar and Mike DeStefano contributed to this article.
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Write to Matt Wirz at matthieu.wirz@wsj.com and Juliet Chung at juliet.chung@wsj.com