Tesla (Nasdaq: TSLA) will be joining the S&P 500 index, expanding its investor base and putting the electric car maker in the same company as market behemoths such as Alphabet, Amazon.com, Apple, and Microsoft.
The announcement, made Monday afternoon by the S&P Dow Jones Indices, sent the company’s shares 13.7% higher in after-market trading. Tesla will officially join the benchmark stock index before the market opens on December 21, the index stated.
When Tesla joins the S&P 500, it will be one of the most valuable companies on the benchmark index. The weighting will be so influential that the S&P is debating whether or not to add the stock at its full market capitalization weight all at once, or in two separate tranches.
An employee leaves the Volkswagen (VW) plant as the company will temporarily close its factories in Mexico amid growing worries over the spread of the coronavirus disease (COVID-19), in Puebla
MEXICO CITY (Reuters) – German automaker Volkswagen said on Wednesday it would extend until April 30 a suspension of activities at two production plants in central Mexico after the government declared a health emergency because of coronavirus.
Volkswagen <VOW.DE> is among manufacturers worldwide who are responding to a fall in demand, as well as supply chain challenges following measures taken to rein in the pandemic.
In a statement the company said the halt was extended from April 12 to comply with government orders for a suspension of all non-essential activities.
Volkswagen said it would continue to pay employees during the suspension. Mexico reported 37 deaths, up from 29 a day earlier, and 1,378 infections, up from 1,215, because of the virus.
(Reporting by Sharay Angulo; Writing by Stefanie Eschenbacher; Editing by Clarence Fernandez)
DEARBORN, Mich. (Reuters) – Investors sent Ford Motor Co shares skidding on Tuesday after the company delivered a weaker-than-expected 2020 forecast, warning of higher warranty costs, lower profits at its credit arm and continued investments in future technology such as self-driving cars.
Shares in the No. 2 U.S. automaker plunged 9.4% in after-hours trading, shaving more than $3 billion off the company’s value. In comparison, electric carmaker Tesla closed up nearly 14%, pushing its market cap to $160 billion, more than four times the size of Ford’s $36.4 billion.
“The results were not OK in 2019,” Ford Chief Financial Officer Tim Stone told reporters at the company’s headquarters outside Detroit.
“As I look to 2020 and beyond, I’m very optimistic,” he said, while cautioning that Ford’s lower guidance does not yet account for the potential impact of the coronavirus outbreak in China.
In an after-hours call with financial analysts, Chief Executive Jim Hackett was more blunt about the challenge of balancing Ford’s protracted turnaround efforts with its continuing work on future technology, including electric and self-driving cars.
“I don’t think this company can keep straddling the old and new worlds forever … This company has to change,” Hackett said.
Ford said it expects 2020 operating earnings to be in the range of 94 cents to $1.20 a share. Analysts were expecting $1.26 a share.
Stone said Ford expects to continue its quarterly dividend of 15 cents, which could cost the company $2.4 billion in 2020. Asked about continuing the dividend after lowering its 2020 guidance, Hackett said, “We like to return value to shareholders.”
The disappointing 2020 forecast, coming after Ford previously trimmed its 2019 outlook, is a blow for Hackett, who took the helm in May 2017.
He has been asking investors to be patient with a restructuring that has seen the formation of a wide-ranging alliance on commercial, electric and autonomous vehicles with Volkswagen AG <VOWG_p.DE> and the sale of its money-losing operations in India to a venture controlled by India’s Mahindra & Mahindra.
But by Ford’s own accounting, the restructuring is far from complete. It has booked $3.7 billion of the projected $11 billion in charges it previously said it would take, and expects to book another $900 million to $1.4 billion this year.
For the fourth quarter of 2019, Ford reported a net loss of $1.7 billion, or 42 cents a share, compared with a loss of $100 million, or 3 cents a share, a year earlier.
The quarter included a loss of $2.2 billion due to higher contributions to its employee pension plans, something it disclosed last month.
Revenue in the quarter fell 5% to $39.7 billion, above the $36.5 billion Wall Street had expected.
Ford’s adjusted free cash flow fell 67% in the fourth quarter to $500 million, including the $600 million cost of bonuses related to a new labor deal with the United Auto Workers union. The UAW deal also played a role in driving North American automotive profit margins down to 2.8% in the fourth quarter.
Ford said its operating losses in China last year totaled $771 million, including a loss of $207 million in the fourth quarter. It lost $1.5 billion in 2018. Ford’s market share in China in the fourth quarter fell to 2% from 2.3% last year.
In December, Ford said it would halve its operating loss in 2019 and nearly halve it again in 2020, followed by further improvement in 2021.
However, that forecast was before the appearance of the fast-spreading coronavirus and its crippling effects on China’s economy.
Ford’s China sales fell about 15% in the fourth quarter and 26% for the year as it continued to lose ground in its second-biggest market. Ford has been struggling to revive sales in China since its business began slumping in late 2017.
Detroit rivals General Motors Co and Fiat Chrysler Automobiles are scheduled to report their results on Wednesday and Thursday, respectively.
(Reporting by Ben Klayman and Paul Lienert; Editing by Tom Brown)
FILE PHOTO: The corporate logo of Ford is seen at Brussels Motor Show
(Reuters) – Ford Motor Co <F> said on Wednesday its fourth quarter results will be hit by a pre-tax loss of about $2.2 billion (1.7 billion pounds) due to higher contributions to its employees pension plans.
The charge is largely related to a drop in discount rates, the company said, as that leads to an increase in the amount of money to be contributed for future pension benefits.
The U.S. automaker said it will record a $2 billion loss related to pension plans outside the United States and a $600 million loss associated with other post-retirement employee benefits plans globally.
However, the overall loss was offset by a $400 million gain associated with pension plans in the United States.
On an after-tax basis, the loss is expected to reduce Ford’s net income by about $1.7 billion in the fourth quarter. The loss will not impact the adjusted earnings per share as it is a special item, the company said.
(Reporting by Dominic Roshan K. L. in Bengaluru; Editing by Arun Koyyur)
WASHINGTON (Reuters) – Toyota Motor Corp <TM> said on Friday it will move production of its mid-size Tacoma pick-up truck from the United States to Mexico as it adjusts production around North America.
The largest Japanese automaker also said it will end production of the Toyota Sequoia in Indiana by 2022 as that facility focuses on mid-size SUV’s and minivans.
Toyota will shift production of the Sequoia in 2022 to Texas and that plant will end production of the Tacoma by late 2021.
Toyota has been building Tacoma trucks at its Baja California plant in Mexico since 2004. Last month, Toyota’s Guanajuato plant began assembly of the Tacoma.
Toyota said its production capacity for the Tacoma in Mexico will be about 266,000 per year. Last year, the automaker sold nearly 249,000 Tacoma pickup trucks in the United States, up 1.3%.
Toyota said the product moves were to “improve the operational speed, competitiveness and transformation at its North American vehicle assembly plants based on platforms and common architectures.”
The new North American trade agreement approved by the U.S. Senate on Thursday ensures that automakers will still be able to build pickup trucks in Mexico without facing new punitive tariffs.
In February, Fiat Chrysler Automobiles NV <FCAU> said it was reversing plans to shift production of heavy-duty trucks from Mexico to Michigan in 2020, freeing a Michigan facility to produce Jeeps.
Toyota said Friday it completed a $1.3 billion modernization investment in its Indiana operations to add 550 jobs. Toyota said there would be no reduction to direct jobs at any of Toyota’s facilities across North America as a result of the vehicle moves.
(Reporting by David Shepardson; Editing by Chris Reese)
Volkswagen logo is seen on a Teramont X SUV displayed at the second media day for the Shanghai auto show in Shanghai
HONG KONG/BEIJING (Reuters) – Volkswagen AG <VWAGY> is set to take a 20% stake in Chinese electric vehicle battery maker Guoxuan High-tech Co Ltd, two sources told Reuters, as the German firm accelerates its electric push into the world’s largest auto market.
The deal would mark Volkswagen’s first direct ownership in a Chinese battery maker and comes as the Wolfsburg-based automaker strives to meet a goal of selling 1.5 million new energy vehicles (NEVs) a year in China by 2025, including plug-in hybrid cars.
The top foreign automaker in China plans to acquire the stake in Shenzhen-listed Guoxuan via a discounted private share placement in the coming weeks, the two sources with knowledge of the matter said. Based on Guoxuan’s market capitalization of $2.8 billion, a 20% stake in the company at present is worth about $560 million.
The deal’s details have been mostly finalized and the two firms are waiting for new Chinese regulatory rules on private share placements that will provide a more flexible pricing mechanism and shorter lock-up periods for majority shareholders, said one of the people, speaking on condition of anonymity.
After the stake purchase, Volkswagen will become the battery maker’s second-largest shareholder with a 20% stake, behind Zhuhai Guoxuan Trading Ltd, a firm controlled by Guoxuan’s founder Li Zhen, which currently holds 25%.
Guoxuan is among a swathe of mid-tier Chinese battery makers behind CATL and BYD. It is based in China’s eastern city of Hefei, where Volkswagen is also building electric vehicles with JAC Motor, one of a number of its Chinese joint venture partners.
A third source, who declined to be named due to the sensitivity of the matter, said Volkswagen has long wanted to control a battery maker to better manage its supply chain.
Volkswagen declined to comment. Guoxuan and the China Securities Regulatory Commission did not immediately respond to requests for comment.
To achieve its NEV sales goal in China, Volkswagen has built a new $2.5 billion electric vehicle plant with partner SAIC Motor that will have annual output capacity of 300,000 cars and is also revamping manufacturing facilities in China’s southeastern city of Foshan to build electric cars with partner FAW Group.
Volkswagen has also identified CATL as a strategic supplier and Volkswagen board member Stefan Sommer told Reuters in July last year that it could even build its own battery cell manufacturing plants in China.
“By holding a stake in the top Chinese battery makers, carmakers can gain more bargaining power on battery prices,” said Yale Zhang, managing director of Shanghai-based consultancy AutoForesight. “Foreign carmakers are now catching up with their Chinese counterparts on securing battery supplies in China.”
Volkswagen’s rivals in China include Tesla, which earlier this month began delivering cars from its $2 billion factory in China. The U.S. electric car maker eventually plans to manufacture 250,000 vehicles a year in the plant’s first phase.
China has been a keen supporter of NEV – pure battery electric, hybrid and plug-in hybrids – and has started implementing NEV sales quota requirements for automakers.
However, cuts to subsidies have dealt the market a blow, with NEV sales contracting for the first time last year. Sales this year are likely to be flat or rise only slightly, according to China’s top auto industry association.
(Reporting by Julie Zhu in Hong Kong and Yilei Sun in Beijing; Additional reporting by Zhang Yan and Zhang Xiaochong in Beijing; Editing by Brenda Goh and Richard Pullin)
SHANGHAI (Reuters) – Ford Motor Co’s <F> China vehicle sales fell for a third consecutive year, by 26.1%, as it battles a prolonged overall sales decline in its second-biggest market that has hit demand for its mass-market Ford brand and sports utility vehicles.
The U.S. automaker delivered 146,473 vehicles in China in the fourth quarter, down 14.7% year-on-year, Ford said in a statement. In total, it sold 567,854 vehicles over 2019.
Ford has been trying to revive sales in China after its business began slumping in late 2017. Sales sank 37% in 2018, after a 6% decline in 2017.
Anning Chen, president and chief executive of Ford Greater China, said that while 2019 was a “challenging” year for the automaker, it saw its market share in the high-to-premium segment stabilize and its sales decline in the value segment start to narrow in the second-half of the year.
“The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability.”
The automaker plans to launch more than 30 new models in China over the next three years of which over a third will be electric vehicles. It has also said it would localize management teams by hiring more Chinese staff and aimed to improve relationships with joint venture partners.
New models it launched in the fourth quarter include a new Ford Escape version – for which the automaker said orders received so far have been much higher than expected – and the Lincoln Corsair, the first localized Lincoln model in China.
In China, Ford makes cars through a joint venture with Chongqing Changan Automobile Co Ltd and Jiangling Motors Corp Ltd (JMC). It has also said it would partner Zotye Automobile Co Ltd to sell lower priced cars.
Its larger U.S. rival General Motors Co <GM> last week said its sales in China fell 15% from a year earlier to 3.09 million vehicles in 2019, its second year of decline.
China’s auto market is set to contract by 2% in 2020 for the third year of decline, the China Association of Automobile Manufacturers (CAAM) forecast, due to a weaker economy and trade dispute with the United States.
Over 28 million vehicles were sold in 2018, down 3% from the prior year, while 2019 sales are likely to have declined 8% from the prior year, CAAM said.
(Reporting by Brenda Goh and Yilei Sun; Editing by Christian Schmollinger and Christopher Cushing)
A Ford model is seen during the China International Import Expo (CIIE), at the National Exhibition and Convention Center in Shanghai
MILAN (Reuters) – Italian tax authorities believe that Fiat Chrysler Automobiles <FCAU> underestimated the value of its U.S. business by 5.1 billion euros following Fiat’s phased acquisition of Chrysler, according to a company filing and a source close to the matter.
The audit, which concerns transactions dating back to 2014, could result in FCA having to pay back taxes for $1.5 billion, the source added, confirming a report by Bloomberg.
FCA said in its third-quarter report that the tax authorities had issued to the company a final audit report in October this year “which, if confirmed in the final audit assessment, could result in a material proposed tax adjustment related to the October 12, 2014 merger of Fiat SpA into FCA NV.”
It said the issuance of a final audit report starts a 60-day negotiation period, which ends with the issuance of a final audit assessment expected to be received by the end of December 2019.
“The company believes that its tax position with respect to the merger is fully supported by both the facts and applicable tax law and will vigorously defend its position,” it said in the third-quarter report.
A spokesman for Italy’s tax agency declined to comment.
“At this time, we cannot predict whether any settlement may be reached or if no settlement is reached, the outcome of any litigation. As such, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss,” Fiat said.
News of the tax probe comes at a delicate time for Fiat Chrysler, which is finalizing talks with PSA, the maker of Peugeot and Citroen, over a planned $50 billion merger to create the world’s fourth-largest automaker.
(Reporting by Silvia Aloisi in Milan; Editing by Anil D’Silva)
DETROIT (Reuters) – Fiat Chrysler Automobiles NV and the United Auto Workers (UAW) union on Saturday announced a tentative agreement for a four-year labor contract, a boost for the automaker as it works to merge with France’s Groupe PSA.
Italian-American Fiat Chrysler and PSA, the maker of Peugeot and Citroen, last month announced a planned $50 billion merger to create the world’s fourth-largest automaker.
The tentative agreement with Fiat Chrysler, which is subject to ratification by the union members, follows contracts that the UAW already concluded with Ford Motor Co and General Motors Co.
The deal with GM followed a 40-day strike in the United States that virtually shuttered GM’s North American operations and cost the automaker $3 billion.
The UAW on Saturday said the contract with Fiat Chrysler included a commitment from FCA to invest $9 billion, creating 7,900 new jobs over the course of the four-year contract. Of the $9 billion, $4.5 billion was announced earlier this year, to be invested in five plants and creating 6,500 jobs.
Detailed terms of the tentative agreement were not released, but they are expected to echo those under the new contracts with GM and Ford, as the UAW typically uses the first deal as a pattern for the others.
“FCA has been a great American success story thanks to the hard work of our members,” UAW acting President Rory Gamble said in a statement. “We have achieved substantial gains and job security provisions for the fastest growing auto company in the United States.”
Ratification is not a sure thing. Rank-and-file UAW members at FCA in 2015 rejected the first version of a contract. In addition, a lawsuit related to a federal corruption probe could also raise doubts among union members about the terms agreed.
The federal corruption led GM to file a racketeering lawsuit against FCA, alleging that its rival bribed union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars. FCA has brushed off the lawsuit as groundless.
Under the UAW’s deal with GM, the automaker agreed to invest $9 billion in the United States, including $7.7 billion directly in its plants, and to create or retain 9,000 UAW jobs.
Ford’s contract included commitments to invest more than $6 billion in its U.S. plants and to create or retain more than 8,500 UAW jobs.
The deals with GM and Ford also created a pathway to full-time employment for temporary workers and left healthcare insurance coverage unchanged.
Both automakers also agreed to signing bonuses, with $9,000 for full-time Ford workers and $11,000 for workers at GM.
(Reporting by Nick Carey; Editing by Leslie Adler)
FILE PHOTO: FCA’s Manley and Elkann speaks at the North American International Auto Show in Detroit, Michigan
Most expensive version offers a range of more than 500 miles
Production expected to begin in late 2021 (Recasts and writes through)
Nov 21 (Reuters) – Tesla Inc on Thursday unveiled its first electric pickup truck that looked like a futuristic angular armored vehicle in gunmetal gray, as the California company took aim at the heart of Detroit automakers’ profits.
At a launch event in Los Angeles, Tesla Chief Executive Elon Musk said the Cybertruck will have a starting price of $39,900 and production is expected to begin in late 2021.
Other versions will be priced at $49,900 and $69,900 with the most expensive offering a range of more than 500 miles.
“We need sustainable energy now. If we don’t have a pickup truck, we can’t solve it. The top 3 selling vehicles in America are pickup trucks. To solve sustainable energy, we have to have a pickup truck,” he said.
The truck, which Musk claimed “won’t scratch and dent”, was described as having windows made from armored glass. But the glass cracked like a spider web when hit with a metal ball during a demonstration. Musk appeared surprised but noted that the glass had not completely broken.
Reactions on Twitter ranged from love to hate of the sharply angled vehicle. “I just watched tesla release the #cybertruck and honestly? My life feels complete,” wrote @aidan_tenud, while @nateallensnyde wrote “Its nice to see Elon Musk make a cardboard box car he drew in kindergarten,”.
Musk earlier tweeted the design was partly influenced by the Lotus Esprit sportscar that doubled as a submarine in the 1970s 007 film “The Spy Who Loved Me”.
The truck marks the first foray by Tesla, whose Model 3 sedan is the world’s top-selling battery electric car, into pickup trucks, a market dominated by Ford Motor Co’s F-150, along with models by General Motors Co, and Fiat Chrysler Automobiles NV .
The pickup shifts Tesla more toward trucks and SUVs. The automaker has so far sold mostly Model S and Model 3 sedans, but also offers the Model X SUV and starting next year the Model Y compact SUV.
A focus on the high-performance end of the market is only natural given the success of Ford’s 450-horsepower F-150 Raptor truck, which launched in 2009 and whose sales have since risen annually, according to Ford spokesman Mike Levine.
While Ford does not disclose Raptor sales, Levine said annual demand is well above 19,000 vehicles and the No. 2 U.S. automaker has never had to offer incentives on the model, which costs in the high $60,000 range. Ford also offers the more expensive F-150 Limited, its most powerful and luxurious pickup.
Ford and GM are also gearing up to challenge Tesla more directly with new offerings like the Ford Mustang Mach E electric SUV as well as electric pickups.
Electric pickups and SUVs could help Ford and GM generate the significant EV sales they will need to meet tougher emission standards and EV mandates in California and other states.
The Trump administration is moving to roll back those standards, but electric trucks are a hedge if California prevails.
Demand for full-size electric pickup trucks in the near term may not be huge, however.
Industry tracking firm IHS Markit estimates the electric truck segment – both full- and mid-sized models – will account for about 75,000 sales in 2026, compared with an expected 3 million light trucks overall. The Tesla truck is not part of that estimate.
Ford aims to sell an electric F-series in late 2021, sources familiar with the plans said. It also will offer the Mach E next year as part of its plan to invest $11.5 billion by 2022 to electrify its vehicles.
In April, Ford invested $500 million in startup Rivian, which plans to build its own electric pickup beginning in fall 2020.
GM plans to build a family of premium electric pickup trucks and SUVs, with the first pickup due to go on sale in the fall of 2021. It plans to invest $8 billion by 2023 to develop electric and self-driving vehicles.
(Reporting by Naomi Tajitsu in Tokyo and Peter Henderson in San Francisco; Additional reporting by Miyoung Kim in Singapore and Joseph White in Detroit; Editing by Edwina Gibbs)
