DEALERSHIP STAFFING CHANGES
AutoNation Inc. said the thousands of staff it dismissed in the midst of the pandemic may not be called back because consumers are making a permanent shift to buying vehicles online. It's not just online retail that lifted AutoNation's results. Interest rates are low, and more people are seeking out personal vehicles to avoid exposure to the coronavirus, says AutoNation CEO Mike Jackson. Although auto demand rebounded faster than expected from April to June, the recent resurgence in cases across the country is clouding the outlook for the rest of 2020, he said.
Source: Bloomberg
TESLA ACCUSES RIVIAN OF POACHING EMPLOYEES, STEALING TRADE SECRETS
Tesla Inc. accused Rivian Automotive Inc. in a lawsuit of an "alarming pattern" of poaching its employees and stealing trade secrets. The world's leading electric-vehicle maker alleged that four of its former workers took highly sensitive proprietary information as they left to work for the rival startup, and Tesla said it suspects there are at least two more culprits. "Misappropriating Tesla's competitively useful confidential information when leaving Tesla for a new employer is obviously wrong and risky," according to the complaint filed in state court in San Jose, Calif. "One would engage in that behavior only for an important benefit -- to use it to serve the competitive interests of a new employer."
Rivian -- which counts Amazon.com Inc., T. Rowe Price, BlackRock Inc. and Ford Motor Co. among its top-tier investors -- denied the allegations. The company said it requires all new employees to confirm "that they have not, and will not, introduce former employers' intellectual property into Rivian systems." "Rivian is made up of high-performing, mission-driven teams, and our business model and technology are based on many years of engineering, design and strategy development," the company said in an emailed statement. "This requires the contribution and know-how of thousands of employees from across the technology and automotive spaces."
The startup was founded in 2009 by R.J. Scaringe, a Massachusetts Institute of Technology graduate with a doctorate in mechanical engineering. The company's 2,400 employees are split between sites in California, Michigan and a production facility in Normal, Ill. It recently denied reports that it's planning to move its headquarters and operations to Silicon Valley -- Tesla's back yard.
Rivian plans to start production of its debut battery electric R1T pickup truck and R1S SUV by mid-2021. The company promises more than 400 miles of range and the vehicles are built for off-road and highway driving. It has previously said the vehicles will have a sticker price of around $70,000. It also has a deal to produce more 100,000 all-electric delivery vans for Amazon, which will go into production once Rivian's own consumer vehicles are under way. The company has been working for seven years on a "skateboard" electric vehicle platform -- including the motor, battery pack and computer systems, which can also easily be used by other automakers for their own electric vehicles.
Tesla has previously sued former employees for allegedly taking its trade secrets to China's Xpeng Motors and Silicon Valley-based Zoox Inc. In the new lawsuit, Tesla called itself Rivian's "number one target from which to acquire information," and said that Rivian has hired 178 ex-Tesla employees, roughly 70 of whom joined Rivian directly from Tesla.
Rivian said in its statement that "we admire Tesla for its leadership in resetting expectations of what an electric car can be," while calling the claims in the lawsuit baseless and "counter to Rivian's culture, ethos and corporate policies."
Source: Bloomberg
BMW'S X5 SUV WILL GET A HYDROGEN FUEL-CELL VERSION IN 2022
BMW AG will make a version of its X5 SUV that runs on hydrogen fuel-cells, part of the carmaker's plan of producing as many drive variants as possible until one technology proves dominant. The i Hydrogen NEXT will get a limited production run starting in 2022, the German manufacturer said in a statement Friday. Toyota Motor Corp. will supply the fuel cells for the vehicle.
Source: Bloomberg
HERTZ PAYS LENDERS $650 MILLION TO RESOLVE DISPUTE OVER FLEET REDUCTION
Hertz Global Holdings Inc said on Friday it has reached an interim $650-million deal with its lenders to resolve a bankruptcy court fight over the company's plan to reduce its leased fleet of rental cars. Under the agreement, Hertz will pay $650 million in cash in equal monthly installments from July to December. The car rental company will also dispose of at least 182,521 leased vehicles between June and December.
Source: Reuters
FORD SECURES FINANCING EXTENSIONS
Ford Motor Co has obtained commitments from enough relationship banks to extend the maturity of at least 90% of $5.35 billion of revolving loans for one year, a source close to the financing said. The second-largest US automaker was in discussions with its bank lenders since early July about a one-year extension of its $3.35 billion three-year main corporate revolving credit facility and its $2 billion three-year supplemental revolving credit facility.
Source: Reuters
RULING PROTECTS CUSTOMER DATA
Dealers in Arizona scored a major victory late Friday when the U.S. District Court in Arizona ruled strongly in favor of a 2019 law that gives local dealerships greater ability to protect customer data that resides in dealer management systems. Two dealer management system (DMS) providers, CDK and Reynolds & Reynolds, last August sued the State of Arizona to overturn the 2019 law, and recently sought an injunction to keep the law from going into effect next month
Source: NADA
An Arizona federal judge has denied two auto dealer data companies' request for an injunction against a state law that bars car dealerships from using its data systems to allow third-party access to the systems. On Friday, U.S. District Judge G. Murray Snow denied CDK Global LLC and the Reynolds and Reynolds Co.'s preliminary injunction request against the Dealer Data Security Law passed by the Arizona legislature last year. The law aims to prevent anti-competitive conduct in proprietary computer systems known as dealer management systems, which CDK and Reynolds provides to car dealerships for business operations management.
Source: Law360
EVERYONE LOVES EVs, EXCEPT THE PUBLIC
Yes, it seems like everyone is plugging into the EV age. Everyone except for consumers. Oh, a few of them are into e-vehicles, and even buy them. Tesla leads the sales pack, yet still struggles to make money. Its buyers are brand-loyal and affluent enough to afford a luxury EV from a company led by a charismatic yet quirky genius who's also into space travel and subterranean tunnel transportation. But the vast majority of car consumers is uninterested in buying a battery-electric, plug-in hybrid-electric or even a hybrid vehicle. Nor are many people willing to pay the extra money for them.
Source: WardsAuto
TESLA'S MUSK SAYS HE'S OPEN TO SUPPLYING BATTERIES TO RIVALS
Tesla Inc. CEO Elon Musk said Tuesday that the company is open to licensing software and supplying powertrains and batteries. Tesla had previously supplied batteries to Mercedes and Toyota Motor under separate partnership deals. Battery manufacturing is an area that analysts and industry officials say the U.S. electric car maker has a competitive edge compared with legacy automakers. "Tesla is open to licensing software and supplying powertrains & batteries. We're just trying to accelerate sustainable energy, not crush competitors!" Musk said in a tweet.
Tesla currently runs a battery joint venture with Panasonic Corp and also sources batteries from China's Contemporary Amperex Technology and South Korea's LG Chem. Tesla is also planning to expand its own battery facility at its Fremont, Calif., plant.
Batteries are the most expensive and important component of electric vehicles. "The supply could lower the entry barriers for startup EV makers, posing a potential threat to legacy automakers, which have their own platforms," said Park Chul-wan, a South Korean battery expert and a professor at Seojeong University. "The strategy, if successful, will increase the EV market's dependence on Tesla," he said.
Musk said in a recent earnings conference call that the real limitation to Tesla's growth is battery cell production at an affordable price, and said the company would expand its business with Panasonic, CATL and LG Chem. In 2014, Musk also said Tesla would allow others to use its patents in hopes of speeding up development of electric cars by all manufacturers.
Source: Reuters
VOLKSWAGEN CUTS DIVIDEND AMID CORONAVIRUS-DRIVEN DOWNTURN
Volkswagen AG slashed its proposed dividend Thursday after swinging to a net loss in the second quarter, but the world's biggest car maker by sales also said there were signs a recovery was under way in markets from Western Europe to the U.S. Volkswagen, which makes the VW, Audi, Porsche, Lamborghini and Bentley brands, posted a net loss of ?1.61 billion euros ($1.9 billion) in the second quarter ended June 30, compared with a net profit of ?3.96 billion the same period a year earlier, as sales slipped across the world because of economic shutdowns aimed at containing the pandemic. Revenue fell 37% to ?41.08 billion from ?65.19 billion.
Source: The Wall Street Journal
CHALLENGING QTR FOR PENSKE'S USED-CAR STORES, BUT JUNE SHOWS REBOUND
Like it was for many retailers in the automotive space, it was a challenging second quarter and first half for Penske Automotive Group's Used Vehicle SuperCenters due to the COVID-19 pandemic. But some bright spots emerged for these stores toward the end of Q2, according to a rundown of quarterly results released by the retailer on Wednesday. Penske's SuperCenters moved 6,600 units during the quarter, a 62.9% year-over-year decline, with revenue at $132.6 million, a 57.5% drop.
Source: Auto Remarketing
FUEL-CELL FIRM BALLARD BOUNCING BACK WITH HELP OF CHINA
Two decades ago, a burst in the dot-com bubble meant that shares of Ballard Power Systems Inc. may have been dead in the water. Now, it's rebounding with a vengeance. After a meteoric rise that saw the hydrogen fuel-cell company's stock surge more than 400 per cent between late 1999 and March 2000, it crashed almost immediately after, falling 88 per cent over the next 18 months. Fast-forward 20 years and the Burnaby, British Columbia-based company is one of the best-performing stocks in Canada this year with a gain of 117 per cent. That's not far off the 154-per-cent jump in shares of Shopify Inc., a darling of the tech industry.
"There's a lot of momentum behind it," Cormark Securities analyst MacMurray Whale said in an interview. In the years since Ballard's sudden boom and bust, it launched a joint venture with Weichai Power Co. in China in 2018 and has directed its focus away from passenger cars and toward electrifying medium- and heavy-duty vehicles such as buses and transport trucks.
"This is all about China," Whale said.
Guy McAree, director of investor relations and marketing at Ballard, said the decision to focus on buses and trucks was driven by the fact that "those are the vehicles that have a disproportionate impact on the environment." The firm received almost 32 per cent of its 2018 revenues from China, according to data compiled by Bloomberg. Earlier this month, the stock rallied to a 17-year high after it received a US$7.7 million order from its joint venture. The company's technology currently powers over 650 electric buses and more than 2,200 electric trucks in the world's second-largest economy, Alfred Wong, managing director at Ballard, said in a statement then.
Cormark's Whale also credited Ballard's recent rally with the growing popularity of electric vehicles, pointing to Tesla Inc.'s 300 per cent surge from its March low. "I think Tesla has shown that you can make a better margin than the normal vehicle," he said. Whale has a buy recommendation on Ballard's stock with a C$35 price target. Ballard's shares still have a lot of ground to cover. Unlike the early 2000s, when the stock reached a pinnacle of C$192, its closing price on Tuesday was C$20.13.
Tech bubble euphoria
Whale, who covered Ballard two decades ago for National Bank Financial, said the rise and fall at the turn of the millennium is partly attributable to the "euphoria" surrounding the dot-com bubble. "Ballard got caught up in that and they couldn't deliver because it was technically too hard to do in the time-frame they had set themselves," he said. "It was too early." The company was not yet focused on heavy-duty vehicles, which has since become its niche. According to McAree, there has since been a "tremendous" improvement in the performance of fuel-cell products and a reduction in the cost of building them. "I don't have a crystal ball, but we do think that people are seeing the value," he said.
Ballard has six buy recommendations, three holds and no sell ratings, with an average price target of C$26, according to data compiled by Bloomberg.
Some caution
Not everyone is bullish. Just last week, New York-based hedge fund Lakewood Capital called Ballard a "consistently loss-making and cash-burning Canadian company" in a letter. "We have tracked Ballard Power (and several other fuel cell stocks) for the past decade, and on five separate occasions, investors bid up the shares in a frenzy only to be left holding the bag months later when they came crashing down to earth," the hedge fund said.
Whale also preached a bit of caution, saying everything "could change on a dime." "If there's no follow-on order after hydrogen programs were announced, or that follow-on order isn't very interesting, then the stock goes down," Whale said. "It's as simple as that."
Source: Bloomberg
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