Author: CNBC Online news

Uber plans to kick off IPO in April

studioEAST | Getty Images
A man holds an Apple iPad Mini as he uses Uber app.

Ride-hailing company Uber is planning to kick off its initial public offering in April, putting it close on the heels of its smaller rival Lyft, people familiar with the matter said on Thursday.

Next month, Uber will issue its required public disclosure, known as an S-1, and launch its investor roadshow, the people said.

The IPO is expected to be one of the biggest technology debuts. The Wall Street Journal previously reported that proposals for Uber's IPO valued the company at $120 billion.

The timing for Uber's IPO means it will most likely be hitting the public markets soon after Lyft completes its own public offering, which is expected to happen by the end of March, people familiar with the matter said.

Uber and Lyft join a number of tech companies expected to go public this year, including Slack, Pinterest and Palantir.

Uber declined to comment.

–CNBC contributed to this article.

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SEC may charge Volkswagen over diesel scandal. Automaker says agency is ‘piling on’

Patrick T. Fallon | Bloomberg | Getty Images
Hoses connect laboratory emission testing equipment to a red 2016 Volkswagen AG Golf TDI inside the California Air Resources Board Haagen-Smit Laboratory in El Monte, California.

The Securities and Exchange Commission may take enforcement action against Volkswagen over the German automaker's involvement in the “dieselgate” emissions scandal, according to VW's annual report.

The automaker said the agency is 'piling on' and that the agency's complaint is without merit.

The agency told Volkswagen it opened in January 2017 a formal investigation, which is ongoing and may result in an enforcement action, according to the annual report. The SEC can issue fines and other civil penalties for violations of securities law.

The SEC has asked Volkswagen for information on potential securities law violations over certain investments the company may have sold to investors. The agency is looking for evidence determining whether the automaker failed to disclose information about vehicles that didn't comply with U.S. emission standards when it issued certain securities to investors.

The SEC declined to comment to CNBC. Volkswagen said the complaint is “legally and factually flawed and that the automaker will “contest it vigorously.”

One of the world's largest carmakers, Volkswagen was rocked by reports first surfacing in 2015 that it had been caught cheating on emissions tests in the United States. The subsequent scandal cost Volkswagen billions of dollars to settle and forced the automakers to recall millions of vehicles.

Here is Volkswagen's full statement:

“The SEC's complaint is legally and factually flawed, and Volkswagen will contest it vigorously,” the automaker said to CNBC. “The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG's former CEO, who played no part in the sales. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company.”

Tesla’s Kirkhorn takes over as CFO. Corporate Controller Taneja promoted to Chief Accounting Officer

Chief Financial Officer Zach Kirkhorn

Tesla made two senior appointments Wednesday, officially giving Zach Kirkhorn the job as CFO and promoting its Corporate Controller Vaibhav Taneja to Chief Accounting Officer.

Both moves, announced in a securities filing Thursday, solidify top leadership at a company that has seen a remarkable amount of turnover in its ranks.

Kirkhorn's promotion was announced in January when Deepak Ahuja, a long time Tesla executive, said he planned to retire. Ahuja had left the company in 2015 but in rejoined in 2017 to replace then-CFO Jason Wheeler.

Kirkhorn's pay package includes a stock option grant of $12 million and a restricted stock unit grant of $4 million, which will be granted and will vest over four years.

Taneja fills the gap created when former CAO Dave Morton left in September after just one month on the job. Morton had joined the company to replace Eric Branderiz, who left the company for “personal reasons” in March 2018. Ahuja and Taneja have shared Tesla's top accounting responsibilities since Branderiz's departure.

Taneja joined Tesla in 2017 following its acquisition of solar power company SolarCity, where he was Corporate Controller. Prior to that, Taneja worked at PricewaterhouseCoopers in India and the U.S. from July 1999 to March 2016, finishing his tenure there as a a Senior Manager in its Assurance practice.

Taneja will receive a stock option grant of $6 million and a restricted stock unit grant of $2 million, which will also vest over four years.

VW says it will not pursue Traton IPO for now due to market conditions

Krisztian Bocsi | Bloomberg | Getty Images
A Traton International LT A26 haulage truck sits on display on the Volkswagen AG (VW) Traton heavy-truck division exhibition area at the IAA Commercial Vehicles Show in Hanover, Germany, on Wednesday, Sept. 19, 2018.

Volkswagen said on Wednesday it would not pursue an initial public offering of its trucks unit Traton due to current market conditions but said the board of management still wanted to list the division if the environment improves.

“In the current market environment, Volkswagen Aktiengesellschaft today decided not to continue with preparation of an IPO of Traton SE for the time being,” Volkswagen said in an adhoc statement.

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Fiat Chrysler says emissions recall of 800,000 vehicles is ‘routine’ under new EPA rule

Rebecca Cook | Reuters
Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.

Fiat Chrysler said a recall of more than 800,000 vehicles reported earlier Wednesday by Reuters was the result of routine testing under new emissions guidelines adopted by the Environmental Protection Agency

Shares of the automaker briefly fell by as much as 2 percent.

The EPA said the recall was the result of “in-use emissions investigations conducted by EPA and in-use testing conducted by FCA as required by EPA regulations.”

Vehicles affected include 2011-2016 model years of the Dodge Journey crossover, 2011-2014 Chrysler 200 and Dodge Avenger sedans, 2011-2016 Jeep Compass SUVs, and 2011-2012 Dodge Caliber hatchbacks.

“We are advised that today's EPA announcement reflects a new policy for announcing routine emissions recalls,” Fiat Chrysler said in a statement. “This campaign has no safety implications. Nor are there any associated fines. This issue was discovered by FCA during routine in-use emissions testing and reported to the agency. We began contacting affected customers last month to advise them of the needed repairs, which will be provided at no charge.”

Shares were 2 percent lower on the news.

Honda to recall about 1 million vehicles in US to replace defective Takata airbags

Ty Wright | Bloomberg | Getty Images
Employees perform quality control inspections on Honda Accord vehicles at the Honda of America Manufacturing Marysville Auto Plant in Marysville, Ohio, on Dec. 21, 2017.

Honda said on Tuesday it would recall about 1.1 million Honda and Acura vehicles in the United States to replace defective Takata airbags on the driver's side.

The company said here it was aware of one injury linked to the defect that may have caused the airbag to rupture when it was deployed in a crash.

The vehicles involved in the recall were previously repaired using specific Takata desiccated replacement inflators (PSDI-5D) or entire replacement airbag modules containing these inflators.

Free repairs of the recalled cars would begin immediately in the United States with replacement parts made by alternate suppliers, Honda said.

Honda became aware of the issue after a Honda Odyssey crash, where the front airbag deployed and injured the driver's arm.

An investigation later showed that manufacturing issues at Takata's Mexico facility introduced excessive moisture into the inflator during assembly, leading to the problem.

The total number of recalled inflators is now about 21 million in about 12.9 million Honda and Acura vehicles that have been subject to recall for replacing Takata front airbag inflators in the United States, the company said.

Automakers in the United States repaired more than 7.2 million defective Takata air bag inflators in 2018, as companies have ramped up efforts to track down parts in need of replacement.

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China’s car sales have fallen for 8 straight months. It may get worse before it gets better

VCG | Getty Images
New cars lined up at a parking lot on Sept. 6, 2017 in Shenyang, Liaoning Province of China.

Chinese auto sales declined almost 14 percent in February, an industry group announced Monday, marking the eighth straight month of year-on-year decline in the world's biggest vehicle market.

Auto demand in China surged for years as the country experienced decades of economic development that created rising consumer class. But annual sales fell last year for the first time in about two decades as growth in the world's second-largest economy slowed and uncertainty due to the trade war with the United States damaged sentiment.

As part of efforts to boost its slowing economy, China announced last week a set of measures to stimulate growth. Those included tax cuts that could help boost demand for autos, but the effect is likely to take time, analysts said.

Citi said in a Monday note that the timing of the planned tax cuts to boost consumer spending remains unclear and thus “will cause buyers to delay car purchases until after the tax is implemented.”

Autos sales are an important barometer of the health of Chinese consumer spending and thus the broader economy, and they're also a key factor for foreign automakers who have hoped China's demand can help support the global auto sector.

'Guide certain sectors'

The China Association of Automobile Manufacturers said in a release on its website that sales declined by 1.48 million vehicles in February from the same month in 2018, marking a drop of 13.8 percent.

“The trend experienced last year has continued into this year, and the economic situation has also been weak,” Shi Jianhua the association's deputy secretary general told reporters at a press conference in Beijing, according to Reuters.

“This has dragged down consumption,” he added. “Consumers are also waiting for more government policies.”

Sean Taylor, chief investment officer for Asia Pacific and head of emerging markets at Deutsche Bank Group's DWS asset management arm, said he expects Chinese authorities to take further steps to boost autos spending if a resolution to the trade war can be achieved.

“The government will probably use policy to guide certain sectors and the autos is the easiest area to do,” Taylor told CNBC on Tuesday. He added that he'd expect Beijing would “front load” that stimulus by quickly putting out some sort of package that could include ultra-low financing for auto loans.

“That can kick in really, really quickly,” he added, though he stressed it won't happen until the uncertainty of the tariff conflict with the U.S. is resolved.

“Sentiment is so important,” he said. “We really have had terrible sentiment, both on the government level, a corporate level and investor level in China.”

Tesla says new Superchargers let drivers fill up faster, 75 miles of charge in 5 minutes

Thomas Peter | Reuters
Zang Yi charges her Tesla car at a charging point in Beijing, China, April 13, 2018.

Tesla has debuted its V3 Superchargers, saying they could enable drivers to add up to 75 miles of charge to a long-range Model 3 in just five minutes.

Elon Musk's company also said the same car could add 1,000 miles worth of charge in an hour under ideal conditions.

The new Superchargers aren't available to most Tesla drivers now, just participants in the company's” early access program” who can drive to company's public beta site near its factory in Fremont, California.

Tesla plans to roll out the V3 Superchargers in North America in the second quarter of 2019, and to sites in Europe and China in the fourth quarter.

The V3 was unveiled at the Fremont plant Wednesday night. Tesla also boasted about the reach of its already-installed charging infrastructure, saying in a blog post:

“Tesla has more than 12,000 Superchargers across North America, Europe, and Asia and our network continues to grow daily: more than 99% of the U.S. population is covered by the network, and we anticipate similar coverage in Europe by the end of 2019. Recently, we passed 90% population coverage in China and are growing that number quickly.”

The V3 Superchargers, which feature liquid-cooled cables, will allow drivers to fill up their virtual tanks, faster. But they will also allow Tesla to move more electric vehicles through their 12,000 charging sites every day — with most drivers paying each time they recharge.

In September, Tesla ended a generous “unlimited charging” promotion that it previously offered as a referral bonus to get new customers into its premium Model S and Model X electric vehicles.

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Tesla’s Elon Musk could be suspended as CEO in latest SEC scuffle, securities lawyers say

Mike Blake | Reuters
Elon Musk

Tesla CEO Elon Musk is facing pretty significant fines and a possible suspension as CEO for recent activity on Twitter that federal regulators said violated his Sept. 29 settlement with the Securities and Exchange Commission, securities lawyers say.

Musk and Tesla have until March 11 to respond to an order from a judge explaining why the court shouldn't hold him in contempt after he tweeted about Tesla's production forecasts for the Model 3, a midsize sedan. The agency said the CEO broke an agreement that requires him to vet any public comments that could affect investor decisions.

Former SEC attorneys and other securities lawyers said it looks like a clear violation. Neither Tesla nor the SEC responded to requests for comment.

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Musk is still considered a first-time offender, in that he hasn't been convicted of a crime, like Martha Stewart was in 2004, or indicted on criminal charges, like Elizabeth Holmes of Theranos was in 2018, and he isn't quite yet a habitual or serial offender, said Elliot Lutzker, a former attorney in the SEC's enforcement division. So it is unlikely the agency would seek an outright ban.

But Musk's Feb. 19 tweet about Tesla's production estimates may temporarily cost him his job as CEO, Lutzker and other attorneys said. Securities attorneys compared it to Stewart's settlement deal with the SEC, where she agreed to a five-year ban as CEO but remained as the creative director of Martha Stewart Living.

“It is looking pretty ominous for Musk,” Lutzker said. “I could very easily see a very significant fine and a possible suspension.”

Musk's initial settlement with the SEC required Tesla to develop a process for vetting any communication, including tweets, that Musk makes with the public. That was supposed to prevent the sort of misleading tweets that led to the SEC's first dispute with Tesla, after Musk tweeted in mid-2018 that he had already secured the funding to take Tesla private at $420 a share. The tweet turned out to be false.

The tweet at the center of the SEC's most recent complaint is one Musk sent out on Feb. 19 at 7:15 p.m. that said, “Tesla made 0 cars in 2011, but will make around 500k in 2019.”

He then corrected himself at 11:41 p.m.: “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”

Musk later defended the tweet, saying the projection has been previously disclosed and thus didn't need to go through the typical vetting process.

But the SEC isn't buying it.

“There was no pre-approved written communication anywhere in the January 30 communications that stated that Tesla would make around 500,000 cars in the 2019 year,” the agency said in its complaint.

The Supreme Court has defined material information very simply, Lutzker said, as anything a reasonable investor would want to know in deciding whether to buy or sell a stock. The settlement requires vetting for any projections about Tesla's business, which would include production forecasts.

Musk may simply have made a mistake, but the SEC has to enforce the settlement anyway, said Jay Knight, an attorney at Bass, Berry & Sims who previously worked in the SEC's corporate finance division. Enforcement is necessary both to keep Musk in check and to send a message to other public company CEOs that disclosure rules still apply, even though the public is increasingly accustomed to social media and the rapid and direct communication enabled by the internet, he said.

“In the world of public companies there are a lot of mini Elon Musks,” Knight said, and there is a tension between getting information out to investors as soon as possible and the possibility that something could be incorrect or misleading.

“While it is difficult for a CEO to write a press release and release it on a wire service, it is really easy to pull out a phone and start tweeting,” he said.

This action also could be part of a longer strategy with Tesla and Musk, said Britt Latham, an attorney at Bass, Berry & Sims who litigates securities cases.

“They are building their case,” Latham said. “If they get a violation here, they could get the court to issue an order that puts some more teeth into the consequences of the next violation. Then at some point, given how unpredictable Mr. Musk is, the agency may assume he will hang himself and give them the opportunity to really take some more serious action.”

This whole ordeal also opens up Tesla to lawsuits. If the company is not enforcing its policies, and the CEO is clearly violating policies that were required by a court order just a few months ago, that is a pretty easy opportunity for plaintiffs' lawyers to step in. That is especially true if Tesla's share price drops.

“At some point these lawsuits start costing a lot of money, even for a big company like that,” Latham said.

Correction: This article has been corrected to state that Elizabeth Holmes of Theranos has been indicted on, but not yet convicted of, criminal charges.

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Carvana CEO says he wouldn’t bet against Tesla selling cars online

Carvana CEO Ernie Garcia: Building trust in the brand could be Tesla's key to selling cars online
1:51 PM ET Thu, 7 March 2019 | 04:26

The head of a rising online used car business said Tesla's decision to take all sales onto the internet may be a much better bet than some skeptics think.

“I think every business has its challenges, but they've done a pretty good job overall, I wouldn't be betting against them,” Carvana CEO Ernie Garcia, said Thursday on CNBC's Squawk Alley. “I think when you buy a new car, questions are different, but the return policy is enormously powerful like it is on the used side. A customer knows they can return it.”

Tesla shares were up more than 1 percent Thursday.

Tesla's shift to online sales has garnered mixed reviews from some investors, with some saying the move could substantially reduce costs by eliminating stores, but also worrying that Tesla is losing a valuable sales strategy.

“The move to direct sales is bold, though we are comforted that 70%+ of Tesla buyers in 2018 did *not* test drive prior to purchase,” Bernstein analyst Toni Sacconaghi wrote in a research note shortly after Tesla's announcement a week ago. “That said,” he added, “we do believe that salespeople have been important in up-selling Tesla customers, as well as selling Tesla solar products.”

The move will result in the closure of most of Tesla's stores and layoffs. At least one employee said they are still in the dark over Tesla's plans.

The electric car maker has long been waging battles in a number of states to allow Tesla vehicle sales. Several states have laws banning the direct sales of vehicles by automakers. The laws are vestiges of an earlier era, when dealers wanted to be protected from automakers competing directly with them.

Garcia said he is not worried too much about direct competition from Tesla, since Carvana focuses on used cars. But he said the company can bring more customers to online car sales overall.

“Tesla has an incredible megaphone,” he said.