Author: CNBC Online news

VW CEO says he hopes he’s done enough to please Trump and avoid tariffs

VW CEO: We want more of U.S. market share
12:07 PM ET Fri, 22 Feb 2019 | 02:35

Volkswagen Group Chief Executive Herbert Diess told CNBC Friday that he hopes the German auto firm has done enough to please President Donald Trump and avoid punitive import tariffs.

Washington is currently holding out for fresh trade talks with the European Union and has said if it's not satisfied it could slap tariffs on EU cars and parts coming into the United States. Trump has complained about German cars' presence on U.S. streets and tweeted threats to tax European, and particularly German, vehicles.

Diess has said import tariffs could cost VW as much 2.5 billion euros ($2.8 billion) each year.

The German firm announced in January that it's investing $800 million in its factory in Chattanooga, Tennessee to prepare the location for the production of new electric cars.

Speaking to CNBC's Annette Weisbach at VW's Wolfsburg headquarters, the German car chief said the investment appeared to please the U.S. president.

“We received a positive tweet,” said Diess, before adding that he hoped VW would “do everything to avoid import taxes.”

Diess added that currently VW only has a 4 percent market share in the United States and is committed to growing that number to become a “volume producer.”

On a global basis VW Group posted 2018 full-year revenues of 235.8 billion euros on Friday. In its outlook for 2019, Diess said he expected a challenging year but predicted sales to rise by around 5 percent.

The key market of China could prove a challenge, however, with Diess admitting that sales there had slowed in the final quarter of 2018 and January 2019 had witnessed a 10 percent slump year-on-year.

Shares of Volkswagen initially rose after the news, but were 0.25 percent lower by 3:45 p.m. London time on Friday afternoon.

Ford is investigating possible problems with fuel economy, emissions tests

Bill Pugliano | Getty Images
Workers build a truck as it goes through the assembly line at the Ford Kentucky Truck Plant in Louisville, Kentucky.

Ford Motor said on Thursday it has hired outside experts to investigate its vehicle fuel economy and testing procedures after employees raised concerns, and did not know whether it would have to correct data provided to regulators or consumers.

The issues involving Ford's testing processes do not involve the use of so-called defeat devices — hardware and software designed deliberately to deceive government emissions tests, Kimberly Pittel, Ford's group vice president for sustainability, environment and safety engineering, told Reuters.

The automaker since last fall has been investigating concerns raised by employees that incorrect calculations were used to translate test results into the mileage and emissions data submitted to regulators, Pittel said.

Ford said it was evaluating changes to the process it uses to develop fuel economy and emissions figures, “including engineering, technical and governance components.”

Ford shares dipped slightly in after-hours trading following the disclosure.

Ford has hired the law firm Sidley Austin to lead an independent investigation into possible discrepancies in calculations used to produce emissions and fuel economy figures, Pittel said. The company is using an independent laboratory to conduct testing.

U.S. and California regulators have been cracking down on automakers for emissions cheating following revelations in 2015 that German automaker Volkswagen had used defeat devices to make models equipped with diesel engines appear to comply with emissions standards when they emitted far more pollution than allowed in real-world driving.

“We have voluntarily shared this information” with the U.S. Environmental Protection Agency and the California Air Resources Board, Pittel said. Ford notified the agencies this week, she said.

The EPA said in a statement on Thursday that information from Ford's investigation is “too incomplete for EPA to reach any conclusions. We take the potential issues seriously and are following up with the company to fully understand the circumstances behind this disclosure.”

The investigation has started with testing of the 2019 Ranger pickup truck, and the company expects data back next week, Pittel said.

She said it was not clear what impact the review will have on advertised mileage or fuel economy data submitted to regulators, nor is it clear how many vehicles could be affected if Ford is required to revise the data.

“We cannot predict the outcome, and cannot provide assurance that it will not have a material adverse effect on us,” Ford told investors in a regulatory filing Thursday.

“We are going to go where the investigation takes us,” Pittel said.

Ford has been embarrassed in the past by errors in fuel economy claims. In 2013, the automaker cut by seven miles per gallon the claimed fuel economy for its C-Max hybrid model following complaints that real-world mileage did not match the claimed fuel economy. In 2014, Ford lowered fuel economy ratings for six other models and offered compensation to customers.

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Auto sales are headed for further declines, says AutoNation CEO Mike Jackson

AutoNation outgoing and incoming CEOs on earnings report and the future of the company
5 Hours Ago | 11:32

It's getting harder to sell cars, and that signals the auto industry is about to enter a period of decline, the departing CEO of the nation's largest auto dealership chain said Friday.

Sales of new vehicles are expected to continue their downward slide since they hit record levels of 17.6 million units in 2016, AutoNation CEO Mike Jackson told CNBC's “Squawk Box.” He is expecting 2019 sales to be around 16.8 million units.

The downturn over the next few years will be far more gradual than the sudden collapse seen about a decade ago during the financial crisis.

AutoNation reported earnings of $1.10 a share on Friday, missing Wall Street expectations, sending shares down 4 percent. The company's stock has fallen almost 30 percent in the last year.

Jackson is stepping down in March. He'll be succeeded by Carl Liebert, most recently chief operating officer of USAA, a financial services company. Liebert also was an executive vice president at Home Depot.

During Jackson's 20 years at the helm, he helped transform a small collection of dealerships into the country's largest automotive retailing chain, weathering downturns in the process.

“As they say in 'The Godfather,' this is the life we chose,” Jackson said. “Autos is a cyclical business. As far as investors are concerned, I don't care whether it's a manufacturer, supplier, retail, you don't buy the stock at the end of the cycle. But that also creates a lot of opportunities which we've taken advantage of over the years and have always come out of downturns stronger than we went into them. And we intend to do that this time also.”

Tesla replaces general counsel Dane Butswinkas after two months

Tesla general counsel leaves after 2 months on the job
11 Hours Ago | 01:12

Tesla is replacing its general counsel, Dane Butswinkas, the company said Wednesday. Jonathan Chang, Tesla's current vice president of legal, will take over Butswinkas' position, effective Wednesday.

It is yet another executive departure for Tesla, which has seen a great deal of turnover in its ranks over the last several years. Most recently, CFO Deepak Ahuja said he will be leaving the company, after serving his second stint with the electric car maker.

This is likely more evidence that Tesla is not a company for everyone and that Elon Musk is a tough boss, said Gene Munster, managing partner at Loup Ventures.

“He's in a one in a billion type of person,” Munster said. “And this is yet further evidence. And I think that is the biggest challenge that the company has — retaining top talent.”

Chang, who is 40 years old, has been with Tesla for eight years. He most recently oversaw legal issues relating to securities, mergers and acquisitions, real estate, compliance, and sales in the U.S. and Europe, Tesla said. He has been involved in Tesla's efforts to overturn state laws prohibiting the direct sale of cars to customers across the United States. He will report directly to CEO Musk.

Tesla shares were down nearly 1 percent midmorning Thursday.

“I'm grateful for the opportunity over the past seven months to have worked with both Elon and Tesla, first as outside counsel and most recently as General Counsel at Tesla. I am returning to my home in Washington, DC and to my trial practice at Williams & Connolly,” Butswinkas said. “I look forward to continuing my work with Tesla in an outside counsel role. I have observed and have tremendous confidence in Jonathan's leadership skills and in the Tesla team. When I joined the company, I said it would be hard to identify a more timely or essential mission than Tesla's—that's as true today as it was then.”

Butswinkas left after just two months on the job. A person familiar with the matter said he was not a good cultural fit with Tesla and wanted to return to his family and law practice in Washington, D.C.

Report of a Model 3 leasing program could be a bad sign for Tesla investors

Salwan Georges | The Washington Post | Getty Images
Tesla's Model 3 at the Tesla store in Washington, D.C.

A report saying that Tesla might be starting a leasing program for its Model 3 sedan could be a bad sign for investors in the electric car maker, according to one analyst.

The timing of the report could be a sign that the gradual expiration of federal tax credits for Tesla vehicles is hitting demand for the sedan, said CFRA analyst Garrett Nelson in a note published Wednesday. The reduction in the tax credits began this year.

“While TSLA has meaningfully driven down vehicle unit costs in recent quarters, we have growing concerns regarding top-line results due to combination of moderating sales volume, price reductions and mix,” Nelson said. “Looking past the near term, we expect TSLA to face significantly increased EV competition starting with the 2021 model year.”

Tesla responded to a report from news site Electrek published on Tuesday saying the electric vehicle manufacturer is planning a leasing program, but that it has not finalized the dates when it will begin.

“This is simply an internal document to ensure teams are prepared for when we eventually introduce a leasing option to customers,” said a statement from Tesla send to CNBC, referring to the email referenced in the Electrek report. “No decision has been made about when Model 3 leasing will be available, but it will definitely be after the dates outlined in this document.”

CEO Elon Musk also said on the company's fourth-quarter earnings calls that Tesla might wait until later this year to start a program.

“We've been reluctant to introduce leasing on Model 3 because of its effect on GAAP financials,” Musk said on the call. “It is worth noting that demand to date is with zero leasing. Obviously, leasing is a way to improve demand, but it makes our financials looks worse. So we're not wanting to introduce that right away. We'll introduce it sometime later this year probably.”

Tesla already offers leases on its other models, and it is common for customers to lease vehicles in the premium end of the car market.

Several manufacturers are either already selling electric vehicles or planning to release new models in the next few years. Some are aimed at the higher end of the market, where Tesla's vehicles are priced, especially the full-size Model S sedan and Model X SUV.

Musk billed the Model 3 as a relatively affordable electric car, and initially Tesla intended to sell them at a starting price of $35,000, much lower than the current price. Competitors are eyeing that end of the market as well.

It seems impossible that Tesla will have full self-driving car tech ready in a year, says analyst

Elon Musk tends to be more accurate, says Kelley Blue Book's Brauer
1 Hour Ago | 02:52

At least one auto industry analyst is skeptical about Tesla CEO Elon Musk's bold claim that the electric car maker will have all the features necessary for full autonomy by the end of the year.

In fact Musk may be misleading the public over how capable Tesla's cars are, said Karl Brauer, executive publisher at Cox Automotive, on CNBC's “The Exchange” on Wednesday.

“I think the term 'misled' works here. I mean, there are so many variables out there,” he said. “There are so many different ways that a car has to be able to deal with driving: weather, lighting, traffic, pedestrians, bicyclists. To say you'll have all conditions solved in the next 12 To 18 months, nobody else is making that claim and there are some pretty big companies out there like Google who are doing this and have been doing this for a decade.”

Musk made his claims about Tesla's progress in self-driving cars in an interview with Cathie Wood and Tasha Keeney of ARK Invest, a group of funds that has positions in Tesla. He said he expects Tesla to have all the features necessary for fully self-driving cars by the end of the year, and to be capable of safely transporting a sleeping passenger in an autonomous vehicle within two years.

“Elon's got one of the best systems currently available in terms of semi-autonomous driving,” Brauer added in an email to CNBC. “But the concept of any car handling all the variables that exist on the road is still hard to fathom. Doing it in the next 12-18 months seems impossible.”

On Tuesday's podcast, Musk did say that having all the features necessary did not mean “now it works with 100% certainty, requiring no observation, perfectly.” He added that regulators will play a big role in determining how these technologies are used and how reliable they will have to be.

Tesla has long offered automated driver assistance technology with its cars through a system called Autopilot. Tesla has apparently been trying to pursue fully self-driving cars, albeit in ways that are very different from competitors.

Musk has famously, and controversially, insisted the laser infrared technology lidar so favored by the vast majority of competitors is not necessary for full self autonomy. The company also uses very different methods from most of its rivals for testing the technology.

Musk also has a reputation for making big claims about how far along Tesla is in terms of certain aspects of its business, such as how quickly it is developing a given technology or producing cars. Musk has said some of his predictions are rough estimates.

“Elon Musk's established history of predictions plays into his latest claims,” Brauer said. “He's missed these kind of predictions in the past, so people shouldn't be surprised he's willing to make them again, or that they might be unrealistic. The current AutoPilot technology is among the most advanced available, but it's nowhere near full self-driving under all conditions. Getting there by the end of this year, or even the end of next year, feels out of scope, but I guess we'll see.”

Tesla declined a request for comment.

Elon Musk tweeted, then revised, Tesla financial guidance. He probably shouldn’t have.

Bobby Yip | Reuters
Tesla Chief Executive Elon Musk stands on the podium as he attends a forum on startups in Hong Kong, China.

Elon Musk tweeted — then revised — projections for full-year Tesla manufacturing numbers.

The CEO said late Tuesday that Tesla would make “around” 500,000 vehicles in 2019, later clarifying he “meant to say” the company's annualized production rate at the end of 2019 could be around 500,000 vehicles — or a production rate of 10,000 cars per week. Total deliveries for the year are still estimated at 400,000, Musk said.

The posts seem unoffensive by Musk's standards, given his penchant for inflammatory tweets. But the incident raises questions about the effectiveness of an SEC fraud settlement and attempts to rein in Musk's online antics.

As part of the company's settlement with the SEC in September — which stemmed from a now-infamous Musk tweet about taking the company private — Tesla was supposed to create a system for monitoring Musk's statements to the public about the company, whether on Twitter, blog posts or any other medium.

“It comes back to, the company is still running like a start-up,” Loup Ventures founder Gene Munster told CNBC's “Squawk Box” on Wednesday. “This is a $50-60 billion market cap company. This should not be run like a start-up.”

It's unclear whether there's a system in place to monitor Musk's tweets about the company. Musk told CBS' “60 Minutes” in December that no one was reading his tweets before he published them.

“I have always had this hope that Elon would change, and I think it's reiterated that he is not going to change,” Munster said.

Musk's tweets have proven to move the stock as much as 10 percent in some cases, and invited a defamation lawsuit from a British rescue diver who sparred with Musk online.

Separately Wednesday, Tesla announced its general counsel was leaving the company after only two months on the job. Share prices were down slightly in early trading Wednesday.

Correction: This story was revised to correct the references for the days of the week.

WATCH: Tesla general counsel leaves after 2 months on the job

Tesla general counsel leaves after 2 months on the job
2 Hours Ago | 01:12

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Chinese electric automaker Kandi shares rocket 40% higher on approval to import cars to the US

Imaginechina via AP Images
Chinese workers push an EV past electric vehicles displayed at a parking lot of Zhejiang Kandi Vehicles Co., Ltd, in Hangzhou city, east China's Zhejiang province.

Shares of Kandi Technologies Group rocketed up more than 35 percent in trading Wednesday after the Chinese electric automaker announced it received approval to import two of its cars to the United States.

The National Highway Traffic Safety Administration (NHTSA) approved Kandi to ship its Model EX3 and Model K22 cars to the U.S.

“With this, we are confident in introducing our reliable vehicles to the American public,” Kandi CEO Hu Xiaoming said in a statement. “We believe both the EX3 and K22 are competitive in price and quality with advanced tech features that are in demand by American consumers.”

While the two cars are all-electric, Kandi is not a “pure play” electric automaker like Tesla or Nio. Kandi Technologies is the joint venture of Kandi Vehicles and Geely Group, which is one of China's largest automakers.

Kandi shares have risen more than 120 percent in the past year and hit a new 52-week high on Wednesday of $8.37 a share.

Elon Musk: Tesla will have all its self-driving car features by the end of the year

J. Emilio Flores | Corbis | Getty Images
Elon Musk, Tesla CEO

Tesla CEO Elon Musk expects that the electric car maker will have the technology needed to essentially operate vehicles without drivers by the end of the year.

The entrepreneur made the comment on a podcast with Cathie Wood and Tasha Keeney of ARK Invest, a firm that owns shares in the company. Tesla's automated driver assistance system Autopilot has garnered both positive attention for the sophistication of its features and negative attention for its association with a number of high-profile accidents.

“I think we will be feature complete — full self-driving — this year,” Musk said. “Meaning the car will be able to find you in a parking lot, pick you up and take you all the way to your destination without an intervention, this year. I would say I am of certain of that. That is not a question mark.”

This is in line with previous comments Musk made on Tesla's fourth-quarter earnings call.

“However,” he added, “people sometimes will extrapolate that to mean now it works with 100 percent certainty, requires no observation, perfectly. This is not the case.”

In addition, the speed at which the technology makes it into the hands of customers depends on what regulators will allow, Musk added.

However within two years, the technology ought to be there for cars to operate without any help from a driver at all.

“My guess as to when we would think it is safe for somebody to essentially fall asleep and wake up at their destination? Probably towards the end of next year,” he said. “That is when I think it would be safe enough for that.”

Tesla was not immediately available for comment.

ARK Invest has a significant investment in Tesla — the carmaker comprises about 8 percent of its holdings. The firm has a famously high $4,000 price target on the stock, but recently sold a portion of its share in the company.

One of its flagship ETFs has reduced its share in Tesla, though the stock remains one of ARK Invest's top holdings across several funds.

— CNBC's
Lora Kolodny
and
Eric Rosenbaum
contributed to this story.

WATCH:Elon Musk's big ambitions may be killing Tesla

Tesla's earnings were better than expected, but Elon Musk still has a lot on his plate
8:48 PM ET Wed, 2 May 2018 | 05:31