Author: CNBC Online news

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.

VOW3

—

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.

7267.T

—

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.

WATCH: A visit to the only Tesla Supercharger station with a lounge

CNBC visits the only Telsa Supercharger station with a lounge
8:59 AM ET Sat, 27 Jan 2018 | 02:20

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.

Investors would not want to remove Musk as Tesla CEO, says managing director
5:09 PM ET Wed, 6 March 2019 | 02:24

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.

WATCH: Tesla has an Elon Musk premium

Bulls and bears agree Tesla has an Elon Musk premium, says WSJ reporter
2:13 PM ET Wed, 6 March 2019 | 02:13

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.

Moody’s downgrades auto industry outlook from stable to negative on falling demand

Barcroft Media | Getty Images

Weakening demand for cars and trucks has pushed credit rating company Moody's to cut its outlook for the auto industry from stable to negative.

Slowing economic growth, a better-than-expected end to 2018 and a host of potential political pitfalls are all expected to dampen global auto sales in 2019, Moody's said in a research note Monday.

The company cut its 2019 growth forecast for worldwide light vehicle sales by more than half, saying they won't totally recover from a slowdown in the latter part of 2018.

Moody's expects global auto sales to grow by 0.5 percent this year, down from its previous forecast of 1.2 percent, “which had assumed a stronger finish in 2018.” For 2020, Moody's forecast growth of 0.8 percent.

Auto sales are likely to continue falling in the first half of 2019, before regaining lost ground in the last two quarters of the year, Moody's said. It's forecasting a slowdown in global economic growth as well, with stronger growth in developing markets such as China. U.S. sales are expected to drop by nearly 3 percent in 2019 and 0.6 percent in 2020, largely due to a drying up of a financing environment that had buoyed sales for so long.

Of course, the threat of U.S. import tariffs and the United Kingdom's potential exit from the European Union are also risks.

The industry is also faced with declining sales at a time when many companies are racing to invest in new transportation tech, including self-driving cars, connected cars, and advanced safety features.

Auto manufacturers also face ever more stringent emissions guidelines, which are forcing investments in hybrid and electric vehicles, and other options for passengers and freight.

Volvo may not sell its Tesla rival electric car in the US over tariffs

Wang Zhao | AFP | Getty Images
A man uses his mobile phone to take a picture of a Polestar 1 car at the Beijing auto show on April 26, 2018. –

Volvo Cars may not sell its high-performance Polestar electric vehicles in the U.S. if Washington slaps tariffs on imports from China, the Financial Times reported Wednesday.

The automaker recently revealed its Polestar 2, which executives said is priced competitively with Tesla's Model 3 sedan.

But Volvo is owned by Chinese auto company Geely, and the group has so far intended to make the cars at a factory in China. It expects to sell more than 50,000 Polestar vehicles.

A lot of those cars won't make it to the United States if tariffs on Chinese imports are too high, Polestar CEO Thomas Ingenlath told the FT.

The Polestar 2 is one of several vehicles automakers are hoping will draw customers from Tesla.

Competition is expected to heat up around the 2021 model year, said CFRA analyst Garrett Nelson. Competitors are already on the market at a midrange price that's competitive with the Model 3 and higher prices where Tesla's more premium Model S and Model X vehicles sit.

The global automotive industry has found itself caught up in President Donald Trump's trade war with China, leading many automakers to re-evaluate where they build and sell their products.

Read the full story from the Financial Times.

Tesla issues $13.8 million in stock to buy trailers to take cars from factory floor to customers

Andrei Stanescu | Getty Images
Car transporter carries Tesla Model 3 vehicles along the highway.

Tesla issued $13.8 million in stock to pay for trucks and trailers to transport its electric vehicles from the factory floor to customers, according to a new securities filing.

Instead of cash, the electric car maker used 49,967 shares at a maximum price of $277.05 a share as of Feb. 12 to buy the trailers from Central Valley Auto Transport, a California company that specializes in car carriers, Tesla said Monday in a filing with the Securities and Exchange Commission.

Central Valley Auto Transport hung up the phone during two attempts by CNBC to get comment. An email to the CEO wasn't immediately returned outside of normal business hours. Tesla declined to comment on the filing.

Tesla finally launched its standard Model 3 starting at $35,000 — Here's what it means for investors
12:21 PM ET Fri, 1 March 2019 | 02:03

Tesla said in its fourth-quarter shareholder letter that it is “continuing to purchase our own car-hauling truck capacity for vehicle shipments.”

Getting its cars from the factory to customers has been a challenge for Tesla in the past. Tesla CEO Elon Musk said in September that the company had moved on from its troubles producing the Model 3 midsize sedan to “delivery logistics hell,” but that the problem was “far more tractable.”

Tesla shares were about flat Monday morning. The company's market value is approximately $50 billion.