Author: CNBC Online news

Tesla’s China factory is set to begin production late next year, Shanghai government says

Qilai Shen | Bloomberg | Getty Images
A Tesla Motors Model S electric automobile at one of the company's electric charging stations in Beijing on March 9, 2016.

Tesla is on pace to begin production at its factory in China in the second half of next year, the Shanghai government said Wednesday.

Land leveling is basically complete and construction is about to begin, with the factory expected to be put partially into operation in the second half of 2019, according to an official WeChat post from the government. The article described a visit by Shanghai Mayor Ying Yong and Vice Mayor Wu Qing.

Tesla did not immediately respond to an emailed request for comment.

In mid-October, Tesla officially acquired an 864,885-square meter plot in Shanghai's Lingang area for the electric car maker's first factory outside the U.S.

Elon Musk's company has also launched an official WeChat account for hiring locals.

Producing in China, the world's largest market for electric vehicles, would allow Tesla to reduce costs significantly. The company has said it is operating at a 55 percent to 60 percent cost disadvantage with a domestic peer due to ocean transport costs and tariffs.

Waymo starts commercial ride-share service

Geoff Robins | AFP | Getty Images
John Krafcik, CEO of Waymo speaks at a press conference at the 2017 North American International Auto Show in Detroit, Michigan, January 8, 2017.

After months of testing and millions of miles developing self-driving vehicle technology, Waymo has officially launched the country's first commercial autonomous ride-share service.

The company's Waymo One program will give customers rides in self-driving vehicles 24 hours a day. Initially, the service will be limited to cities surrounding Phoenix, including Tempe, Mesa and Chandler.

While there may be many potential customers who want to ride in an autonomous vehicle, the Waymo One service will initially be offered to a limited number of people. Those customers will include hundreds of people in the Phoenix area who were test users of the Waymo self-driving vehicle fleet that has been in development since April 2017.

“Self-driving technology is new to many, so we're proceeding carefully with the comfort and convenience of our riders in mind,” said Waymo CEO John Krafcik. One example of Waymo taking a cautious approach rolling out its ride-share service is the company's use of safety drivers to supervise the rides, at least initially. In addition, the company's app and consoles in the Waymo One vehicles will allow riders to instantly connect with support agents who can assist riders with questions.

Alphabet's Waymo One marks the start of the race by automakers, tech companies and other firms to launch autonomous ride-share services. General Motors subsidiary Cruise plans to launch a similar service using self-driving vehicles next year.

What's driving the competition? The pursuit of greater profits. Studies of have shown the biggest cost for ride-share operations is the expense of paying a driver. General Motors estimates it costs ride -share companies more than $3 per mile in San Francisco. However, GM believes that cost could drop to roughly $1 per mile by 2025 with driverless vehicles in ride-share fleets.

Waymo has said it expects the cost to consumers for using Waymo One to be competitive with Uber, Lyft and other ride-hailing services.

Here’s the buyout GM offered before announcing 14,000 job cuts

John Gress | Reuters
Trucks come off the assembly line at GM's Chevrolet Silverado and GMC Sierra pickup truck plant in Fort Wayne, Indiana, July 25, 2018.

General Motors executives painted a bleak outlook of the global economy in offering buyouts to 17,700 employees last month.

“We must take significant action and now while our company and the economy are strong,” they said in talking points given to managers in October to discuss the severance plan with staff. CNBC obtained the “leader talking points,” and GM verified their authenticity.

An “intensely competitive” industry combined with pressure from rising commodities prices, interest rates and a difficult trade environment created a sense of urgency. “We need … to make the right pre-emptive moves so that we come out of this tough time ahead,” they said in the talking points.

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The Detroit automaker on Monday announced plans to halt production at five factories in North America and cut about 14,000 jobs in the company's most significant restructuring since its bankruptcy in 2009. The news falls on the heels of an otherwise strong quarter. Its third-quarter earnings released Oct. 31 — the same day GM started soliciting the buyouts — showed its first year-over-year earnings growth since the first quarter of 2017 and sent the stock soaring 9 percent.

'Not an option'

But executives saw stiff competition and a tough economy ahead. The cuts are designed to free up some cash and position its workforce of 180,000 for the future of autonomous vehicles and electric cars.

“We cannot afford to wait and see what happens in the industry, or with China, or in international trade or currency, to then react,” the severance document said. “Even if macro-economic factors are partially to blame, continuing to lower guidance to Wall Street is not an option.”

GM offered voluntary buyouts to roughly 17,700 eligible employees in North America with at least 12 years of service, according to the document. The company was aiming for 8,000 voluntary buyouts among its salaried workers as part of a total headcount reduction of 14,000, spokesman Pat Morrissey confirmed. He said about 2,250 workers accepted severance agreements by the Nov. 19 deadline.

The carmaker previously said that involuntary layoffs would follow if there were not enough takers. Roughly 5,750 salaried workers and 6,000 hourly employees will be laid off, he confirmed. Half of the hourly workers are in Canada with the other half in the U.S., where the company will work with union officials to try to move to other plants, Morrissey said.

Salary and benefits

GM is allowing some employees who took the buyouts to leave as early as this coming Saturday with an official last day of Jan. 31 and salary and benefits continuing for six months after that. Executives could also leave in December with an effective last day of Feb. 28 and a full year of salary and benefits, according to the severance materials.

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GM warned this summer that the trade war instigated by President Donald Trump could force job cuts in the United States. Trump was irate with GM's announcement this week, tweeting on Tuesday that he was “very disappointed” with the company and CEO Mary Barra for idling plants in Ohio, Michigan and Maryland.

“Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get,” Trump tweeted. He also threatened to cut all of the company's federal subsidies, following up on Wednesday with the announcement that the administration was studying all tariffs on cars imported to the U.S. because of the “G.M. event.”

GM says the move would help to save $6 billion a year. Shares of the company jumped 4.8 percent on the announcement Monday, but Trump's tweets drove the stock down Tuesday and Wednesday. Its shares have fallen by almost 20 percent during the last year.

“A strong cash position is the only way the company can deal with these factors and also continue to invest in growth opportunities and to set ourselves up for the future,” the talking points said.

“The leadership team is very focused on improving our cash generation and profit performance on each of our vehicles.”

— CNBC's
Robert Ferris
contributed to this article.

The future of the auto industry lies in car sharing, Chinese executives say

Dave Zhong/Getty Images for CNBC International
Freeman H. Shen, Founder, Chairman & CEO of WM Motor, speaks during Fireside Chat on Day 2 of CNBC East Tech West at LN Garden Hotel Nansha Guangzhou on November 28, 2018 in Nansha, Guangzhou, China.

Several Chinese auto and transportation industry leaders are preparing for a future in which people share cars, rather than own them individually.

“(The new generation), they're not interested in the ownership. They're probably more interested in accessibility,” Freeman Shen, founder and CEO of Chinese electric car company WM Motor, said last week at CNBC's East Tech West conference in the Nansha district of Guangzhou, China.

Technological advances in the last several years have aided the rise of multibillion-dollar ride-hailing giants such as Uber and Didi. They, in turn, have challenged the traditional taxi driver system and cultivated a habit of on-demand car services for tens of millions of users globally despite ongoing safety concerns. Traditional automakers, many already trying to navigate rising interest in the electric vehicle market, are paying close attention to the ride sharing trend. Notably, General Motors is testing the waters with its own rental program.

In China, Feng Xing Ya, general manager of Guangzhou-based automaker GAC, also said the future of the auto industry lies in car sharing.

“(It's) a challenge for the auto industry because people may buy fewer cars,” Feng said in Mandarin, according to a CNBC translation, during a Nov. 27 conference session.

Without giving much detail on a plan, Feng said he favored a strategy of entering — rather than avoiding — the car sharing economy, which he said can still generate a lot of income for a company.

However, such a rapid change in consumer tastes could give start-ups an advantage.

Shen, formerly a director at Fiat Chrysler and Chinese automaker Geely, said traditional automakers are too focused on selling cars rather than improving user experiences. He said his company's focus on software and newness to the market means he has everything to gain and little to lose from a shift to ride sharing.

Shen founded WM Motor — which stands for “world champion” in German — in 2015 and the company has received more than $1 billion in funding, according to Crunchbase.

The rise of car sharing may also lead to new kinds of living environments in China as Beijing tries to encourage technological and urban developments through “smart cities.”

“If we can allocate the seats instead of vehicles … then we can use the transportation system more efficiently,” Henry Liu, vice president, chief scientist of smart transportation at Didi, said during a conference session.

“If you think about the future city, I think the future city will have much less in terms of parking spaces, road spaces, because we don't really need that much of spaces for vehicles,” Liu said. “At that moment, I think we have an autonomous vehicle fleet. And they can serve the transportation demand.”

Volkswagen and Tesco to build UK’s biggest free car-charging network

Volkswagen
A Volkswagen car charging outside a Tesco supermarket.

German auto firm Volkswagen and U.K. grocer Tesco have teamed up to build the largest free electric car charging network in Britain.

The two firms announced Friday that over the next three years they will install nearly 2,500 charging points in the parking lots of up to 600 Tesco stores across the United Kingdom.

Volkswagen U.K. board member Mike Orford told CNBC by phone that his company wants to encourage people towards electric vehicle ownership by removing anxieties about when and where a car can be charged.

“People that live in a flat who might want an electric car can't charge at home as they have to park in the street. If they say, 'Actually, I know I go to Tesco twice a week for a shop,' then this suddenly feels quite viable,” he said.

Figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed that more than 120,000 'alternatively fueled vehicles' have been registered in the U.K. in 2018 — a 22 per cent increase on the same period last year.

Installed by the charging network operator Pod Point, customers at larger Tesco sites will be able to choose between a free 7-kilowatt (kw) charger or a pay-as-you go rapid charge 50 kw option.

Orford said people wouldn't need to be a Tesco customer to make use of the charge points, but the parking bays would be monitored in the same way as disabled or “mother and baby” spots.

Volkswagen hopes the use of the bays, which should be compatible with most makes of electric cars, will become habitual to shoppers.

“It is a bit like plugging in your mobile phone, most of us don't wait until the battery is flat,” Orford said, before adding, “People can get a quick 10-minute charge while just buying a pint of milk.”

The cost is being borne by both Volkswagen and Tesco, but beyond stating that it is a “multi-million pound” initiative, neither company is revealing the expected outlay.

Volkswagen Group has said its VW brand should sell a million electric cars a year by 2025. The auto group announced earlier this month it would spend almost 44 billion euros ($50 billion) on developing electric cars, autonomous driving and new mobility services by 2023.

On Wednesday, Volkswagen confirmed it is deciding where to locate a new factory in North America to build electric vehicles for the U.S. market.

Clarification: This story has been updated to reflect that the charging points will be in the parking lots of up to 600 Tesco stores.

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Arrest of ousted Nissan Chairman Ghosn raises conspiracy theories, talk of ‘a coup’

Marlene Awaad | Bloomberg | Getty Images
Carlos Ghosn, chairman of the alliance between Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp., pauses during a Bloomberg Television interview at the Paris Motor Show in Paris, France, on Tuesday, Oct. 2, 2018.

If all had gone according to plan, Carlos Ghosn would have been winging his way to Amsterdam on his corporate jet Wednesday night en route to a potentially critical meeting of senior members of the Renault-Nissan-Mitsubishi Alliance — of which he has long served as CEO.

Instead, the 64-year-old executive is in solitary confinement occupying a tiny cell in the Tokyo Detention Centre, where he's been stuck since Nov. 19 when he was arrested minutes after arriving in the Japanese capital for a visit to alliance member Nissan's headquarters. Following what was described as a “months-long” investigation, which Nissan said was triggered by a whistleblower, Ghosn stands accused of a number of financial irregularities. Chiefly, he's accused of misusing company funds and underreporting his income at Nissan, where he served as chairman.

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Ghosn reportedly failed to report about $82 million in compensation that was deferred until after his retirement, among other things, The Wall Street Journal said Thursday, citing an unnamed person familiar with Nissan's investigation.

Mounting questions

But, as the investigation drags on without formal charges, there are mounting questions about what the case is really about.

Ghosn wouldn't be the first senior industry executive to face allegations of financial abuses. But barring instances of bribery or other serious crimes, arrests are extremely rare.

If anything, a number of industry executives — as well as some Nissan insiders — are asking whether the Brazilian-born Ghosn has actually become a pawn in an increasingly bitter dispute between France's Renault and Nissan over control of their global empire, according to interviews with at least a half-dozen people close to Nissan, the alliance or Ghosn himself. They asked not to be named because they still have strong ties to the industry or directly to Nissan.

Ghosn's abrupt arrest, lack of charges and the timing — just before what was expected to be an important meeting of alliance leaders — has industry executives wondering whether the charges are justified or even real. His immediate dismissal from Nissan and lengthy detention, without being able to address the accusations, has elicited questions across the globe about the lack of due process, with even French officials weighing in.

“It's a coup,” contended George Peterson, an auto-industry veteran and head of the California-based consulting firm Auto Pacific, Inc.

Peterson said he believes the Japanese side of the nearly 20-year-old alliance wanted to see Ghosn out before he made an anticipated move that would have seen the French side of the alliance formally take over its two Asian allies, both of which have continued to operate as independent companies, despite their close ties to Renault.

Conspiracy talk

Talks of a possible conspiracy within Nissan's senior ranks have surfaced in news reports on both sides of the Pacific in recent days, and they normally might have been greeted with a laugh. But a number of people close to Nissan are not dismissing the subject outright, the people said. Some, if anything, are taking it quite seriously.

“The timing seems more than coincidental,” suggested one former top auto executive who has high-level ties with Nissan.

Nissan spokeswoman Christina Adamski declined to comment for this story, pointing to the company's previous statement on Ghosn's arrest Nov. 19. Nissan accused then-Chairman Ghosn and board member Greg Kelly of conspiring to conceal Ghosn's full pay from Japanese authorities as well as “numerous other significant acts of misconduct.”

Nissan CEO Hirota Saikawa appointed himself as chairman and also fired Kelly. Mitsubishi Motors also removed Ghosn as chairman of its board. Renault's chief operating officer, Thierry Bollore, is filling in for Ghosn as CEO on a temporary basis. Both Renault and the alliance have retained Ghosn as chairman and CEO so far.

Ghosn couldn't be reached for comment, and his U.S.-based attorneys at Paul, Weiss, Rifkind, Wharton and Garrison didn't respond to requests for comment.

Mitsubishi and Renault didn't return requests for comment for this story.

Following Ghosn's ouster at Mitsubishi, CEO Osamu Masuko said the move was “unavoidable,” though it was also “an agonizing decision.” He added that, “The priority was what to do to protect the company, what to do to protect our employees and their families.”

'Strange'

Kelly, who was arrested with Ghosn, has denied any wrongdoing and said Ghosn was paid appropriately. Japanese prosecutors won court approval Friday to detain the two executives for another 10 days.

“It seems pretty harsh when it involves a major corporate executive, who has been credited with saving the company, and another board member. It just seems strange,” Kelly's attorney Aubrey Harwell said of their treatment.

Ghosn was arrested a little more than two weeks before the alliance's top officials were due to meet in Amsterdam on Thursday. They were there to discuss a number of key issues that could reshape, perhaps even fracture, a partnership that in 2017 claimed to be the best-selling automotive group in the world, according to the former auto executive with high-level ties with Nissan. The group sold more cars than industry powerhouses Toyota, Volkswagen and General Motors.

Little news came out of the meeting. But Renault, Nissan and Mitsubishi issued a joint statement Thursday saying their three boards “have all — individually and collectively — emphatically reiterated their strong commitment to the Alliance” and remain “fully committed.”

'Le Cost-Cutter'

What was originally known as the Renault-Nissan Alliance was formed in 1999 when the French automaker decided to invest $5 billion to keep the foundering Japanese company alive. Ghosn, who had earned a reputation as a miracle worker — and a nickname of “Le Cost-Cutter” for salvaging troubled Renault two years earlier — headed to Japan with an aggressive Nissan turnaround plan. Within three years, the carmaker was in the black and had shed billions of dollars in debt.

Originally appointed chief operating officer, Ghosn was elevated to CEO, a post he subsequently took at Renault while also becoming head of the alliance.

In 2016, the executive moved to expand the empire, acquiring a controlling stake in Mitsubishi, a long-troubled Japanese company that teetered on the edge of bankruptcy after revealing a lengthy scheme to falsify fuel economy numbers. Ghosn appointed himself Mitsubishi chairman while stepping back from day-to-day duties at Nissan. He took the chairman's title, handing the chief executive role to Saikawa.

Nissan CEO Saikawa

The Japanese executive was once seen as something of a protege of Ghosn's, but any semblance of collegiality disappeared immediately after the arrest when Saikawa told reporters assembled for a hastily called news conference, “I feel strong anger and disappointment.”

Saikawa hasn't backed off since then. He told Nissan employees in Japan on Monday that Ghosn had grown too powerful, The Wall Street Journal reported. And he made it clear that he and other senior leaders at Nissan wanted to see some major changes in the relationship with Renault.

“They've long bridled over the relationship,” said a former Nissan executive who spent a number of years working close to Ghosn in Japan. “They felt they were being treated like second-class citizens.”

For its initial, $5 billion, investment, the French carmaker took a controlling stake in Nissan and subsequently increased that to 43.4 percent. The Japanese carmaker, in turn, has a 15 percent stake in its ally. Things are even more lopsided than that might suggest. Renault claims the right to appoint board members to Nissan and to name the head of the alliance umbrella organization.

'Not equal partners'

“We've been an equal partner based on mutual trust. But at the core, there were parts where we were not equal partners,” Saikawa said three years ago, following changes made to their agreement limiting the French government's ability to use its double voting rights in Renault. Nissan, referring to the change as “deterrence,” got the right to boost its own holdings in its partner if the agreement was violated.

Recent developments seem to have raised new concerns on the part of the Japanese. “When Ghosn made himself chairman of Mitsubishi, that was seen as a step too far..

GM President Dan Ammann taking over as CEO of Cruise autonomous unit

Elijah Nouvelage | Reuters
A woman gets in a self-driving Chevy Bolt EV car during a media event by Cruise, GM’s autonomous car unit, in San Francisco, California, November 28, 2017.

General Motors President Dan Ammann is taking over as CEO of the automaker's Cruise autonomous vehicle unit, the company said Thursday.

Current CEO and co-founder Kyle Vogt will become chief technology officer and president. The changes will take effect on January 1, 2019, the company said.

“These appointments further demonstrate our commitment to transforming mobility through the safe deployment of self-driving technology and move us closer to our vision for a future with zero crashes, zero emissions and zero congestion,” GM Chairman and CEO Mary Barra said in a statement. “As we move toward commercial deployment, adding Dan to the strong team led by Kyle is the next step.”

GM's shares were slightly down in intraday trading.

Now that Ammann will head Cruise, GM's international businesses and its financial wing will report directly to Barra, GM said.

GM's autonomous unit is currently valued at $14.6 billion, GM said. The business received an investment from Japanese conglomerateSoftbank in May. In October, the company announced a partnership with Japanese automaker Honda to build an autonomous vehicle.

Ammann is credited with leading GM's acquisition of the San Francisco-based autonomous vehicle technology company in 2016.

Ford cuts shifts at factories in Kentucky and Michigan, but keeps jobs

Luke Sharrett | Bloomberg | Getty Images
An employee works on a Ford Expedition sports utility vehicle on the assembly line at the Ford Kentucky Truck Plant in Louisville, Kentucky.

Ford is cutting a shift at two of its plants, but the automaker is avoiding layoffs by moving workers to other facilities, the company said Wednesday.

The automaker is shifting about 500 workers from its Louisville Assembly plant to its Kentucky Truck Plant — both in Kentucky — to increase production of the Ford Expedition and Lincoln Navigator, which are both experiencing strong sales.

It will also move 500 jobs from its Flat Rock Assembly Plant to its Livonia Transmission plant, which makes transmissions for several vehicles, including its F-150 full-size pickup and the Ranger, a midsize pickup Ford is reintroducing after 8 years. Both plants are in Michigan.

Ford makes the Ford Escape and the Lincoln MKC, both compact crossover vehicles, at the Louisvile Assembly plant, and the Mustang sports car at Flat Rock.

Higher demand for pricey pickups and SUVs have helped automakers, particularly American ones, weather falling sales this year. Ford is especially strong in larger pickups and SUVs. Ford Expedition sales in October increased 36 percent from one year ago, while Lincoln Navigator rose more than 80 percent over the same month in 2017. At the same time, sales of the Escape fell 7 percent, the MKC 8.5 percent, and the Mustang 6 percent.

“Our collectively bargained contract provides for the placement of all members displaced by the shift reduction and, after working with Ford, we are confident that all impacted employees will have the opportunity to work at nearby facilities,” said United Auto Workers Union Vice President Rory Gamble.

General Motors came under fire this week after announcing it was winding down production at five plants in the U.S. and Canada and cutting 14,000 jobs. President Donald Trump was irate with GM, tweeting on Tuesday that he was “very disappointed” with the company and CEO Mary Barra for idling plants in Ohio, Michigan and Maryland.

“Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get,” Trump tweeted. He also threatened to cut all of the company's federal subsidies, following up on Wednesday with the announcement that the administration was studying all tariffs on cars imported to the U.S. because of the “G.M. event.”

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BMW executive says China tariffs haven’t hurt US-made SUV sales one bit

Luke Sharett | Bloomberg | Getty Images
A worker applies final touches on a Bayerische Motoren Werke AG (BMW) sports utility vehicle (SUV) on an assembly line at the BMW Manufacturing Co. plant in Greer, South Carolina, U.S. on Thursday, May 10, 2018.

China's import taxes on U.S.-made cars have not hurt demand for BMW's X line of sport utility vehicles that are made in South Carolina, a top executive said Wednesday.

The ongoing trade war between Beijing and Washington hasn't dampened the appetite for German luxury family cars among China's well-heeled, according to the carmaker.

“We have not seen one single unit drop since the tariffs have been introduced,” said BMW North America President and CEO Bernhard Kuhnt. BMW's Spartanburg plant is its largest in the world, and it primarily makes SUVs, which are becoming ever more popular with customers in many markets around the world.

The German automaker cut its annual guidance in September, attributing it in part to rising international trade tensions.

Its sales in China showed no signs of slowing, rising 12 percent in October over the same month last year and 6 percent year to date.

China is a massive market for luxury cars, said Michael Dunne, CEO of ZoZoGo, a firm that advises automakers on doing business in China. BMW, Mercedes, and Audi sell twice as many cars in the country as they do in the United States.