Author: CNBC Online news

Elon Musk just sent this memo to employees about the cheaper Model 3 and store closures

Qilai Shen | Bloomberg | Getty Images
GP: Elon Musk, chief executive officer of Tesla Inc., speaks during an event at the site of the company's manufacturing facility in Shanghai, China, on Monday, Jan. 7, 2019.

Tesla CEO Elon Musk on Thursday sent an email to employees explaining the company's decision to reduce its headcount in its sales and marketing divisions, according to a copy of the memo that was sent to CNBC.

News of the upcoming layoffs come as Tesla announced that sales of the $35,000 Model 3 were finally available, adding that all sales of Tesla vehicles would be moving exclusively online. As part of the announcement, Musk also warned that the company would not turn a profit in the first quarter, sending Tesla's share price down more than 3 percent Thursday night.

Here's the full memo:

Last month, I noted in my email that the fundamental issue Tesla must overcome is that our products remain too expensive for most people. We know there are many people who want to buy Model 3, but simply can't afford to do so.
That is why we're excited to announce today that we are now offering the standard Model 3 at $35,000. This is a significant milestone for Tesla, the culmination of years of hard work by employees across the company, and something of which you should all be very proud. You can read the details of the announcement on our blog: LINK HERE
In addition, we are also making the decision to shift all sales worldwide to online only.
Last year, 78% of all Model 3 orders were placed online, rather than in a store, and 82% of customers bought their Model 3 without ever having taken a test drive. Customers can now buy a Tesla in North America via their phone in about 1 minute, and that capability will soon be extended worldwide. We are also making it much easier to try out and return a Tesla without a test drive. You can now return a car within 7 days or 1,000 miles for a full refund. Customers are becoming increasingly comfortable making purchases online, and that is especially true for Tesla — which is a testament to the products we make.
As a result, over the next few months, we will be winding down many of our stores and significantly reducing our spend on sales and marketing, which will help make the price changes we've announced today possible. Shifting all sales online combined with other ongoing cost efficiency will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point.
A small number of stores in high-traffic locations will remain as galleries, showcases and Tesla information centers. At the same time, we will be increasing our investment in the Tesla service system and manufacturing, and I expect that headcount to grow next year.
Unfortunately, this means that some jobs will be impacted or transitioned to other areas of the business. This is a hard decision, but it necessary to make our cars more affordable. Our sales team has fought on the front lines of advancing our mission and has been our connection to hundreds of thousands of customers along the way. I want to express my sincere gratitude for all that you've done.
Kn the coming weeks, we will be evaluating all of our sales and marketing organization to understand where there are operation efficiencies, and how best to support the transition to online sales while also continuing to deliver a truly awesome and education Tesla buying experience.
We'll be sharing more information on this transition soon.
Thank you,
Elon

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A ‘no-deal’ Brexit is already happening for us, Aston Martin CEO says

Aston Martin CEO: No-deal Brexit is here
11 Hours Ago | 02:31

The boss of luxury car maker Aston Martin Lagonda has told CNBC that his company is already operating in a “no deal” Brexit scenario.

“From our point of view, a no-deal Brexit isn't something that is in the planning or might happen. No-deal Brexit has already happened for us,” chief executive Andy Palmer told “Squawk Box Europe” on Thursday.

Palmer said the firm has a 12-week build time for its cars and therefore vehicles being manufactured now would be sold after the Brexit cut-off date at the end of March.

At present, Britain and Northern Ireland will leave the European Union on March 29th with no deal as U.K. lawmakers have failed to agree on the terms that can be signed off between London and Brussels.

Aston Martin has used a surplus of cash from a weakening pound to market more heavily in the United States in a bid to mitigate the effects of Brexit.

Describing that move as “very successful,” Palmer said the U.K. car firm had also increased the level of stock in the supply chain from 3 days to 5 days and raised the level of cars ready for sale.

“I think we are in good shape, but I don't know what shape we have to be in because nobody knows what 'no-deal' Brexit looks like,” he added.

If Britain leaves the EU without a deal, it is assumed it will rely on World Trade Organization rules that mean U.K. car manufacturers must produce at least 55 percent of a car with parts sourced in Britain — a specification known as “local content.”

Palmer said Aston Martin had worked hard to reach the 55 percent level but warned that rival car companies could struggle.

Shares in Aston Martin Lagonda Global Holdings fell more than 15 percent Thursday as it swung to a loss in its first annual report card since joining the London Stock Exchange.

The stock was 1,168 pence by mid-morning Thursday after posting a pre-tax loss of £73.1 million ($97.2 million) in 2018. The share price is down 38 percent from its October initial public offering price of 1,900 pence.

A record number of robots were put to work across North America in 2018, report says

kynny | iStock | Getty Images
A robotic arm at an industrial manufacturing factory.

Robots took on a record number of jobs in North American firms last year, the Robotic Industries Association (RIA) said Thursday.

According to the RIA's data, 35,880 robots were shipped in 2018 to the U.S., Canada and Mexico, up 7 percent from the previous year. Of those shipments, 16,702 were to non-automotive companies — a year-on-year increase of 41 percent.

The consumer goods sector purchased almost 50 percent more robots in 2018 than in 2017, while life sciences saw an increase of a third.

However, shipments to the automotive industry slowed by 12 percent. The industry accounted for 53 percent of total robot shipments to North American companies — its lowest share since 2010.

“These sales and shipments aren't just to large, multinational companies anymore. Small and medium-sized companies are using robots to solve real-world challenges, which is helping them be more competitive on a global scale,” said Jeff Burnstein, president of the Association for Advancing Automation — the RIA's parent company.

U.S. record

In the U.S. alone, robot shipments across all sectors increased by more than 15 percent, marking a record number of shipments to American companies.

Every sector included in the RIA's analysis saw an increase, with the exception of the automotive industry, where robot shipments to American vehicle makers fell by 30 percent.

Despite an increasing uptake of automation in the workplace, some have argued that companies should be doing more to preserve human jobs.

Last month, South African President Cyril Ramaphosa told a press conference that policymakers needed to “deliver a human-centered agenda.”

In its 2018 “Future of Work” report, the World Economic Forum noted that businesses “will need to recognize human capital investment as an asset rather than a liability.”

“New technology adoption drives business growth, new job creation and augmentation of existing jobs, provided it can fully leverage the talents of a motivated and agile workforce who are equipped with futureproof skills,” the report said.

Meanwhile, a 2018 report from the International Labour Organization concluded that robotization in developed countries negatively affects employment in emerging countries.

GM President of North America Alan Batey is retiring after 40 years

Bill Pugliano | Getty Images
Flags fly outside the General Motors world headquarters building.

General Motors' President of North America Alan Batey plans to retire in 2019 after 40 years at the Detroit automaker, the company said Thursday.

His role will be filled by Barry Engle, who currently runs GM's international business, starting April 1. Engle has been with GM since 2015, beginning his tenure at the automaker as executive vice president and president of South America. he was promoted to head of all GM's international operations in 2017.

Engle has held a variety of positions elsewhere in the automotive industry, including 13 years at Ford, a CEO of an agricultural equipment company, and CEO of an electric vehicle startup called THINK. He was also a Chrysler Plymouth Jeep dealer.

Batey will stay on as an adviser.

Julian Blissett, who is currently executive vice president of GM-SAIC, the automaker's joint partnership with Shanghai Automotive Industry Corporation, will become senior vice president of GM International.

Batey has been in his current role since 2014, and has also led Global Chevrolet since 2013. He was vice president of U.S. sales and service from 2012 to 2013, and vice president of U.S. sales and service for Chevrolet from 2010 to 2012. Batey started with GM in 1979 and has held positions around the world, including the United Kingdom, Switzerland, United Arab Emirates, Germany, Netherlands, Korea, and Australia.

Shares of GM were down 1.5 percent on Thursday.

This story is breaking news. Please check back for updates.

Auto loan delinquencies rise as the cost of monthly payments hit record high

Daniel Acker | Bloomberg | Getty Images
A salesman talks to a person in a vehicle at a Fiat Chrysler Automobiles (FCA) car dealership in Moline, Illinois.

A growing number of borrowers with auto loans are failing to make their monthly payments, according to Experian.

The credit reporting firm, which tracks millions of auto loans, said Thursday the percentage of auto loans delinquent for more than 60 days inched up in the fourth quarter to 0.78 percent from 0.76 percent the previous year.

“The percentage of delinquencies has trended upward within the last few years,” said Melinda Zabritski, senior director of automotive financial solutions for Experian. “But it is worth noting, the percentages are still well below the high-water mark set in 2009.”

While the delinquency rate is well below the historical average, economists say the uptick adds to concerns Americans may be showing signs of struggling financially. Earlier this month, the Federal Reserve Bank of New York reported that more than 7 million borrowers were at least three months behind on their auto loans at the end of last year — more troubled borrowers than at the end of 2010 when overall delinquency rates were at their worst. The delinquency rates are lower now because the market for auto loans has since grown.

Zabritski says the stats are worth watching, but not yet to the point of serious concern. “It's only natural to see an uptick in automotive delinquent loan volume. It's important to view these trends within the larger industry context,” she said.

Americans are borrowing more money than ever to buy new vehicles, $1.17 billion in the fourth quarter, according to Experian. That's not surprising given that consumers are buying more pickups and SUVs, which carry a higher sticker price than sedans.

The automotive website Edmunds says the average transaction price for a new vehicle, what consumers actually paid dealers, in December hit an all-time high of $37,260, an increase of $6,598 from December 2010. As a result of the higher prices, the average new vehicle auto loan in the fourth quarter climbed more than $600 to $31,722, according to Experian.

Not only are consumers borrowing more to pay for a new vehicle, they are also making higher monthly loan payments. Experian says the average monthly payment for a new vehicle hit a record high of $545, up $30 from a year earlier. That increase is driving up interest in used vehicles, which sell at a far lower price and typically carry a lower monthly payment.

Experian says the average used vehicle loan in the fourth quarter topped $20,000 for the first time, with the average used car having a monthly loan payment of $387.

Volvo unveils Tesla Model 3 rival Polestar 2

Polestar
The Polestar 2 electric performance car from Volvo

Electric performance brand Polestar unveiled its first fully electric vehicle on Wednesday in a bid to steal buyers away from Tesla's Model 3.

The car is the first volume model from Volvo's former performance sub-brand, which was spun out in 2017 to be a high-end electric vehicle brand.

Polestar
The Polestar 2 electric performance car

The Polestar 2 is the first electric car to compete with the Tesla Model 3, with a starting price of 39,900 euros ($45,400), the company said. There will also be a launch edition made during the vehicle's first 12 months of production that starts at 59,900 euros ($68,200).

Polestar
The interior of the Polestar 2 electric performance car from Volvo

The vehicle is a further step into the world of electrification for Polestar. The brand's first vehicle was the Polestar 1, a plug-in hybrid. The new vehicle has more than 400 horsepower, and can go from 0-100 kilometers per hour in 5 seconds.

It will also be one of the first cars in the world to base its infotainment system on Google's Android system, and will have Google Maps, and Google Assistant built into the system.

The vehicle will be built in China and will be available in 2020. The company said it will be taking the vehicle on a “road show” to promote it around the world starting in early March 2019.

Elon Musk lashes out: ‘Something is broken with SEC oversight’

SEC wants Elon Musk to be held in contempt of court for allegedly violating December agreement
8 Hours Ago | 02:56

Tesla CEO Elon Musk lashed out at the Securities and Exchange Commission on Tuesday, one day after the agency asked a judge to hold him in contempt for allegedly violating the terms of a settlement made last year.

“Something is broken with SEC oversight,” Musk tweeted.

The SEC's latest complaint said a Feb. 19 tweet by Musk about Tesla production was inaccurate.

At first, Musk had said Tesla would make “around” 500,000 vehicles in 2019, but then revised the tweet hours later.

“Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week,” he said. “Deliveries for year still estimated to be about 400k.”

After reports surfaced that the agency was seeking an injunction against him, Musk said Monday night that he had already mentioned these numbers in an earnings call.

“SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k,” Musk said. “How embarrassing …”

Shares of Tesla were down nearly 2.5 percent in premarket trading Tuesday. They had fallen by as much as 5 percent on Monday night.

Tesla's share price has given the electric car maker a $51 billion market value, which is almost as high as the $56 billion market value of General Motors, the largest U.S. automaker, and larger than Ford's $34 billion market capitalization.

But Tesla shares have fallen more than 10 percent this year and 15 percent over the last 12 months.

Musk and the SEC have battled a number of times over the last several months. The two parties settled a dispute in October over some tweets Musk had made earlier in 2018 saying he was considering taking Tesla private and that he had already secured the funding. One of the conditions of that deal is that someone is required to oversee and approve anything Musk intends to say to the public about the company.

Investors had hoped that the settlement would allow Tesla to put the whole affair behind it and focus on its ambitious plans for ramping production, building new factories and developing new vehicles.

“With Tesla/Musk settling with the SEC in October this black cloud was in the rear view mirror for the company (and investors) and now this latest tweet (which most investors shrugged off at the time) represents a wild card that could potentially bring this tornado of uncertainty back into the Tesla story until resolved,” Wedbush analyst Dan Ives said in a note sent Tuesday morning. “At this point we are more concerned around this issue being another distraction for Musk & Co. as the company navigates one of its most challenging periods in its history and certainty did not need this news.”

Also concerning is the continued turnover in the company. Most recently, general counsel Dane Butswinkas left the company one day after Musk tweeted his 2019 projections for vehicle production. Butswinkas had only been on the job for two months.

Chief Financial Officer Deepak Ahuja announced his retirement when Tesla reported fourth-quarter earnings in January.

“Certainly, we don't like to see the turnover that we've seen with senior management with Deepak Ahuja leaving and the general counsel,” Oppenheimer analyst Colin Rusch said Tuesday on CNBC's “Squawk Box.” “That is not a great sign for the stability of the organization. We do think that there's enough management depth to keep this thing going, and certainly a big enough window in terms of the competitive environment for them to continue to take share of the market. But the volatility in the staff and the news flow is certainly a concern for us.”

Canada’s cut-price answer to Tesla just officially opened its factory in China

The “SOLO EV” has a 100-mile range and a retail price of $15,500.

Vancouver-based Electra Meccanica has confirmed that larger-scale production of its single-seat budget electric car is underway at a facility in central China.

The “SOLO EV” has a 100-mile range and a retail price of $15,500. The three-wheeler can be charged at a regular household socket in under 6 hours.

Deliveries began in May 2018, with components supplied by Zongshen Industrial Group and assembled in British Columbia, Canada. Now the firm is looking to ramp up production by building in China itself and has officially opened the Zongshen facility in the province of Chongqing.

Electra said in a statement Monday that it expects to produce approximately 50 SOLO EVs in the quarter ended March 31, 2019 before accelerating to a total of 5,000 cars by year-end.

“I am proud of our strategic partners at Zongshen, who have provided us with a state-of-the-art production facility and a highly-skilled production team to make the Electra Meccanica SOLO EV a reality,” said Jerry Kroll, CEO of Electra Meccanica.

The company is also developing the Tofino, a two-seater electric roadster sports car and in November 2018, the company said total vehicle pre-orders exceeded 64,000 units, representing $2.4 billion in potential sales. The majority of these orders were for the as-yet unbuilt Torfino.

The company's first U.S. dealership opened in Los Angeles in 2018 as the firm looks to target California's early adoption of electric cars.

With a market cap of just $126 million, shares in the firm now trade on the NASDAQ. They have been highly volatile over the last 52-weeks, hitting a low of 90 cents and a high of $8.25. As at Tuesday morning, the latest price was $3.89.

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

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We’ll have to wait before autonomous vehicles are mainstream, CEO of Softbank’s Arm says

ARM Holdings CEO on the future of self-driving cars
15 Hours Ago | 05:31

It's going to be “a while” before self-driving cars become mainstream, the CEO of Arm Holdings told CNBC Tuesday.
“It is a phenomenally hard problem to anticipate what a car could do under absolutely any set of circumstances,” Simon Segars, who was speaking at CNBC's Karen Tso at the Mobile World Congress in Barcelona, Spain, added.
“I think you're going to start to see early services, in quite a constrained way, quite soon over the next couple of years,” he added, explaining that there was “some way to come” before the technology was “completely mainstream.”
Over the last few years, the development of technology has led to several trial runs of autonomous vehicles.

In August 2018, for example, the Hyundai Motor announced that the first journey by an autonomous truck on a South Korean highway had taken place. The firm's Xcient truck, which has a maximum load capacity of 40 tons, drove around 40 kilometers between Uiwang and Incheon.
The vehicle used an autonomous driving system that allowed it to accelerate, decelerate, steer and maneuver through traffic without needing input from a human, although one was on board to take control as and when required.
Back in Barcelona, Arm Holdings' Segars gave an insight into the technology required for autonomous vehicles.
“Self-driving cars have … racks of servers in them, that's great for prototyping, but if you want to make millions of them then you've got to shrink it down, so there has to be a pathway to get all of that technology into very low cost, very power efficient chips.”

France’s Peugeot set to make American return after 30-year absence

Peugeot Automotive

French car brand Peugeot will be making a return to the North American market, parent Groupe PSA announced Tuesday morning, though the exact timing of the relaunch is uncertain and could be pushed out as late as 2026.

Peugeot was one of a number of European brands that pulled out of the American market during a severe industry downturn in the early 1990s, a list that included Fiat before it bought Chrysler and French rival Peugeot. The parent company has been exploring ways to return for several years and has already launched several mobility services ventures in the U.S. Groupe PSA had been exploring which of its various marques would spearhead its return and has settled on the flagship Peugeot.

“This is another step in a multi-step return to the market,” Groupe PSA North America CEO Larry Dominique said in an interview with CNBC.

The exact timing for relaunching Peugeot in the U.S. has yet to be determined, Dominique, a former Nissan executive, emphasized, noting that it could stretch out as late as 2026 though it will more likely happen sooner.

“This is not about speed. It's about getting things right,” Dominique said. “The good news for us is PSA is not dependent on me to sell a single car. The idea is to build the brand the right way.”

The roots of Groupe PSA stretch back 208 years and the company today has operations in a variety of fields, including culinary goods, watches and bicycles, though automobiles constitute the largest source of its 74 billion euros in revenue in 2018.

Groupe PSA sold 4.1 million vehicles in 2018, a 3.8 percent decline, according to the Global Auto Database, positioning it as the world's ninth largest automotive group. The numbers include not only the group's largest brand, Peugeot, but also Citroen, DS and Opel/Vauxhall — the latter purchased from General Motors which has exited the European market.

The Paris-based company first signaled plans to return to the U.S. in April 2016, announcing that it would begin a decade-long effort to begin with a push into mobility services. It said it could take several more years to determine which of the various group car brands would then be re-launched in North America.

Several mobility service ventures are already in operation, including the Free2Move Carsharing service launched in Washington, D.C. late last year. The goal is to roll that out in major cities across the U.S. and Canada over the next few years.

For the time being Free2Go is offering two Chevrolet products, the Chevrolet Equinox SUV and Chevy Cruze sedan, but the goal is to add Peugeot products over the next few years. That is likely to happen even before PSA re-launches its retail sales network, Dominique previously told CNBC, and would serve as a way to gauge consumer reaction to its products.

PSA also is rolling out a service that will allow users of its Free2Move smartphone app to schedule multi-modal travel – everything from bicycle rentals to train tickets and car-sharing. And the group now operates parking service at airports in Los Angeles and other cities allowing customers to rent out their own vehicles while traveling, something known as a peer-to-peer car-sharing service.

Those operations aim to take advantage of what many analysts see as a dramatic shift in personal transportation likely to take place over the coming decade, some experts predicting that millions of Americans may abandon personal vehicle ownership in favor of car and ride-sharing, as well as mass transit.

That could play a major role in shaping the way the Peugeot brand itself comes back to the North American market, said Michelle Krebs, executive automotive analyst with Cox Automotive.

But she cautioned that even then, “It will be no cakewalk. The North American market isn't going to grow a lot.”

Krebs expects that the cars Peugeot brings back to North America will also reflect another major, ongoing shift: the growth of electrification. Most major manufacturers have announced plans to introduce hybrids, plug-ins and pure battery-electric vehicles, or BEVs, to their fleets. Rival Volkswagen AG, for example, expects to have more than 50 different BEVs, as well as dozens of hybrids, on sale by 2025.

While Dominique wouldn't say precisely what approach PSA will take, it has already begun adding electrified models and they are expected to play at least something of a role in the Peugeot brand's American revival.