Tesla's big plans for China, some (gloomy) third quarter earnings updates, the latest on Carlos Ghosn and more awaiting you in The Morning Shift for Thursday, October 24, 2019.
1. provides: Tesla's Profit
Heyo, guess who scrapped a profit the previous quarter? Tesla! The surplus was "modest" according to The Verge but now that it is okay, the next major hurdle is to see how the electric car manufacturer handles China, the world's largest electric car market.
But first, a quick summary. For Q3, Tesla claims it generated $ 6.3 billion of revenue (slightly during Q2 and down about $ 520 million from Q3 201
Tesla saw a slow start in 2019. To make up for that, Tesla's Q4 numbers must be stellar. Verge reports that the company had to send "between 360,000 and 400,000 cars", and eventually bring itself out of the red, it must focus on China. Now that the new, Shanghai Gigafactory is open it should help increase sales.
Per The Verge:
This is where the new Gigafactory comes in. China is the largest market for EVs and, despite a recent downturn in both the car market and the overall economy, still represents a huge opportunity for Tesla. Until now, all the cars Tesla sold in China were made in the United States and shipped to China, making them subject to tariffs and the changing wind of the trade war. Manufacturing cars locally means that Tesla should be able to sell more in China, even with a weak Chinese economy.
Once a year of lobbying and negotiations for the factory concluded when Tesla and China were finally able to reach agreement in July 2018 Shanghai Gigafactory was built in just 168 days . And it was apparently cheaper to build than the Fremont and Nevada Model 3 production systems here.
Will Tesla continue to make money in the face of a global declining car market? We'll see.
Second Gear: Q3 Profits
While we're in third-quarter profits, let's check in with a few other automakers. See how they feel.
First up is Daimler, who reported "a slight increase in operating profit for the third quarter," according to Reuters . This was helped by Mercedes-Benz sales. But at the same time, the company also said that things like cost cuts and regulatory provisions from diesel litigation can also increase.
Daimler said it would cut costs after the Mercedes-Benz Cars margin dropped to 6%, down from 6.3% the year before due to production problems with the Mercedes GLS and because cars were fitted with expensive anti-emission filters.
God, I'm so sorry I didn't kill our planet right away means you have to spend a little more money on your big SUV. (I'm not sorry at all.)
Then we got Ford, who reported a 57 percent drop in net income in the third quarter, according to Automotive News Europe . The company has lowered its full-year results guidance and expects increased warranty and incentive costs, as well as falling sales in China.
Chief Financial Officer Tim Stone said that Ford now expects total 2019 earnings before interest and taxes from $ 6.5 to $ 7 billion, down from the previous estimate of $ 7 billion to $ 7.5 billion . That would represent a decline from the $ 7 billion earned in 2018.
"We think Q3 was a good quarter," Stone told reporters at Ford's headquarters in Dearborn, Michigan. “The progress we have made also indicates that we have more work to do and more opportunities ahead. We believe the path is improving across the business. "
All Ford Explorer production issues probably didn't help either.
However! This lowered forecast may just be the last straw that S&P Global rankings need to downgrade Ford this year, Bloomberg notes:
S&P assigned the company a negative view back in July, citing to the weakness of Ford's foreign operations and the company's ongoing restructuring. The outlook is for a period of 12 to 24 months, which could lead to a cut in the BBB rating. A downward downturn, as S&P analyst Nishit Madlani has said is likely, will leave Ford one level above the garbage.
Anyway, this is just business. We get to sit on the side and watch it all happen.
3. provides: They stick sticking with collusion
Ousted former Nissan chairman Carlos Ghosn has spent the last year in and out of prison after charges of misconduct. He states that he was victim of a conspiracy . This is the story his lawyers are sticking to, blessing them.
Ghosn's lawyers have asked Tokyo District Court to "dismiss all charges against him" because they believe "prosecutors cooperated with Nissan government officials and leaders to remove him from the position," Reuters reports from the story:
Ghosn's legal team in a press release on Thursday said they had filed two lawsuits ahead of a scheduled meeting in advance of the lawsuit the same day that lists cases of "mistreatment" by prosecutors and "factual defenses" that show Ghosn is innocent
"The prosecution against him resulted in illegal collaboration between prosecutors, government officials at METI (Ministry of Economy, Trade and Industry) and leaders in Nissan, who formed a secret working group to drum up allegations of wrongdoing," he said.
The rest of the story takes a turn for the darker. Apparently Ghosn, who is out on bail in Japan, in kke is allowed to contact his wife or use the internet unattended (I mean, who isn't?) and needs to "submit to monitoring his movements."
His first trial is believed to start in March. I can't wait to see how it goes.
Fourth Gear: Noisy Brakes
You are all familiar with Brembo from the colorful brake pads sometimes found on sports and performance cars. It has been good and good for Brembo up to this point, but the Italian brake manufacturer has experienced a slight complication when faced with electric cars.
It all comes down to noise. Electric cars are, as is known (mostly) silent. There is no screaming engine that can drown the brakes while working, and the silence of EVs is pretty much a nice feature for owners. Brembo is trying to develop new products to keep up with the electrified age, according to Reuters .
Brembo develops lighter electric brake cable mechanisms used in electric cars to replace traditional hydraulic brakes and faces a threat to the business from so-called regenerative braking systems that capture energy lost when cars slow down and pumps it back into the battery.
"Electric motors make no noise, so the braking system can eventually be annoying to passengers," said Brembo's Executive Vice President Matteo Tiraboschi.
"They can even watch a movie in the future while sitting in their cars, thanks to autonomous driving, so our goal is also to make braking ever quieter, "he told Reuters at Brembo's Bergamo headquarters.
I don't think this necessarily means that performance brakes will disappear at any time. I think there will always be a need for performance brakes because there will always be people who will go fast, but the trick is to make sure they work just as well, but also quieter than ever.
5th Gear: Nissan Could Sell European Plants
Nissan has some great Decisions to make as car sales in Europe go slow and things are constantly shifting towards electric cars. Now that we know Infiniti pulls out of Europe the question is what to do with the plants.
tte comes from Bloomberg who reports:
The Japanese manufacturer, which in March said it will stop selling the exclusive brand Infiniti in Western Europe, is measuring interest from potential buyers for its UK factories and Spain, the people said, asking not to be identified because the discussions are private. Disposal of one or both plants is an option as Nissan's market share in the region has fallen. While no decisions have been made, potential buyers may include Chinese carmakers, the people said.
"At this time, we have no plans to sell the two plants in Europe," said Azusa Momose, a spokeswoman at Yokohama-based Nissan.
There is a general pressure to increase EVs, which have fewer moving parts and require much smaller assembly teams and installations. It makes much of a traditional assembly plant and workforce redundant or useless.
This, together with yesterday's news that Nissan could be branded as Datsun, does not draw a good picture of the startup of Nissan.
Reverse: Last Flight Of The Concorde
Neutral: Will China Save Tesla?
Will the estimated increase in Chinese sales be exactly what Tesla needs to squeeze into the black?