Autos – TheNewsHub

Volkswagen's Scout Motors reveals first EVs as it shifts to include plug-in hybrids

suimt — Fri, 25 Oct 2024 00:49:43 +0000

Scout Terra pickup truck and Scout Traveler SUV concepts

Scout

NASHVILLE, Tenn. — Volkswagen-backed Scout Motors revealed its first electric vehicles Thursday and announced plans for the brand to expand its lineup to include an emerging type of plug-in hybrid electric vehicle in addition to EV models.

Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer EVs in a bid for the German automaker to expand its presence in the U.S. However, slower-than-expected adoption of EVs and higher costs have led it to change course and include extended-range electric vehicles, or EREVs.

“Being a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW’s operations in the U.S., told CNBC. “The pivot that we made a number of months ago into offering range extender definitely was a smart play.”

EREVs are basically a type of plug-in hybrid electric vehicle. They include EV motors and battery cells, as well as a traditional internal combustion engine to power the vehicle’s electric components when the battery loses its energy. The engine essentially acts as a generator to power the EV components when needed.

Scout Terra pickup truck concept

Keogh said Scout added EREVs to better protect the brand from any market volatility amid less-than-expected consumer demand for EVs.

“We think electrification is the future. Range extender sets it up as an EV car, so it introduces people to electrification, yet it has a super smart, let’s say, ‘backup plan,'” he said during an interview Thursday. “It will drive like an EV.”

He said Scout has no plans to offer a traditional, non-electric vehicle with only an internal combustion engine.

The company’s first vehicles — a full-size pickup truck and large SUV — will cover about 40% of the highly profitable U.S. sales market.

Keogh said the company targets to be profitable on an operational basis within the first full calendar year after initial production of the vehicles, which will be built at a $2 billion plant that’s under construction in South Carolina.

“If you look at these profit pools, these two areas, from this size pickup truck to this sized SUV … these are the largest profit pools in the world,” Keogh said.

Scout Traveler SUV concept

Scout

Being profitable during that timeframe would be quite a success, as current EV startups such as Rivian Automotive and Lucid Group lose tens of thousands of dollars on each vehicle they produce after several years.

Meanwhile, Keogh said an announced software deal between VW and Rivian will not impact Scout’s operations. He described the $5 billion software deal, which includes the establishment of a joint venture, as an “exciting opportunity” for Scout.

“It’s good for scaling. It’s good for technology. It’s good for everything,” Keogh said.

Scout’s South Carolina plant is planned to have a production capacity of 200,000 vehicles. Scout expects to use batteries — the most expensive part of an electric vehicle — from VW’s joint venture battery cell manufacturer in Canada.

The company opened reservations for the vehicles Thursday night on its website. Scout plans to sell the vehicles directly to consumers instead of through a traditional franchised dealer network like VW does in the U.S.

North American Charging Standard, an 800-volt architecture with up to 350-kilowatt charging capability, and will be capable of bi-directional charging that will allow the vehicle to act as a generator.

Toyota Land Cruiser. It’s larger than Jeep’s well-known Wrangler, which is currently available as a plug-in hybrid electric vehicle.

The truck is a full-size pickup — a segment currently dominated by Ford, General Motors and Stellantis’ Ram brand. But the electric pickup market where Scout will compete remains a developing market.

Automakers such as GM and Ford rushed to release all-electric pickup trucks early in this decade to compete against several EV startups, many of which never materialized, as well as Tesla. Stellantis is expected to release all-electric and EREV full-size pickups by next year.

Scout Traveler SUV concept

But after rushing the vehicles to market, sales slowed. Much like the overall EV industry, the large vehicles went from commanding significant price premiums to being highly incentivized.

Overall, this electric “truck” market, including the SUVs, accounted for nearly 58,000 vehicles sold during the first half of this year, according to estimates from Motor Intelligence. That’s less than 1% of the roughly 7.9 million light-duty new vehicles sold during that time in the U.S., but a 35% quarterly increase from the first to the second quarter, according to the data.

Keogh believes Scout can differentiate itself in the market with its products, lower pricing and brand appeal. Additional Scout products are expected to follow in the years ahead, Keogh said.

“Can we consider some point in the future sizing down? Absolutely,” he said. “You want to throw the dart at the best place first. And I think we’ve done that between these two vehicles.”

General Motors is set to report earnings before the bell. Here's what Wall Street expects

suimt — Tue, 22 Oct 2024 04:01:01 +0000

The General Motors headquarters inside the Renaissance Center in Detroit on April 15, 2024.

Jeff Kowalsky | Bloomberg | Getty Images

DETROIT — General Motors is set to report its third-quarter earnings before the bell Tuesday.

Here is what Wall Street is expecting, according to average estimates compiled by LSEG:

Earnings per share: $2.43 adjusted
Revenue: $44.59 billion

Those results would mark a 1% uptick in revenue compared with a year earlier and a 6.6% increase in adjusted earnings per share.

GM’s 2023 third quarter included $44.13 billion in revenue, net income attributable to stockholders of $3.06 billion, or $2.20 per share, and adjusted earnings before interest and taxes of $3.56 billion, or $2.28 per share.

The quarterly report comes just two weeks after a GM investor day in which the company indicated its earnings strength is expected to continue into next year.

Topics of interest for investors that were not addressed earlier this month include GM’s funding plans for its embattled Cruise autonomous vehicle unit, China restructuring and any updates regarding its near-term electric vehicle sales and plans.

This is developing news. Please check back for additional updates.

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Lucid CEO says Wall Street misinterpreted $1.75 billion capital raise

suimt — Mon, 21 Oct 2024 20:21:18 +0000

Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.

Andrew Kelly | Reuters

DETROIT — Investors misinterpreted a public offering on Wednesday by Lucid Group that raised roughly $1.75 billion — and led to the stock’s worst daily performance in nearly three years, CEO Peter Rawlinson told CNBC.

Rawlinson said the raise, which included a public offering of nearly 262.5 million shares of its common stock, was a timely, strategic business decision to ensure the electric vehicle company has enough capital for its ongoing operations and growth plans. It also should alleviate any potential worries that the company would need to issue a “going concern” disclosure regarding its operations, he said.

“We’d signaled that we had a cash runway to Q4 next year. As a Nasdaq company, we have to avoid a going concern. And a going concern is issued within 12 months of your financial runway,” Rawlinson said Monday from the company’s newly opened offices in suburban Detroit. “So, it should have been no surprise to anybody.”

But Wall Street analysts largely took a negative view of the move due to its timing. Several said the raise was unnecessary or came earlier than expected for the company, which had $5.16 billion of total liquidity to end the third quarter. That included more than $4 billion in cash, cash equivalents and investment balances.

The announced transactions also come two months after Lucid said Saudi Arabia’s Public Investment Fund had agreed to supply the company with $1.5 billion in cash, as the EV maker looks to add new models to its product line.

“A cap raise was slightly larger and earlier than we had expected,” Morgan Stanley analyst Adam Jonas wrote following the raise being announced Wednesday after markets closed.

Lucid’s stock

RBC Capital Markets analyst Tom Narayan shared similar thoughts: “We suspect that investors will wonder why LCID is raising more capital just after it secured the PIF capital in August, and at currently depressed share price levels. We expect Lucid shares to trade sharply lower as a result,” he wrote in an investor note Wednesday night.

Rawlinson on Monday reiterated that the company would raise capital “opportunistically.” He said the company’s current funds now secure its capital into 2026, ahead of it launching a new midsize platform later that year.

“This is exactly as expected. It is exactly to the playbook. It should have come as zero surprise to anyone,” he said. “And why did I choose this moment? Because I didn’t want to string it out to the end, because I didn’t have to.”

Shares of Lucid declined about 18% on Thursday after the announcement — marking the worst daily decline for the company since December 2021.

Rawlinson said Lucid is currently in a highly capital-intensive investment period as it expands its sole U.S. factory in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, an SUV called Gravity; develops its next-generation powertrain; and builds out its retail and service network.

“Those five categories are the long-term investment for the future that we’re making now,” Rawlinson said. “Have we got to cut costs with every car we’re making? Absolutely.”

Wednesday’s announcement was made in conjunction with plans for Lucid’s majority stockholder and affiliate of PIF, Ayar Third Investment Co., to purchase more than 374.7 million shares of common stock from Lucid to maintain its roughly 59% ownership of the company.

Such a transaction is called pro rata, which allows an investor such as PIF to participate in future rounds of financing and retain its ownership stake. It’s something the PIF has routinely done with Lucid.

Individual investors were likely concerned by share dilution following the action, but Rawlinson said the continued support of the PIF should be viewed as a positive.

“I think it’s been misinterpreted and misreported,” Rawlinson said. “The norm is to go pro rata. If we didn’t go pro rata, it surely would be a signal that the PIF were losing faith in us.”

Lucid last week said the public offering was expected to raise about $1.67 billion, with a 30-day option for underwriter BofA Securities to purchase up to nearly 39.37 million additional shares of Lucid’s common stock as well.

Lucid has reported record deliveries in 2024 of its current model, an all-electric sedan called Air. The company expects to produce 9,000 vehicles this year. Production of its Gravity SUV is expected to start by the end of this year.

However, Lucid’s sales and financial performance have not scaled as quickly as expected following higher costs, slower-than-expected demand for EVs, and marketing and awareness problems for the company.

Stellantis to shutter and sell large testing facility amid cost-cutting efforts

suimt — Fri, 18 Oct 2024 21:54:14 +0000

Carlos Tavares, chief executive officer of Stellantis NV, speaks to the media at the Stellantis auto manufacturing plant in Sochaux, France, on Thursday, Oct. 3, 2024.

Nathan Laine | Bloomberg | Getty Images

DETROIT — Automaker Stellantis plans to shutter and sell its large vehicle proving grounds in Arizona at the end of this year, CNBC has learned.

The decision is the latest cost-cutting measure by the trans-Atlantic automaker under CEO Carlos Tavares, who has been increasingly under pressure from Wall Street, dealers and the United Auto Workers union amid the company’s lagging financial performance, layoffs and overall business decisions.

The Arizona Proving Grounds covers 4,000 acres between Phoenix and Las Vegas in Yucca, Arizona. It has been used for vehicle testing and development for the automaker since then-Chrysler purchased the property for $35 million from Ford Motor in 2007.

The closure was confirmed by three people familiar with the plans who agreed to speak on the condition of anonymity because the matters are private.

Stellantis plans to use a proving grounds in Arizona owned by Toyota Motor beginning next year, according to two people familiar with the decision. Toyota opened its operations, which are costly to maintain, for other companies to use in 2021.

Stellantis Chrysler Arizona Proving Grounds

Source: Google Earth

Stellantis confirmed the closure Friday morning, citing the company’s ongoing cost-cutting and real estate evaluations.

“Stellantis continues to look for opportunities to improve efficiency and optimize its footprint to ensure future competitiveness in today’s rapidly changing global market,” the company said in an emailed statement.

The automaker also said it is “working with the UAW to offer proving ground employees special packages or they can choose to follow their work in a transfer of operations” but that employees could be placed on an “indefinite layoff, which would entitle them to pay and benefits for two years.”

Stellantis said 41 employees currently work at the Arizona Proving Grounds, including 37 hourly workers represented by a local chapter of the UAW.

The UAW, which has been increasingly critical of Tavares and such layoffs, did not respond for comment on the planned closure.

Stellantis, like most automakers, has several proving grounds in different climates and geographies to develop and test vehicles ahead of selling them to consumers. Stellantis’ other major U.S. proving grounds facility is a 4,000-acre campus located west of Detroit in Chelsea, Michigan.

Stellantis’ complex in Arizona was one of 18 facilities the company notified the UAW it could potentially close during the union’s contract negotiations last year with Stellantis.

A majority of the other operations were parts and distribution centers that were expected to be consolidated into “mega sites,” as well as the company’s massive 500-acre campus in metro Detroit formerly used as Chrysler’s world headquarters.

The status of the other properties was not immediately clear, however, local and state politicians, including Michigan Gov. Gretchen Whitmer, have expressed concerns that Stellantis could move to shutter the former headquarters in Auburn Hills, Michigan.

Stellantis has significantly reduced the number of its U.S. employees in recent years amid Tavares’ cost-cutting measures.

Stellantis has reduced employee head count by 15.5%, or roughly 47,500 employees, between December 2019 and the end of 2023, including a 14.5% reduction in North America, according to public filings. That doesn’t include further head count reductions and layoffs this year.

The automaker had only about 11,000 U.S. salaried employees at the end of last year. That compared with 53,000 at General Motors and 28,000 at Ford.

The reductions have occurred as Stellantis has attempted to outsource many engineering efforts to lower-cost countries such as Brazil, India and Mexico, according to several people familiar with the moves.

Bloomberg News earlier this year reported that Stellantis moved to recruiting a majority of its engineering workforce in those countries, where the cost per employee amounts to roughly €50,000 ($53,000) or less per year — far less than similar positions in the U.S. and Europe.

Chevrolet aims to defend highly profitable SUV market position with updated Tahoe, Suburban

suimt — Wed, 16 Oct 2024 21:01:55 +0000

DETROIT — General Motors has updated its highly profitable large SUVs for Chevrolet for the 2025 model year to defend the brand’s long-standing segment leadership.

The Detroit automaker’s Chevrolet Tahoe and Suburban have led the mainstream full-size SUV segment for more than 45 years, according to GM. But increased competition from automakers such as Ford Motor, Jeep and Nissan Motor has slowly eaten away at the automaker’s market share.

“We’re playing a little offense here with what we’re doing today,” Chevrolet Vice President Scott Bell said Tuesday during a media event in suburban Detroit. “We certainly have a response for our competitors from multiple segments.”

2025 GMC Yukon AT4 Ultimate.

GMC

Chevrolet’s retail market share of full-size SUVs is about 34.2%. Adding in its GMC sibling Yukon and Yukon XL SUVs, GM’s share is at 64% of the industry, according to the automaker. That is down from more than 70% when the vehicles were last fully redesigned for the 2020 model year.

The large SUVs for GMC have also been updated for the 2025 model year. Both Ford and Nissan have updated their large three-row SUVs that are on sale this year.

Updates to the vehicles in general include new styling, larger interior screens, enhanced performance and, in some cases, the addition of new high-end models to boost profits.

For Chevrolet, the 2025 Chevrolet Tahoe and Suburban check many of those boxes and include the addition of GM’s hands-free Super Cruise advanced driver-assistance system.

“Overall, they’re critical in our portfolio,” Bell told CNBC. “They’re very important to us from a profitability perspective, and they have been for four years.”

Starting pricing for the 2025 Tahoe will range from about $60,000 for a Tahoe LS to more than $83,000 for the top-end High Country. 2025 Suburban pricing will start between about $63,000 and more than $86,000. Prices include mandatory $1,995 destination charges.

The updated SUVs are expected to begin arriving in U.S. dealerships in the coming weeks, the company said.

Edmunds.com, a wholly owned subsidiary of CarMax, reports the mainstream full-size SUV segment has grown to represent 2.7% of the U.S. market this year, up from 2% in 2017. Segment sales totaled roughly 312,500 units through September of this year.

GM said sales of the Chevrolet Tahoe and Suburban are significantly lower this year due to the model-year changeover and reduction in fleet sales, but the brand continues to easily lead the segment.

Combined sales of the Chevy SUVs, which are essentially the same vehicle but in different sizes, were off 19.3% through September compared to a year earlier to 102,292 units.

Sales of the Ford Expedition — the closest competitor to Chevy’s SUVs — totaled 73,396 units in 2023. Sales of that vehicle were up 3% through September of this year to more than 58,000 units.

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GM to invest $625 million in joint venture to mine EV battery raw materials in U.S.

suimt — Wed, 16 Oct 2024 20:46:44 +0000

The clay mixture from which lithium will be extracted is held by Tim Crowley, spokesman for Lithium Americas Corp.

Carolyn Cole | Los Angeles Times | Getty Images

DETROIT — General Motors has agreed to establish a joint venture with Lithium Americas Corp. that includes the automaker supplying $625 million in cash and credit to the Canadian mining business, the companies announced Wednesday.

The deal is centered on the development, construction and operation of a lithium carbonate mining operation called Thacker Pass in Humboldt County, Nevada. Lithium is a key component for batteries that power electric vehicles.

The joint venture agreement replaces a previously announced, planned equity investment by GM into the Vancouver, Canada-based company.

Securing raw materials such as lithium from the U.S. is crucial to GM’s plans to profitably grow its all-electric vehicle business and meet tightening federal requirements for incentives to produce and sell the vehicles and the large batteries needed to power them.

“We’re pleased with the significant progress Lithium Americas is making to help GM achieve our goal to develop a resilient EV material supply chain,” Jeff Morrison, GM senior vice president of global purchasing and supply chain, said in a release. “Sourcing critical EV raw materials, like lithium, from suppliers in the U.S., is expected to help us manage battery cell costs, deliver value to our customers and investors, and create jobs.”

GM and Lithia Americas stocks

The announcement sent shares of Lithium Americas higher by 23% in trading Wednesday to close at $3.29. The company’s market cap is $532.9 million.

In windswept, remote Thacker Pass in the far northern reaches of Nevada permits approved for a massive lithium mine, proposed by Lithium Americas Corp., are drawing impassioned protest from the local indigenous population, ranchers, and environmentalists.

Carolyn Cole | Los Angeles Times | Getty Images

GM will have a 38% interest in Thacker Pass, according to the release. The joint venture investment is expected to include $330 million cash to be contributed on the date of its closing; $100 million cash to be contributed at a “final investment decision” for a phase of the project; and a $195 million letter of credit facility prior to first draw on the $2.3 billion Department of Energy Loan.

“Our relationship with GM has been significantly strengthened with this joint venture as we continue to pursue a mutual goal to develop a robust domestic lithium supply chain by advancing the development of Thacker Pass,” Lithium Americas CEO Jonathan Evans said in a release.

June 7, 2021Jonathan Evans is President and CEO of Lithium Americas Corp. He holds the clay mixture from which lithium will be extracted.

Carolyn Cole | Los Angeles Times | Getty Images

The joint venture is in addition to GM’s $320 million investment into Lithium Americas in February 2023. The investment included GM acquiring approximately 15 million common shares of Lithium Americas.

In August, GM and Lithium Americas agreed to delay a second tranche investment worth $330 million in the miner to explore alternative structures for the investment.

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Trump or Harris? Here are the 2024 stakes for airlines, banks, EVs, health care and more

suimt — Sun, 13 Oct 2024 13:36:31 +0000

Former President Donald Trump and Vice President Kamala Harris face off in the ABC presidential debate on Sept. 10, 2024.

Getty Images

With the U.S. election less than a month away, the country and its corporations are staring down two drastically different options.

For airlines, banks, electric vehicle makers, health-care companies, media firms, restaurants and tech giants, the outcome of the presidential contest could result in stark differences in the rules they’ll face, the mergers they’ll be allowed to pursue, and the taxes they’ll pay.

During his last time in power, former President Donald Trump slashed the corporate tax rate, imposed tariffs on Chinese goods, and sought to cut regulation and red tape and discourage immigration, ideas he’s expected to push again if he wins a second term.

In contrast, Vice President Kamala Harris has endorsed hiking the tax rate on corporations to 28% from the 21% rate enacted under Trump, a move that would require congressional approval. Most business executives expect Harris to broadly continue President Joe Biden‘s policies, including his war on so-called junk fees across industries.

Personnel is policy, as the saying goes, so the ramifications of the presidential race won’t become clear until the winner begins appointments for as many as a dozen key bodies, including the Treasury, Justice Department, Federal Trade Commission, and Consumer Financial Protection Bureau.

CNBC examined the stakes of the 2024 presidential election for some of corporate America’s biggest sectors. Here’s what a Harris or Trump administration could mean for business:

American Airlines and JetBlue Airways in the Northeast and JetBlue’s now-scuttled plan to buy budget carrier Spirit Airlines.

The previous Trump administration didn’t pursue those types of consumer protections. Industry members say that under Trump, they would expect a more favorable environment for mergers, though four airlines already control more than three-quarters of the U.S. market.

On the aerospace side, Boeing and the hundreds of suppliers that support it are seeking stability more than anything else.

Trump has said on the campaign trail that he supports additional tariffs of 10% or 20% and higher duties on goods from China. That could drive up the cost of producing aircraft and other components for aerospace companies, just as a labor and skills shortage after the pandemic drives up expenses.

Tariffs could also challenge the industry, if they spark retaliatory taxes or trade barriers to China and other countries, which are major buyers of aircraft from Boeing, a top U.S. exporter.

— Leslie Josephs

JPMorgan Chase faced an onslaught of new rules this year as Biden appointees pursued the most significant slate of regulations since the aftermath of the 2008 financial crisis.

Those efforts threaten tens of billions of dollars in industry revenue by slashing fees that banks impose on credit cards and overdrafts and radically revising the capital and risk framework they operate in. The fate of all of those measures is at risk if Trump is elected.

Trump is expected to nominate appointees for key financial regulators, including the CFPB, the Securities and Exchange Commission, the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation that could result in a weakening or killing off completely of the myriad rules in play.

“The Biden administration’s regulatory agenda across sectors has been very ambitious, especially in finance, and large swaths of it stand to be rolled back by Trump appointees if he wins,” said Tobin Marcus, head of U.S. policy at Wolfe Research.

Bank CEOs and consultants say it would be a relief if aspects of the Biden era — an aggressive CFPB, regulators who discouraged most mergers and elongated times for deal approvals — were dialed back.

“It certainly helps if the president is Republican, and the odds tilt more favorably for the industry if it’s a Republican sweep” in Congress, said the CEO of a bank with nearly $100 billion in assets who declined to be identified speaking about regulators.

Still, some observers point out that Trump 2.0 might not be as friendly to the industry as his first time in office.

Trump’s vice presidential pick, Sen. JD Vance, of Ohio, has often criticized Wall Street banks, and Trump last month began pushing an idea to cap credit card interest rates at 10%, a move that if enacted would have seismic implications for the industry.

Bankers also say that Harris won’t necessarily cater to traditional Democratic Party ideas that have made life tougher for banks. Unless Democrats seize both chambers of Congress as well as the presidency, it may be difficult to get agency heads approved if they’re considered partisan picks, experts note.

“I would not write off the vice president as someone who’s automatically going to go more progressive,” said Lindsey Johnson, head of the Consumer Bankers Association, a trade group for big U.S. retail banks.

— Hugh Son

Inflation Reduction Act.

Harris hasn’t been as vocal a supporter of EVs lately amid slower-than-expected consumer adoption of the vehicles and consumer pushback. She has said she does not support an EV mandate such as the Zero-Emission Vehicles Act of 2019, which she cosponsored during her time as a senator, that would have required automakers to sell only electrified vehicles by 2040. Still, auto industry executives and officials expect a Harris presidency would be largely a continuation, though not a copy, of the past four years of Biden’s EV policy.

They expect some potential leniency on federal fuel economy regulations but minimal changes to the billions of dollars in incentives under the IRA.

— Mike Wayland

more than $4 trillion a year.

Despite spending more on health care than any other wealthy country, the U.S. has the lowest life expectancy at birth, the highest rate of people with multiple chronic diseases and the highest maternal and infant death rates, according to the Commonwealth Fund, an independent research group.

Meanwhile, roughly half of American adults say it is difficult to afford health-care costs, which can drive some into debt or lead them to put off necessary care, according to a May poll conducted by health policy research organization KFF.

Both Harris and Trump have taken aim at the pharmaceutical industry and proposed efforts to lower prescription drug prices in the U.S., which are nearly three times higher than those seen in other countries.

But many of Trump’s efforts to lower costs have been temporary or not immediately effective, health policy experts said. Meanwhile, Harris, if elected, can build on existing efforts of the Biden administration to deliver savings to more patients, they said.

Harris specifically plans to expand certain provisions of the IRA, part of which aims to lower health-care costs for seniors enrolled in Medicare. Harris cast the tie-breaking Senate vote to pass the law in 2022.

Her campaign says she plans to extend two provisions to all Americans, not just seniors: a $2,000 annual cap on out-of-pocket drug spending and a $35 limit on monthly insulin costs.

Harris also intends to accelerate and expand a provision allowing Medicare to directly negotiate drug prices with manufacturers for the first time. Drugmakers fiercely oppose those price talks, with some challenging the effort’s constitutionality in court.

Trump hasn’t publicly indicated what he intends to do about IRA provisions.

Some of Trump’s prior efforts to lower drug prices “didn’t really come into fruition” during his presidency, according to Dr. Mariana Socal, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.

For example, he planned to use executive action to have Medicare pay no more than the lowest price that select other developed countries pay for drugs, a proposal that was blocked by court action and later rescinded.

Trump also led multiple efforts to repeal the Affordable Care Act, including its expansion of Medicaid to low-income adults. In a campaign video in April, Trump said he was not running on terminating the ACA and would rather make it “much, much better and far less money,” though he has provided no specific plans.

He reiterated his belief that the ACA was “lousy health care” during his Sept. 10 debate with Harris. But when asked he did not offer a replacement proposal, saying only that he has “concepts of a plan.”

— Annika Kim Constantino

Paramount Global and Skydance Media is set to move forward, with plans to close in the first half of 2025, many in media have said the Biden administration has broadly chilled deal-making.

“We just need an opportunity for deregulation, so companies can consolidate and do what we need to do even better,” Warner Bros. Discovery CEO David Zaslav said in July at Allen & Co.’s annual Sun Valley conference.

Media mogul John Malone recently told MoffettNathanson analysts that some deals are a nonstarter with this current Justice Department, including mergers between companies in the telecommunications and cable broadband space.

Still, it’s unclear how the regulatory environment could or would change depending on which party is in office. Disney was allowed to acquire Fox Corp.’s assets when Trump was in office, but his administration sued to block AT&T’s merger with Time Warner. Meanwhile, under Biden’s presidency, a federal judge blocked the sale of Simon & Schuster to Penguin Random House, but Amazon’s acquisition of MGM was approved.

“My sense is, regardless of the election outcome, we are likely to remain in a similar tighter regulatory environment when looking at media industry dealmaking,” said Marc DeBevoise, CEO and board director of Brightcove, a streaming technology company.

When major media, and even tech, assets change hands, it could also mean increased scrutiny on those in control and whether it creates bias on the platforms.

“Overall, the government and FCC have always been most concerned with having a diversity of voices,” said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investment.
“But then [Elon Musk’s purchase of Twitter] happened, and it’s clearly showing you can skew a platform to not just what the business needs, but to maybe your personal approach and whims,” he said.

Since Musk acquired the social media platform in 2022, changing its name to X, he has implemented sweeping changes including cutting staff and giving “amnesty” to previously suspended accounts, including Trump’s, which had been suspended following the Jan. 6, 2021, Capitol insurrection. Musk has also faced widespread criticism from civil rights groups for the amplification of bigotry on the platform.

Musk has publicly endorsed Trump, and was recently on the campaign trail with the former president. “As you can see, I’m not just MAGA, I’m Dark MAGA,” Musk said at a recent event. The billionaire has raised funds for Republican causes, and Trump has suggested Musk could eventually play a role in his administration if the Republican candidate were to be reelected.

During his first term, Trump took a particularly hard stance against journalists, and pursued investigations into leaks from his administration to news organizations. Under Biden, the White House has been notably more amenable to journalists.

Also top of mind for media executives — and government officials — is TikTok.

Lawmakers have argued that TikTok’s Chinese ownership could be a national security risk.

Earlier this year, Biden signed legislation that gives Chinese parent ByteDance until January to find a new owner for the platform or face a U.S. ban. TikTok has said the bill, the Protecting Americans From Foreign Adversary Controlled Applications Act, which passed with bipartisan support, violates the First Amendment. The platform has sued the government to stop a potential ban.

While Trump was in office, he attempted to ban TikTok through an executive order, but the effort failed. However, he has more recently switched to supporting the platform, arguing that without it there’s less competition against Meta’s Facebook and other social media.

— Lillian Rizzo and Alex Sherman

Washington Post previously reported.

In keeping with the campaign’s more labor-friendly approach, Harris is also pledging to eliminate the tip credit: In 37 states, employers only have to pay tipped workers the minimum wage as long as that hourly wage and tips add up to the area’s pay floor. Since 1991, the federal pay floor for tipped wages has been stuck at $2.13.

“In the short term, if [restaurants] have to pay higher wages to their waiters, they’re going to have to raise menu prices, which is going to lower demand,” said Michael Lynn, a tipping expert and Cornell University professor.

— Amelia Lucas

has said she and Biden “reject the false choice that suggests we can either protect the public or advance innovation.” Last year, the White House issued an executive order that led to the formation of the Commerce Department’s U.S. AI Safety Institute, which is evaluating AI models from OpenAI and Anthropic.

Trump has committed to repealing the executive order.

A second Trump administration might also attempt to challenge a Securities and Exchange Commission rule that requires companies to disclose cybersecurity incidents. The White House said in January that more transparency “will incentivize corporate executives to invest in cybersecurity and cyber risk management.”

Trump’s running mate, Vance, co-sponsored a bill designed to end the rule. Andrew Garbarino, the House Republican who introduced an identical bill, has said the SEC rule increases cybersecurity risk and overlaps with existing law on incident reporting.

Also at stake in the election is the fate of dealmaking for tech investors and executives.

With Lina Khan helming the FTC, the top tech companies have been largely thwarted from making big acquisitions, though the Justice Department and European regulators have also created hurdles.

Tech transaction volume peaked at $1.5 trillion in 2021, then plummeted to $544 billion last year and $465 billion in 2024 as of September, according to Dealogic.

Many in the tech industry are critical of Khan and want her to be replaced should Harris win in November. Meanwhile, Vance, who worked in venture capital before entering politics, said as recently as February — before he was chosen as Trump’s running mate — that Khan was “doing a pretty good job.”

Khan, whom Biden nominated in 2021, has challenged Amazon and Meta on antitrust grounds and has said the FTC will investigate AI investments at Alphabet, Amazon and Microsoft.

— Jordan Novet

Here's what investors need to know after GM's capital markets day

suimt — Wed, 09 Oct 2024 14:58:54 +0000

The GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021.

Rebecca Cook | Reuters

DETROIT — Wall Street reacted to General Motors’ investor day on Tuesday with a shrug.

Executives used the Detroit automaker’s event to focus on broad, near-term updates to the company’s operations in an attempt to separate itself from its competitors amid more challenging market and economic conditions. But it did little to move the company’s stock.

GM believes it is in a unique position to outperform the industry and Wall Street’s expectations with its all-electric vehicles and traditional internal combustion engine vehicles. The company expects to improve profits for both types of vehicles as it targets adjusted earnings next year to be similar to 2024.

“It all starts there: scale, capital efficiency and cost discipline. These will differentiate us from others in our industry, and frankly, from our own past performance,” GM CEO Mary Barra said during the roughly three-hour event from its manufacturing operations in Spring Hill, Tennessee.

GM President Mark Reuss even took jabs at its traditional crosstown rivals Ford Motor and Stellantis. Without naming them, he said GM doesn’t need a “skunkworks” team to develop affordable EVs like Ford and that cutting to profitability, like Stellantis appears to be doing, doesn’t work.

Nonetheless, investors have largely failed to reward GM for being ahead of the curve for domestic EV production as well as outperforming many automakers in the profitability of its traditional gas- and diesel-powered vehicles.

Several Wall Street analysts were unchanged in their opinion and ratings of the automaker after the event, citing continued optimism but a lack of details in its overall strategy.

Shares of GM, Ford and Stellantis in 2024

“A missed opportunity — no strategy, just tactics. GM’s investor day showcased many of the company’s current achievements, but did not provide much insight on strategy,” Bernstein analyst Daniel Roeska wrote Wednesday in an investor note.

Others such as Barclays’ Dan Levy and BofA Securities’ John Murphy said while the event lacked some details, it fortified GM’s positioning compared to competitors.

“GM’s Investor Day yesterday didn’t provide much in the way of sharp shifts in strategy. However, we believe it served as a strong reminder of GM’s balanced and pragmatic approach — a thoughtful combination of ramping on EVs alongside a keen focus on execution and cost while continuing to generate robust shareholder returns,” Levy wrote in a Wednesday investor note.

Shares of GM closed Tuesday essentially unchanged at $46.01. The stock remains up nearly 30% this year, but it has been under pressure of late due to several downgrades and price target adjustments by Wall Street analysts.

Here are several topics investors should know from the event:

“similar range” to the company’s results this year, CFO Paul Jacobson said.

Its targeted adjusted earnings before interest and taxes for 2024 were between $13 billion and $15 billion, or $9.50 and $10.50 per share, up from previous guidance of $12.5 billion to $14.5 billion, or $9 to $10 per share, earlier this year.

Through the first half of 2024, GM earned $8.3 billion in EBIT-adjusted and generated $6.4 billion in adjusted automotive free cash flow.

Jacobson said GM’s capital spend also is expected to be consistent in 2025 with this year. GM’s 2024 financial guidance includes anticipated capital spending of between $10.5 billion and $11.5 billion.

is ultimately dead.

GM will drop the “Ultium” name for its electric vehicle batteries and supporting technologies after spending years promoting the brand as it rethinks its EV and battery operations.

The company said the batteries and the technologies will remain, but the name will be gone, except in production operations such as its “Ultium Cells” joint venture plants with LG Energy Solution.

Instead, GM plans to use a variety of battery chemistries and cell designs, said Kurt Kelty, a former Tesla executive who joined GM as vice president of battery earlier this year.

“GM is evolving to a multifaceted approach,” he said. “This should only help GM strengthen our position of producing more EV models than any other automaker.”

previously announced initiative that’s expected to retire roughly 250 million shares of the automaker.

From 2022 through the end of 2024, GM will have returned about $20 billion to shareholders through share repurchases and dividends, Barra said.

The automaker is targeting to get below 1 billion outstanding shares by early 2025, Jacobson said. It has more than 1.1 billion outstanding shares as of Wednesday morning, according to FactSet.

operations in China.

GM’s operations in China have experienced a decade-long slide in earnings, and executives said they are discussing restructuring options with their China-based partners.

“In China, you’ll begin to see evidence of a turnaround this year, with a significant reduction in dealer inventory and modest improvements in sales and share,” Barra said.

Regarding Cruise, GM said its spending next year is not expected to top this year’s. It did not provide updates on its long-term plans for the troubled robotaxi business.

With GM’s investor day being two days ahead of Tesla’s highly anticipated robotaxi day, Wall Street analysts expected some sort of update on the venture, especially regarding future financing or capital spend for the company.

Hyundai Motor: When asked about GM’s announced non-binding memorandum of understanding with Hyundai, Barra said the teams “are working closely and making progress every week on what will become definitive agreements.”
Chevy Bolt: GM said its next-generation Chevrolet Bolt EV that’s expected next year will be only slightly higher than the 2023 Bolt, which started at $28,795.

PHEVs: GM reconfirmed plans to introduce plug-in hybrid electric vehicles, of PHEVs, in 2027. In the meantime, Reuss, citing single-digit market share, said GM is “not missing on anything right now without PHEVs.”

— CNBC’s Michael Bloom contributed to this report.

GM investor day: Cruise, cash and EV profits top of mind for Wall Street

suimt — Mon, 07 Oct 2024 17:42:06 +0000

Mary Barra, chair and chief executive officer of General Motors Co., during a news conference at the Hudson’s building in Detroit, Michigan, US, on Monday, April 15, 2024.

Jeff Kowalsky | Bloomberg | Getty Images

DETROIT — A lot has changed since General Motors’ last investor day two years ago, but one thing that hasn’t is the automaker’s ability to outperform Wall Street’s expectations — doing so every quarter since then.

GM CEO Mary Barra will attempt to convince investors during a capital markets day Tuesday that she and her executive team can continue to do that despite slowing consumer demand and changing market conditions.

Wall Street analysts are eager to hear about plans for electric vehicles and hybrids, the company’s embattled Cruise autonomous vehicle unit, its China restructuring and GM’s near-term plans for free cash flow, lowering costs and rewarding investors.

Many of them are expecting GM will be more grounded in its near-term targets and messaging than it has in its most recent investor days, including three years ago, when Barra and others laid out ambitious long-term financial targets by to double the automaker’s revenue to about $280 billion by 2030.

“It’s clear we enter a very different industry environment vs. three years ago,” Barclays analyst Dan Levy said last week in an investor note. “Accordingly, whereas the theme for GM three years ago was “Growth Motors,” we believe the theme today is “praGMatic Motors.”

The company is expected to tout its “flexibility” when it comes to producing EVs, as well as vehicles with traditional internal combustion engines, commonly called ICE, at the event. To underscore that effort, the event is taking place GM’s vehicle assembly and Ultium EV battery plants in Tennessee. Spring Hill Assembly produces both types of vehicles.

Barra and other executives have stressed such a dual strategy since lowering or withdrawing nearly all of the company’s EV targets amid slower than expected adoption of electric vehicles.

“We are making the most of every opportunity we have in ICE and in EV and leveraging our core strengths,” Barra said during the company’s second-quarter investor call in July. “We’re being flexible and opportunistic, but also importantly, we’re being very disciplined.”

downgraded GM and cut price targets, citing challenging market conditions and low upside potential, among other things.

“We want to wait and see which updates GM shares with the market and downgrade the stock to Market-Perform,” Bernstein analyst Daniel Roeska wrote in a Sept. 23 investor note.

GM’s stock remains overweight with a price target of $54.64 a share, according to average estimates of 29 analysts compiled by FactSet.

business in the country has been in a yearslong freefall.

The operations, which recorded $2 billion in equity income in 2018, posted a loss of $104 million during the second quarter — its second consecutive quarterly loss after hitting a roughly 20-year low in 2023.

China has been inundated with domestic automakers such as BYD that have caused a pricing war, especially when it comes to EVs.

GM’s 2024 Chevrolet Equinox EV (right) next to a gas-powered Chevy Equinox on May 16, 2024 in Detroit.

Michael Wayland / CNBC

In GM’s home market, investors are seeking updates to its plans for EVs as well as hybrids. Unlike crosstown rival Ford, which has amped up its focus on hybrids, GM hasn’t offered a hybrid option other than a Corvette for many years.

“The event will likely provide a glimpse into GM’s efforts to balance the slowdown in EV adoption with its Future business plan, which we still expect will be centered on electrification, but with a greater emphasis on hybrid technology,” BofA Securities analyst John Murphy said in a Sept. 20 note.

GM has maintained expectations that its EVs will be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.

Regarding Cruise, Wall Street is particularly interested in the company’s future funding plans for the embattled autonomous vehicle unit.

After ceasing all on-road operations last year and ousting leaders following an accident involving a pedestrian in October, Cruise has slowly been attempting to relaunch operations, but it remains far from it was before the incident.

Buttigieg claps back at Elon Musk for false claims about Helene federal response

Aseem — Sat, 05 Oct 2024 02:08:48 +0000

Transportation Secretary Pete Buttigieg spoke directly to Elon Musk Friday on the billionaire’s X platform, part of an effort to counter false conspiracies about federal disaster aid for victims of Hurricane Helene that Musk spread on X, where his follower count stands over 200 million.

“No one is shutting down the airspace and FAA doesn’t block legitimate rescue and recovery flights,” wrote Buttigieg. “If you’re encountering a problem give me a call.”

Buttigieg was replying to a post from Musk that falsely claimed the Federal Aviation Administration was shutting down airspace in the disaster zone and “throttling” flights transporting supplies.

An FAA spokesperson told CNBC, “There are no airspace restrictions in place in North Carolina as rescue efforts continue because of Hurricane Helene. Pilots looking to come into Asheville or Rutherford airports need to reach out to the airport for permission to land. The FAA is working with local authorities to ensure rescue efforts happen safely.”

Musk’s false claim was one of several conspiracies Musk has spread about federal emergency personnel this week, as tens of thousands of people turn to government agencies for disaster relief in states hard-hit by Helene.

“@FEMA is not merely failing to adequately help people in trouble, but is actively blocking citizens who try to help!” Musk said in an apparent text message within his social post.

A spokeswoman for the Federal Emergency Management Agency responded to Musk in a statement to CNBC: “The claims about FEMA confiscating or taking commodities, supplies or resources in North Carolina, Tennessee, or any state impacted by Helene are false,” said public affairs director Jaclyn Rothenberg.

FEMA has deployed Starlinks before to assist in disaster response in places like Guam, Hawaii and Alaska, she noted. In storm-ravaged North Carolina, Starlink units are supporting state and local governments, urban search and rescue and disaster coordination efforts.

Musk has formally endorsed Republican former President Donald Trump, and he has become a mega donor to the GOP in recent years.

On Friday, Trump amplified Musk’s false claims about FEMA and FAA on Trump’s own social media platform, Truth Social, where he posted them without comment to his nearly 8 million followers.

Musk’s SpaceX and its satellite internet service brand Starlink, have previously said that they would send approximately 500 Starlink kits, donated by private individuals and organizations, to help with the Helene recovery efforts. They also made Starlink internet service free for users for 30 days in areas devastated by Helene.

This was after FEMA had previously announced it was dispatching SpaceX’s Starlink terminals to bring internet services to remote areas hit by the storm.

Musk frequently uses X to provoke — but in lashing out at FEMA on Friday, he escalated his battle with the U.S. government.

He has previously threatened to sue the Federal Aviation Administration, attacked the Environmental Protection Agency for penalizing SpaceX, and lashed out at other federal agencies.

Musk’s SpaceX depends upon federal agencies for what amounts to billions of dollars in annual revenue, and his automaker Tesla has handsomely benefitted from federal programs that gave the company a crucial loan, tax breaks and other subsidies and incentives.

People who have suffered loss or damage due to Tropical Storm Helene in designated counties, can apply for government assistance using the FEMA app, which can be downloaded from the Apple Store or Google Play Store, by visiting DisasterAssistance.gov, or by calling 1-800-621-3362.

— NBC’s Cristian Santana contributed reporting