It’s grave times out there for the auto industry. I mean, something must be going wrong, because BMW and Mercedes-Benz are working together. All that and more on The Morning Shift for October 16, 2018.
1st Gear: Shares Plummet As The Shorts Get Aston Martin
I feel like we don’t take enough time to appreciate Aston Martin, a company that within our living memory was designing cars off of gigantic wooden bucks made out of mahogany. Next to Morgan, it was the most old school of the little British carmakers.
Anyway, now it’s trying to be new and tech-ey and electric and it wants investor money, going public last week. This has introduced it to a problem that has plagued Tesla and also the sanity of anyone attempting to report on Tesla: short sellers.
Going public hasn’t been great for Aston Martin so far, with investor uncertainty up front and now some falling prices thanks to short-sellers.
I’ll let Bloomberg explain:
Money managers may love James Bond’s car, but have been quick to short the stock.
A group of short sellers including Carmignac Gestion SA have wagered against Aston Martin Lagonda Global Holdings Plc within days of its listing, with a bearish position equal to about 6.6 percent of the carmaker’s stock, according to data from Blacklight Technology Partners. And so far, those bets have paid off, with the shares plummeting more than 20 percent since they started trading on Oct. 2.
Aston Martin had sought to benchmark itself against rival Ferrari NV in a London initial public offering that valued the company at 4.3 billion pounds ($5.7 billion).
In a sign that some investors are skeptical about the company’s prospects and valuation, short sellers started their attempt to bet against the company the very first day it started trading, according to people with knowledge of the matter.
Great. It’s only a matter of time before CEO Andy Palmer’s twitter feed goes from nice audio clips of upcoming supercars and jokes about getting fat like the rest of us to screeds about how he’s going to make Aston Martin-branded protein powder to own the shorts. He’ll be tweeting about weed and Evangelion and how he’s gonna make a fine mayor of Mars City someday. Everything is downhill from here.
2nd Gear: Audi Settles $927 Million For Dieselgate
The technological hub of the Volkswagen Auto Group finally settled with German prosecutors.
While Volkswagen itself took a 1 billion euro fine, Audi is getting just an 800 million euro ($927 million) fine for cheating on V6 and V8 engines, as Reuters reports.
Neither settlement has “any effect” on civil suits over cheating diesels or investigations into individual executives, as Bloomberg also points out.
Neither will also have any effect, most likely, on anything Volkswagen and Audi are or are not already doing, as well.
3rd Gear: BMW, Daimler Working With Antitrust To Combine Car Sharing Ventures
There are signs all around us that the old automotive industry is shrinking, then consolidating, and that the legacy carmakers are getting pressed tighter and tighter together to face the problems of emissions regulations, safety regulations, EV innovations, and even mobility startups.
I mean, BMW and Mercedes-Benz are working together.
They are working together. Not “sabotaging each other’s engine dynos to stop development of hybrid V12s” or “hacking each other’s servers to slow the design of rival SUV convertibles,” but cooperating. I never thought I would see the day.
In any case, the particular cooperation comes from the two companies’ car sharing ventures, Car2Go and DriveNow, neither of which has really taken the fight to Uber or Didi on its own. So the two are looking to merge, and have filed with the EU’s antitrust commission to make sure everything is kosher, as Automotive News Europe reports:
The companies made the offer on Monday, a filing on the EU competition enforcer’s website showed, without providing details.
The Commission is expected to seek feedback from customers and rivals before deciding by Nov. 7 whether to accept the concessions, demand more or open a full-scale investigation.
You know shit is real when these two are collaborating.
Also, profits are higher than ever. These two things may be tied. Needs more study.
4th Gear: Emissions Trouble For Volvo Trucks
The second-largest manufacturer of the big rig world, Volvo Trucks, announced today that its trucks have been meeting emissions standards when new, but not when they’re out on the road in the real world. The problem comes not from an explicit cheat, like it did with Volkswagen, but with a degrading part, as Volvo admitted in a press release:
The Volvo Group has detected that an emissions control component used in certain markets with stringent emissions standards is degrading more quickly than expected, reducing its ability to convert nitrogen oxides (NOx) as efficiently as intended, which in turn could cause the engines or vehicles to exceed emissions limits for NOx. The investigation so far indicates that the degradation does not seem to affect all vehicles and engines in the same way and to the same extent.
Those “certain markets” are the U.S. and Europe, if you’re curious. It’s plain to see the real victim here: investors. At least, that’s how Bloomberg immediately and wonderfully saw the issue,t he scope of which we do not yet know. How many trucks or how bad the violation remains unclear. Stock prices are a different matter, as Bloomberg reports:
If your aim was to pen a statement likely to put the fear of God into investors in the automotive industry, it would probably read something like the one Volvo AB published on Tuesday.
“Nitrogen oxide,” “North America,” and “material” financial impact are phrases no shareholder wants to read in the wake of Volkswagen AG’s diesel-emissions scandal.
Please, everyone, take some time today to think of your local investors.
5th Gear: Which One Of You Idiots Put Down An Order For A Flying Car?
Y’all know this shit is never happening, right? It has been half a century or more. Every year we get a new announcement that the tech is “two years away,” And yet! Terrefugia, the Geely-backed flying car company that once promised full-scale production by 2012, says that it has been taking orders, as Automotive News China reports:
Terrafugia, a U.S. flying-car developer owned by private Chinese carmaker Zhejiang Geely Holding Group, has begun taking orders for its first product.
Deliveries of the Transition, a two-seat aircraft that can switch between driving and flying modes in less than one minute, are to begin in 2019, Terrafugia said.
Initially the Transition will be sold only in the U.S. The company has yet to disclose pricing.
I’m not even mad anymore. I just want to know how I can get to separate rich people from their money.
Reverse: RIP Dan Wheldon
Neutral: How Do You Look Back On Aston’s Last Decade?
In light of the company’s current trouble with going public, how do you look back on the last ten years of concept cars, low-volume supercars, and mainstream products?
I think it has done a lot right, but I think it also shows some limitations of showing the right products when it comes to being a successful automaker.