Daimler did better than expected, there’s a purge at Volkswagen, and New York is investing hundreds of millions in electric vehicle infrastructure. All that and more in The Morning Shift for July 17, 2020.
The company, which produces Mercedes cars in addition to a big truck, bus, and van business, had expected to lose $2.1 billion in the second quarter because of the coronavirus pandemic. In the end, it was a little better than that.
Daimler reported a preliminary deficit of 1.68 billion euros ($1.9 billion) before interest and taxes in a statement late Thursday. That beat a consensus estimate of 2.1 billion euros provided by the German manufacturer, which said that free cash flow and liquidity also held up better than expected.
China is helping, while Merc is also leaning heavily on ... the big-money S-Class to help its recovery.
Mercedes-Benz deliveries in China, the brand’s largest market, climbed to a record in the second quarter, and global retail sales of its cars edged higher in June. To keep the momentum going, the Stuttgart-based company is preparing to roll out new iterations of its flagship S-Class sedan, a key profit driver that continues to out-sell rivals including BMW’s 7 Series.
The S-Class will be flanked by an all-electric sibling, dubbed EQS, the first car to be based on a dedicated electric-car platform with a battery range of more than 700 kilometers (435 miles). Chief Executive Officer Ola Kallenius has said Mercedes plans to shore up its offerings especially in the lucrative segment of larger luxury vehicles.
Meanwhile, Kallenius had this to say in a press release:
“This has been a complex quarter. We took proactive decisions on costs and spending and focused intensely on working capital management. We were then able to seize opportunities allowed by the market recovery, thanks to our compelling product line-up. We also announced key strategic partnerships in electrification and vehicle software during the quarter that position us well for the future. But, there is still much to do. Our systematic efforts to lower the breakeven of the company by reducing costs and adjusting capacity will need to continue,” said Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG.
Its Tuscaloosa, Alabama factory makes C-Classes. But Daimler said Friday that it (along with its plant in Aguascalientes, Mexico, which produces a form of the A-Class) would stop making the sedans and focus on SUVs.
Daimler is in a bit of a soul-search mode. From Reuters:
Daimler is reviewing whether to sell its plant in Iracemapolis, Brazil, Handelsblatt said, citing company sources, and added that an extension of its factory in Kekskemet, Hungary, was unlikely to see the light of day.
The carmaker is also reviewing its portfolio of niche cars, like the coupe and convertible variants of its C-Class and E-Class, as well as the compact B-Class, Handelsblatt reported.
Daimler declined to comment on the details of potential cuts.
The company’s development of its new all-electric cars has been rocky, while a bunch of executives have been recently cleared out, which Bloomberg reports doesn’t seem to be happenstance.
And it’s the German giant whose executive suites are turning over: in a matter of days, its trucks chief resigned, the leader of its van unit was demoted, and its head of software was reassigned.
Even CEO Herbert Diess’s job looked insecure for a moment before VW’s supervisory board settled on stripping him of responsibility for the company’s namesake division.
The circumstances of each individual’s cases vary, and VW continues to have a massive advantage over Tesla in many respects. But some investors are concerned it might not be coincidence that all four VW executives in question were external hires installed to push through deep changes at the automaker.
The upcoming ID.3 and ID.4 are Volkswagen’s most important new cars in decades, probably since the Beetle. It is mission critical that VW sticks the landing.
Its sales there are only expected to fall by a single-digit percentage as the country bounces back from the pandemic. That is smaller than what the company had originally been planning for. SUVs and luxury car sales are helping.
The German automaker sold 1.59 million vehicles in China in the first six months of 2020, down 17% from 1.92 million units in the same period last year. For all of 2019, Volkswagen sold around 4.23 million vehicles in the country.
Volkswagen is China’s biggest foreign automaker, followed by U.S. rival General Motors Co (GM.N).
The country’s overall auto sales, which include passenger cars and commercial vehicles, dropped 17% in January-June. The China Association of Automobile Manufacturers has forecast full-year sales to fall 10% to 20%.
Volkswagen China chief Stephan Woellenstein said the automaker’s sales in the second half this year will likely be level with same period last year, though a possible second wave of the novel coronavirus outbreak lends uncertainty.
The money will go to charging stations as the state tries to encourage the wider adoption of EVs. Say what you will about Tesla, but EV sales still haven’t really taken off in a wide scale way here or anywhere else.
The measure is set to create more than 50,000 charging stations and will largely be funded by the state’s investor-owned utility companies, with the total budget capped at $701 million through 2025.
An additional $48.8 million is allocated from a 2017 settlement with German carmaker Volkswagen Group over its diesel emissions cheating scandal to fund electric school and transit buses, as well as charging stations.
New York’s announcement comes on the heels of a similar measure by Florida, which on July 10 announced an $8.6 million investment to expand charging stations.
It’s hard to know how significant $750 million is in the scheme of things, though according to one report $2.2 billion will be needed to meet U.S. demand through 2025. What I can say for sure is that Florida’s $8.6 million is laughable.
I’m gonna drive somewhere in August, socially distanced and masked up and probably within New York state and after I get tested, the first trip since all of this began. I’ve been spending too much time plotting just where.