Volkswagen might have finally decided what to do with one of its crown jewels, Elon Musk is in distress, and Nikola has a new president. All that and more in The Morning Shift for February 22, 2022.
This was rumored last week, after, last October, Volkswagen saying that it was pumping the brakes on the plan. It’s unclear what has changed (other than Tesla’s continued dominance) in the stock market, too. This would be directly out of the Tesla playbook, which is going public to fund a big EV push.
From The Wall Street Journal:
The German auto maker said it had worked out a framework agreement with Porsche SE that still requires formal approval of both companies and their supervisory boards. VW shares jumped nearly 9% on the news as trading opened on the Frankfurt stock exchange, and were trading at around €188.14 by midmorning, equivalent to $212.81.
The announcement comes after more than a year of speculation and intense discussion among VW core shareholders that include Porsche Automobil Holding SE, the fund owned by the Porsche and Piëch families, the state of Lower Saxony, which controls around 20% of VW and has special rights under Germany’s “VW Law,” and the influential IG Metall labor union which holds half the seats on VW’s board of directors.
Porsche SE confirmed the talks and said it could purchase Porsche AG shares in the event of an IPO. People close to the family said as recently as December that it was considering selling some of its 53% stake in VW to take a large share of Porsche, which the family ceded to VW after Porsche’s failed attempt to take over VW in 2008.
Porsche Chief Financial Officer Lutz Meschke first raised the benefits of a potential IPO in 2018, saying such a move could unlock value and replicate Ferrari NV’s successful share sale years earlier. The deliberations didn’t gain support from VW at the time.
But the prospect has remained part of conversations around Porsche and officials have openly flirted with the idea that would give one of the world’s most coveted car brands more independence.
“I think Porsche could be an interesting part for thinking about an IPO,” Porsche CEO Oliver Blume said during a briefing with U.S. reporters last year, cautioning that a final decision won’t be his to make. “We have to hand it to Volkswagen and they have nothing decided.”
Porsche has been sort of an odd duck in the VW universe after it got absorbed in a very strange failed takeover attempt in the 2000s, and continuing on through the current strangeness around VW sending Bugatti to Rimac via Porsche.
2nd Gear: Meanwhile, All Those Burned Porsches and Bentleys In The Atlantic Could Be A $335 Million Loss
I’m not quite sure why this story has taken on a life of its own, other than that some men just want to watch the world burn, but according to a new estimate, that boat fire off the Azores could amount to losses of up to $335 million.
Via Automotive News:
The Anderson Economic Group on Monday increased its estimate from $282 million on Friday.
VW has not disclosed its potential losses from the fire aboard the crippled Felicity Ace and it is unclear how much insurance will cover the costs for the lost vehicles. Of the 4,000 vehicles, 1,100 of them are Porsches. The rest of the vehicles are from the VW brand, Audi, Bentley and Lamborghini, according to various reports.
“The lost Porsche vehicles alone, which we assume are 1,100 vehicles including many customized high-end models, would exceed $140 million. We further anticipate salvage costs in excess of $150 million,” Anderson’s report said. “Similar disasters in the recent past suggests total losses for this incident may not be realized for a year or more and could be far above the value of the lost cargo.”
“Given that the ship continues to burn, no crew is onboard, and suspected lithium fires have been confirmed, we now estimate that nearly all of the vehicles are irreparably damaged and will not be saleable in the U.S. market. We note that these vehicles have experienced fire, smoke, and water damage, and they risk being submerged in salt water, as well. Today’s report that the fires are ebbing included the telling explanation that there was probably little combustible material left to burn.”
Poor Matt Farah has a car on the boat.
The claim, made on Monday, comes after the same lawyer said last week that the Securities and Exchange Commission was trying to “chill” Elon’s right to free speech.
Alex Spiro, Musk’s outside counsel, claimed in a letter last week that the SEC was targeting Tesla Inc. and its chief executive officer because Musk is an outspoken government critic. Spiro wrote to a judge Monday that at least one SEC staff member responded to this by leaking certain information regarding its probe.
“This leak is emblematic of the vindictive, improper conduct that occasioned my letter,” Spiro wrote. He didn’t elaborate on what information he was accusing the SEC of divulging.
Musk tweeted on Tuesday that his lawyer was “peeling back the first layer of the corruption onion” and told his 74.5 million followers to “stay tuned.”
Spiro said in his letter Monday he had requested specific SEC staff to preserve records and devices and reported the matter to the SEC Office of Inspector General.
Press officials for the SEC didn’t immediately respond to a request for comment on the filing. Tesla shares fell 2.3% to $837.14 as of 8:10 a.m. Tuesday, before the start of regular trading.
Does any of this mean anything, outside of the legal maneuvering? Not unless you’re a Tesla shareholder or short. I fear that the whole drama has reached boring levels of absurdity.
Tesla’s cursed plant in Germany is still far from a sure thing, and, as Bloomberg reports, a legal challenge over water has the potential to upend it. The issue is that climate change has stressed the area’s water supply, and Tesla’s plant would demand lots of water.
While Musk in August flippantly pointed to water “everywhere” around Berlin, the region is suffering from falling groundwater levels and prolonged droughts due to climate change.
That has sparked a legal challenge that will go to court next week and an acknowledgment from local authorities that supplies will not suffice once Tesla ramps up the plant.
The issue has the potential to further delay or even stop the 5 billion euro ($5.7 billion) project in what could turn into a costly setback to the automaker’s expansion.
“Tesla will increase the problem for sure,” said Irina Engelhardt, who heads the hydrogeology department at Berlin’s Technical University. “There might not be enough water for everyone.”
“The current water supply is sufficient for the first stage of the factory,” Brandenburg Economy Minister Joerg Steinbach said in an interview. Once Tesla expands the site, “we will need more.”
I am impressed with how succinct this quote is from a local resident:
Steinbach said that while he is taking the environmental concerns very seriously, the large majority of the local population is in favor of the factory. Brandenburg authorities are backing efforts to drill for more water in the area and supplies could also be sourced from further away if necessary, he said.
But digging new wells probably will not make the concerns disappear. Manuela Hoyer, who lives just a few miles from the factory, says Tesla is getting preferential treatment from local politicians even though it would make an already serious environmental issue worse.
“We have been told for years that we should not water our lawns,” Hoyer, who is active in a citizen’s initiative monitoring the project, said in an interview. “Then the world’s richest man comes along and gets everything he wants.”
It would, at this stage, still be a major surprise if Tesla’s plans were disrupted, a seriously unpleasant one, too, for Tesla, given how big the market for EVs is in Europe and how big it will become. Still, it seems like the smart money is on the plant ultimately getting approved.
That is Michael Lohscheller, who, as Peter Campbell from the Financial Times notes, is a “proper automobile grown-up,” having spent time at Opel, Mitsubishi, and Volkswagen.
From Nikola’s release:
“Michael Lohscheller brings several decades of direct automotive industry expertise to our already accomplished leadership team at Nikola. His role will be immediately pivotal as the Nikola Tre BEV moves into production, and as we continue to achieve development milestones for the Nikola Tre FCEV,” said Nikola Chief Executive Officer Mark Russell.
Lohscheller’s career has included leadership roles in finance, technology, purchasing and logistics at Volkswagen, before becoming Volkswagen Group of America Executive Vice President. Lohscheller was named CEO of Opel, both under GM and Stellantis ownership. Under his leadership, Lohscheller led Opel to sustainable profitability. He also oversaw Opel’s transformation into a respected electrified car brand. Most recently Lohscheller served as CEO of VinFast, the global electric automotive brand from Vietnam.
“As Nikola moves into global production, an experienced and respected industry veteran like Michael strengthens the Nikola team,” said Stephen Girsky, Nikola Corporation board chair. “He knows his way around the manufacturing floors, board rooms and showrooms and has worked with the latest technologies throughout his career. We are pleased to welcome Michael to the team.”
This is a startingly level-headed thing for Nikola to do, though I will also note that plenty of automotive industry veterans have gone to auto startups and not fared as well as their track records suggest. Take Byton.
If you think the end of last year’s Formula 1 season was some bullshit, well, that is the history of racing, which is almost all chicanery.
On February 22, 1959, Lee Petty defeats Johnny Beauchamp in a photo finish at the just-opened Daytona International Speedway in Florida to win the first-ever Daytona 500. The race was so close that Beauchamp was initially named the winner by William France, the owner of the track and head of the National Association for Stock Car Auto Racing (NASCAR). However, Petty, who was driving a hardtop Oldsmobile 88, challenged the results and three days later, with the assistance of news photographs, he was officially named the champ. There was speculation that France declared Beauchamp the winner in order to intentionally stir up controversy and generate publicity for his new race track.
It is a blessed week in New York, by which I mean alternate side parking was suspended yesterday.