Behind GM, Ford’s new EV technique is old-time financing: Money

The cab to a Ford all-electric F-150 Lightning truck prototype is seen on an automated guided vehicle (AGV) at the Rouge Electric Vehicle Center in Dearborn, Michigan, September 16, 2021.

Rebecca Cook | Reuters

Detroit’s automakers have brought a surprisingly conservative financial strategy to making EVs the next vehicle of choice for American consumers.

They’re paying cash.

General Motors other ford are investing $65 billion between them – $35 billion at GM and $30 billion for Ford – and, so far, don’t propose to borrow any of it. Instead, the most radical change in auto products in a century is being paid for out of the companies’ operating cash flow – seriously reducing the risk to the companies over time, and, for now, boosting their stock prices.

“The short answer is that they are doing it because they can,” said Nishit Madlani, automotive sector lead at bond rating agency Standard and Poor’s. “The popularity of trucks [since the pandemic began] and strong pricing is giving them confidence.”

Detroit’s aggressive investment and conservative financing has been years in the making. It has been aided by $4 billion borrowed by GM in May 2020, and by Ford drawing down a revolving credit line by $15 billion around the same time, moves intended to cushion a feared sales implosion from Covid-19. As sales declined more modestly than feared in 2020 and then began to bounce back in 2021, cash flow remained strong, taking the companies’ stock prices higher and letting Ford repay high-interest debt.

At the same time, both companies held on to cash by suspending dividends and share repurchases. And the companies have cut billions in annual costs, by slashing whole lines of unprofitable sedans, withdrawing from unprofitable markets overseas, and focusing tightly on trucks, which remain the most profitable part of their business.

Put all of this together, and the two biggest native-born US automakers have the cash to take on the industry’s biggest technological transformation since its founding.

Record car profits, record car prices

“Auto manufacturers are expecting record profits once we get through supply chain issues and chip shortages, which we expect to last most of this year,” CFRA Research analyst Garrett Nelson said. “The existing business is good, and the driver is car prices at a record high.”

The Detroit 2’s financing strategy stands in stark contrast to how Tesla, then a start-up, financed its push into EVs over the last decade. The EV leader repeatedly raised money from the stock and bond markets to pay for its plans, filing paperwork with federal regulators for $10 billion in stock sales as recently as 2020. Tesla’s first EV factory in California was financed with a loan that was federally guaranteed in 2010, when the EV market was nascent, before the company went public or had material revenue.

GM and Ford are ready to spend even more.

“If anything, it will go up from there,” a Ford spokesman said.

The US car market’s bounce back to nearly 15 million units sold in 2021 provided the financial cushion Detroit needed to push forward aggressively, according to Nelson. The collapse was not nearly as large as the one that accompanied the 2008 financial crisis, when the US passenger vehicle market fell to slightly more than 10 million cars and trucks. The brief, shallow dip helped assure that the war chests of the two companies were big enough to meet the need for billions of dollars in new investment, Madlani said.

“We prepared for the known and the unknown,” said the Ford spokesman. “The unknown part was the pandemic. The known was that we needed to be a leader in electric vehicles.”

The sales rebound, while still well below pre-pandemic pace, has translated into $7.8 billion in free cash flow over the nine months that ended in September at Ford. At GM, where automotive operations barely broke even on operating cash flow in the first nine Months of 2020, liquidity was still strong enough to let the company spend more than $4 billion on capital expenditures. GM is due to report fourth-quarter results on Feb. 1, with Ford set to announce its results Feb. 3.

Analysts expect Ford to report profits of 42 cents a share on $35.8 billion of revenue, up 75% since the September quarter, according to Thomson Reuters data. GM is forecast to earn $1.11 a share, down from $1.52 in the third quarter. GM raised its own forecast for the full year in December, saying it will earn $14 billion in earnings before interest and taxes, up from $11.5 billion to $13.5 billion it had previously predicted.

Ford and GM profits have held up, even though US industry unit sales are off the 17 million-vehicle annual pace before Covid, because the companies aggressively cut costs to prepare for the transition, Nelson said. Ford got almost entirely out of the business of making sedans, for example, and GM laid off 4,000 salaried workers in 2019. That’s in addition to factory closings that included GM’s storied Lordstown, Ohio plan, later sold to EV start-up Lordstown Motors.

On top of that, the companies are holding plenty of extra cash as a reserve if their cash flow misses forecasts. As long ago as 2019, analysts who spoke warily of all the money Ford needed to invest in its business respectfully noted that it also had $37 billion in cash and short-term securities. Ford now has $46.4 billion, and generated more than $12 billion in operating cash in the first nine months of 2021.

Ford, GM EV forecasts

Both companies have had plenty to say about financing strategy, and EV planning, at investor conferences in the last year. The common theme: Building Ford’s EV strategy around existing model names like the Mustang and especially the F-150 pickup truck, for which the company has garnered 200,000 pre-orders, is paying off in both customer acceptance and cost containment.

“Within the next 24 months, based on the demand for these products, [we] would be the number two EV automaker, probably close to 600,000 EVs a year globally [from Ford’s current product lineup] and we don’t plan to stop there,” Ford’s North American chief operating officer Lisa Drake told a Goldman Sachs-sponsored investor conference in December. “The complexity of the product in EV space is much less than at [internal combustion engines]. …And that’s going to allow us to be more efficient with our capital and more efficient with the labor and the assembly plants.”

At GM, the EV strategy includes a wave of new vehicles using new and existing nameplates – most recently, the company unveiled a $42,000 electric version of its Chevrolet Silverado SUV – as well as its Cruise joint venture with Honda, Microsoft and other investors to build an EV-centered autonomous- car business.

That has meant manufacturing complexes devoted to EV production that are in progress – or in production – in two Michigan towns and in Spring Hill, Tennessee, with planned battery plants near the sold-off Lordstown plant and in Spring Hill. GM chief financial officer Paul Jacobson said in March the company saves $1 billion to $1.5 billion per plant by converting existing car factories rather than developing all-new ones, which will reach $20 billion to $30 billion by the time GM’s EV effort reaches its full scale .

For now, the challenge is that electric vehicles are much less profitable than the big pickups and SUVs that dominate the two companies’ business, Nelson says, but that isn’t likely to last. Nelson says that as battery costs continue to drop and Ford and GM build scale in their EV business, they can surpass the profitability of internal combustion powered vehicles – noting that Tesla is more profitable, per dollar of sales, than Ford or GM’s auto businesses. Ford says its Mustang Mach E is profitable even though it sold fewer than 30,000 units in 2021.

“We do eventually expect to match [internal combustion engine] profitability with EVs as battery cell costs decline and we scale our operations,” a GM spokesman wrote in an e-mail.

At Morgan Stanley, analyst Adam Jonas – a longstanding EV bull – says Ford’s surge which led its stock to outperform Tesla last year, suggests that its EV-focused businesses are now worth about $50 billion, with every 100,000 sales of EVs likely to add $2 to its stock price. But he warned in a Jan. 13 report that hard-to-avoid bumps in the rollout of the electric F-150 and other vehicles will likely cause the stock to dip temporarily later this year.

“From a $25 level, we believe expectations for Ford’s success in EVs, while possible to achieve, are difficult to exceed,” Jonas wrote.

Riot Video games Hires Former MRC CFO DJ Jacobs As Leisure Head Of Technique, Enterprise Operations – Deadline

EXCLUSIVE: Riot games, the developer and publisher of League of Legends, knocked earlier MRC CFO DJ Jacobs as Head of Strategy and Business Operations for Entertainment.

“Riot’s commitment to delivering fun and memorable experiences to its players and fans has always impressed me,” said DJ Jacobs. “I’m very excited to be joining this team to bring our characters and stories to players in exciting new ways.”

Jacobs, who will lead group, content and product-level strategies for Riot’s new entertainment division, has more than 15 years of experience in the media and entertainment industry overseeing investments and acquisitions, new business initiatives, film and TV underwriting, strategic planning and financing.

Hot Off Sundance Success, Questlove to Helm Sly Stone Doc; Together for EP

For Riot, he will work with key product leaders to lead commercialization, research and insights, and partnerships between film, television, music, consumer products, live experiences, animation and third-party game release.

“DJ’s extensive experience in both the creative and operational side of the media and entertainment business makes him an ideal leader to help us grow this new division,” said Shauna Spenley, global president of entertainment, Riot Games. “His track record of building teams and securing strategic partnerships will prove essential as we expand our popular intellectual property to include players around the world in new, innovative ways.”

Before joining Riot Games, Jacobs spent nine years at MRC, where he was CFO and Chief Strategy Office. He led efforts to raise debt and equity that raised over $ 2 billion, served on Greenlight’s film and television committees, and developed key strategic partnerships with agents, artists and distributors. He began his career at The William Morris Agency and in the production of ABC’s Grey’s Anatomy before moving to Credit Suisse’s wealth management division. He has an engineering degree from Harvard University.

Laws geared toward transgender folks is an election technique, journalist says

The Republican Party is turning to old tactics to build a new coalition after losing control of the Senate and Presidency in the 2020 elections.

Politico’s national political correspondent Gabby Orr said Friday the GOP’s strategy to pass laws banning transgender female athletes from women’s sports teams was motivated by its goal of overcoming election failures and recovering local voters.

“My sources, who are going behind the scenes on this issue and who want Republicans to talk about it, think this could be something that resonates … not just with non-ideological voters – when labeled a justice issue – but also with the socially conservative grassroots voters that the Republican Party has to bring out, “Orr said.

Mississippi is poised to become the first state against transgender people this year after its legislature passed a law banning transgender women from competing in women’s sports in schools and universities. Republican Governor Tate Reeves tweeted Thursday night that he would sign the bill.

Orr warned, however, that the strategy could “absolutely” shut down moderates.

“We’ve seen some of the loudest voices talking about it in the GOP are Marjorie Taylor Greene (Georgia Congressman) and Ted Cruz (Senator from Texas). So they’re not exactly popular politicians with moderate voters, let alone suburbanites Women, “Orr said on CNBCs”The news with Shepard Smith. “The GOP risks backfiring at a time when we really saw the country’s trend in support of anti-discrimination laws, including Republicans.”

Orr quoted a Public Religion Research Institute survey 61% of Republicans support non-discrimination protection for LGBTQ Americans in 2020. That was five percentage points more than in 2019.

Idaho passed a law last year banning transgender women from competing in women’s sports, but one federal district suspended the law and it wasn’t enacted. At least 26 states have introduced similar bills across the country.

Challenges and issues in vaccine technique

Pharmacy students Anne Brandt (l) and Sarah Schulz are preparing six syringes from a vial with the SARS-CoV-2 coronavirus vaccine from Biontech / Pfizer for vaccination of medical staff at the Leipzig University Hospital. There are currently more requests for vaccination appointments than can currently be offered.

Image Alliance | Image Alliance | Getty Images

Since Germany started its vaccination campaign together with the rest of the EU at the end of December, it has encountered a number of logistical challenges.

Now, nearly a month after the program began, the slow progress made by some German lawmakers and health professionals is causing frustration and concern.

Health Minister Jens Spahn had targeted 300,000 vaccinations per day, but the country has not yet achieved this. Data from the health department, the Robert Koch Institute, Published Tuesday showed that just over 62,000 vaccinations (most of which were first-time doses) had been given in the past 24 hours.

Since the start of vaccinations in Germany in all 16 federal states on December 27, almost 1.2 million people in Germany (the priority groups are currently healthcare workers, residents of nursing homes and employees, as well as the elderly) have received a first dose of the coronavirus Vaccine and nearly 25,000 have received their second dose.

In contrast, the UK, which was the first country in the world to approve and introduce the Pfizer BioNTech vaccine (partly developed in Germany), and the Oxford-AstraZeneca University candidate in early December has started its Covid vaccination program with over 4 million people so far vaccinated on their first dose of vaccine (over 450,000 had their second dose) and At the end of last week, there were more than 300,000 vaccinations a day.

Wide range of problems

The EU had a policy of buying coronavirus vaccines as a block, but some countries, including Germany, also made their own additional purchase agreements.

Nonetheless, supply problems were already a problem at the beginning of the vaccination campaign in Germany, as vaccines were not available in certain centers and other difficult logistical problems arose with the vaccination of his priority groups such as the elderly. This has resulted in inconsistent vaccine delivery performance from state to state within the country.

Dr. Stefan HE Kaufmann, a renowned immunologist and microbiologist in Germany and founding director of the Max Planck Institute for Infection Biology in Berlin, told CNBC on Tuesday that the vaccination process was associated with challenges from the start.

“The number one priority (in the vaccination campaign) is currently the elderly and people with serious illnesses, especially in children’s homes. This process is ethical, but very time-consuming. It also includes health care workers and medical staff in nursing homes and hospitals. Apparently some of the nursing home staff are hesitant about vaccination, “he noted.

Fenna Martin (C) vaccinates Marielotte Kilian (L), 87, and Richard Kilian (R), 86, against Covid-19 in the vaccination center, which was installed on January 19, 2021 at the convention center in Wiesbaden, western Germany, which opened in the western state of Hesse its first six vaccination centers in the midst of the novel coronavirus.

ARNE DEDERT | AFP | Getty Images

So far, only the vaccines developed by Pfizer, BioNTech and Moderna have been approved for block use by the European Medicines Agency. The easier to store and transfer (and cheaper) candidate from AstraZeneca and Oxford University has not yet been approved.

When it comes to introducing vaccines, time is of the essence, especially in cases where there is an increase due to the more transmissible mutations. Nevertheless, Germany has registered fewer cases than many of its neighbors and has recorded just over 2 million infections to date. The death toll stands at 47,958.

A key problem for both the UK and the EU is that supply cannot meet current demand for vaccines, and Germany was no exception. with early reports from people struggling to get a vaccination appointment due to lack of doses. But vaccine manufacturers have promised to increase production and deliver millions more cans to be dispensed over the next few weeks and months.

In the meantime, however, “the doses secured for immediate use are insufficient,” said Kaufmann.

“While so-called vaccination centers have been set up throughout Germany, vaccines for a rapid maximum vaccination rate are currently lacking in these centers. (The) hope is that the process will be accelerated after the difficult and time-consuming vaccination has been achieved (at nursing homes),” he said and noted that the speed of the German vaccination campaign “would have been faster if more doses of BioNTech and Moderna had been secured”.

“In my opinion, everything must be done to get more doses for immediate or short-term use. This is all the more important as mutant strains that could evade vaccine-induced immune responses are becoming more common,” he warned.

Political criticism

Germany is not the only one who sees a slow start to its vaccination campaign. The European Commission has been criticized across the EU for failing to procure enough vaccines for the block.

Florian Hense, European economist at Berenberg, told CNBC that the approval and procurement process has left the EU behind, or at least behind, other countries like the UK and the US when it comes to sourcing vaccines.

“Since the EU negotiated and approved vaccinations with pharmaceutical companies on behalf of its member states, the German vaccination campaign was always ‘un-German’, regardless of what you associate with the term,” he told CNBC on Monday.

Elderly people who have just been vaccinated against COVID-19 wait briefly for side effects before leaving the vaccination center at the Messe Berlin exhibition center on the opening day of the center during the second wave of the coronavirus pandemic on January 18, 2021 in Berlin, Germany. The center is the third to open in Berlin. Three more are to be opened in the coming weeks as soon as supplies of the Pfizer / BioNTech and Moderna vaccines pick up speed.

SEAN GALLUP | AFP | Getty Images

“I suspect that the EU’s later approval delayed the start of vaccinations and has since limited the pace of vaccinations per day as vaccinations arrived in the EU more slowly than the UK, US (per capita)” “

Needless to say, other parliamentarians have criticized the government’s overall strategy. Dr. Janosch Dahmen, doctor and German MP for the Greens, told CNBC that he was “very concerned because Germany is already behind”.

“The progress of the vaccination campaign is far too slow and one of the reasons is the supply bottleneck. The more pressing problem, however, is that the vaccination infrastructure shows several problems, mainly staff shortages, distribution problems in the federal states and much more too much of a central approach,” he said.

“As a doctor and a politician, I am very concerned about the situation here and, apart from all the efforts we need to make to make the nationwide vaccination campaign more effective, we need to build bridges through testing, self-testing and testing, and we need to put more effort into contact tracing which is another important part of fighting this pandemic, “said Dahmen.

Cardinals Shildt relishes NL-style technique, ‘fixed dialog’ in dugout and searching for psychological edges for ‘bodily chess’ | Sports activities

Strategy meeting

When the inevitable is imminent, the DH subtracts some NL-style game art, especially when it comes to removing a pitcher. The manager no longer has the prize hitter’s escape hatch. It’s all about the mug, everything about the phone call Shildt thought was the most difficult.

“There are many great opportunities for strategy in NL play that not only dictate this game, but how you progress through this game can affect the next few games,” Shildt said. “I love this strategy, the way it looks. I’m not overly optimistic that we may ever return to the National League game. But I want to give the Heisman (stiff arm) as long as possible. “

Pitching decisions, pitching options, and preferred pitching matchups are an integral part of Shildt’s pregame meetings with his trainer.

Last year the staff came to the stadium five hours before the first pitch, four or five hours later than usual. On the first day of a series, the coaches go through their areas of responsibility and describe the development of trends and the characteristics of the opponent. Bullpen coach Bryan Eversgerd, for example, calls up the left-handers and provides some reports on how their things play specifically against the opposing players.

Shortly before the game, Shildt, Marmol and pitching coach Mike Maddux meet to plan the game. They will discuss how to see a possible matchup for right-handed Ryan Helsley in the fourth inning or seventh, for example, and how to deal with the same matchup when they are sixth or eighth deficit. The goal is to script possible outcomes for the game, let helpers know when to use them, and prepare staff for the decisions they are likely to make.