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Tesla expects record Q2 deliveries; New Nissan board not pursuing merger talks

TOP NEWS

* Tesla Inc. CEO Elon Musk told employees in an email that the electric-car maker is on track to deliver a record number of vehicles in the second quarter, Reuters reported. Tesla, which saw its shares plunge to lowest since late 2016 over lowering demand concerns, saw the stock close higher for the first time since May 14 on news that it could beat its previous record of 90,700 deliveries in the fourth quarter in 2018. The email also said Tesla produced about 900 Model 3 units daily this week, nearing its target of 7,000 per week. Separately, Tesla sold 20,491 vehicles in California in the first quarter. This marked an increase of 172.1% year over year in its home market and helped push the market share of electric vehicles past 5% for the first time, according to data from the California New Car Dealer Association. Tesla sold 15,805 Model 3 vehicles in the quarter, more than the next four competitors combined.

* Nissan Motor Co. Ltd. board member Keiko Ihara said the carmaker and its newly appointed board members have no plans to discuss a merger with Renault SA, Reuters reported. "We don't have time to feel any of the pressure which appears to be coming externally," she said. Although the Japanese government reportedly disapproves of the merger, Renault reportedly has been pushing for merger talks. Ihara, who also chairs a provisional council for an external nominations committee to be set up in June, said the process to find eventual successors to CEO Hiroto Saikawa and other executives would begin soon after the group is formed.

CARMAKERS

* Moody's Japan K.K. downgraded Nissan's issuer rating to A3 from A2, citing weak sales in the U.S., days after S&P Global Ratings downgraded the Japanese carmaker. Moody's also revised Nissan's outlook to negative. The rating agency said the negative outlook reflects the continuing slide in Nissan's profitability, impacted by weak sales in the U.S. which is Nissan's "largest market." The automaker's margins have weakened over the past two years, because shrinking operating profit for North America, due to high sales incentives offered in the U.S. Its consolidated operating margin fell to 2.7% in fiscal 2018 from 4.8% the year before. Nissan warned that it expects the margin to continue weakening to 2.0% in fiscal 2019.

ELECTRIC AND AUTONOMOUS VEHICLES

* Audi will stop producing the Audi TT coupe in favor of an electrified range consisting of 12 models as it looks to take on Tesla. The Volkswagen AG brand's e-tron will be the flagship model of the range, which will include seven plug-in hybrids and five electric cars. Audi said the move is part of its attempts to focus only on key projects and to transition into an e-mobility company.

* California-based self-driving startup Aurora Innovation, Inc. said it will acquire Blackmore, a provider of Light Detection and Ranging, or LiDAR, remote sensing technology, for an undisclosed amount. Aurora, founded by executives from Google, Tesla and Uber Technologies Inc., said the startup will help its Driver software become "safer, more efficient, and more cost-effective" than all other self-driving systems.

MOBILITY SERVICES

* Moovel Group GmbH, a mobility joint venture co-owned by Daimler AG and Bayerische Motoren Werke AG, acquired U.S. mobility platform Validated from private equity firm Techsta Central LLC for an undisclosed sum and rebranded itself as Reach Now. Validated helps drive retail traffic to physical stores by allowing businesses, universities, retailers and restaurants subsidize transportation for customers and employees using shared mobility services, according to the release. The startup was founded as Parkt Inc. in 2015 as an alumnus of private equity company Techstars Central's startup accelerator program in Seattle.

* Uber Technologies Inc. rolled out 350 Jump electric bikes in Islington, London, CNBC reported, citing executive Jamie Heywood. The ride-hailing company's e-bike program is part of its plans to transition the app into a mobility provider, where users can find different transportation options, Heywood's statement said.

* Uber will team up with the state of Queensland in Australia to launch a submarine-sharing program, scUber, from May 27 to June 18. Riders in Heron Island and Port Douglas can pay A$3,000 to join the program, which involves helicopter and submarine rides as well as several tours. In the same release, Uber said proceeds will go to conservation of the reef.

POLICY, REGULATIONS AND SAFETY

* The Alliance of Automobile Manufacturers, a U.S. trade body that includes Toyota Motor Corp., General Motors Co., Volkswagen and other carmakers as members, said it will review new U.S. legislation that requires automakers to install systems reminding parents to check for children in the back seat before exiting the car, Reuters reported. Since 1998, about 800 children reportedly died of heatstroke after being left in hot cars, lawmakers said, though the Alliance said "fewer than 13% of new car buyers have a child six years old or younger" and that it will take about 20 years before the technology can be implemented in all passenger cars.

* Porsche's North American arm issued a recall of 33,206 Panamera hatchbacks over a shortcircuit risk that can cause fire, the U.S. National Highway Traffic Safety Administration said. The Volkswagen brand said the recall is expected to begin June 23 and that dealers will add a relay harness to the air-conditioner blower control unit and reseal it to prevent water from entering it.

AUTO PARTS AND EQUIPMENT

* Moody's Japan K.K. revised Panasonic Corp.'s outlook to negative and affirmed the Japanese consumer electronics company's A3 long-term issuer rating and senior unsecured bond ratings. The rating agency said the negative outlook reflects the increasing uncertainty over whether Tesla's battery supplier can generate enough earnings to restore its operating margins over the coming years, given the delays in turning its automotive business profitable. Moody's noted that Panasonic has invested heavily on its automotive business over the past three years, spending approximately ¥200 billion in its Gigafactory in the U.S. with Tesla.

* Nokian Renkaat Oyj CEO Hille Korhonen told reporters in Helsinki that it expects its U.S. site in Tennessee to double North American sales in five years and boost sales of its all-season tires, Reuters reported. The Finnish tire-maker invested $360 million in the site, which expects to begin production in the second half of 2019. Nokian Tyres operates plants in Russia and Finland.

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The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, Hang Seng rose 0.32% to 27,353.93, while the Nikkei 225 was down 0.16% to 21,117.22.

In Europe, around midday, the FTSE 100 was up 0.75% to 7,285.09, and the Euronext 100 increased 0.37% to 1,039.60.

On the macro front

The durable goods orders report and the Baker-Hughes Rig Count are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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