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EPA may not consult California in emission rule; Glass Lewis slams Tesla board

TOP NEWS

* The Trump administration will put up Environmental Protection Agency's draft proposal for public review in May to ease Obama-era vehicle emission norms through 2026 without consulting aggrieved states like California, in a departure from President Donald Trump's stance to have "expedited" talks with the state, Reuters reported, citing two officials briefed on the matter. Trump's comments at a meeting May 11 with major automakers had no bearing on the outcome of the draft, set for a formal White House review in the week of May 21, The Wall Street Journal reported.

* U.S. proxy adviser Glass Lewis & Co. LLC backed CtW Investment Group's call for Tesla Inc. shareholders to vote against the proposed re-election of three of its directors, including Kimbal Musk, brother of CEO Elon Musk, and 21st Century Fox CEO James Murdoch, citing a lack of objectivity and other concerns, Bloomberg News reported. Glass Lewis reportedly also sought a split in the company's chairman and CEO roles held by Elon Musk. Separately, Soros Fund Management LLC took a $35 million stake in the electric luxury carmaker by way of convertible bonds due March 2019, according to an SEC filing.

CARMAKERS

* Bayerische Motoren Werke AG or BMW Group aims to achieve a pretax profit "sustainably" over €10 billion in 2018, Reuters reported, quoting BMW CFO Nicolas Peter's comments to German business newspaper Handelsblatt. The luxury automaker reportedly expects to record operating margins of 8% to 10% in its core car business in the year, while pursuing an overall company goal of more than 10% in operating margin in future. Separately, BMW Group acquired permission to test self-driving cars in Shanghai and will have seven on city streets by December, Handelsblatt tweeted.

* China's Geely Automobile Holdings Ltd.-owned Volvo Cars said it will only produce mild petrol hybrids, plug-in petrol hybrids or battery electric vehicles beginning in 2019 as part of its strategy to move away from diesel-powered vehicles. Its S60 sedan, to be launched in the spring of 2018, will be Volvo Cars' first model without a diesel variant. CEO Håkan Samuelsson said Volvo has the funds to meet the challenges of electrification and self-driving cars regardless of whether the firm launches an IPO, Reuters reported.

* Senior managers and supervisory members of Porsche Automobil Holding SE's board can travel to the U.S. without facing prosecution in the wake of the country's indictment of Martin Winterkorn, the former CEO of Porsche-controlled Volkswagen AG, Reuters reported, citing Porsche's legal chief Manfred Doess at an annual shareholder meeting. Doess reportedly also denied any information about an international arrest warrant against the German sports car maker's chairman Wolfgang Porsche, who is additionally a member of VW's supervisory board.

ELECTRIC AND AUTONOMOUS VEHICLES

* Tesla Inc. CEO Elon Musk expects that the U.S. electric car maker will "quite likely" produce over 500 of its flagship Model 3 vehicles per day from the week of May 14, Electrek reported, quoting Musk in an internal email to employees. He also asked employees to point out "any specific bottlenecks" in the production line as Tesla seeks to roll out 6,000 Model 3s per week by the end of June, the report added. Meanwhile, the company will briefly halt production of the sedan at its Fremont, Calif., plant from May 26 to May 31 to augment its assembly line, Reuters reported, citing sources inside Tesla.

* Chinese investment firm Shenzhen Capital Group Co. Ltd., along with asset manager Wu Capital, led a $128 million series A funding round in Roadstar.ai, an autonomous driving start-up, China Money Network reported.

* Hyundai Motor Co.'s robotics arm Hyundai Cradle invested an undisclosed sum in California-based Metawave Corp. to tap into Metawave's automotive radar technology. Metawave's proprietary WARLORD radar features better imaging and artificial intelligence technologies for autonomous vehicles, Hyundai Motor said.

REGULATIONS AND SAFETY

* Mexico's chief trade negotiator told a television network that completing the necessary negotiations on a new North American Free Trade Agreement framework "isn't easy" and was unlikely to happen before a May 17 deadline that would need to be met for the United States Congress to vote on a new treaty before the end of 2018.

* German Chancellor Angela Merkel reiterated an assurance not to enforce on carmakers costly emission-control retrofits on their vehicles as such measures might make companies unable to invest in future technologies, Reuters reported.

* Toyota Motor Corp. recalled voluntarily 7,638 units, comprising its namesake cars and Lexus units, in Russia to correct a possible microchip defect related to an airbag problem, Reuters reported, citing the country's standards agency. The cars reportedly were sold from June 2015 to September 2016.

AUTO PARTS AND EQUIPMENT

* U.S. proxy advisory firm Institutional Shareholder Services Inc. recommended Hyundai Motor Group shareholders reject the South Korean conglomerate's proposed restructuring plan because of a "lack of compelling business justification" for "unaffiliated" unit Hyundai Mobis Co. Ltd's shareholders, Reuters reported. The deal would enable the controlling Hyundai family to retain firm control over group companies but its valuation "appears to be unfavorable for company shareholders," ISS reportedly wrote. ISS is the third entity to oppose the deal after Glass Lewis & Co. and Elliott Management Corp. Hyundai Motor said it looked at alternatives before deciding on the restructuring, which will generate "substantial value" for Hyundai Mobis' shareholders, Reuters added.

AUTOMOTIVE RETAIL

* Volkswagen AG's Czech carmaker Škoda Auto delivered an all-time high of 107,100 units in April, up 10.1% year over year from 97,300 vehicles it sold in April 2017, boosted by a 34% year-over-year rise in its largest market China and double-digit sales growth in Eastern Europe and Russia. Škoda's KODIAQ and KAROQ SUVs sold the highest in the month.

TRUCKS AND MOTORCYCLES

* Matthias Gruendler, CFO of Volkswagen's trucks and buses unit, which combines the MAN and Scania brands, has resigned from his position for personal reasons, Reuters reported, citing a company spokeswoman. Meanwhile, MAN forecast 2018 sales to be slightly higher than the €14.3 billion it recorded in 2017 and an operating profit for the year broadly at par with 2017's €566 million, Reuters reported, citing MAN CEO Joachim Drees at an annual shareholder meeting. Drees reportedly said the company's performance is "encouraging" but still "not satisfactory" as it targets a "higher level of efficiency" ahead of a planned IPO.

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The day ahead

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

In Asia, the Hang Seng fell 0.13% to 31,110.20, and the Nikkei 225 was down 0.44% to 22,717.23.

In Europe, as of midday, the FTSE 100 was up 0.13% to 7,732.64, and the Euronext 100 had fallen 0.09% to 1,070.51.

On the macro front

The MBA mortgage applications report, the Housing Starts report, the Industrial Production report, the Atlanta Fed's business inflation expectations survey and the EIA petroleum status report are due out today.

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