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Tesla to cut 7% of workforce; Ghosn faces new allegations, Renault exit

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Tesla to cut 7% of workforce; Ghosn faces new allegations, Renault exit


* Tesla Inc. said it will cut its workforce by 7% as it prepares to ramp up its Model 3 production, adding that its headcount grew by 30% in 2018, which is more than it can support. In an email to employees, Tesla CEO Elon Musk said preliminary, unaudited results indicate Tesla made less GAAP profit in the fourth quarter of 2018, compared with the third quarter, which was also the company's first profitable quarter. For the first quarter of the year, Musk hoped that shipment of higher priced Model 3 variants to Europe and Asia may allow the electric-car maker a tiny profit.

* Nissan Motor Co. Ltd. and Mitsubishi Motors Corp. added to the list of allegations of financial misconduct against their former Chairman Carlos Ghosn amid strong indications that the embattled executive is likely to be pushed out of Renault SA as well. Nissan and Mitsubishi Motors said a joint investigation revealed that Ghosn received a salary and other payments from the companies' Netherlands-based joint venture totaling €7.8 million without the approval of its board. Separately, Ghosn's lawyers requested bail for the auto executive a second time, The Japan Times reported.


* As expected, Bayerische Motoren Werke AG will increase its stake to 75% from 50% in its joint venture BMW Brilliance Automotive Ltd. with Brilliance China Automotive Holdings Ltd., paving the way for other carmakers to boost stake in Chinese joint ventures. The transaction, which was approved by Brilliance's shareholders, will extend the JV's term to 2040 from 2028. The deal, which is subject to the approval of the relevant authorities, is expected to close by 2022 at the latest.

* Nissan is set to cut up to 700 contracted staff at a U.S. production facility in response to declining van and truck sales, Reuters reported, citing a spokesman for the Japanese carmaker. The targeted assembly plant in Canton, Miss., manufactures vans and Frontier and Titan pickup trucks. Nissan said van production shifts there would be reduced to one from two, while those for the Frontier and Titan would drop to two shifts from three.

* Workers at Audi AG's plant in Gyor, Hungary, will stage a two-hour warning strike on Jan. 18 to protest the wage gap between their salaries and those of Western and regional peers, Reuters reported, citing the workers union. The Audi Hungaria Independent Union rejected the German carmaker's offer to raise wages by 10% in 2019 and another 10% in 2020, and is instead seeking an immediate 18% salary increase, the report said.


* Hyundai Motor Group will invest 70 billion Indian rupees, or nearly $1 billion, to jumpstart its electric car operations in India, The Economic Times (India) reported, citing government officials. The Hyundai Motor Co. parent will use the investment to expand its plant in Chennai and provide EV incentive packages. The investment is also expected to create 1,500 jobs and is expected to be finalized in the week of Jan. 21. Separately, Maruti Suzuki India Ltd.-parent Suzuki Motor Corp. said it will open two more plants in India's Gujarat state, increasing its capacity to 750,000 units by 2020, the news agency reported, citing Suzuki President Toshihiro Suzuki. The executive added that the company will introduce electric vehicles in India by 2020.


* The Trump administration may be willing to dial back or even completely remove its heavy tariffs on China as the two countries work toward a trade deal ahead of a looming March 1 deadline, The Wall Street Journal reported. If a deal is not reached by March 1, the U.S. is poised to raise the 10% tariff on $200 billion of Chinese goods, including automobiles, to 25% on March 2. A Treasury spokesperson working with the trade team said officials have not made any recommendations to date.

* A no-deal Brexit could cost Germany's auto industry €3 billion since cars and auto parts comprise about 30% of Germany's exports to the U.K., Handelsblatt reported, citing the Association of European Carmakers. About 1,100 European trucks bring just-in-time components and systems into the U.K. daily, the report added.

* Four senior officials at German carmaker Audi AG were indicted in the U.S. District Court for the Eastern District of Michigan over their alleged involvement in the company's emissions test cheating. Richard Bauer, Axel Eiser, Stefan Knirsch and Carsten Nagel were charged with conspiracy to defraud the U.S., to commit wire fraud and to violate the Clean Air Act. The charges relate to the "dieselgate" scandal involving Audi parent Volkswagen AG, which has since admitted to cheating emissions standards by installing defeat devices and paid several billion dollars in fines.


* Renault Group sold 3,884,295 vehicles in 2018, up 3.2% from 2017. Excluding the Jinbei and Huasong brands, which were included in the company since Jan. 1, 2018, the French carmaker sold 3,718,692 automobiles, down 1.2% from the year before. Of vehicles sold, over 49,600 were electrified, up 36.1% from 2017. Sales of Renault branded vehicles dropped 5.2% to 2,532,567. In 2019, Renault is aiming for a slight increase in sales, with growth in the second half due to the launch of new international models and New Clio, the carmaker's flagship model in Europe.

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The day ahead

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

In Asia, the Hang Seng increased 1.25% to 27,090.81, and the Nikkei 225 rose 1.29% to 20,666.07.

In Europe, around midday, the FTSE 100 was up 1.40% to 6,930.93, and the Euronext 100 was up 1.52% to 949.88.

On the macro front

The industrial production report, the consumer sentiment report and the Baker-Hughes Rig Count report 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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