Volkswagen Fails To Compete

It’s been a rough year for automakers, which continued today with Germany’s Volkswagen. 😨

The automobile company owns several brands, including Porsche, Audi, and its original brand, Volkswagen. However, the company’s CEO told staff at an internal meeting that its original brand is “no longer competitive” and that cuts are coming.

Like others in the industry, the parent company VW Group has been working to improve the financial performance of the Volkswagen brand to help fund its shift toward electric vehicles. Although the VW brand had the highest sales volumes, its operating profit margins remain well below its other mass-market brands. đŸ”ģ

CEO Thomas Schaefer said, “With many of our pre-existing structures, processes, and high costs, we are no longer competitive as the Volkswagen brand.”

VW Group hopes to raise the VW brand’s return on sales (ROS) from last year’s 3.6% to 6.5% by 2026, primarily driven by cost-cutting and better differentiation in the marketplace. The company will look to take advantage of its workforce’s “demographic curve,” using early or partial retirement agreements to trim its bloated staff levels. đŸ”ē

Overall, the VW Group is looking to implement a nearly $11 billion savings program, which will have to include broad measures beyond headcount cuts. And it certainly needs to figure it out soon if it’s going to sustain the necessary support for its electric-vehicle push.

Its U.S.-listed ADR is trading back at more than 13-year lows as investors await executives’ plan to balance profitability and an electric-vehicle transition. 📉

Additionally, shares of Albermarle, the largest U.S. provider of lithium for electric vehicle batteries, fell another 6% today. The Global X Lithium and Battery Tech ETF ($LIT) continues its precipitous decline as consumers move away from electric vehicles, causing its inventories to climb far more than anticipated. đŸĒĢ

If the transition to electric vehicles wasn’t already difficult enough for traditional automakers, increased labor costs and lower consumer affordability have put additional pressure on all of the industry’s players. 🙃

Japan’s Nippon Takes Over U.S. Steel

After months of bidding, U.S. Steel finally has a buyer. However, the auction’s winner has some parties concerned. 🤔

Japan’s Nippon Steel emerged as the top bidder for the 122-year-old steelmaker, beating out offers from Cleveland-Cliffs, ArcelorMittal, and Nucor. Its $55 per share price represents a 142% premium to where $X shares were trading before Cleveland-Cliffs’ $35-per-share offer kicked off the bidding war.

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A Chip Off The Holiday News Flow

It’s a slow week in the market, but as usual, there’s some news out of the semiconductor space. Let’s take a look. 👀

First up is Israel granting Intel $3.2 billion to support the company’s biggest investment in the country. Intel will not only build a $25 billion factory that creates thousands of jobs but will also buy $16.6 billion in goods and services from Israeli suppliers over the next decade. It is anticipated that the plant will open in 2028 and operate through at least 2035. 🏭

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Tesla Unveils Its Cybertruck

Elon Musk has been in the news quite a bit recently. But today, he was back in the headlines for better reasons, delivering the company’s first Cybertrucks at its Austin headquarters. đŸ›ģ

The live event comes after roughly four years of delays and missteps. In it, Musk touted the truck’s towing abilities, bulletproof doors, and straight-line speed, with the event ending with several customers taking delivery of their vehicles.

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Pfizer’s Flop Continues

It’s been a rough ride for pharmaceutical giant Pfizer since the end of the pandemic, and that rollercoaster ride continues today. đŸŽĸ

The company last announced earnings in October but needed to update Wall Street on its 2024 forecast. It cited weak demand for its Covid products as the reason for a weaker-than-anticipated revenue and earnings forecast.

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