TPT May 2018

G LOBA L MARKE T P L AC E

Mr Blanco had better luck with Sam Abuelsamid, a Chicago- based senior analyst at Navigant Research (Chicago) where he leads the mobility research service of Navigant’s Transportation Efficiencies programme. Here, abbreviated and lightly edited, are Mr Abuelsamid’s views as to how Tesla, General Motors and Nissan are readying themselves for what he terms “a tax-abatement apocalypse”: • “Tesla ’s strategy is interesting and is at least partly driven by its precarious finances. A big part of the reason for the minimalist design of the M3 was to cut manufacturing and engineering costs. If Tesla wanted to get as many Model 3s as possible to mainstream customers, it would push out base cars in the $35,000-to-$40,000 range so those buyers could get the maximum tax credit. “Instead, it is delivering loaded cars to existing customers so the company can maximise its revenue right now. Those customers are more likely to tolerate the quality problems that baseline customers will not. Unfortunately, those customers will get a much smaller tax break as a result.” • “I suspect General Motors is doing everything it can right now – in collaboration with cell maker LG Chem – to drive cost out of the Bolt EV, especially the battery. GM already said it wants the cell cost below $100 per kilowatt hour by 2020. It will need to bring the price down to compensate for the loss of incentives next year. “I believe that this is part of its push for automated mobility services. GM can deploy zero-emission vehicles through these services, where there is less price sensitivity, helping to meet sales goals for its ZEVs . Expect GM to make a major push on its new full-size pickup trucks and SUVs (sport utility vehicles), to use the margins from those to help offset ZEV costs.” • “As for Nissan, it’s already taken a lot of cost out of the Leaf (largely a carryover platform) and it has a longer- range version coming along with more electric models. Like every other maker it is pushing SUVs hard, and I expect the company to keep pressing to grow sales of the Titan and Armada to boost its margins.” › Mr Blanco of Green Car Reports added a footnote: “We can already see this in the way Nissan has been promoting the second-generation Leaf, with a focus on its ProPilot Assist lane-centring technology and other features.” Elsewhere in automotive . . . › Toyota has said it will build the next generation of its Auris hatchback at its Burnaston plant in Derbyshire, UK, the BBC reported on 28 February. The Japanese carmaker, which in March 2017 pledged to invest $330mn in upgrading Burnaston for a new generation of cars, also said that its Deeside factory in North Wales would build most of its engines. The decision is expected to secure more than 3,000 jobs across the two plants. The BBC noted that several big carmakers have committed to building more cars in the UK since the Brexit vote in June 2016. That November, Nissan announced plans to build the next generation of Qashqai and X-Trail sports utility vehicles at its Sunderland factory, and BMW said it would assemble its electric Mini in Oxford. But Toyota – having already invested more than $3.4bn in Britain, far more than at any of its other European bases – leads the pack.

Cor por ate Amer ica Otherwise upbeat about the global economic outlook, leaders of midsize American businesses fret about finding skilled workers According to the results of a business outlook survey released in February by JPMorgan Chase, an important swathe of corporate America feels increasingly good about the strength of the world economy but shares a particular nagging fear. (“Survey: Business Confidence in Economy Soars While Concerns Over Skills Gap Grow,” The Hill, 21 February) The annual survey, conducted online 2-19 January, queried 1,685 executives in midsize businesses – defined by Chase as having $20mn to $500mn in yearly revenue. Some 69 per cent of respondents expressed confidence in the global economy, a 39-point increase over 2017. Roughly nine in ten of those polled (89 per cent) said they are optimistic about the US economy. In its first year, the government under President Donald Trump slashed the corporate tax rate from 35 per cent to 21 per cent. Among the midsize business executives responding to Chase, 17 per cent said they expected a major boost from this; 53 per cent predicted moderate benefits; and 21 per cent saw only minor gains ahead. The executives said their firms are most likely to use their tax savings to pay down debt (44 per cent); make capital investments (43 per cent); and raise wages (33 per cent). Twenty-two percent said they would hire more workers, while 24 per cent said their windfall would go toward shareholder dividends. As noted by Sylvan Lane of The Hill , a Washington- based monitor of congressional activity, coaxing US-based international companies to bring back earnings – and associated tax revenues – from overseas was a major goal of the tax bill. But only 12 per cent of the midsize executives said their businesses would repatriate their foreign earnings. Forty-nine per cent said they would keep money in their foreign offices or pay down foreign debt. › The economic confidence expressed by the Chase respondents generally was tempered by perceptions of a growing gap between the positions companies are looking to fill and the pool of skilled workers from which they can draw. Close to half of midsize business leaders surveyed (45 per cent) expressed concern about the limited supply of talented job applicants. The most common concerns expressed by the executives were the shortage of applicants (52 per cent) and the shortage of candidates with sufficient training or skills (50 per cent). › As to small businesses – defined by JPMorgan Chase as having $100,000 to $20mn in yearly revenue – their leaders disclosed no investment plans. But 65 per cent of the 955 respondents said they hoped to step up hiring and 56 per cent intend to raise workers’ wages. These percentages were unchanged from the 2017 survey.

Dorothy Fabian, Features Editor (USA)

55

www.read-tpt.com

MAY 2018