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US and European equity markets closed higher, while APAC closed
mixed. iTraxx and CDX indices closed tighter across IG/high yield,
and precious metals and oil were also higher on the day. In
addition to Q3 quarter-end on Wednesday, markets will be focused on
Friday's US nonfarm payroll report to gauge the pace of recovery in
US employment in the wake of the limited improvement in the weekly
jobless claims numbers.
Americas
US equity markets closed higher today; Russell 2000 +2.4%,
Nasdaq +1.9%, S&P 500 +1.6%, and DJIA +1.5%.
10yr US govt bonds closed flat/0.66% yield and 30yr bonds
closed +2bps/1.42% yield.
CDX-NAIG closed -2bps/58bps and CDX-NAHY series 35.1 began
trading today and closed at 404bps.
DXY US dollar index closed -0.4%/94.26.
Gold closed +0.9%/1,882 per ounce and silver +2.2%/$23.60 per
ounce.
The count of seated diners on the OpenTable platform last week
averaged about 42% below the year-earlier level, an improvement
over the prior week's average of 44% down. Meanwhile, requests for
driving directions on Apple Maps declined last week broadly in line
with seasonal norms. These data do not raise any new concerns about
internal mobility. However, gross movie receipts during the week
ending 24 September were 95% below the comparable week last year,
down from the prior week's year-on-year comparison of 90% down.
Activity at movie theaters has yet to gain traction. (IHS Markit
Economists Joel Prakken and Ben Herzon)
Crude oil closed +0.9%/$40.60 per barrel.
The below charts show the Jan 2019 - June 2020 monthly
investment value changes (estimated net value of buys/sells) by
fund investment style for US actively managed mutual funds that
report their holding monthly. The data is based on a static group
of over 2,000 mutual funds that reported holdings every month
during the period and totaled $2.9 trillion in AUM across all
equity holdings as of June 2020. The top chart shows the monthly
net change in investment value by fund style and the bottom chart
shows the cumulative change during the entire 18-month period. The
most notable trend was the sharp divestment of IOC's equity by
value funds starting in July 2019 and deep value in August 2019.
It's also worth noting that there was over $131 million of net
purchases into yield funds in March 2020 across the group of
funds.
In a press release, Devon Energy Corp. announced the signing of
an agreement to acquire WPX Energy Inc. in an all-stock transaction
valued at $6.34 billion. The transaction is expected to close in
the first quarter of 2021. Under the deal, WPX shareholders will
receive 0.5165 common shares of Devon for each WPX share. Based on
560.9 million WPX shares outstanding and Devon's closing price on
25 September 2020, the total equity offer value is $2.55 billion or
$4.55 per share. The offer price is a 2.5% premium to the 25
September closing price of WPX. The total transaction value
includes the assumption of WPX's 30 June 2020 working capital
surplus of $135 million and $3.92 billion of long-term debt and
liabilities. On closing, WPX shareholders will own approximately
43% of the combined company. Devon expects the synergies from the
merger to result in $575 million in annual cash flow improvements
by year-end 2021. The enlarged company is expected to hold 400,000
net acres in the Delaware Basin, which accounts for 60% of total
oil production. The remaining assets are located in the Anadarko
Basin, Williston Basin, Eagle Ford Shale and Powder River Basin.
Devon said the acquisition will drive immediate synergies and
enable them to accelerate free cash flow growth and return of
capital to the shareholders. In March 2020, WPX Energy completed
the acquisition of Delaware Basin focused Felix Energy II LLC in a
stock and cash transaction valued at $3.5 billion. WPX Energy is an
independent exploration and production company, focused in the
Permian and Williston basins. The company is based in Tulsa,
Oklahoma. (IHS Markit Upstream Companies and Transactions' Karan
Bhagani)
The below IHS Markit Price Viewer chart shows intraday prices
for the WPX Energy 5.250% 9/24/2024 bond issue increased as much as
9% at approximately 10:00am EST today on the merger
announcement:
The US Army Corps of Engineers (USACE) has reissued
water-crossing permits for the Mountain Valley Pipeline natural gas
project in Virginia and West Virginia two years after they were by
a federal appeals court. In 2018, a three-judge panel of the 4th
Circuit Court of Appeals count found that the USACE-issued permit
violated a West Virginia regulatory requirement that pipeline
stream crossings much be completed within 72 hours to limit
environmental impact. The US Forestry Service has also made a Draft
Supplement Environmental Impact Statement (DSEIS) for the pipeline
available for public comment. The DSEIS covers the siting of the
Mountain Valley Pipeline in the George Washington and Jefferson
National Forest. The DSEIS was prepared in the wake of a 2018 4th
Circuit Courts ruling that vacated the Bureau of Land Management's
Right of Way and Forest Service's Forest Plan amendment. The
Mountain Valley Pipeline is an under construction 490 kilometer
natural gas link between northwestern West Virginia to southern
Virginia in the eastern United States. (IHS Markit Upstream Costs
and Technology's Chris Alexander)
LyondellBasell (Houston, Texas) has issued its 2019
Sustainability Report, including plans to produce and market 2
million metric tons (MMt) of recycled and renewable-based polymers
annually by 2030. The company currently possesses 11.5 MMt/y of
polyolefins capacity. Other objectives highlighted by the report
include reducing carbon dioxide (CO2) emissions by 2030 to 15% of
the levels recorded in 2015; advancing workplace diversity,
inclusion, and equity initiatives; and working with American
Chemistry Council and Plastics Europe industry peers to ensure 100%
of plastic packaging is reused, recycled, or recovered by 2040.
"Our goals underscore what we see possible in the next decade, and
our sustainability ambitions require us to adapt our business
models," says Jim Seward, senior vice president/research and
development, technology, and sustainability. "When viewed through
the lens of technology and innovation, our track record
demonstrates our capacity to advance new collaborations and
partnerships for the benefit of society." Earlier this month,
LyondellBasell successfully started up a pilot chemical recycling
facility in Ferrara, Italy. The plant, which employs the company's
MoReTec technology, is capable of processing 5-10 kilograms/hour of
household plastic waste.
In a unique demonstration, electric vehicle (EV) startup Canoo
displayed its upcoming EV platform as a basic go-cart, driven by a
professional racing driver. Canoo produced a video demonstrating
the event. Canoo says its skateboard can support dual, front or
rear motor configurations, capable of up to 500 hp and more than
300 miles of range. The rear unit delivers a maximum of 300 hp and
450 Nm of torque, while Canoo says the front unit is designed to
deliver a maximum of 200 hp and 320 Nm of torque. When optimized
for urban driving environments, Canoo says the efficiency of the
motors is designed to peak at 97%. Canoo also describes its
steer-by-wire as the industry's first true steer-by-wire, and
inspired by racing cars, for a highly responsive experience and
versatility in the company's future line-up. Canoo notes that
without any mechanical connection, it is "able to demonstrate for
the first time how the steering wheel can be moved to suit any
cabin design or driver positioning. This versatility is well suited
to accommodate full autonomy once commercially available, as well
as for right hand drive and Canoo's future delivery vehicles." The
demonstration was clever for helping to show how flat the
skateboard is and its power and configuration versatility, although
so far, Canoo has indicated plans for its vehicles to serve
transport and goods delivery. While Canoo demonstrated the
skateboard, it did not provide an update on timing for vehicle
production, from previous plans for 2021. Of interest is the
demonstration's focus on dynamic performance and high horsepower
ratings; for the environment the first Canoos are expected to play,
speed is less important than range. However, the specifications
speak to the wide range of configurations possible and the
capability that Canoo has harnessed. (IHS Markit AutoIntelligence's
Stephanie Brinley)
Spot block cheese settled slightly lower at USD2.5550 per
pound, down USD0.0725 from last Friday, and barrels settled at
USD1.6600, up USD0.0250 compared with last week. The spread between
the block/barrel market narrowed to USD0.8950 per pound compared
with last week on six trades total. Cheese cold storage numbers
were neutral to bearish for cheese prices. Stocks did not draw down
much during August compared to normal, despite a falling pricing
environment. USDA estimated total cheese in cold storage at the end
of August was 1,378 million pounds, down 13 million pounds from
July, but up 14 million pounds (or 1%) from a year ago. The
five-year average seasonal cheese cold storage drawdown between
July and August is 23 million pounds. American style cheese
inventory rose five million pounds during the month to 790 million
pounds, up 23 million pounds from a year ago. Midwest cheesemakers
are finding milk supplies plentiful and running plants near full
capacity. Some plants are doing seasonal maintenance. Most cheese
plants are just working through contractual milk supplies but
finding extra spot milk loads near class prices is obtainable. The
extreme level of the block/barrel cheese price spread is creating
nervousness about the sustainability of the rally in the block
market. Inverted cheese/class III futures are problematic for
cheese makers holding on to unpriced inventory. Western cheese
plants are running strong but are cognizant of the inverted futures
market when making decisions. Demand has been more uneven in the
Western US because of weakness in food service. Retail remains
mostly strong and export has been hit or miss depending on how US
prices stack up against global markets. The current US block price
near USD2.60 is starting to choke off price sensitive export
business to global markets. US block prices will likely fall soon
in order to get competitive again with world markets. US milk
production trends remain bearish and domestic demand should be
levelling off heading into the fourth quarter. IHS Markit forecasts
barrel prices to hit USD1.50 per pound and blocks USD1.75 per pound
by first quarter 2021. (IHS Markit Food and Agricultural
Commodities' Jana Sutenko)
Honduras's monthly economic activity index remained low in
July, even as sectors such as manufacturing, construction, and
hospitality began to reactivate slowly, signalling a sluggish
recovery through 2020. (IHS Markit Economist Lindsay Jagla)
In July, the monthly index of economic activity (IMAE) grew by
only 2.2% month on month (m/m), according to the Central Bank of
Honduras (Banco Central de Honduras), resulting in an overall 12.3%
year-on-year (y/y) contraction of the IMAE.
Most sectors hit lows in April and May, and have begun a
gradual m/m recovery, including manufacturing (+24.7% in July),
construction (+9.8%), and hotels and restaurants (+6.7%). However,
these sectors have been the hardest hit by the economic shutdown
and remain well below pre-coronavirus disease 2019 (COVID-19)
levels.
Compared with Costa Rica, Guatemala, and El Salvador,
Honduras's IMAE experienced the largest contraction up to
June.
The government's slow rollout of its economic reopening plan
and the continued enforcement of curfew and quarantine measures
have had a significant impact on the country's IMAE. The first
phase of Honduras's economic reopening plan began at the end of
July and the second phase is set to begin on 28 September.
As firms scale up their operations further and more quarantine
measures are lifted for citizens, IHS Markit assesses that there
are likely to be increased upticks in economic activity in the
second half of the year. The IMAE signals the direction of the
country's GDP growth and although the second-quarter GDP data have
not yet been published, we expect a significant contraction
followed by gradual quarter-on-quarter improvements through 2020,
in line with the higher frequency IMAE data.
Overall, based on significant contractions in economic
activity, we are likely to revise down our GDP forecast for
Honduras, resulting in an overall decline close to double digits in
2020.
Europe/Middle East/Africa
European equity markets closed sharply higher; Germany +3.2%,
Italy/Spain +2.5%, France +2.4%, and UK +1.5%.
10yr European govt bonds closed mixed; Italy -2bps,
France/Spain/Germany flat, and UK +1bp.
iTraxx-Europe closed -2bps/59bps and iTraxx-Xover
-18bps/344bps.
Brent crude closed +1.1%/$42.87 per barrel.
Siemens AG has spun off 55% of Siemens Energy AG to Siemens'
shareholders and thereby made the corresponding number of shares
available for free-float ownership. A further 9.9% were transferred
to Siemens Pension-Trust e.V. Siemens AG intends to further reduce
its direct stake of 35.1% in Siemens Energy significantly within 12
to 18 months. Going forward, the independent Siemens companies
Siemens AG, Siemens Healthineers AG, and Siemens Energy AG will
work together within an ecosystem of common interests. Each company
will focus on the priorities and characteristics of their specific
businesses and industries. With some 240,000 employees, Siemens AG
will primarily concentrate on technologies in digital
transformation, in smart infrastructure and in sustainable
transportation. Siemens Energy will locate its Corporate Center in
Berlin, returning to its roots, where Werner von Siemens and Johann
Georg Halske founded their company in Berlin in 1847 and with the
discovery of the electrodynamic principle in 1866 laid a foundation
for Siemens Group and today's Siemens Energy. Berlin is one of
Siemens Energy's largest locations worldwide. The decision, as to
which of its Berlin locations will serve as headquarters, remains
open and a more detailed concept will be developed in the coming
months. The establishment of the Corporate Center will begin during
the next fiscal year (1 October 2020 to 30 September 2021). The
CEO, CFO, and a few teams, will initially move into their offices
in Berlin. Siemens Energy's administrative headquarters will remain
in Munich, Germany, where the company is listed on the Commercial
Register. The company's decentralized approach will remain valid
after the end of the Covid-19 pandemic. The energy technology
company employs 91,000 employees worldwide and generated revenue of
EUR29 billion (USD32 billion) in 2019. (IHS Markit Upstream Costs
and Technology's Kamila Langklep)
After earlier saying it would drop the battery cell and battery
pack production from its Germany plans, reports indicate that Tesla
has revised that decision. Reuters reports that Tesla indicated on
24 September that it still intends to build batteries and packs at
the facility, though it will have to start a new approval process,
and no timeline for the application was indicated. Reuters says
that the Ministry for Agriculture, Environment and Climate
Protection in the state of Brandenberg, where the facility is
located, is expected to approve factory plans by the end of 2020.
Environmentalists and local residents have expressed objections to
the new factory, in part on water usage concerns. Tesla's Berlin
plant will build the Model 3 and Model Y for the European market,
as Tesla's CEO Elon Musk has recently been advocating that it is
more efficient and profitable to build a vehicle as close to where
you are going to sell it as possible. The company had reportedly
pulled back on planning to produce batteries at the location in
July. At Tesla's recent battery day, Musk indicated that the
company is planning to supply as much as 20 million EVs globally,
though did not indicate a timeframe for such a target. (IHS Markit
AutoIntelligence's Stephanie Brinley)
Volkswagen (VW) has partnered with Uber to launch a pilot
project with electric vehicles (EVs) in Berlin (Germany). This
partnership will allow Uber car rental partners to use Volkswagen's
e-Golf cars for a sustainable ride with "Uber Green". The objective
of the pilot project is to use up to 100 pre-owned e-Golf cars that
are more than a year old to achieve zero-emission transport
service. Holger B. Santel, head of sales and marketing in Germany
for the VW Passenger Car brand, said, "Through our cooperation with
Uber, we are helping improve air quality in urban areas with our
locally carbon-neutral electric vehicles. In addition, with the
demanding continuous operation of battery-electric vehicles in a
ride hailing service, we will gain valuable experience which we
will be able to use for future vehicles." The VW brand plans to
offer EVs in all major segments by 2022 and expects to produce 1.5
million of these cars in 2025. To attain this, VW plans to invest
EUR33 billion (USD38 billion) group-wide by 2024. VW has also been
using the e-Golf cars for its all-electric free-floating
car-sharing service WeShare. Uber has announced a target of 2040
for 100% of its ride-hailing fleet globally to be zero-emission
vehicles. By 2030, the company has set a goal of converting all its
cars to EVs in the United States, Canada, and Europe. To achieve
this, the company has partnered with General Motors (GM) and
Renault-Nissan, and has also earmarked USD800 million on programs
to help drivers switch to EVs. (IHS Markit Automotive Mobility's
Surabhi Rajpal)
UK-headquartered private equity investment company Permira has
announced that a company backed by its funds has made an agreement
to acquire German generics manufacturer Neuraxpharm from funds
advised by another UK-based private equity investment group, Apax
Partners. No financial details of the transaction were made
available. Neuraxpharm specialises in drugs used in the treatment
of disorders of the central nervous system (CNS). Permira has
stated in a press release that its funds will support Neuraxpharm's
goals of becoming "the leading CNS-focused specialty pharmaceutical
platform in Europe" and will back the company's successful
"buy-and-build strategy". The closing of the acquisition is subject
to customary regulatory conditions and is expected in the final
quarter of 2020. Neuraxpharm has annual sales revenues of about
EUR450 million (USD523 million) and employs 850 people; it is one
of the major players on the European market for CNS medicines. In
recent years, Neuraxpharm has been active in acquisitions, building
its presence in the central European region, as well as launching
sales on the UK market. (IHS Markit Life Sciences' Brendan
Melck)
Launch of new vegan ice cream products doubled in the last five
years as UK consumers find vegan products more appealing. According
to a research published by Mintel, launches of vegan ice cream
accounted for 7% of all new products entering the market within the
category in the last 12 months (2019/20), more than double the 3%
of five years ago (2015/16). The focus on the texture of
plant-based ice cream is increasing, with products containing nuts,
cookie pieces, toffee pieces and cookie dough chunks surging from
2% to 13% over the last four years (2016/17-2019/20). This trend is
likely to appeal to the 73% of UK ice cream consumers who said that
they like ice cream with different textures. Chocolate (accounting
for 26% of innovation over the last 12 months), vanilla (11%) and
coconut (9%) remains the most popular in terms of plant-based
flavour innovation. The ice-cream is expected to incorporate new
ingredients such as quinoa or other seeds, while oat might be
included in an increasing number of products' recipes following its
popularity in plant-based drinks. About 12% of UK adults agree that
the coronavirus outbreak has made a vegan diet more appealing,
nearly doubling among under-25s (23%). This is partially due to the
fact that protein has gained importance among consumers. The share
of new food products featuring high/added protein claims has
doubled from 2% to 4%. Meanwhile, high/added protein ice cream
claims have increased from under 1% of ice creams to over 2% in the
last four years and about 16% of Britons said that they would eat
more ice cream if it had added protein. From a global point of
view, Japan is one of the largest innovators for ice cream as for
other products. In 2015/16 Japan accounted for 7% of launches
globally, but since then its innovation has been coming thick and
fast and Japan is now responsible for a one in 10 (10%) of product
launches, overtaking the US to become the world leader in ice cream
innovation. The US now accounts for 9% of new products launched,
slipping back from its number one position. With a 6% share of
global ice cream innovation, Germany is Europe's number one ice
cream innovator and third in terms of global innovation. Meanwhile,
the UK has a 4% share. (IHS Markit Food and Agricultural
Commodities' Cristina Nanni)
A 5G-based autonomous electric mini-bus trial has been launched
in Stockholm (Sweden) as part of a two-week pilot project. The
project, called 5G Ride, is led by Urban ICT Arena, Keolis, Telia,
Ericsson, Intel, and T-Engineering. The bus will carry passengers
along the 1.6 km route on the island of Djurgården, stopping at the
Biological Museum and Rosendal Castle. The service will operate
with limited passengers owing to the COVID-19 virus pandemic and
will also follow other precautions and guidelines. A safety driver
will also be present in the bus to take control in case of an
emergency. The project aims to demonstrate how 5G technology can
improve public transport. 5G technology provides high-speed data
transfer, low latency, and reliability so that the vehicle can
respond to the centralized control tower's commands in real time.
For the project, Telia is providing 5G connectivity in
collaboration with Ericsson and Intel is providing analytics and
processing technology across the network. The autonomous bus is
provided by T-Engineering and is operated by Keolis. The initial
tests will be followed by further trials in 2021, with the
companies aiming to "pave the way towards making 5G-enabled
electric driverless public transport services a reality". (IHS
Markit Automotive Mobility's Surabhi Rajpal)
Moody's downgraded Kuwait on 22 September, following a
downgrade review period initiated in March. The key rationale is
the likely short-term depletion of the General Reserve Fund (GRF)
before the end of the 2020 fiscal year ending March 2021. (IHS
Markit Sovereign Risk's Ana Melica)
Parliament recently ended the mandatory transfer of 10% of
revenue to the Future Generations Fund (FGF) and reversed last
year's transfer, but Moody's points out that this will only extend
the availability of GRF funds until December 2020.
A key risk would be a lack of liquid funds when Kuwait's
Eurobond tranche of USD3.5 billion matures in March 2022.
Meanwhile, parliament rejected the draft debt law in August, so
the government remains unable to borrow since 2017. Even if
Kuwait's Emir passes the debt law by emergency decree after the
National Assembly concludes its session at the end of September but
before the election in November, Moody's estimates that the law's
KWD20-billion (USD65 billion) debt ceiling will be reached in less
than two years.
Even with an unlimited debt ceiling, Moody's estimates that the
government would need to issue KWD27.6 billion (USD90 billion) from
fiscal years 2020 to 2023 to fund its deficits, and it is unlikely
that it would be able to borrow such a large amount. This would
raise sovereign debt from 12% of GDP in 2019 to around 70% of
GDP.
This is based on Moody's expectation of huge fiscal deficits of
KWD13.7 billion (38% of GDP) this fiscal year and KWD10.6 billion
(26% of GDP) next year, largely a result of continued current
expenditure growth in recent years, primarily on salaries, as the
government is a primary employer. Weak private-sector development
and a growing and youthful population have given the government few
alternatives, as it is trying to prevent a rise in unemployment
that could lead to social unrest
Moody's expects that a positive rating action could result from
improved governance and policy responses, leading to fiscal
consolidation and diversification over the longer term that reduces
the reliance on oil. A negative rating action could result from
increased liquidity risk, particularly if there is material risk of
non-payment as the Eurobond redemption date approaches. Over the
medium term, a downgrade could occur if there is a sharp rise in
sovereign debt because of a lack of fiscal consolidation and low
oil prices.
Niger's Ministry of Finance presented on 19 September a report
on the context of the drawing up of the 2021 budget, as well as
recent development of the national economy, highlighting that
significant external risks are expected to burden public finances
next year. (IHS Markit Economist Alisa Strobel)
The finance ministry states that, during 2011-20, the budget
allocation to defense and security represented on average 17% of
budgetary resources, against the government's forecast of 10%.
Regional security challenges are set to continue to build pressure
on government expenditure in tandem with ongoing pressure on
finances stemming from tackling the COVID-19 virus outbreak and
dealing with weather-related hazards, in particular floods.
In terms of public finances, good performances were recorded
between 2017 and 2019, despite the unfavorable security context in
the region. The budget deficit, including grants, fell from 4.1% of
GDP in 2017 to 3.0% in 2018 and 3.6% in 2019. However, the
government raises concern that the COVID-19 crisis will have a
severe impact by causing a deterioration of the budget deficit,
such as through a loss of tax revenue and an increase in public
expenses, which will stretch into 2021.
The budget framework for the 2021 fiscal year assumes GDP
growth of 8.1% and a projected inflation rate of 2.0%, with the
2021 general state budget resources projected at XOF2,644.53
billion (USD4.68 billion) in 2021, against XOF2,422.33 billion in
the first collective budget for 2020, an increase of 9.17%.
State revenue losses are expected to remain high, yet lower
than during the start of the crisis, and are estimated at XOF199
billion, compared with the government's forecasts initials of
XOF997 billion, including XOF117.6 billion under the General
Directorate of Taxes, XOF78.4 billion for the General Directorate
of Customs, and XOF3 billion non-tax revenue. Spending in fiscal
year 2020 will increase by XOF86.1 billion, predominately because
of the implementation of the response plan to the COVID-19
pandemic.
Asia-Pacific
APAC equity markets closed mixed; India +1.6%, Japan/South
Korea +1.3%, Hong Kong +1.0%, Mainland China -0.1%, and Australia
-0.2%.
Chinese electric vehicle (EV) start-up NIO has rolled out a new
function to its NIO Pilot system. The Navigate on Pilot (NOP) will
enable NIO vehicles to perform certain functions, such as auto-land
changing, automatically on designated routes covered by
high-resolution mapping. The automaker said the NOP is China's
first commercial application of driver assistance technology
enabled by high-resolution mapping. NIO also announced its Power Up
Plan centered on expanding its charging facilities across China.
The company said that its target is to build 30,000 fast charging
piles at hotel resorts, tourist attractions, and commercial
locations. The aim of NIO's Power Up Plan is to lead to the
expansion of its charging network to cover 30,000 25-kW chargers in
China. According to its plan, the project will not be financed
solely by NIO, instead, it will team up with interested partners
who are willing to share charging resources with NIO over the next
three years through a subsidy program. NIO said that by the end of
September its vehicle owners will have access to 430 NIO authorized
charging piles across China. These charging piles, which are
operated jointly by NIO and its business partners, provide services
to all EVs, not just NIO models. (IHS Markit AutoIntelligence's
Abby Chun Tu)
Chinese electric vehicle (EV) start-up Xpeng will start
building a new manufacturing plant in Guangzhou (China) with CNY4
billion (USD587 million) in financing from the local government,
reports Reuters. The new plant is expected to have an annual
capacity of 100,000 vehicles. According to local media reports, the
funds will be provided by an investment company backed by Guangzhou
Development District. The investment will be used for the
development of Xpeng's new vehicles and the construction of a new
manufacturing plant in the city. Xpeng currently produces its G3
sport utility vehicle (SUV) in Zhengzhou under manufacturing
contract with Haima Auto. Production of Xpeng's second model, the
P7 sedan, has already started at its own plant in Zhaoqing,
Guangdong province. The two plants already have a combined capacity
of 250,000 units per annum. (IHS Markit AutoIntelligence's Abby
Chun Tu)
Turing Drive in partnership with the government of Taipei
(Taiwan) is conducting a midnight trial of an autonomous bus
service on the Xinyi bus lane. Taipei residents can participate in
the final stage of this service by registering for one of the six
road sections ranging from 1 to 1.7 kilometers. The trial service
will be available from 12.30 am to 2.00 am every day expect
Thursdays and the bus will accept 15 passengers, reports the Taipei
Times. Taiwan's government plans to promote the autonomous vehicle
(AV) industry and in 2019 unveiled a test field for AVs. In 2019,
the Automotive Research & Testing Center (ARTC) unveiled
Taiwan's first electric minibus, the WinBus, with Level 4
autonomous driving capabilities. LILEE Systems has launched a
commercial autonomous bus service in Tainan (Taiwan) as part of the
city's two-year smart transport development plan. In 2018, Acer and
Yulon Motor unveiled a co-developed autonomous concept car at the
Technology Innovation Summit 2018 in Taiwan. (IHS Markit Automotive
Mobility's Surabhi Rajpal)
Hyundai has shipped four fuel-cell electric vehicles (FCEVs),
two Nexo FCEVs and two Elexity FCEV buses, to Saudi Arabia, reports
Newswire. These vehicles will be delivered to Saudi Aramco, a
global comprehensive energy and chemical company in Saudi Arabia.
In June 2019, Hyundai signed a memorandum of understanding (MOU)
with Saudi Aramco for the comprehensive development of hydrogen as
energy. The MOU provides a framework to accelerate the expansion of
a hydrogen ecosystem in South Korea and Saudi Arabia, which
includes the installation of hydrogen refueling stations. The two
parties will also explore the use of advanced non-metallic
materials in various fields including the automotive industry. The
FCEVs supplied this time will be used for demonstration projects
such as pilot operations. Hyundai is one of the few automakers that
already has a successful fuel-cell offering in the market: it
launched the Tucson FCEV in 2013, one of the first mass-produced
FCEVs globally, followed by the next-generation Nexo FCEV in 2018.
It also has fuel-cell commercial vehicles in its line-up. Hyundai
has begun fostering the growth of fuel-cell and other related
industries around the world as part of its 'FCEV Vision 2030'. It
has announced plans to invest KRW7.6 trillion (USD6.4 billion) in
FCEV production facilities and related research and development
activities by 2030. (IHS Markit AutoIntelligence's Jamal Amir)
Indian policy think-tank NITI Aayog has drafted a proposal to
offer USD4.6 billion in incentives to companies setting up advanced
battery manufacturing facilities, reports Reuters. The
recommendation includes incentives of USD4.6 billion by 2030,
starting with cash and infrastructure incentives of INR9 billion
(USD122 million) in the next financial year, which will then be
gradually increased annually. The proposal is likely to be reviewed
by the central government in the coming weeks, said an unnamed
senior government official with knowledge of the matter. The local
manufacturing of batteries, which constitute around one-third of
the total cost of an electric vehicle (EV), will help trim the cost
of EVs to affordable levels in India, thereby boosting demand.
Sales of EVs are yet to pick up in India owing to a lack of
charging infrastructure and higher costs. The latest proposal by
NITI Aayog is aimed at providing a thrust to EVs, reducing the
country's oil dependence, and reducing pollution. The draft
proposal cited that India's annual domestic demand for battery
storage and market size are currently less than 50 GWh and worth
just over USD2 billion. However, these could grow to 230 GWh and
more than USD14 billion in 10 years' time. The Indian government
has been working to introduce programs to leverage the country's
size and scale to develop a competitive domestic manufacturing
ecosystem for electric mobility. In 2019, the Indian government
approved the setting up of a new program, called the National
Mission on Transformative Mobility and Battery Storage, to promote
the manufacturing of EV components and batteries in the country
(see India: 8 March 2019: Indian government approves new program to
promote manufacturing of EV components, batteries). The program
includes the creation of a phased manufacturing program (PMP) valid
for five years until 2024 to support the setting up of a few
large-scale, export-competitive integrated battery and
cell-manufacturing 'Giga plants' in India, and the localization of
production across the entire EV value chain. The PMP will be
finalized by the new program. (IHS Markit AutoIntelligence's Isha
Sharma)
Posted 28 September 2020 by Chris Fenske, Head of Fixed Income Research, Americas, IHS Markit
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