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As Europe battles an ‘onslaught’ of China EVs, one CEO has a plan

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A Renault Espace E-Tech full Hybrid (L) and a Megane E-Tech 100% Electric EV (C) are displayed during the Geneva Motor Show 2024 at Palexpo on Feb. 26, 2024 in Geneva, Switzerland. 

John Keeble | Getty Images News | Getty Images

Renault’s chief executive on Tuesday said that European policymakers should take inspiration from China as they look to boost the region’s automotive industry in an increasingly tough landscape.

In a report signed by Renault Group CEO Luca de Meo, the auto industry was described as a “pillar of the European economy” that was “facing an onslaught of electric vehicles from China.”

It comes after numerous auto firms — both within and outside of Europe — said that competition from China was among the biggest challenges to their business outlook.

The French automaker argued that Europe’s auto sector was suffering from an “imbalance in competition.” It cited the tax credits granted for green manufacturing projects in the U.S. Inflation Reduction Act, and the hefty subsidies reportedly being given to domestic manufacturers by the Chinese government.

EU should reach decision in China EV anti-subsidy probe within a year: Dombrovskis

Europe also faces significantly higher energy costs than both markets, the report said, and 40% higher wage costs than China.

The European Commission, meanwhile, is set to introduce up to 10 new regulations each year between now and 2030, placing businesses “at a huge disadvantage” as they struggle to meet new deadlines, it said.

‘Team sport’

As it looks to address these issues, Renault suggested that Europe take note of how China has supported its own auto industry and proposed a range of policies.

European Union politicians need to develop a new industrial strategy for the region and “deploy a regulatory framework with a stable base but open-ended content, on the same lines as the Chinese model,” the report said. It called for the creation of a body to assess the impact of auto industry regulations.

It also suggested the establishment of “green economic zones” which receive subsidies and tax breaks, inspired by China’s “special economic zones.”

Describing the energy transition as a “team sport,” the report said the EU should oversee a deal between the private and public sectors to shore up funding for electric vehicle development on a “European level.”

A BYD Co. Seal electric sedan during the media day for the Munich Motor Show (IAA) in Munich, Germany, on Monday, Sept. 4, 2023.

Chinese EVs are now seen posing a ‘real threat’ to Europe’s auto industry

“Under pressure from financial markets, European manufacturers are often forced to focus on short-term profits rather than making the investments necessary for the long term, with no guarantee of a return. China has solved the problem by consolidating all its forces, including financial institutions, around a single goal,” it said.

In another reference to China, Renault called for a renewed focus on the development of smart autonomous vehicles, taking inspiration from the country’s setting of common standards in the field. This could see manufacturers share roughly 70% of the technical content of such cars.

“The smart connected vehicles developed in this way will be virtuous in three ways: smoother traffic flows, lower energy consumption and fewer deaths on the road,” it said.

‘Growing signs of weakness’

Renault’s report notes that the automotive sector is of significant economic importance for Europe, accounting for 8% of total gross domestic product, employing 13 million people and boasting a trade surplus of 102 billion euros [$110.80 billion] with the rest of the world.

“At the same time, the automotive industry is a huge source of revenue for government, generating 392 billion [euros] and over 20% of tax revenue within the European Union,” the report said. “Nevertheless we are seeing growing signs of weakness that could be a cause for real concern if nothing is done.”

China EV stocks pressured amid price war fears

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United Airlines (UAL) 1Q 2024 earnings

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A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport.

Justin Sullivan | Getty Images

United Airlines on Tuesday cut its aircraft-delivery expectations for the year as it grapples with delays from Boeing, the latest airline to face growth challenges because of the plane-maker’s safety crisis.

United expects to receive just 61 new narrow-body planes this year, down from 101 it said it had expected at the beginning of the year and contracts for as many as 183 planes in 2024.

“We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,” CEO Scott Kirby said in an earnings release. “And, we’ll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”

United said it plans to lease 35 Airbus A321neos in 2026 and 2027, turning to Boeing’s rival for new planes as the U.S. manufacturer faces caps on its production and increased federal scrutiny. In January, United said it was taking Boeing’s not-yet-certified Max 10 out of its fleet plan. The airline said it has converted some Max 10 planes for Max 9s.

It lowered its annual capital expenditure estimate to $6.5 billion from about $9 billion.

United is also facing a Federal Aviation Administration safety review, which has prevented some of its planned growth. A spokeswoman told CNBC earlier this month that the carrier will have to postpone its planned service from Newark, New Jersey, to Faro, Portugal, and service between Tokyo and Cebu, Philippines.

United earlier this month postponed its investor day, which was scheduled for May, “because our entire team is focused on cooperating with the FAA to review our safety protocols and it would simply send the wrong message to our team to have an exciting investor day focused primarily on financial results.”

The airline said it would have reported a profit for the quarter if not for a $200 million hit from the temporary grounding of the Boeing 737 Max 9 in January.

The FAA temporarily grounded those jets after a door plug blew out minutes into an Alaska Airlines flight, sparking a new safety crisis for Boeing and slowing deliveries of its planes to customers including United, Southwest and others.

The airline posted a net loss of $124 million, or a loss of 38 cents a share, in the first quarter compared with a $194 million loss, or 59 cents, a year earlier. Revenue rose nearly 10% in the first quarter compared with the year-earlier period to $12.54 billion, with capacity up more than 9% on the year.

Here’s what United reported in the first quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:

  • Loss per share: 15 cents adjusted vs. a loss of 57 cents expected
  • Revenue: $12.54 billion vs. $12.45 billion expected

The airline expects to post earnings of between $3.75 and $4.25 in the second quarter, ahead of analysts’ estimates of about $3.76 a share. Airlines make the bulk of their profits in the second and third quarters, during peak travel season.

The carrier also reiterated its full-year earnings forecast of between $9 and $11 a share.

United’s shares were up more than 4% in after-hours trading on Tuesday.

United executives will hold a call with analysts at 10:30 a.m. ET on Wednesday.

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Ex-Post Office boss regrets ‘missed opportunity’ to halt Horizon scandal

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“On reflection, and I have reflected on this very hard, when I finished being the Horizon programme director [in early 2000] it would have been very beneficial if I had notified both the lawyers and the [investigations team] that Horizon was a new system coming in, and that they should be very cautious about evidence coming out of that system,” he said.

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Sri Lanka’s economic crisis and debt restructuring efforts By Reuters

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COLOMBO (Reuters) – Sri Lanka’s government rejected a proposal from its international bondholders on Tuesday on restructuring the more than $12 billion the country owes to them.

It means a near two-year spell in default will drag on for Sri Lanka and that the country’s next tranche of vital IMF support money could potentially get delayed.

Below is a timeline of the key events in the crisis and the efforts to resolve it:

2021-2022: Sri Lanka’s economy crumbles after years of overspending leaves its foreign exchange reserves critically low and the government unable to pay for essentials, such as fuel and medicine.

The country’s bonds suffer from multiple downgrades by credit rating agencies warning of the increasing risk of default. At the start of 2022 it manages to make a $500 million bond payment but it leaves its foreign exchange reserves precariously low.

MAY, 2022 – Sri Lanka is declared in default after it fails to make a smaller $78 million bond coupon payment.

JULY, 2022 – Public anger drives protesters to storm then-President Gotabaya Rajapaksa’s office and residence. Rajapaksa flees to the Maldives, before moving on to Singapore.

Current President Ranil Wickremesinghe is voted into power by Sri Lankan lawmakers.

MARCH, 2023 – The International Monetary Fund approves a near $3 billion bailout for Sri Lanka after talks with Wickremesinghe’s government and assurances about its plans to repair the country’s finances.

OCTOBER, 2023

Sri Lanka announces an agreement with China’s EXIM (export/import) Bank to delay payments on about $4.2 billion worth of loans the Chinese lender it has extended to the country.

NOVEMBER, 2023

Other creditor nations including India, Japan and France agree to restructure about $5.9 billion in debt.

MARCH, 2024

A group of Sri Lankan officials arrives in London to meet with a number of investment funds that hold its more than $12 billion worth of government bonds. Talks advance to the key “restricted” phase where proposals are discussed privately and those involved agree not to buy or sell any of the debt on the open market.

© Reuters. FILE PHOTO: A general view of the main business district as rain clouds gather above in Colombo, Sri Lanka, November 17, 2020. REUTERS/Dinuka Liyanawatte/File Photo

APRIL, 2024

The government rejects a proposal tabled by the bondholders. The main stumbling blocks are that some the “baseline” assumptions used differ to those of the IMF and that the plan did not include a contingency option for the government in case the economy fails to recover as expected.



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