GM’s Competition With Tesla Heats Up

MARKET MOVERS

• GM’s competition with Tesla heats up. General Motors said it is launching a new business unit, called GM Energy, that will offer people a variety of products and services to help people produce and store electricity at homes and offices*. GM Energy will sell battery packs, solar panels, and cloud software that will connect electric vehicles to energy utility companies.

• Ford and General Motors were downgraded by UBS, which sees ‘rapidly deteriorating’ consumer demand. Plagued by inflation, he said consumers are looking away from big purchases like cars, a U-turn from during the pandemic when they were in limited supply and people were willing to pay above market value.* Analyst Patrick Hummel downgraded General Motors from buy to neutral, while Ford was moved from neutral to sell.

• Ride-sharing stocks tumble as the U.S. proposes new rules for gig workers. The U.S. Department of Labor issued a rule proposal that could force companies to classify their drivers as employees rather than contractors*. If implemented, that rule would likely substantially raise labor costs for food-delivery and ride-sharing companies, and for other employers that rely heavily on contract workers.

• Honda’s new $4.4 billion EV battery plant will be built in Ohio. Honda Motor and LG Energy Solution on Tuesday said a new multibillion-dollar plant to produce batteries for electric vehicles will be located in Ohio. Construction of the new facility is expected to begin in early 2023, followed by mass production of lithium-ion batteries* by the end of 2025.

• Delta invests in electric air taxi startup, Joby. The carrier is investing $60 million in startup Joby Aviation, which is planning to build and operate an electric vertical takeoff and landing aircraft, or eVTOL, effectively an air taxi. Delta will also have an exclusive five-year partnership with Joby operating eVTOLs as part of the Delta network. Read more here.

WHAT TO WATCH

• Amazon could be primed for a big 2023. Industry experts believe Amazon's retail business will soon rebound. About 57% of Amazon's items sold in the e-commerce segment during the second quarter were from third-party sellers, an all-time high. If third-party sellers continue growing, it could help stabilize the company's profitability. Meanwhile, Amazon expects steady long-term growth for AWS  and should contribute more to the overall bottom line. Read more here.

• Jamie Dimon says a U.S. recession is 6-9 months away. He warned that a “very, very serious” mix of headwinds is likely to tip both the U.S. and the global economy into recession by the middle of next year. Among the indicators ringing alarm bells, Dimon cited the impact of runaway inflation, interest rates going up more than expected, the unknown effects of quantitative tightening, and Russia’s war in Ukraine. Source(8:34)

• Nissan confirms it is in talks over investment in Renault EV unit. They were discussing ways to reinforce their partnership*, including the possibility of investment by Nissan in Renault’s new electric-vehicle unit. Nissan is pressing Renault to sell a portion of its stake in the Japanese automaker, currently 43%, in exchange for Nissan taking part in the new Renault unit that would house its EV assets.

• Credit Suisse may face an $8 billion capital shortfall in 2024. This is based on estimates by analysts at Goldman Sachs Group Inc., underscoring the challenges for the troubled lender as it nears what’s likely to be a deep restructuring.* At the very least, the Zurich-based firm is facing a hole of 4 billion francs, given the need to restructure the investment banking operations at a time of minimal capital generation.

• IMF cuts global growth forecast for next year, warns ‘the worst is yet to come.’ More than a third of the global economy will see two consecutive quarters* of negative growth, while the three largest economies — the US, the EU, and China — will continue to slow. There are three major events currently hindering growth: Russia’s invasion of Ukraine, the cost-of-living crisis, and China’s economic slowdown. Together, they create a volatile period.