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COVID-19 Will Change the Auto Industry for Good and Further Push EVs

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EV Stock Market

As with every downturn: some companies will emerge stronger but others will not make it through. And the same goes for automakers. Even if they survive plants being idle, there are trends in consumer behaviour which will drastically change in the post-pandemic world such as less commute as both companies and employees now know the benefits of working from home. And what makes it all worse is that the industry was already getting ready for a brutal year even before COVID-19 was in sight.

Pandemics pushed sales in a free fall and is calling upon Darwinism to redefine things

The only way out is to realign the whole industry and whatever these companies end up doing, it will have a profound effect on its workforce: eight million people worldwide to be exact. The problem is that it took nearly a decade for European car manufacturers to recover from the 2008 Big Recession. And despite US taking half the time, sales are flat for about five years now. China’s immense size that resulted in explosive growth helped but then even that market has been stagnating for two years now. Although European manufacturers such as Volkswagen (OTC:VWAGY), Daimler AG (OTC:DDAIF), Fiat Chrysler (NYSE:FCAU) are getting ready to slowly restart their plants, unlike their US counterparts, everyone has to be wondering what lies ahead as we all know things will no longer be the same. Besides Tesla (NASDAQ:TSLA) whose flamboyant CEO is fighting with the authorities as it reopened its California plant without consent on Monday, Detroit’s automakers whose combined value has been exceeded by Tesla alone are waiting as orders are clear: it is too soon with the US being the new epicentre of the virus. COVID-19 wrecked Tesla’s momentum as the company has been on a wild ride this year but its fourth consecutive quarter of profitability is now even more challenging.

And there is the whole debate whether Tesla should be categorized as a tech stock. But traditional combustion-engine automakers have something else than legacy standing behind them, they learned the hard way to cushion such blows from the 2007-2008 financial crash. General Motors (NYSE:GM) especially as it even managed to make a profit in its latest quarter unlike Ford Motor Company (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU). But as sales plummet further, shutting down underused plants may be a matter of survival as when the EU went into lockdown in March, car sales were cut off by more than a half.

EVs are somewhere over the rainbow

Amid all this – Evs have shown supreme resilience and even despite plunging oil and gasoline prices. COVID-19 did eventually catch up to them in April but still far less than the traditional car market as the EU segment dropped 80% with only a 30% hit to EVs. And now that people get to actually witness the benefits that climate change activists are so fiercely fighting for as air has never been cleaner in modern history, it is to be expected that consumers will be willing to invest an extra buck into green purchases. There’s no way back after you’ve tasted something better, and in this case, it is way better in more ways than one.

Partnerships ahead- even between former enemies

To counter attack, traditional automakers will only have the option to unite such as Volkswagen and Ford Motor which are developing autonomous driving software together. But partnerships always bring in the psychological challenges as we know too well from the Renault- Nissan storyline. Yet, even the giant such as Toyota Motor (NYSE:TM) is smart enough not to go at it alone while being among the strongest to weather the storm as it perfected its ship to be pretty much sinkless.

Long story short

Plunging sales could force factories to close and lead to takeovers and mergers, but also cause a surge in sales of electric cars as the pace of the electric revolution will only intensify. And regardless what you think of Musk, he also co-founded PayPal (NASDAQ:PYPL) which is another confirmation of his “visionary” capacity and he delivered and surprised the world with Tesla despite the financial concerns and bottlenecks. Tesla’s fortune fortunately turned well before COVID-19 took the world hostage. And most certainly has evaporated fears that electric cars will be owned by only a shiver of humanity. Moreover, now that Tesla has shown that traditional auto giants can be challenged, this opens a doorway for many green start-ups. And we didn’t even tackle green segment: solar technology, another one of Tesla’s segments and used by Worksport Inc (OTC:FNHI) which will make it even accessible by launching the world’s first pickup truck solar powered tonneau covers. But more on that in the post-COVID-19 era!

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

Oil Giants Have Contrasting Approaches to the Crisis

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oil industry stocks

The oil industry was already under pressure due to the climate crisis and increasing regulation from governments to cut emissions. Now, many are wondering if the coronavirus is the last drop that will kill the oil industry and help save the planet. Analysts say that the oil and gas industry will never be the same. Without any exaggeration, oil is facing the gravest challenge in its 100-year history. Oil giants have been pushed to ‘survival mode’ and an environment of pure carnage due to plunging demand and a destructive price war.

Unprecedented times

With some labelling the situation as “apocalyptical”, the least lurid description is “unprecedented”. Oil prices have been the lowest in almost two decades, with even worse potentially on the way. This latest cyclical oil shock is hitting an industry whose days are counted. But the world’s economy and infrastructure is still heavily invested in fossil fuels to a truly staggering level. This means oil has enormous inertia. Moreover, the aspects that made us rely on oil during last hundred plus years are still around because it is still a powerful way to produce and transport energy.

The answer of Oil Giants

Dividend Aristocrats are still betting their future on oil

Chevron Corporation (NYSE: CVX) is continuing to drill for oil. Chevron and Exxon Mobil Corporation (NYSE: XOM) are certain they can still bring in a few profitable years while their European rivals are betting their future on renewables. Chief Executive Officer Mike Wirth believes the energy business is simply undergoing another of its natural transitions. Chevron is not focused on replacing oil, but rather at making oil and gas more efficient and more environmentally benign. This isn’t surprising as it is coming from someone who profits from the status quo.

It’s a multibillion-dollar gamble that would have been less surprising before the pandemic turned the whole world upside down. The risk is that the industry’s mightiest could end up being left behind by producing a lot of climate-endangering oil and gas that no one wants or needs. Wirth insists he’s comfortable with that risk, because he finds that this energy transition is simply “misunderstood.” Exxon has also reiterated its commitment to being oil’s last man standing decades from now.

Chastened BP committed to dramatically reduce oil and gas production

In sharp contract, BP p.l.c. (NYSE: BP) announced dramatic steps to address climate change on August 4. This strategy includes an unexpected vow to reduce oil and gas production 40% over the next decade. Its CEO admitted its strategy was greatly influenced by the COVID-19 crisis.

Contrasting public approaches

So far, Chevron and Exxon’s approach to climate change is in contrast to those of BP, Royal Dutch Shell (NYSE: RDS-B) (NYSE: RDS-A) and France’s Total S.A. (NYSE: TOT). All three have committed to speed up their shift to cleaner fuel sources. The aim is to align with the Paris climate agreement and become “carbon zero” by 2050.

On the other hand, Chevron and Exxon have pledged to sustain their dividends unlike BP and Royal Dutch Shell Plc that were forced cut their highly prized dividends due to the low oil prices.

Chevron and Exxon claim to support the goals of the Paris Agreement by reducing emissions, but they haven’t committed to a zero-carbon footprint. They plan to reduce emissions from their own operations but not those of their products. Their position is also politically easier in the U.S., where fossil fuels count on significant support from the Congress. Chevron and Exxon are simply avoiding the switch to a field where they have little expertise and where they perceive returns to be lower.

Business of oil may never return to ‘normal’

Shell CEO Ben van Beurden recently suggested that the oil business might never recover. BP’s Bernard Looney didn’t rule out the possibility that post-pandemic demand has already peaked. Those are horrifying news for companies that used to thrive as providers of a scarce resource that underpins the global economy. First of all, the resource is no longer scarce because of shale. BP even lowered its forecast it made two months ago by predicting that over the upcoming decades, crude prices could trend as much as 20% lower than initially thought.

Natural gas could be the answer

Natural gas is cheap these days. Its supplies also seem larger than oil reserves. Many experts are betting on natural gas to be our largest electricity provider. It is a perfect complement to solar and wind power. This is why it also makes sense to run cars on it. EVs are cleaner but their production also has an environmental footprint so they cannot solve all our problems. Another possibility is to use coal-to-liquid processes, just like what Germany did during WWII. But, it is a dirty and expensive way to increase supply. Rest assured, oil giants will explore any opportunity to keep the business afloat.

The solution could be gradual

A key question is whether the taken action is capable to alter the course of the climate crisis. Many experts are optimistic believing that the switch to renewables will provide the atmosphere the opportunity to gradually heal. The most enthusiastic ones believe 2019 will go down in history as the peak year for carbon emissions. But there are also pessimistic opinions that the fossil fuel industry will come back from the dead and that low oil prices will slow the much-needed transition to renewables.

Outlook is uncertain

Experts, including Jeff Currie at Goldman Sachs, are certain the climate change debate will take an entirely new direction. But exactly how will that look like remains to be seen. The first question is how long is the COVID-19 crisis going to last? And no one really knows the answer. But it is certain that these challenges combined are permanently altering the oil industry.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Five Stocks That Have You Covered for EV Developments

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Electric vehicles

While lockdowns have been in place around the world due to the coronavirus pandemic, many people only ventured out on four wheels when they needed to get groceries. The International Energy Agency reported that at the end of March, road transport was down by half. Naturally, new vehicle sales have suffered. What is intriguing is that this has mainly affected cars with internal combustion engines produced by traditional automakers such as General Motors (NYSE: GM), Ford Motor (NYSE: F) and Fiat Chrysler Automobiles (NYSE: FCAU).

EVs resisted

But despite the drop in its biggest market, China, the demand for electric vehicles held up rather well. Germany topped the bill with a 148 percent increase according to Bloomberg, but then again, EVs are central to its recovery plan. Although the majority of us immediately thinks of Tesla Inc (NASDAQ:TSLA) that is showing no signs of stopping as it delivered its fourth consecutive quarter of profit despite the pandemic-induced havoc, there are other EV stocks to keep an eye on.

EV Charging Network

Miami, Florida-based Blink Charging (NASDAQ:BLNK) owns and operates an EV charging network across the U.S., Dominican Republic, Greece and Israel. It operates, maintains and tracks those EV charging stations through a cloud software.

Over its first quarter, the company enjoyed a solid growth as its revenue of $1.3 million increased 125% on a year-over-year basis. Its gross margin also improved from 9.3% to 23.8%.

Blink’s international expansion continued with its second quarter as $2.9 million in revenues during the first six months of 2020 surpassed full year 2019 revenues of $2.8 million. Product sales of EV charging equipment increased more than 350% with overall 2020 revenues increasing 120%. But it still has a long way to go to profitability as net loss amounted to $3.0 million.

A different EV

Canada-based Electrameccanica Vehicles (NASDAQ:SOLO) sells a somewhat different EV. The Solo EV might look like a regular car from the front but it has only one wheel at the back. It is a single-passenger three-wheeled, battery-powered electric vehicle that the company markets as a short-range vehicle for commuting. The Canadian group plans to expand with a plant in the U.S. In early June, it narrowed its choice to five states. Electrameccanica could easily become an acquisition target in the future. But for now, it is still a company with minimal revenue.

Exchange traded fund to cover anyone building a strong presence in the EV space

Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) is an exchange-traded fund that seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles, its components and materials, such as batteries, software and hardware.

It has 75 holdings with net assets close to $30 million. Since we are still on the first pages of the EV book, many of these funds resemble broader tech ETFs. The fund’s top three holdings are none other than Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT). Tesla is also in there, of course, but in seventh place. The top ten companies account for almost one third of the fund. Year-to-date, the fund is up about 9% and it hit an all-time high of $16.25 less than a month ago.

Exchange traded fund focused at battery technology developments

Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) has 43 holdings with net assets close to $690 million. It focuses on the whole lithium cycle: from mining and refining the metal, all the way through battery production.

The main disadvantage of EVs is their hefty price tag. This figure is greatly influenced by the cost of the car battery. This is an area where lithium-ion batteries are heavily used. Therefore, anyone who believes in electrification should keep track of the developments on this front.

The fund’s top three components are Albemarle (NYSE:ALB), Tesla, and LG Chem (OTCMKTS:LGCLF). They comprise approximately 22% of the fund. More impressively, the fund is up over 37% year to date and  has hit a 52-week high at $38.71 just a month ago.

Solar power to accessorize super EVs

Worksport (OTC: WKSP) is soon to debut its line of its innovative pickup truck tonneau covers in the U.S., its biggest market.  The company’s TerraVis innovative technology has the potential to disrupt the overall automotive market as it integrated solar power into its tonneau covers. Its generator can store energy and increase the driving range of the vehicle. Moreover, Worksport’s pricing will make this complex technology affordable and accessible. Considering pickups are the #1 vehicle in the US and tonneau covers its #1 accessory, Worksport could have an interesting growth potential ahead.

Technology advancements ahead

Automakers need to find out a way to achieve economies of scale to make EVs more affordable and build a massive charging infrastructure all over the globe, which is perhaps an even more daunting task. But these stocks have what it takes to lead the way into electrification with new technological developments.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Lyft Vs Uber Is No Longer the War We’re Interested In

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Uber Stock News

On Wednesday, Lyft Inc (NASDAQ: LYFT) reported its second quarter results for the period that ended on June 30th. This was its first full quarter during the pandemic that ended the life we knew practically overnight. Not surprisingly, Lyft reported a dramatic revenue drop of 61%.

The full furry of the pandemic

The second quarter parked more than 17,000 airplanes as April passenger volume dropped 90%. Skies were empty, but so were streets and hotels. Hotel occupancy fell to 24.5% which is a US record low. World cities were quarantined. Bars, restaurants, cinemas, theatres and all popular destinations such as Walt Disney’s Corporation (NYSE: DIS) theme parks were entirely shutdown. Companies were managed from home, so employees had no need to commute by rideshare. Business travel, a growing part of the rideshare industry, is predicted to drop over 35% this year.

Lyft’s results

During the second quarter, Lyft delivered a net loss of $437.1 million. The company at least managed to beat Wall Street expectations of 99 cents per share with adjusted losses of 86 cents. Revenue of $339 million also exceeded Refinitiv’s estimate of $336.8 million. With 8.7 million active riders, it achieved a revenue per rider of $39.06. Although it did not offer any guidance, Lyft expects to achieve profitability on an adjusted basis during the fourth quarter of the following year. Unlike its primary competitor, Uber Technologies Inc (NYSE: UBER), it does not have a food delivery, freight or investments and operations overseas to help it make up for losses in travel and transportation. Thanks to Uber Eats that doubled during the pandemic, Uber managed to exceed analyst expectations. Revenue did decline, but the increased demand for its diversified services greatly amortized the blow.

But a rare bright spot for Lyft is that rides in July increased 78% compared to April. This figure provides a glimmer of hope for the undergoing quarter. But despite the good news, these 8.7 million active riders will now need to be classified as ‘employees’ which brings a whole new set of issues.

Both ride hailing giants lost the battle against CA

Uber and Lyft’s war against California is far from over but they lost the first battle. On Monday, San Francisco Superior Court judge issued a preliminary injunction requiring the gig-economy companies to reclassify their drivers as employees. This means that their drivers will be entitled to minimum wage, unemployment insurance, workers’ compensation and paid sick leave.

President and co-founder of Lyft, John Zimmer, said during the earnings call on Wednesday that the company may need to suspend its ride-hailing operations in California which makes about 16% of its rides starting on August 21 if a court does not overturn the ruling which enacted the Assembly Bill 5, commonly known as the ‘gig-workers bill’.

Reclassification of independent contractors to employees would result in higher prices, fewer available rides and hundreds of thousands of drivers losing their jobs. The resulting wages and benefits would also cost both companies, neither of which are profitable, hundreds of millions of dollars.

The future after the pandemic

Like with many travel-related industries, the demand for rideshare seemed to have disappeared into thin air back in April with Lyft and Uber seeing a severe drop between 70% and 80%. Although things are improving with eased social distancing measures, we are still far from winning the battle against COVID-19. The underlying concern is whether the fear of infection has forever changed the demand for the rideshare model? Only one thing is certain – we’re in for an entirely ‘new normal’ even once we put this pandemic behind us. Moreover, no one knows exactly how will this new normal look like.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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