August 8, 2017 News of the Day: Uber Shutting Down its Car Leasing Business, Tesla Raises $600 Million in Just a Few Hours, Cruise Launches Self-Driving Car App

Home > News > Content

【Summary】August 8, 2017 News of the Day

Original Eric Walz    Aug 08, 2017 12:08 PM PT
August 8, 2017 News of the Day: Uber Shutting Down its Car Leasing Business, Tesla Raises $600 Million in Just a Few Hours, Cruise Launches Self-Driving Car App
author: Eric Walz   

Uber Shutting Down its Car Leasing Business

Ride-hailing company Uber is evaluating options for its capital-intensive U.S. car-leasing business, including a sale of the unit, a source familiar with the matter told Reuters.

The Xchange Leasing business, which has about 40,000 vehicles and 14 showrooms in the United States, has attracted interest from some buyers who are considering buying it outright, according to the source.

Other options include a partnership or winding down the unit by reducing its presence in a number of cities that may lead to layoffs, the person said.

Uber's sub-prime car leasing division offered flexible vehicle leases for Uber driver partners, who in turn would use the vehicle to pick up passengers. However, industry analysts criticized Uber for the large monthly payments and other costs associated with the leases.

The Wall Street Journal reported earlier on Tuesday that as many as 500 jobs could be affected by the program, representing about 3 percent of Uber's 15,000-employee staff.

Uber executives decided to wind down Xchange, a wholly owned subsidiary, after realizing that the average loss per vehicle was 18 times what they had thought. Uber executives were informed that losses were $9,000 per car on average, steeply above the previous estimates of around $500 per car, according to the report.

Earlier this month, the Journal reported that Uber's Singapore unit knowingly rented its drivers defective cars that were at risk of catching fire.

Nissan to Exit Battery Business


For years, Nissan has owned a controlling share of a battery company, creatively named the Automotive Energy Supply Corporation (AESC). If you've ever driven a Nissan Leaf, you've driven a car with an AESC battery. Today, Nissan announced plans to sell AESC to an investment firm.

GSR Capital, a Chinese investment firm, will buy AESC, as well as Nissan's battery factories in Smyrna, Tennessee, and Sunderland, England, and part of Nissan's battery development operations in Japan at sites including Oppama, Atsugi, and Zama. Before that happens, though, Nissan will first buy out its partners, the NEC Corporation and NEC Energy Devices.

According to Nissan, this move puts the Japanese automaker in a better position. "This is a win-win for AESC and Nissan," said Hiroto Saikawa, president and chief executive officer of Nissan, in a release. "It enables AESC to utilize GSR's wide networks and proactive investment to expand its customer base and further increase its competitiveness. In turn, this will further enhance Nissan's EV competitiveness. AESC will remain a very important partner for Nissan as we deepen our focus on designing and producing market-leading electric vehicles."

The good news for the workers is that, at least for now, no layoffs are planned. According to the company's statement, "the workforce at all facilities covered by the deal, including the production plants at Zama, Sunderland, and Smyrna, will continue to be employed."

Tesla Raises $600 Million in Just a Few Hours With Bond Offering

tsla bonds.jpg

Tesla's Elon Musk is selling his dream and bond investors are willing buyers.

In a meeting for bond buyers in Manhattan on Monday Musk came away with orders for $600 million after just a few hours, according to investors briefed on the matter. The session was part of a four-day debt-marketing extravaganza aimed at raising $1.5 billion to support the electric carmaker's new mass-market Model 3.

The campaign kicked off with a presentation at the New York Palace Hotel that had the billionaire personally answering investor questions while a gleaming blue Model 3 sat on display in the courtyard. Musk also invited his audience to a visit scheduled for later this week at the company's assembly plant in Fremont, California.

To be fair, bond market investors for years have suspended reality and their basic training to buy into ever-riskier credits as interest rates shriveled. But Tesla has something else going for it: the halo effect, says Kevin Mathews, global head of high yield at Aviva Investors Americas.

"The halo effect is real," said Mathews. "We saw that with Netflix. As a brand name, people know it, they know the situation from a financial standpoint, so when it came to market, people bought it."

Netflix Inc. sold $1 billion of bonds with a 4.375 percent coupon in October. The bonds are now trading with a yield of about 4.2 percent, as investors continue to bet on the growth story and ignore the cash burn.

Musk is asking his investors to do the same. The Model 3 is key to Musk's plans to turn Tesla into more of a mass-market manufacturer. With a $35,000 starting price that's about half the base cost of the Model S, Tesla's new, smaller sedan has nearly 500,000 reservations. The carmaker plans to turn out a total of 500,000 vehicles in 2018 and a million in 2020.

GM's Cruise Launches Self-Driving Car Sharing App For Employees

cruise app.png

GM's autonomous driving division, Cruise Automation, announced the launch of the beta version of its autonomous ride-sharing app currently being used by employees in San Francisco, where they operate a fleet of autonomous Chevy Bolt EV test vehicles.

The new service is called ‘Cruise Anywhere' and the company claims that it is already becoming the primary mode of transport for some of its employees.

Cruise CEO and co-founder Kyle Vogt said in an interview with Techcrunch:

"We've always said we'd launch first with a ride share application, and this is in line with that and just further evidence of that. We're really excited about how the technology is evolving, and the rate at which it's evolving. This is a manifestation of that – putting the app in people's hands and having them use it for the first time and make AVs their primary form of transportation."

Engineers are still required in the driver's seat of all vehicles since it's a test fleet, but Cruise's significant fleet of test vehicles in San Francisco enables them to run the service 7 days a week between 16 and 24 hours a day.

In June, GM announced the completion of the first batch of 130 Chevy Bolt EV autonomous prototypes at its Orion Assembly Plant located in Orion Township, Michigan.

While GM remains open to work with other ride-sharing platforms, the automaker invested heavily in Lyft, they aim for Cruise Anywhere to stand on its own. GM purchased the startup for ~$1 billion last year.

Intel Completes $15 Billion Purchase of Mobileye


U.S. technology giant Intel Corp. and Israeli automotive technology firm Mobileye N.V. said on Tuesday that Intel has completed the acquisition of the outstanding shares of the Jerusalem-based company in a tender.

The acquisition is expected to accelerate innovation for the automotive industry and positions Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles, the companies said in a statement.

The combination of Intel and Mobileye will allow Mobileye's computer vision expertise, essentially the eyes of the vehicle to complement Intel's high-performance computing and connectivity expertise, the brains "to create automated driving solutions from cloud to car," the statement said.

Intel estimates the vehicle systems, data and services market opportunity to be worth up to $70 billion by 2030.

"With Mobileye, Intel emerges as a leader in creating the technology foundation that the automotive industry needs for an autonomous future," said Intel CEO Brian Krzanich. "It's an exciting engineering challenge and a huge growth opportunity for Intel. Even more exciting is the potential for autonomous cars to transform industries, improve society and save millions of lives."

The transaction will enable a merger of operations between Intel's Automated Driving Group (ADG) and Mobileye, which Intel agreed to buy in March for $15.3 billion in the largest-ever purchase of an Israeli tech firm. As part of the deal, Cyclops, a subsidiary of Intel, put out a tender to acquire all of the issued and outstanding ordinary shares of Mobileye for $63.54 per share in cash.

The companies said that the combined Mobileye organization will lead Intel's autonomous driving efforts, and will have the full support of Intel resources and technology to define and deliver cloud-to-car solutions for the automotive market segment, the statement said.

Mobileye plans to delist its ordinary shares from the New York Stock Exchange (NYSE) as soon as possible, the statement said. Following the delisting from the NYSE, Mobileye ordinary shares will not be listed or registered on another national securities exchange. Delisting is likely to reduce significantly the liquidity and marketability of any Mobileye ordinary shares that have not been tendered pursuant to the tender offer.

Prev                  Next
Writer's other posts
    Related Content