The “merger of equals” has returned, the most terrifying words you can say about Chrysler. Years after the littlest of the Big Three made it out of Daimler’s purgatory, Stellantis has used the same language to describe its merger. All that and more in The Morning Shift for November 24, 2020.
1st Gear: Not The Merger Of Equals Again
By 2007, DaimlerChrysler was getting divorced, ending a one-sided relationship that turned Chrysler into a shriveled husk of its former self, cost-cut to oblivion by the larger Daimler. How could we have known it was all going to go to shit? Let’s look at this New York Times business report from back then, You Say ‘Takeover.’ I Say ‘Merger of Equals.’
In 1998, both sides — Daimler-Benz executives in Stuttgart, Germany, and Chrysler executives in Auburn Hills, Mich. — famously labeled the deal a ‘’merger of equals,’’ a gauzy term without legal definition.Mr. Kerkorian, the 86-year-old Las Vegas casino mogul who was Chrysler’s top shareholder at the time of the merger, is suing DaimlerChrysler. He contends that the deal was fraudulently labeled a merger when it was actually envisioned as a takeover from the start by Mr. Schrempp, Daimler-Benz’s chief executive, and the rest of his management team.
Testimony in the trial was expected to conclude last week but was thrown off course when DaimlerChrysler turned over 61 pages of notes written by former top Chrysler executives during the transaction.The notes were sealed, though a few scraps emerged in court proceedings, including bullet points like ‘’loss of independence’’ and ‘’senior management sold out.’’
It’s a dark moment in Chrysler’s history, and the “merger of equals” is its enduring slogan. With that in mind, please relish this new report from Automotive News on Fiat-Chrysler’s new Stellantis merger situation with the PSA in France:
The merger between Fiat Chrysler Automobiles and PSA Group to create Stellantis is being called a merger of equals by the two companies, but recently-filed documents confirm what many analysts have believed since the deal was announced last year: The combination is actually an acquisition of FCA by PSA, at least for accounting purposes.
The information is in the prospectus filed last week by FCA with the Mercato Telematico Azionario and Euronext Paris stock exchanges to list the Stellantis shares after the merger. The document has also been filed with the Securities and Exchange Commission in the U.S.
[...]
The filing does call the deal a “merger of equals” meaning “a transaction in which the shareholders of each of PSA and FCA would own an equal stake in the combined group.” The same phrase has also been used by both groups in all the public communication related to the merger.
But “merger of equals” is not a legal definition. And equal stakes, as shown above, do not always mean equal powers. Considering also the fact that PSA is paying a premium, both companies agreed that PSA is the acquirer.
I would not be stoked if I worked at Chrysler right now.
2nd Gear: Please Enjoy This Interview With VW Talking Circles Around Electric Cars And The Environment
Electric cars are supposed to be good for the environment. Car companies love talking about how all the EVs they are making are good for the environment. Do not ask a car company that is busy investing in EVs about anything else related to protecting the environment because it will get confusing fast. Automotive News sat down with the head of VW, Herbert Diess, talking with him about pivoting the company to electric vehicles. The answers show that VW wants to make EVs, but not, like, actually sacrifice to help save the world or anything. Here AN asks Diess if he would go EV-only in markets and Diess says that’s not up to him:
Could VW brand soon sell only electric cars in advanced countries and no longer offer combustion engines ?
That’s up to the customers and legislators. In various countries there are discussions about when only emissions-free vehicles will be allowed to be sold. Restrictions on the registration of combustion engines or even bans on this drive system will answer the question of what customers will be able to buy in the future
Here is Diess saying he will keep selling polluting cars as long as they make VW money:
There are many countries where combustion engines will continue to be popular for decades. Will VW abandon these markets?
No, we have very good combustion engines and hybrids. And in countries with low car usage, it makes sense to think electric right from the start.
And here’s Diess saying that he won’t be investing in charging infrastructure like Tesla has:
Does it still make sense to build up a network of filling stations there? Solar energy and electric mobility are much more obvious.
The basic principle for the market strategy is that electromobility makes particularly good sense where CO2-free electricity is available.
Car companies will make EVs, and they will say EVs are helping the environment, but anything beyond that is going to be a rare charity. Car companies just aren’t in business to help the environment.
3rd Gear: Chinese Battery Maker Just Picked Out A New Factory In Germany
Speaking of electric vehicle development in Germany, the rather rural state of Saarland is getting a new factory from the battery-making arm of Great Wall Motors in China. Making batteries there should be more eco-friendly and humane, as Automotive News reports:
Battery cell makers are rushing to open factories in Europe, and one of the most intriguing is Svolt, a spinoff of Great Wall Motors that has decided to invest up to 2 billion euros ($2.4 billion) in Germany to create a European manufacturing base.
Executives say Svolt will be the first to bring to series production, around the middle of next year, a high-energy cell that eliminates cobalt entirely in favor of a nickel-heavy chemistry.
Not only does this reduce the price, it also eliminates dependence on a metal largely mined in one central African country, the Democratic Republic of Congo, often under controversial conditions.
4th Gear: Newest Billion-Dollar Startup Is An Indian Used Car Website
Up until this morning I had assumed “unicorn” startup was just a fanciful term, but it denotes a startup that passes a $1 billion valuation. In any case, the newest one sells used cars in India in the face of a coronavirus-related public transportation crisis, as Bloomberg reports:
India’s mass transit systems, unreliable even before the coronavirus pandemic, were shut off completely when the country locked down. As a result, Indians rushed to find alternative transportation, and that often meant used cars.
A major beneficiary was Cars24 Services Pvt., an online marketplace for used cars based in Gurgaon, India. The company’s valuation jumped to more than $1 billion after a new round of funding, Cars24 plans to announce Tuesday. DST Global, the investment firm led by Russia-born billionaire Yuri Milner, invested $200 million in the deal.
The investment doubles the total funds raised by Cars24 since the business was established five years ago. The chief executive officer and co-founder, Vikram Chopra, was an investment analyst early in his career at Sequoia Capital, one of the world’s most prominent venture capital firms and now a Cars24 investor. Chopra started Cars24 after having a hard time selling his car before a temporary move to the U.S., he said. Daunted by the situation, he ended up giving his car to a friend instead, he said.
We’ll see how much everyone loves their cars when they are stuck in permanent gridlock! That’s the growing momentum here in New York, at least. You can’t all ditch the subway and expect roads not to get hammered.
5th Gear: Here’s A Fun Story From The Alternate Universe Of High-Speed Rail
With all that in mind, my brain got scrambled reading this report on China and Japan in a “race” to complete more high-speed rail. I am not convinced that this Bloomberg article didn’t fall out of an alternate universe:
Japan and China are racing to build a new type of ultrafast, levitating train, seeking to demonstrate their mastery over a technology with big export potential.
Magnetic levitation, or maglev, trains use powerful magnets to glide along charged tracks at superfast speeds made possible by the lack of friction. A handful of short distance and experimental maglev trains are already in operation, but Asia’s two biggest economies are vying to develop what would be the world’s first long-distance intercity lines.
On one side is Central Japan Railway Co.’s ¥9 trillion ($86 billion) maglev that’s expected to connect Tokyo and Osaka by 2037. On the other is China’s 100 billion yuan ($15 billion) on-again, off-again project that will run between Shanghai and the eastern port city of Ningbo. After several false starts, it’s now forecast to be completed by around 2035. Japan’s is more expensive largely because of the amount of excavation that will be required to tunnel through the mountainous countryside.
The report notes that the winner of this race will be well-positioned to sell this technology to other, more developing nations. Please include America on that list.
Reverse: I Can’t Wait To Put This All Behind Me, Ignore The News, And Go On To Buy A New 1964 1/2 Mustang
Neutral: What Should Chrysler Get Up To?
I had high hopes for Stellantis until, well, probably right up until I heard the name “Stellantis.” What would you do if you were in charge of directing Chrysler? Go back to talking about jamming batteries in the Lotus Evora again?