- Tesla Plans China Plant With 500,000 Vehicle Capacity
Tesla Inc. has reached a preliminary agreement with the Shanghai government to build a factory that’ll rival production from its lone U.S. assembly plant, as Elon Musk takes his biggest step yet to expand overseas.
Construction will begin soon, after securing needed permits, and it will produce 500,000 electric vehicles a year for Chinese consumers in two to three years, the company said in a statement. While Musk, 47, said more than two years ago that he expected Tesla would produce that many vehicles a year from its lone car plant in California by 2018, the company is well off that pace because of slower-than-expected output of the Model 3 sedan.
The memorandum of understanding is a major development in a more than yearlong effort by Tesla to open China’s first production facility to be wholly owned by a foreign carmaker. Work toward getting the factory built has gained urgency as Donald Trump engages in a trade war that’s ensnared imports of the company’s vehicles into China. Tesla follows Harley-Davidson Inc. in charting plans to expand outside the U.S. to circumvent tariffs that have surfaced amid the U.S. president’s escalating trade disputes.
Tesla shares rose as much as 2.9 percent Tuesday in New York. The stock is up 3.7 percent this year.
The youngest publicly held U.S. automaker is looking to expand its capacity and more efficiently reach global markets. Tesla’s lone car-assembly plant is in Fremont, California, where it’s built about 88,000 cars through the first half of this year, and it has a giant battery factory in neighboring Nevada. After moving ahead in China, the world’s largest market for electric vehicles, Tesla has said it will reveal plans toward the end of 2018 to build a plant in Europe.
Tesla said a year ago it was working with the Shanghai government to explore local manufacturing. Since then, production in China has become even more crucial: Last week, in response to tariffs imposed by the U.S., China increased the import duty on U.S.-made cars to 40 percent, prompting Tesla to raise prices. A plant in China also reduces shipping costs and potentially makes sourcing components more economical.
The company has boosted prices of Model S sedans and Model X crossovers in China by as much as $30,000 after Beijing imposed additional duties on American-built autos, putting its vehicles beyond the reach of more consumers in its No. 2 market globally.
In November, Musk said Tesla is about three years away from starting production in the world’s largest auto market. At the time, he suggested the plant would supply China and potentially other parts of Asia with a couple hundred thousand vehicles a year — less than half the new projection. Tesla probably will make the smaller Model 3 sedan and upcoming Model Y crossover in China, he said then, rather than the pricier Model S sedan or Model X sport utility vehicles, which often sell for more than $100,000 in the U.S.
China presents a massive growth opportunity for Tesla and rivals such as BMW AG and Daimler AG, which are seeking to take advantage of a massive and fast-growing market for new-energy vehicles. That category, which includes battery-powered, plug-in hybrid and fuel-cell automobiles, reached 777,000 units last year and could surpass 1 million this year, according to estimates by the China Association of Automobile Manufacturers. The government’s target is 7 million vehicles a year by 2025.
Tesla sold 14,779 vehicles in China last year, according to data from LMC Automotive. That gave it about 3 percent of the nation’s battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment. China accounted for 17 percent of Tesla’s 2017 revenue, according a filing with U.S. regulators.
“Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here,” the company said in a statement.
Ramping up manufacturing is critical to the carmaker being able to sustain itself financially while pursuing Musk’s mission to transition the world to battery-powered transportation. Tesla produced 5,031 Model 3s in the last week of the second quarter in its Fremont plant, meeting a target that Musk had said was crucial to generating cash and earning profit. Building from that run rate, Musk projected that the company wouldn’t need to raise more money.
The Shanghai government’s statement didn’t give any details on how much Tesla will spend on the China plant. The company had $2.7 billion in cash at the end of the first quarter.
A Goldman Sachs analyst estimated in May that Tesla may need to tap capital markets for more than $10 billion by 2020 to fund its auto-making operations, new products and its expected expansion into China. It’s turned to one of China’s tech giants before to raise money, with Tencent Holdings Ltd. spending $1.8 billion to buy a 5 percent stake in March 2017.
Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns
Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.
Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.
The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.
This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.
While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.
Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.
Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.
Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.
Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.
Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.
Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.
The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.
However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.
Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.
He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.
Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.
The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.
NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade
The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.
Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.
Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.
In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.
Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.
He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.
Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.
In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.
Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.
The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.
As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.
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