- 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.
Nigeria to Become Leading Gold Producer in West Africa – Adegbite
Adegbite Says Nigeria to Become Gold Hub in West Africa
The Minister of Mines and Steel Development, Olamilekan Adegbite, has said Nigeria is on its way to becoming a leading gold producer in West Africa.
Adegbite made the statement in Abuja while taking stock of his first year in office as minister.
He said, “Indeed, the international roadshows we have had in the past have produced fruits. Today, we have Thor exploration in Osun State through the Segilola Gold project.
“The exploration firm is projected to start producing (gold) in the first half of next year. The project is expected to create about 400 direct jobs and 1,000 indirect jobs.”
According to Adegbite, the Federal Government has licensed two gold refineries that would refine in line with the London Bullion Market Association standard.
He added, “Numerous industries will spring up when our gold economy becomes full-fledged. Some of them will include equipment leasing and repairs, logistics and transport, as gold requires a specialised means of transport, security, insurance, aggregators, and so on.”
The minister noted that for the first time, the country had mined, processed and refined gold under the Presidential Artisanal Gold Mining Development Initiative for use as part of Nigeria’s external reserves.
Adegbite also stated that the mines ministry had initiated a process that would lead to local capacity development in the production of barite.
“Presently, the barite that is used in the oil and gas industry is imported. But we are resolved to reverse this trend. As you may know, barite is a critical weighting material in drilling fluids due to its high specific gravity,” he said.
NUPENG, Lagos State Agree to Call Off Strike
NUPENG Agrees With Lagos State, Call Off Strike
The Nigeria Union of Petroleum and Gas (NUPENG) has ordered Lagos State Petroleum Tanker Drivers (PTDs) to call off its ongoing strike.
This was disclosed in a joint communique signed by the Lagos Commissioner of Energy and Mineral Resources, Olalere Odusote, and the NUPENG Deputy National President, Solomon Kilanko.
It would be recalled that Investors King had reported that NUPENG directed all PTDs to withdraw their services from Lagos State effective from Monday 10 August 2020 because of the persistent extortions and harassments of PTDs by both uniform security agencies and touts.
However, on the 10th of August, the commencement day of the strike, Lagos State government met with the leadership of NUPENG to address the union concerns and eventually agreed on a way forward.
Part of the communique reads “The Lagos State Government met today with the representatives of NUPENG, which agreed to call off its strike immediately.
“Other decisions taken at the meeting are security – the state government will meet the heads of all security agencies and secure their commitment to ensure the free passage of petroleum products vehicles given their importance to the economy.”
“Area boys’ – the menace of ‘area boys’ will be handled by relevant government agencies and a dedicated phone number will be established, within the next week to ensure the petroleum products transporters have prompt access to security agencies.”
The communique also stated that the Lagos State government will set up a standing committee to communicate with the union on an ongoing basis, saying it will help address a similar issue going forward. See the complete communique below.
Crude Oil Expands Gain on US Stimulus talks, Better Than Expected Chinese Factory Data
Crude Oil Gains on US Stimulus, Better Than Expected Chinese Factory Data
Oil prices extended its gains on Tuesday following a better than expected factory data from China and a possible agreement between Democrats and Republicans on economic stimulus.
“The oil complex is heavily reliant on that aid. We need people to be able to boost economic activity to spur demand,” said John Kilduff, partner at Again Capital in New York.
President Trump on Monday said House Speaker, Nancy Pelosi and Senator Chuck Schumer, top Democrat in the chamber of Congress, wanted to meet him to discuss or make a deal on coronavirus-related economic stimulus.
The possibility of a stimulus deal, coupled with a reduction in China’s factory deflation in the month of July due to the surge in oil prices and improved industrial activity bolstered the outlook of the energy sector.
China is the world’s largest importer of crude oil. Therefore, improved factory activity generally boosts the oil market.
Also, the announcement from Iraq that it planned to cut an additional 400,000 barrels per day in August and September to compensate for its previous overproduction above OPEC+ quota aided the oil market this week.
“This would send out a strong signal to the oil market on various levels. That said, this would also require the international companies operating in Iraq to join in with the cuts,” Commerzbank analyst Eugen Weinberg said.
The Brent crude oil, against which Nigerian oil is priced, expanded from $41.30 per barrel it traded on Monday to $45.40 per barrel on Tuesday at 10:10 am Nigerian time.
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