Rivian investment a ‘catch-up move’ for Volkswagen that could take years to pay off, advisory firm says | Canada News Media
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Rivian investment a ‘catch-up move’ for Volkswagen that could take years to pay off, advisory firm says

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4 months ago

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Volkswagen’s $5 billion investment in electrical vehicle startup Rivian is a “catch-up move” for the German automaker, but could take years to pay off, according to Cyrus Mewawalla, head of thematic intelligence at GlobalData.

Volkswagen and Rivian on Tuesday announced that the German automaker would invest as much as $5 billion in Rivian in the coming years after an initial $1 billion investment.

Rivian shares jumped about 30% in early trading on Wednesday. Meanwhile, Europe-traded shares in Volkswagen were last down 2.3% as of 2:43 p.m. London time.

“Volkswagen has fallen behind in two areas, on electric vehicles themselves, but also on autonomous driving and other software within the car. And Rivian is strong on both,” Mewawalla told CNBC’s “Street Signs Europe” on Wednesday.

The investment will therefore help Volkswagen in these areas, but the firm is notably behind in the electric vehicle space, he added.

GlobalData expects Volkswagen’s share of battery powered EVs to be just 8% this year, compared with an estimate of 15% for BYD and up to 16% for Tesla, Mewawalla said.

Volkswagen said deliveries of all-electric vehicles were down by 3.3% year on year in its 2024 first-quarter results, citing market conditions and shortages of parts. The automaker added that it delivered 136,436 all-electric vehicles in the first three months of the year.

“I think it’ll take a long time to pay off,” Mewawalla said, referring to the investment. “Whilst this is a catch-up move for VW I think it could take several years for it to make an impact on its, on its revenues.”

Volkswagen declined to comment further on the deal.

Rivian

Mewawalla signaled that a potential risk is that Rivian is focused on premium cars, whereas many EV makers are focused on the mass market. This means cheap, but high-tech Chinese-made EVs are a threat, he said.

Both the EU and U.S. have expressed concerns about cheap Chinese EVs flooding the global market and crowding out Western companies. The U.S. has raised tariffs on imported Chines EVs, while the EU has announced provisional duties on them. China and the EU are expected to start talks on the issue.

Correction: This story has been updated to correct when Volkswagen shares were traded in London. 

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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7 days ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

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2 weeks ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

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2 weeks ago

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October 10, 2024

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TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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