The Truth About Cars » High Finance http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 23 May 2015 14:36:15 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.2 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars » High Finance http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/high-finance/ Kitsap Transit Eyeing Liquor Advertising To Improve Bottom Line http://www.thetruthaboutcars.com/2015/05/kitsap-transit-eyeing-liquor-advertising-to-improve-bottom-line/ http://www.thetruthaboutcars.com/2015/05/kitsap-transit-eyeing-liquor-advertising-to-improve-bottom-line/#comments Tue, 19 May 2015 20:00:22 +0000 http://www.thetruthaboutcars.com/?p=1070978 Faced with a potential budget shortfall in the coming years, Kitsap Co., Wash.-based Kitsap Transit is eyeing liquor adverts to help with the bottom line. The move to place said adverts on its fleet came as a suggestion from the authority’s advertising partner, Titan Outdoor, KOMO-TV reports. The ad agency takes half of all revenue […]

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Kitsap_Transit_2004_Gillig_Low_Floor_774-a

Faced with a potential budget shortfall in the coming years, Kitsap Co., Wash.-based Kitsap Transit is eyeing liquor adverts to help with the bottom line.

The move to place said adverts on its fleet came as a suggestion from the authority’s advertising partner, Titan Outdoor, KOMO-TV reports. The ad agency takes half of all revenue made on ad sales related to Kitsap Transit, and is also in charge of the authority’s mobile ad program.

Executive Director John Clauson admits it would be hard to estimate how much additional revenue adding liquor advertising to the buses — adverts are only part of its budget, alongside local taxes and fare collection — but adds if doing so “adds an extra $20,000 a year, it’s tough to just walk away from it and say no.”

While the proposal would mandate “tasteful” advertising of liquor products and include responsible-drinking disclaimers, critics warn said adverts could encourage teenagers to drink. However, most riders are welcome to the idea, with reasons ranging from keeping fares low as a result of the increase in revenue, to freedom of speech for all advertisers.

The decision to go forward with the proposal may come as soon as the authority’s next board meeting June 2. If approved, Kitsap Transit would be the first transit authority in Washington state to allow liquor advertising on its fleet.

[Photo credit: Zargoman/Wikimedia Commons/CC BY-SA 3.0]

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Takata Close To Installment Agreement With Automakers Over Airbag Recalls http://www.thetruthaboutcars.com/2015/05/takata-close-to-installment-agreement-with-automakers-over-airbag-recalls/ http://www.thetruthaboutcars.com/2015/05/takata-close-to-installment-agreement-with-automakers-over-airbag-recalls/#comments Thu, 14 May 2015 19:00:43 +0000 http://www.thetruthaboutcars.com/?p=1068634 Like consumers making payments over several months for their purchases, Takata is asking automakers to pay its part of the airbag recall in installments. The automakers are reportedly close to sealing the deal that would grant the beleaguered supplier the ability to spread its financial responsibility for the recalls instead of paying everything all at […]

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Takata TTAC Style

Like consumers making payments over several months for their purchases, Takata is asking automakers to pay its part of the airbag recall in installments.

The automakers are reportedly close to sealing the deal that would grant the beleaguered supplier the ability to spread its financial responsibility for the recalls instead of paying everything all at once, Bloomberg reports.

Takata is also meeting with its bankers to ensure it has the cash flow needed to make good on those payments, with an anonymous source stating the supplier hasn’t created the conditions that would merit a call-back of its loans by the banks during FY 2014.

The deal follows an ongoing recall action of Takata’s airbags, affecting over 28 million vehicles from 10 different automakers around the globe, with Honda bearing the brunt of the crisis as the supplier’s biggest customer.

[Photo credit: Takata]

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General Motors Investing $1B Into Warren Tech Center, Adding 2,600 Jobs http://www.thetruthaboutcars.com/2015/05/general-motors-investing-1b-into-warren-tech-center-adding-2600-jobs/ http://www.thetruthaboutcars.com/2015/05/general-motors-investing-1b-into-warren-tech-center-adding-2600-jobs/#comments Thu, 14 May 2015 18:00:15 +0000 http://www.thetruthaboutcars.com/?p=1068602 General Motors announced Thursday it will invest $1 billion into its Warren Tech Center in Warren, Mich., adding 2,600 jobs through 2018. The investment will see renovations, expansions and new additions to the tech center, with work set to start this month, The Detroit News reports. Included in the investment are new design studios, an […]

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Renaissance Center Circa May 2009

General Motors announced Thursday it will invest $1 billion into its Warren Tech Center in Warren, Mich., adding 2,600 jobs through 2018.

The investment will see renovations, expansions and new additions to the tech center, with work set to start this month, The Detroit News reports.

Included in the investment are new design studios, an IT building, additional parking and testing facilities, and revamped R&D buildings, as well as “extensive office upgrades” and other interior remodeling through most of the buildings at the center.

The 2,600 new jobs coming into the campus are expected to be salaried positions in engineering, IT and design, though GM didn’t state whether any of the jobs were transfers from other locations, as well as when those jobs would begin appearing.

The announcement follows one made last month involving a $139.5-million investment into the Tech Center’s Pre-Production Operations facility, a part of GM’s overall $5.4-billion investment plan to modernize its plants through 2017.

[Photo credit: Robert Emperley/Flickr/CC BY-SA 2.0]

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Oil Bull Market Rally Could Soon Falter Without China http://www.thetruthaboutcars.com/2015/05/oil-bull-market-rally-could-soon-falter-without-china/ http://www.thetruthaboutcars.com/2015/05/oil-bull-market-rally-could-soon-falter-without-china/#comments Wed, 13 May 2015 19:00:09 +0000 http://www.thetruthaboutcars.com/?p=1067698 Those hoping to make it big on oil commodities would do well to bet against the bulls on parade, as China won’t be around to keep prices afloat this time. During the early days of the Great Recession, oil prices quickly regained footing thanks to China’s then-booming economic standing, Bloomberg reports. However, fuel use in […]

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PetroChina-Station

Those hoping to make it big on oil commodities would do well to bet against the bulls on parade, as China won’t be around to keep prices afloat this time.

During the early days of the Great Recession, oil prices quickly regained footing thanks to China’s then-booming economic standing, Bloomberg reports. However, fuel use in the nation has slowed by half of what it was in the previous decade, following global trends of decreased consumption.

Global demand is expected to grow 1.3 million barrels/day to 94.58 million in 2016 according to the Energy Information Administration, with China taking 11.34 million barrels/day; the U.S. will use 19.44 million/day, lower than what was used in 2008. The figure is an increase of 3.1 percent over this year, yet pales when compared to the 11-percent jump in 2010. The spike delivered a boost to oil prices of 15 percent.

Combined with rising oil production pushing toward a glut in supply — to the tune of 1.8 million barrels/day in inventory currently, and 900,000/day during H2 2015 — China’s economic power faltering despite the government’s best efforts, and technological advancements reducing overall oil consumption, the global demand for oil will remain low for some time to come.

[Photo credit: Otebig/Wikimedia Commons/CC PD 1.0]

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General Motors Set To Announce Major Investment For Warren Tech Center http://www.thetruthaboutcars.com/2015/05/general-motors-set-to-announce-major-investment-for-warren-tech-center/ http://www.thetruthaboutcars.com/2015/05/general-motors-set-to-announce-major-investment-for-warren-tech-center/#comments Wed, 13 May 2015 16:00:23 +0000 http://www.thetruthaboutcars.com/?p=1067370 General Motors is expected to announce Thursday its plans for the Warren Tech Center, including its proposed $1-billion investment into the facility. Both Warren, Mich. city officials and inside sources have stated GM could invest up to $1 billion throughout the entire campus, The Detroit News reports. The proposed investment would follow the $139.5-million investment […]

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GMTechCenter

General Motors is expected to announce Thursday its plans for the Warren Tech Center, including its proposed $1-billion investment into the facility.

Both Warren, Mich. city officials and inside sources have stated GM could invest up to $1 billion throughout the entire campus, The Detroit News reports. The proposed investment would follow the $139.5-million investment made to the Tech Center last month for a new body shop and improvements to the stamping plant at the facility’s Pre-Production Operations wing, part of the automaker’s overall $5.4-billion investment plan for its plants in the United States.

According to GM’s tax abatement application to the Warren City Council, the automaker is considering putting $419.4 million into expansion and renovation of the Tech Center, including $180 million for the design studio, a total of $117.7 million for a yet-to-be-determined building and unidentified parking, and $20 million for renovation and expansion of the center’s Advanced Engineering Center lab. The overall project would retain 3,800 employees and add 2,600 more in engineering, IT, R&D and other categories over the years.

Though details surrounding the announcement are scant, representatives have stated the 50-percent tax abatement approval — meant to save GM $97 million in property taxes over the next decade and beyond — was key to getting the project off the ground.

[Photo credit: Local hero/Wikimedia Commons/CC BY-SA 3.0]

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Riviera Tool’s Old Penny Stock Erupts After Tesla Purchase Announcement http://www.thetruthaboutcars.com/2015/05/riviera-tools-old-penny-stock-erupts-tesla-purchase-announcement/ http://www.thetruthaboutcars.com/2015/05/riviera-tools-old-penny-stock-erupts-tesla-purchase-announcement/#comments Fri, 08 May 2015 18:00:47 +0000 http://www.thetruthaboutcars.com/?p=1064322 Tesla’s announcement Thursday of its purchase of Riviera Tool LLC sent shares of the supplier’s old penny stock soaring, but it may have been for nothing. In over-the-counter “pink-sheet” trading, the penny stock for Riviera Tool Co. — the former name of the Grand Rapids, Mich.-based supplier — jumped 10,000 percent from less than a […]

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Perepetual Penny Calendar

Tesla’s announcement Thursday of its purchase of Riviera Tool LLC sent shares of the supplier’s old penny stock soaring, but it may have been for nothing.

In over-the-counter “pink-sheet” trading, the penny stock for Riviera Tool Co. — the former name of the Grand Rapids, Mich.-based supplier — jumped 10,000 percent from less than a penny to a peak of 60 cents a share, Detroit Free Press reports. The old stock would later close at 22 cents, an increase of 4,400 percent when compared to its worth hours earlier. The OTC trading saw 16 million shares exchange hands after a lull in activity lasting over a month.

However, the shares may not hold much value at all. In 2007, an investment into the supplier by Laurus Master Fund, Ltd. took Riviera Tool off the American Stock Exchange trading floor, though a number of public shares landed in the pink sheet market, where traders buy and sell low-value stocks. Riviera became an LLC once taken off the market, rendering the old shares as little more than keepsakes.

Riviera Tool is responsible for producing stamping parts for Tesla, and will be renamed Tesla Tool & Die by its new owner.

[Photo credit: Windell Oskay/Flickr/CC BY 2.0]

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Fitch: Marginal Losses Projected For Subprime Auto Loans In 2015 http://www.thetruthaboutcars.com/2015/05/fitch-marginal-losses-projected-subprime-auto-loans-2015/ http://www.thetruthaboutcars.com/2015/05/fitch-marginal-losses-projected-subprime-auto-loans-2015/#comments Wed, 06 May 2015 20:00:22 +0000 http://www.thetruthaboutcars.com/?p=1063010 Despite the risks subprime auto loans carry, the market is likely to experience only marginal losses through 2015 according to a recent analyst forecast. Analysts at Fitch Ratings found in Q1 2015 subprime delinquencies of 60 days and above ticked up 3.56 percent, compared to 2.8 percent in 2014, Automotive News reports. Net losses on […]

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Buy Here Pay Here Subprime Financing Extravaganza Circa September 2014

Despite the risks subprime auto loans carry, the market is likely to experience only marginal losses through 2015 according to a recent analyst forecast.

Analysts at Fitch Ratings found in Q1 2015 subprime delinquencies of 60 days and above ticked up 3.56 percent, compared to 2.8 percent in 2014, Automotive News reports. Net losses on an annualized basis also went up in the quarter, from 4.96 percent last year, to 6.58 percent now.

Though those increases have given cause for alarm among analysts and the federal government alike, as well as the ever-increasing volume for subprime loans, Fitch claims the loans are performing as they should. However, the rating agency expects the performance to deteriorate over the course of the year, citing factors including easier lending approvals and lower wholesale prices as potential problems.

[Photo credit: Daniel Oines/Flickr/CC BY 2.0]

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Luxury Brands Doing Well On The Back Of Lower-End Models http://www.thetruthaboutcars.com/2015/05/luxury-brands-well-back-lower-end-models/ http://www.thetruthaboutcars.com/2015/05/luxury-brands-well-back-lower-end-models/#comments Mon, 04 May 2015 19:00:17 +0000 http://www.thetruthaboutcars.com/?p=1061074 Want to know why Mercedes, Audi, Lexus and all of the other luxury players are doing so well these days? Because of less-costly, lower-end luxury models. The low-end models, whose starting base prices are between $31,000 and $35,000, are pulling in new customers who desire the status a given badge conveys, USA Today reports. Edmunds.com […]

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2014-CLA-CLASS-COUPE-GALLERY-023-WR-D

Want to know why Mercedes, Audi, Lexus and all of the other luxury players are doing so well these days? Because of less-costly, lower-end luxury models.

The low-end models, whose starting base prices are between $31,000 and $35,000, are pulling in new customers who desire the status a given badge conveys, USA Today reports. Edmunds.com senior analyst Jessica Caldwell explains:

Luxury sales have increased as products have become affordable to a wider audience. Of late, luxury car brands have focused on the lower end of the price spectrum, introducing models such as the Lexus NX, Mercedes-Benz GLA, BMW X1 and Porsche Macan, which are slotted below existing popular SUVs on the price spectrum.

Caldwell adds leasing is also helping bolster the luxury brands’ high status, as most of their offerings are leased. Those who’d rather own their low-end luxury ride opt for long-term financing with low interest rates, with payments spread out over several years.

The brands’ consumer base is also varied. Kelley Blue Book analyst Akshay Anand said buyers were coming from every corner, “especially as Millennials start to create more wealth for themselves and continue to be as aspirational as ever,” helped by an improving economy.

[Photo credit: Mercedes-Benz]

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GM Gives Away 2016 Chevrolet Malibu, Invests $174 Million In Kansas http://www.thetruthaboutcars.com/2015/05/gm-gives-away-2016-chevrolet-malibu-invests-174-million-kansas/ http://www.thetruthaboutcars.com/2015/05/gm-gives-away-2016-chevrolet-malibu-invests-174-million-kansas/#comments Mon, 04 May 2015 18:00:32 +0000 http://www.thetruthaboutcars.com/?p=1060954 In celebration of a key milestone, General Motors CEO Mary Barra gave away a 2016 Chevrolet Malibu Monday, a feat that could never happen with the old Malibu, even with Oprah’s help. The Malibu was given to retired U.S. Army corporal and Purple Heart recipient Trent Brining, who received his medal when a rocket-propelled grenade […]

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2016-Chevrolet-Malibu-007

In celebration of a key milestone, General Motors CEO Mary Barra gave away a 2016 Chevrolet Malibu Monday, a feat that could never happen with the old Malibu, even with Oprah’s help.

The Malibu was given to retired U.S. Army corporal and Purple Heart recipient Trent Brining, who received his medal when a rocket-propelled grenade delivered severe injuries to his arms and legs while on patrol in Baghdad in 2005. Brining is currently a financial advisor for a local credit union near Overland Park, Kansas, 30 minutes south of where his new Malibu will be assembled later this year in nearby Fairfax.

Over the next two days, GM will select four other individuals to receive a new vehicle built in the region where they reside. The giveaways are in celebration of the automaker’s 500-millionth vehicle to leave the assembly line. Barra added her company expects to sell “more than 1,000 new vehicles per hour, 24 hours per day” during 2015, a figure that would deliver an estimated 10 million units in volume by the end of the year.

Speaking of Fairfax Assembly, Chevrolet global president Alan Batey announced the plant would receive a $174-million investment for new equipment and technology to help assemble the 2016 Malibu. The investment is part of GM’s overall $5.4-billion investment scheme to help improve its standing for years to come. Monday’s announcement follows the first one made last week in Michigan, where three facilities will split $783.5 million for similar improvements.

[Image credit: Chevrolet]

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Gales: Lotus Will Show Profit By End Of FY 2016 http://www.thetruthaboutcars.com/2015/05/gales-lotus-will-show-profit-end-fy-2016/ http://www.thetruthaboutcars.com/2015/05/gales-lotus-will-show-profit-end-fy-2016/#comments Fri, 01 May 2015 16:00:57 +0000 http://www.thetruthaboutcars.com/?p=1058418 After going broke for so long, Lotus Cars CEO Jean-Marc Gales says his company will be back in the black by March 2017, when FY 2016 ends. To do this, Gales implemented cost-cutting measures while improving the current lineup to help increase sales and profits, Automotive News Europe reports. In the short term, this meant […]

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Lotus Evora S Circa August 2013

After going broke for so long, Lotus Cars CEO Jean-Marc Gales says his company will be back in the black by March 2017, when FY 2016 ends.

To do this, Gales implemented cost-cutting measures while improving the current lineup to help increase sales and profits, Automotive News Europe reports. In the short term, this meant making some changes to the automaker’s offerings, such as adding an automatic transmission to the Exige, and refocusing the facelifted U.S.-bound Evora to better compete against the Porsche 911 and Audi R8. Gales said the U.S. would be the Evora’s biggest market as it leads the charge back to these shores after federal crash standards kept the model out for 2015.

At home in Hethel, England, 260 were cut from the workforce of 1,250, less than the 325 Gales had planned to cut in September 2014. The CEO also cut back consulting and engineering work conducted by Lotus Engineering, focusing the engineering arm on developing the automaker’s lineup, as well as combing through the supply chain to replace larger suppliers with smaller ones.

On the sales front, 2,015 cars left the showroom floor during FY 2014, an increase of 55 percent compared to the previous year’s 1,403; Gales is aiming for 3,500 sold by 2016. The increase is helped by an expansion of its dealerships, which stood at 174 at the end of March. He said his goal is to have 200 by the end of 2015.

As for profits, Gales said that losses were “massively reduced” compared to FY 2014’s £65.6 million ($100 million USD), and FY 2013’s £159.4 million ($242.2 million). He adds that he expects to see a profit for Lotus by the end of FY 2016, an experience the company hasn’t had “from the car side in over 20 years.”

[Photo credit: Vetatur Fumare/Flickr/CC BY-SA 2.0]

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AAA: Average Annual Driving Costs Fall 2 Percent In 2015 http://www.thetruthaboutcars.com/2015/04/aaa-average-annual-driving-costs-fall-2-percent-2015/ http://www.thetruthaboutcars.com/2015/04/aaa-average-annual-driving-costs-fall-2-percent-2015/#comments Tue, 28 Apr 2015 19:00:48 +0000 http://www.thetruthaboutcars.com/?p=1055737 According to AAA’s 2015 Your Driving Costs study, annual driving costs costs fell 2 percent to an average of $8,698 in 2015. The annual study, which looks at the associated costs in owning and maintaining a typical sedan driven 15,000 miles a year, found that fuel costs fell nearly 14 percent to 11.2 cents per […]

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AAA Your Driving Costs 2015 Infographic

According to AAA’s 2015 Your Driving Costs study, annual driving costs costs fell 2 percent to an average of $8,698 in 2015.

The annual study, which looks at the associated costs in owning and maintaining a typical sedan driven 15,000 miles a year, found that fuel costs fell nearly 14 percent to 11.2 cents per mile, while finance charges came down 21 percent to just $669 per year. The former is due to a combination of falling gas prices at the pump and improved fuel economy, the latter due to low finance rates amid rising sales and heavy dealer competition.

However, vehicle depreciation climbed 4.1 percent to $3,654 as new-car sales help push used and off-lease models back onto the lot. Insurance trickled up nearly 9 percent to $1,115/year for an average policy, mainly because of higher-cost modern features linked to safety, use of lightweight materials, and newer connected-vehicle systems.

Maintenance costs barely rose to just over 5 cents/mile in 2015 – though owners are behind on routine maintenance – while licensing, registration and taxes totaled $665 a year on average, thanks to slightly higher prices on the showroom floor. Tires held their ground as a result of the dynamics and competitiveness of the market, with costs rising to just 0.98 cents/mile.

Among the vehicle types factored into the annual average, owners of minivans and SUVs will continue to fare well at the pump and in financing their vehicles, as those vehicles average 0.625 cents and 0.708 cents per mile in 2015. Owners of large sedans face the highest average cost at 0.710 cents/mile, while midsize and small sedan owners pay 0.581 cents and 0.449 cents for every mile driven, respectively.

[Image credit: AAA]

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City Officials Ready To Approve Incentives For Arlington Assembly Expansion Plan http://www.thetruthaboutcars.com/2015/04/city-officials-ready-approve-incentives-arlington-assembly-expansion-plan/ http://www.thetruthaboutcars.com/2015/04/city-officials-ready-approve-incentives-arlington-assembly-expansion-plan/#comments Tue, 28 Apr 2015 17:00:01 +0000 http://www.thetruthaboutcars.com/?p=1055641 City officials in Arlington, Texas will vote Tuesday evening to approve incentives for General Motors’ $1.2-billion expansion of Arlington Assembly. Mayor Robert Cluck says the incentive package – including a reduction of real estate and business taxes by 80 percent over 10 years and waived construction and development permits – is in exchange for an […]

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2015 Chevrolet Suburban LTZ

City officials in Arlington, Texas will vote Tuesday evening to approve incentives for General Motors’ $1.2-billion expansion of Arlington Assembly.

Mayor Robert Cluck says the incentive package – including a reduction of real estate and business taxes by 80 percent over 10 years and waived construction and development permits – is in exchange for an expansion that would add 589 jobs to the factory, Detroit Free Press reports. Cluck added that his city “had a beautiful relationship with General Motors,” and sees no issue with the package being passed.

In addition to the new jobs, the plan would add 1.2 million square feet and approximately $1 billion in equipment to the factory floor, with $300 million going toward building improvements for the 60-year-old facility that assembles Chevrolet’s Tahoe and Suburban SUVs, as well as GMC’s Yukon and Yukon XL models, and Cadillac’s Escalade. A spokeswoman for GM declined to offer anything more specific about the plans, claiming that the automaker had “nothing to announce at this time.”

The expansion comes as demand for the aforementioned SUVs have climbed 51 percent in Q1 2015 when compared to the same period in 2014. The demand has the 4.4 million-square-foot factory operating on three shifts six to seven days per week just to keep pace.

[Photo credit: Chevrolet]

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Norway Set To Review EV Incentives Amid Soaring Sales http://www.thetruthaboutcars.com/2015/04/norway-set-review-ev-incentives-amid-soaring-sales/ http://www.thetruthaboutcars.com/2015/04/norway-set-review-ev-incentives-amid-soaring-sales/#comments Tue, 21 Apr 2015 16:00:50 +0000 http://www.thetruthaboutcars.com/?p=1049953 The law of unintended consequences has found another victim in Norway as the nation re-assesses its electric vehicle incentives amid soaring sales. Monday marked the 50,000th EV sold in Norway since the nation implemented incentives in 2012 meant to encourage electric-vehicle adoption among its citizens. The incentive includes toll and parking fee exemptions, free use […]

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Tesla Model S delivery to Høyres Nikolai Astrup in Norway

The law of unintended consequences has found another victim in Norway as the nation re-assesses its electric vehicle incentives amid soaring sales.

Monday marked the 50,000th EV sold in Norway since the nation implemented incentives in 2012 meant to encourage electric-vehicle adoption among its citizens. The incentive includes toll and parking fee exemptions, free use of charging stations, and bus-lane usage in addition to the usual tax credit scheme, Reuters reports. The milestone arrived three years earlier than expected by the government, whose official data shows that one-fifth of 2015 new-car sales in Norway are of electric models. Norway, a nation of 5.1 million, now accounts for one-third of all battery-powered vehicle sales in Europe based on 2014 sales figures.

As such, the nation’s finance ministry is looking to revise those incentives, especially in light of losing kr3 billion to kr4 billion ($380 million to $510 million USD) in revenue, as well as complaints about increased sales of the Tesla Model S, which made up 3 percent of overall EV sales last year. The latter issue has led to calls from critics to remove the incentives for wealthy consumers.

The finance ministry will present the outcome of its review when the revised budget is presented May 1.

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Ford To Announce $2.5B Investment In Mexico On 90th Anniversary http://www.thetruthaboutcars.com/2015/04/ford-announce-2-5b-investment-mexico-90th-anniversary/ http://www.thetruthaboutcars.com/2015/04/ford-announce-2-5b-investment-mexico-90th-anniversary/#comments Wed, 15 Apr 2015 14:00:15 +0000 http://www.thetruthaboutcars.com/?p=1044762 This Friday, Ford will announce a $2.5-billion investment plan for two of its factories in Mexico. According to Reuters, Ford will spend $1.3 billion to expand its engine production facility in northern Chihuahua for two new diesels, with the remaining $1.2 billion to go a transmission plant in Guanajuato. A government representative said the Chihuahua […]

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Ford Chihuahua Plant in Mexico

This Friday, Ford will announce a $2.5-billion investment plan for two of its factories in Mexico.

According to Reuters, Ford will spend $1.3 billion to expand its engine production facility in northern Chihuahua for two new diesels, with the remaining $1.2 billion to go a transmission plant in Guanajuato. A government representative said the Chihuahua investment would create 4,000 jobs as a result.

The announcement will be made in Mexico City in celebration of Ford’s 90th anniversary in Mexico, with Mexico president Enrique Peña Nieto set to attend. Ford’s previous major investment occurred in 2008, when the automaker spent $3 billion to update the Cuautitlan plant for production of the Fiesta.

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Reedy: CarMax Lending Arm Won’t Fully Play In Subprime Market http://www.thetruthaboutcars.com/2015/04/reedy-carmax-lending-arm-wont-fully-play-subprime-market/ http://www.thetruthaboutcars.com/2015/04/reedy-carmax-lending-arm-wont-fully-play-subprime-market/#comments Thu, 09 Apr 2015 12:00:40 +0000 http://www.thetruthaboutcars.com/?p=1041145 Though CarMax’s lending arm will press forward with its subprime lending test program, it won’t be a major player in the subprime game. According to Automotive News, CarMax CFO Tom Reedy said as much during an earnings call with the media and analysts this month, stating that the company has three partners already doing well […]

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Carmax

Though CarMax’s lending arm will press forward with its subprime lending test program, it won’t be a major player in the subprime game.

According to Automotive News, CarMax CFO Tom Reedy said as much during an earnings call with the media and analysts this month, stating that the company has three partners already doing well for CarMax in the subprime market; thus, no reason for CarMax Auto Finance to take a greater role in said market like it does in the prime lending market.

For now, the lending arm will continue loan originations at 5 percent of subprime vehicle sales for the duration of the testing period, which began January 2014. The arm originated $72.2 million of receivables under the program through the end of February 2015.

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ChemChina, Finanzaria Buying Pirelli In €7.1B Takeover Deal http://www.thetruthaboutcars.com/2015/03/chemchina-finanzaria-buying-pirelli-7-1b-takeover-deal/ http://www.thetruthaboutcars.com/2015/03/chemchina-finanzaria-buying-pirelli-7-1b-takeover-deal/#comments Tue, 24 Mar 2015 11:00:41 +0000 http://www.thetruthaboutcars.com/?p=1028233 Should things go as planned, China National Chemical Corp. — ChemChina — will buy into Pirelli in a €7.1 billion ($7.7 billion USD) deal. Automotive News reports the deal could bring premium-tire technology to ChemChina, while giving Pirelli a huge jump in the Chinese domestic market. However, the chemical company’s bid of €15/share last weekend […]

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Pirelli F1 Tire Range

Should things go as planned, China National Chemical Corp. — ChemChina — will buy into Pirelli in a €7.1 billion ($7.7 billion USD) deal.

Automotive News reports the deal could bring premium-tire technology to ChemChina, while giving Pirelli a huge jump in the Chinese domestic market. However, the chemical company’s bid of €15/share last weekend may be the beginning of a protracted takeover as it and Pirelli’s largest investor, Cam Finanziaria, attempt to secure 90 percent of the stock to take the tire company off of the trading floor; the share price climbed to €15.76 Monday.

The terms of the deal would give ChemChina 50.1 percent of the company, Finanziaria 49.9 percent, and would begin with the former paying €15/share for Finanziaria’s 26.2 percent of Pirelli, followed by a public tender for the rest of the company at the same price. Should that fail, however, ChemChina could merge its 66 percent with Finanziaria’s holdings to force a delisting. Pirelli chair and CEO Marco Tronchetti Provera would remain CEO under the deal, while ChemChina will seek a new chair.

The Sino-Italian buy-in is part of a number of takeovers of Italian companies by Chinese buyers, and would be the fifth-largest deal by a state-owned enterprise.

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More US Consumers Signing Long-Term Auto Loans http://www.thetruthaboutcars.com/2015/03/us-consumers-signing-long-term-auto-loans/ http://www.thetruthaboutcars.com/2015/03/us-consumers-signing-long-term-auto-loans/#comments Fri, 20 Mar 2015 14:00:23 +0000 http://www.thetruthaboutcars.com/?p=1025785 In the past, six-year auto loans were few and far between. Today, more of those loans are being issued, with seven- and eight-year loans gaining popularity. NPR reports such loans are helping to fuel a boom in U.S. new-car sales, with one-third of the loans lasting 74 months and beyond. AutoPacific analyst Ed Kim says […]

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Signing his life and wallet away for the next six or so years with a long-term auto loan agreement

In the past, six-year auto loans were few and far between. Today, more of those loans are being issued, with seven- and eight-year loans gaining popularity.

NPR reports such loans are helping to fuel a boom in U.S. new-car sales, with one-third of the loans lasting 74 months and beyond. AutoPacific analyst Ed Kim says the cars are one of the reasons for the long loans:

Consumers are demanding a lot more technology in their vehicles, infotainment technologies. There’s also a lot more safety features that are in vehicles right now. Emissions and efficiency technology that are in vehicles right now, that are making vehicles cost a lot more.

Kim adds that the main driver is that most consumers are still crawling out of the Great Recession, which Experian Automotive’s Melinda Zabritski says isn’t much of a problem as far as lending goes. She says that while it would be sensible to take on 36- or 48-month loans on a new vehicle, “the average consumer just can’t afford that.”

Critics counter that the long-term loans could hurt consumers and automakers alike in the near- and long-term. Consumer advocate Mike Sante states that those who are taking out those loans have no business doing so in the first place, and should buy a less expensive new or used vehicle with a loan of no more than four years. Honda Executive Vice President John Mendel, whose company offers 36- and 48-month loans, says loans beyond five years are too long, and adds that he hopes his competitors come to their senses.

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House Republicans Gunning For End Of Auto Technology Loan Program http://www.thetruthaboutcars.com/2015/03/house-republicans-gunning-end-auto-technology-loan-program/ http://www.thetruthaboutcars.com/2015/03/house-republicans-gunning-end-auto-technology-loan-program/#comments Fri, 20 Mar 2015 11:00:04 +0000 http://www.thetruthaboutcars.com/?p=1025721 Should Republicans in the U.S. House have their way, the loan program meant to foster development of advanced automotive technologies would be killed. The Detroit News reports the $25 billion Advanced Technology Vehicle Manufacturing Program, which issued loans between its establishment in 2008 and the last fulfilled request in 2011 to companies like Tesla, Nissan […]

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US Rep Tom Price with Republican Members of US House Budget Committee

Should Republicans in the U.S. House have their way, the loan program meant to foster development of advanced automotive technologies would be killed.

The Detroit News reports the $25 billion Advanced Technology Vehicle Manufacturing Program, which issued loans between its establishment in 2008 and the last fulfilled request in 2011 to companies like Tesla, Nissan and Ford, would see the remaining $16.5 billion be rescinded as part of the House Budget Committee’s budget proposal:

The budget rescinds all unobligated balances from the president’s stimulus green energy programs. The government cannot recover taxpayer dollars from failed projects like Solyndra, but it can protect taxpayers from being on the hook for future boondoggles.

Said “boondoggles” include the aforementioned solar panel startup Solyndra ($536 million received; failed in 2011), Fisker ($529 million; now under new ownership), and Vehicle Production Group ($50 million received; U.S. Department of Energy sold the loan to AM General for $3 million). On the other hand, Ford ($5.9 billion), Nissan ($1.4 billion) and Tesla ($465 million) have done well with their loans, with Tesla paying off its loan nine years early.

The effort to kill the program has been ongoing since the collapse of Solyndra, but until now, the House Republicans haven’t had support from the Senate. Now under Republican control, however, Congress could do away with the program barring a veto from President Barack Obama.

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US New-Truck Leases Rise Thanks To Higher Residuals, Transactions, More Content http://www.thetruthaboutcars.com/2015/03/us-new-truck-leases-rise-thanks-higher-residuals-transactions-content/ http://www.thetruthaboutcars.com/2015/03/us-new-truck-leases-rise-thanks-higher-residuals-transactions-content/#comments Wed, 18 Mar 2015 10:00:01 +0000 http://www.thetruthaboutcars.com/?p=1023753 Forget about leasing Benzes and Lexuses: trucks are the new hotness, thanks to higher residuals and transaction prices, as well as more content. Automotive News reports leases accounted for 14 percent of light-duty truck sales in the United States, which is smaller than the 20 percent overall figure for U.S. new-car leases, as well as […]

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Forget about leasing Benzes and Lexuses: trucks are the new hotness, thanks to higher residuals and transaction prices, as well as more content.

Automotive News reports leases accounted for 14 percent of light-duty truck sales in the United States, which is smaller than the 20 percent overall figure for U.S. new-car leases, as well as the ~50 percent figure for luxury vehicle leases.

For automakers, this means they can continue to ride the strongest streak in sales the light truck market has experienced in current times, while also bringing customers into showrooms every three years. In exchange, they also gain less profit from leases — even with higher residuals — and more risk on whether or not the resale value will be strong in three years’ time, especially with external factors like fuel prices and the strength of the economy when the leases are up.

Factors driving the current leasing boom in the light-duty truck segment include higher average transaction prices — hitting a new average high of $41,029 in 2014 — the aforementioned residuals that are several points higher now than in 2010 — leading to more cash on the hood and other deals for potential lessees — and more content and features, like Wi-Fi, luxurious materials and advanced connected-vehicle systems.

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Ally Financial Offering 84-Month Loans Amid Industry Risk Concerns http://www.thetruthaboutcars.com/2015/03/ally-financial-offering-84-month-loans-amid-industry-risk-concerns/ http://www.thetruthaboutcars.com/2015/03/ally-financial-offering-84-month-loans-amid-industry-risk-concerns/#comments Thu, 12 Mar 2015 14:00:02 +0000 http://www.thetruthaboutcars.com/?p=1020481 Though most lenders aren’t comfortable with the idea of 84-month auto loans, Ally Financial is going full steam ahead with such loans. Automotive News reports the former financial arm of General Motors — joining Toyota Financial Services in the seven-year lending game — is taking on 84-month loans because, per CEO Jeffrey Brown, the lender […]

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Ally NYSE Trading Floor

Though most lenders aren’t comfortable with the idea of 84-month auto loans, Ally Financial is going full steam ahead with such loans.

Automotive News reports the former financial arm of General Motors — joining Toyota Financial Services in the seven-year lending game — is taking on 84-month loans because, per CEO Jeffrey Brown, the lender hadn’t taken enough risk over the past two to three years. Representative Gina Proia adds that the loan terms would be offered to well-qualified consumers in 24 states in 2015 as part of Ally’s commitment “to offering competitive products designed to help dealers provide their customers with a variety of options that meet a range of consumer credit needs and monthly payment preferences.”

However, Ally and Toyota Financial are among the only ones to offer such terms, as most lenders want their customers to come back more often. Financial observers, meanwhile, are watching longer-term loans with a cautious eye, citing concerns of risks to the United States economy down the road if things were to follow the same path as the housing bubble in 2007 and 2008.

Moody’s Analytics senior director Cristian deRitis is among those observers, though he isn’t worried about the risks attached, citing higher lending standards for 84-month loans, the small market size compared to the overall auto financing market, and the consumer base for most of the loans coming from credit unions, whose members don’t fall into delinquency often.

Speaking of the overall market, the average length for an auto loan is 66 months for new vehicles in Q4 2014, 62 months for used models. Both figures are up one month over the same period in 2013.

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Auto Lending Rising As Access To Credit Opens Up http://www.thetruthaboutcars.com/2015/03/auto-lending-rising-access-credit-opens/ http://www.thetruthaboutcars.com/2015/03/auto-lending-rising-access-credit-opens/#comments Tue, 10 Mar 2015 14:00:37 +0000 http://www.thetruthaboutcars.com/?p=1019490 With auto lending easier to come by these days, bank regulators and analysts are keeping their eyes open for potential signs of trouble. According to The Detroit Bureau, the Federal Reserve Bank of Cleveland found that newly originated auto loans in Q3 2014 reached $105 billion, the highest level of originations since 2005. The high […]

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Discussing some auto financing

With auto lending easier to come by these days, bank regulators and analysts are keeping their eyes open for potential signs of trouble.

According to The Detroit Bureau, the Federal Reserve Bank of Cleveland found that newly originated auto loans in Q3 2014 reached $105 billion, the highest level of originations since 2005. The high level of originations are attributed to an increased demand for vehicles and easing lending standards.

Researchers Emre Ergungor and Caitlin Treanor add that those with good and bad credit scores are landing the loans, with banks taking the higher-rated consumers and finance companies going for all levels of risk, especially the subprime consumers.

Other factors driving the new credit boom include increased consumer confidence, job opportunities, and the brief respite in fuel prices. However, the boom has attracted the federal regulators, who are planning to go through the standards and practices of several large lending companies for potential liability and discrimination issues.

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Study: Millennial Fastest-Growing Auto Lending Segment http://www.thetruthaboutcars.com/2015/03/study-millennial-fastest-growing-auto-lending-segment/ http://www.thetruthaboutcars.com/2015/03/study-millennial-fastest-growing-auto-lending-segment/#comments Thu, 05 Mar 2015 15:00:01 +0000 http://www.thetruthaboutcars.com/?p=1015978 Alleged to not be interested in cars or driving them, millennials are the fastest-growing segment of car buyers as far as lending goes, per a new study. According to Automotive News, credit-reporting company TransUnion found the group represented 27 percent of overall auto loans and lease originations made in 2014, up from just 16 percent […]

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hipster lyft millennials

Alleged to not be interested in cars or driving them, millennials are the fastest-growing segment of car buyers as far as lending goes, per a new study.

According to Automotive News, credit-reporting company TransUnion found the group represented 27 percent of overall auto loans and lease originations made in 2014, up from just 16 percent in 2009. Senior vice president and automotive business leader Jason Laky says this is due to both an improving economy and millennials’ entering into the next phase of their lives:

They’re maturing into their adulthood. They’re getting to the point where they’re employed, they’re having families, they’re moving to a place where they’re financing just like previous generations.

Meanwhile, Gen Xers were the largest segment in auto lending, accounting for 34 percent of loans and originations in 2014. Boomers followed close behind with 32 percent, down from 34 percent in 2013. Average balances per generation are $21,779 for Gen X, $21,055 for boomers, and $18,678 for millennials, the last group experiencing the largest jump in average outstanding balances at 4.1 percent.

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Buffett, Soros Boost Stakes In General Motors In Q4 2014 http://www.thetruthaboutcars.com/2015/02/buffett-soros-boost-stakes-general-motors-q4-2014/ http://www.thetruthaboutcars.com/2015/02/buffett-soros-boost-stakes-general-motors-q4-2014/#comments Thu, 19 Feb 2015 14:00:11 +0000 http://www.thetruthaboutcars.com/?p=1004058 While Harry J. Wilson wants General Motors to buy-back $8 billion in shares, Warren Buffett and George Soros have boosted their stakes in the company. The Wall Street Journal reports Buffett’s Berkshire Hathaway increased its stake in GM 1 million shares to a total of 41 million during Q4 2014. Meanwhile, Soros Fund Management added […]

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GM First Day as a Public Company Celebration

While Harry J. Wilson wants General Motors to buy-back $8 billion in shares, Warren Buffett and George Soros have boosted their stakes in the company.

The Wall Street Journal reports Buffett’s Berkshire Hathaway increased its stake in GM 1 million shares to a total of 41 million during Q4 2014. Meanwhile, Soros Fund Management added 728,938 shares in the same period, boosting overall holdings to 4.9 million.

Both purchases were made prior to Wilson’s announcement that he would not only call for the buyback — citing concerns about how the automaker isn’t spending its $25-billion “fortress balance sheet” — but to also push for a seat on its board to help further the cause. Wilson was hired by President Barack Obama to help GM in its bankruptcy proceedings in 2009.

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WSJ To Tesla: Cast Aside Corporate Welfare To Improve Image http://www.thetruthaboutcars.com/2015/02/wsj-tesla-cast-aside-corporate-welfare-improve-image/ http://www.thetruthaboutcars.com/2015/02/wsj-tesla-cast-aside-corporate-welfare-improve-image/#comments Tue, 17 Feb 2015 14:00:51 +0000 http://www.thetruthaboutcars.com/?p=1002850 Despite its visions of having a valuation on par with Apple within a decade, Tesla’s subsistence on subsidies may be hard for some to swallow. The Wall Street Journal said as much in an opinion piece following Tesla CEO Elon Musk’s proclamation to grow his company 50 percent annually, with a stock valuation of $700 […]

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Despite its visions of having a valuation on par with Apple within a decade, Tesla’s subsistence on subsidies may be hard for some to swallow.

The Wall Street Journal said as much in an opinion piece following Tesla CEO Elon Musk’s proclamation to grow his company 50 percent annually, with a stock valuation of $700 billion to come in 10 years’ time; the company is currently valued at $27 billion. The publication points out that its $108 million loss in Q4 2014 — thought to be linked to delivery issues, a strong dollar and manufacturing issues — would have been much worse had it not taken $86 million from selling federal carbon credits that quarter.

Continuing with the train of thought, WSJ noted those credits were the result of Tesla’s lineup falling in line with federal and state fuel-efficiency and ZEV mandates, the surplus of said credits being sold to other automakers whose own lineups may be lacking in the green department. In 2014 alone, Tesla sold $216 million in credits, matching 7 percent of what the company sold in EVs.

Other points noted include the $1.5 billion in tax breaks bestowed upon the automaker in its native California and in Nevada, where its Gigafactory battery-pack production facility, as well as the $7,500 federal tax rebate consumers receive upon purchasing a Model S. The publication concluded by urging Musk to “turn off the taxpayer tap,” on the premise that by so doing, he and his company would gain more friends “for the long haul,” whomever they may be.

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Tesla’s Q4 2014 Sees $108M Loss Despite Strong Demand For S, X http://www.thetruthaboutcars.com/2015/02/teslas-q4-2014-sees-108m-loss-despite-strong-demand-s-x/ http://www.thetruthaboutcars.com/2015/02/teslas-q4-2014-sees-108m-loss-despite-strong-demand-s-x/#comments Thu, 12 Feb 2015 00:05:04 +0000 http://www.thetruthaboutcars.com/?p=997306 Tesla’s Q4 2014 didn’t go so well despite strong demand for its Model S, losing $108 million in earnings over the quarter. The Wall Street Journal reports the automaker has 10,000 booked orders for the premium EV sedan, as well as 20,000 for the Model X crossover now expected to hit the showrooms in Q3 […]

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Tesla’s Q4 2014 didn’t go so well despite strong demand for its Model S, losing $108 million in earnings over the quarter.

The Wall Street Journal reports the automaker has 10,000 booked orders for the premium EV sedan, as well as 20,000 for the Model X crossover now expected to hit the showrooms in Q3 2015. However, the loss is attributed to both a lag between production and fulfillment of the Model S P85D, and a strong dollar.

Sales in Q4 2014 fared better than in Q4 2013, with 9,834 units sold over 6,892. The sales figure also bests Q3 2014’s results, when 7,785 vehicles left the showroom. Overall deliveries for the outgoing fiscal year amounted to 32,733 — short of the 33,000 Tesla hoped to move that year — with 55,000 global sales projected for the upcoming year.

Q4 2014 revenue jumped to $956.6 million over the previous year’s $615 million, while operating expenses almost doubled over the same period, hitting $336.5 million. Capital spending for the upcoming year is expected to hit $1.5 billion, divided between Gigafactory investments, production increases, readying the Model X for production, and sales and service. Cash supply dropped from $2.4 billion in Q3 2014 to $1.9 billion in Q4.

As for the stock price, Tesla shares closed at $212.80 Wednesday, having recovered from CEO Elon Musk’s comments in January about Chinese sales and when his company would become profitable; the stock price then fell to $177.22. That said, it’s still lower than the peak of $291.42 achieved last September.

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