Porsche and Audi unveil electric cars to take on Tesla

The high-performance electric car market is shaping up to be a high-profile battleground featuring some of the world's most glamorous brands after Porsche and Audi unveiled models to challenge US pioneer Tesla Motors. 

PHOTO: EUROKARS

SEP 14, 201510:03 PM

[FRANKFURT] The high-performance electric car market is shaping up to be a high-profile battleground featuring some of the world's most glamorous brands after Porsche and Audi unveiled models to challenge US pioneer Tesla Motors.

Consumers have largely shunned electric vehicles because of their high price tags and limited driving range, as well as the scarcity of charging stations, though many analysts predict sales will rise sharply by the end of the decade.

Tesla, however, has enjoyed success and managed to stay ahead of the pack with new technology, which has extended driving range and reduced costs.

Germany's Audi and Porsche - Volkswagen's two premium flagships - showcased purely battery-powered cars at the Frankfurt auto show on Monday.

See who is talking about AUDI

Last 30 days:

• 3035
• 175
• 721

30 days avg

HOT COMPANIES

Shire +225% messages

• Vodafone +157%
• Kingfisher +47%
• 3i Group +42%
• Antofagasta +35%
• Sainsbury +34%
• Randgold +32%
• St James's Place +32%
• RSA Insurance +30%
• BP +27%

• Vodafone +157%
• Kingfisher +47%
• 3i Group +42%
• Antofagasta +35%
• Sainsbury +34%
• Randgold +32%
• St James's Place +32%
• RSA Insurance +30%
• BP +27%

The impact on Tesla is not clear cut, according to analysts. As two of the world's most sought-after auto brands, they represent heavyweight competition for the attention of wealthy, environmentally conscious buyers. But they also boost the credibility and cachet of the all-electric market, which could benefit Tesla.

"It will certainly sharpen the public focus on electric vehicles and raise overall awareness. Consumers are also set to gain from growing offerings of electric cars, especially in the performance segment," said Commerzbank analyst Sascha Gommel.

Audi unveiled its e-tron quattro sport-utility concept - its first electric model designed for series production - and Porsche its first-ever battery-powered sports car in Frankfurt.

Neither car will be available to buy until around 2018, but the launches are perhaps aimed at stealing the limelight from Tesla's first luxury electric crossover, the Model X, ahead of its planned start of deliveries on Sept 29.

Audi had initial misgivings over whether to launch dedicated electric vehicles, a reticence which some analysts said risked making them look like a laggard in an industry where innovation is a major draw for customers.

The all-electric venture represents a change of course for Audi, which had previously focused on developing electric variants of existing models such as its two-seater R8 sports car rather than committing to serial production like German rival BMW with its "i" brand electric series.

While the two car brands did not reveal many specifics about their models, they are set to match Tesla - whose prices start at around US$77,000 - in the crucial driving range department.

Audi said its e-tron quattro, to be launched by 2018, would have over 500 km (311 miles) per charge. That compares with about 300 miles for Tesla's new Model S P90D saloon, which is already getting rave media reviews.

Porsche also boasts over 500 km of range with its first all-electric concept sports car, two sources close to the company said, adding that it was roomier than the 911 and predicting a market launch in 2018-19.

"The largest challenge set forth by Tesla against all entrants into the pure electric market is that the benchmarks have already been set, and the bar is rather high," said Ivan Drury, senior manager at US automotive website Edmunds.com.

"The fascination with Tesla is not that they were the first to introduce an all-electric vehicle, it stems more from the first electric vehicle without compromise to styling, performance metrics and range," Mr Drury said.

Audi has paid heed with the electric R8 which it dropped in 2012 due to poor range but revived earlier this year after doubling the range to 450 km.

The German brands may rapidly close the gap with Tesla on engine and battery technology, said Laurent Petizon, an automotive consultant with AlixPartners.

Audi and Porsche can make "a better car than Tesla in terms of driving experience, balance, suspension and road handling", Petizon added. "They have been doing it for 100 years and it's their job."

REUTERS

      

Gold bulls can't shake Fed woes as US$2.6b wiped from ETPs

SEP 15, 201512:22 AM

[NEW YORK] Gold bulls can't shake the specter of higher US interest rates as Federal Reserve policy makers gather this week.

Prices are trading near a one-month low, investors are dumping holdings through exchange-traded products, and the metal's volatility is rebounding. A resilient US job market and dollar strength are adding to gold's woes, spurring money managers to cut their bets on a rally by more than a third.

More than US$2.6 billion was wiped from the value of gold ETPs in the past three weeks as investors awaited the central bank meeting. While Fed-fund futures show lowered expectations for monetary tightening this week, traders are still pricing in more than a 50 per cent chance for a rate increase by the end of the year. Higher borrowing costs reduce bullion's allure because it doesn't pay interest, unlike competing assets such as bonds.

"The likelihood is the Fed moves this year, and for now a tighter Fed and stronger dollar are both keeping a lid on gold," said Rob Haworth, a senior investment strategist in Seattle at US Bank Wealth Management, which oversees US$127 billion. "When I look at the gold market, that's the biggest overriding factor."

Futures added 0.4 per cent to $1,108.10 an ounce as of 12 p.m. on the Comex in New York. Prices slid 1.6 per cent last week. The MSCI All-Country World Index of equities gained 1.9 per cent, while the Bloomberg Dollar Spot Index slid 0.8 per cent.

Speculators cut their net-long position by 36 per cent to 28,286 futures and options in the week ended Sept. 8, according to US Commodity Futures Trading Commission data published three days later. Bearish wagers climbed 18 per cent to 87,815 contracts, the first gain since July 21.

A divergence between gains for the US economy and cooling growth in Asia and Europe means the Bloomberg Dollar Spot Index is heading for a third year of increases, the longest streak since data for the measure begin in 2004. Gold often moves inversely to the greenback and is poised for a third straight annual loss. BNP Paribas SA said gold will continue to fall against the backdrop of a strengthening dollar. The bank sees prices reaching $925 by the third quarter of 2016, according to a Sept 10 report.

It's been a tough two years for investors in gold, which first fell into a bear market in April 2013. More than US$54 billion has been wiped since then from the value of global ETPs, or securities that are physically backed by bullion and linked to the price of the metal. Gains in the US job market are showing that the economy is strong enough to withstand higher interest rates and cutting demand for the metal as a haven. For the last six months, first-time unemployment claims have been below the 300,000 level that economists associate with a healthy labor market.

Holdings in bullion ETPs fell 4.4 metric tons last week to 1,517.3 tons. The assets reached 1,508.2 tons on Aug. 11, the lowest since 2009.

"Things aren't bad enough to require gold as the end-of- the-world safe haven," said Frances Hudson, an Edinburgh-based global thematic strategist at Standard Life Investments who oversees US$393.1 billion.

While the US central bank is looking to raise rates, monetary policy is still loose in other parts of the world, boosting the metal's appeal as a store of value. China's currency devaluation last month came as policy makers there place more emphasis on combating the deepest economic slowdown since 1990. European Central Bank President Mario Draghi signaled this month that he may expand stimulus.

Gold surged 70 per cent from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale, spurring concern that inflation would quicken. The metal tumbled has tumbled more than 40 per cent from a record $1,923.70 reached in 2011.

"There's going to be a significant opportunity with prices down here, because I think with all this currency devaluation people are going to run to gold eventually," said Jeffrey Sica, who oversees US$1.5 billion as the president of Circle Squared Alternative Investments in Morristown, New Jersey.

BLOOMBERG

    
 

Morgan Stanley sees 'long winter' for commodities, Sharma says

SEP 14, 20159:49 PM

[LONDON] The commodities bear market may last for many years, with oil dropping as low as US$35 a barrel, as production cuts haven't been sufficient to wipe out the global surplus, according to Morgan Stanley Investment Management Inc.

China's industrial slowdown is weighing on demand growth while a drop in currencies including the Russian ruble has shielded some companies from lower oil prices, deterring them from cutting output, Head of Emerging Markets Ruchir Sharma said.

"A long winter in commodities is what we have to be prepared for," he said by phone from New York. "From places like Russia to Australia the currencies have fallen a lot and so the marginal cost of production for some of these commodities in those countries hasn't fallen that much."

The Organization of Petroleum Exporting Countries is pumping oil near a record following the group's decision last year to protect market share by maintaining volumes. Among non-Opec nations, the US expects output this year to be the highest since 1972. Russian production reached a post-Soviet high in 2015 as a weak ruble cut costs while taxes adjusted to lower prices.

See who is talking about MORGAN STANLEY

Last 30 days:

• 3215
• 185
• 698

30 days avg

HOT COMPANIES

Shire +225% messages

• Vodafone +157%
• Kingfisher +47%
• 3i Group +42%
• Antofagasta +35%
• Sainsbury +34%
• Randgold +32%
• St James's Place +32%
• RSA Insurance +30%
• BP +27%

• Vodafone +157%
• Kingfisher +47%
• 3i Group +42%
• Antofagasta +35%
• Sainsbury +34%
• Randgold +32%
• St James's Place +32%
• RSA Insurance +30%
• BP +27%

The ruble has lost 10 per cent against the US benchmark this year. Russian oil producers are generating cash as if the price of oil were still US$100 a barrel rather than US$50, Goldman Sachs Group Inc said in a note on Sept 1.

"They are unlikely to cut their production any time soon because the currency has fallen so much," Mr Sharma said.

A 200-year history of commodity prices shows they typically move between a decade of bull market and two decades of a bear market, according to Sharma, who helps manage US$25 billion at Morgan Stanley. It takes many years to clear the additional capacity that a bull market generates, he said.  This time around, the slowdown in economic growth in China, the world's biggest buyer of raw materials, will continue to erode oil prices that surged in the mid-2000s.

China's 7 per cent economic growth in the first and second quarters of this year was the slowest in almost six years. No other emerging-market nation has the demand to fill the gap left by that slowdown, Mr Sharma said.

"China continues to be the central player as far as demand is concerned," he said. "Even if the Chinese economy stabilizes, the industrial part of the economy is likely to be much weaker."

Goldman Sachs said Friday that the endurance of the global oil surplus could push prices down to US$20 a barrel. That compares with West Texas Intermediate crude at about US$44 on Monday and Brent at about US$48.

Brent has dropped more than 50 per cent in the past year. The international benchmark will average US$73.05 a barrel in 2018, according to 13 analysts surveyed by Bloomberg. That's lower than the US$79.16 estimate at the beginning of this year.

BLOOMBERG