FT : Volvo plans to install laser sensors on all new cars to increase safety

Volvo plans to install laser sensors on all new cars to increase safety
First model to contain lidar will be electric SUV

Volvo Cars intends to install laser-based sensors in all future models in an effort to cut serious accidents involving its vehicles by a fifth, becoming the first carmaker to roll out the technology across its entire fleet.

The upcoming electric version of its flagship XC90 sport utility vehicle, called the EX90, will feature a lidar sensor that allows it to see “a black tyre on a black road at 120m ahead, or a pedestrian at 250m”, said Volvo boss Jim Rowan. 

Using the system will reduce collisions by 9 per cent, and fatal or injury-inducing accidents by a fifth, Rowan added.

He said it is the company’s “intent” to fit similar lidars to all future models, allowing Volvo to further bolster its industry-leading safety credentials.

Rivals including Mercedes-Benz and BMW have announced plans to use lidar sensors in some models, as the industry’s upmarket players try to build additional features into their cars that they believe will help set them apart in the fiercely competitive premium segment.

While lidar systems are common in self-driving vehicles, few carmakers have installed them into regular road cars, in part because of the cost. The use of safety sensors is going to become more common in road cars, particularly with the EU requiring all cars to have emergency breaking capabilities if they detect a stopped object ahead.

Volvo, the first carmaker to install three-point seat belts in the 1950s, has strived to avoid any fatal accidents involving its vehicles.

Its new safety set-up will also monitor drivers inside the vehicle, sensing if they are about to fall asleep, or detecting changes in breathing patterns that might mean the car needs to stop, an advance on a previous eye-tracking system the company demonstrated in 2019.

Rowan said the company had yet to decide whether to license the new technology to other carmakers, a move that would echo its decision to make its seatbelt patents available for free during the last century.

As carmakers install evermore crash avoidance features in their latest models, the industry is debating which kinds of sensors offer greatest perception at a reasonable price.

Tesla boss Elon Musk has been a longstanding advocate of camera-only technology, pointing out that humans drive using their eyes. 

Volvos will feature cameras and radar systems as well, but using lidar allows the car to see beyond darkness, Rowan said. 

“You’ll see maybe 60m with a headlight, our lidar will see 250m with lidar ahead in darkness,” he said. “That becomes really meaningful, that gives an extra at least 3-4 seconds . . . For night-time driving a camera just won’t have that technology.”

He said it also builds a faster picture, because lidar travels at light speed, while radar only travels at the speed of sound.

While it will buy the lidar from Luminar, a company in which Volvo has invested, Volvo has developed the software for processing its images in-house, with a team of “hundreds” of developers, Rowan said.

FT : Saudi Arabia and the US are drifting back on to the rocks

Saudi Arabia and the US are drifting back on to the rocks
Crown prince Mohammed bin Salman is no friend to Biden’s America

Joe Biden was forced to swallow his pride when he visited Saudi Arabia in July to fist-bump Mohammed bin Salman. Though he opened himself to accusations of hypocrisy after having branded the kingdom a pariah, Biden’s embarrassment would have been worth the gain if it had undercut Vladimir Putin’s Russia. No such result has been visible. Saudi Arabia’s autocratic crown prince seems to have moved closer to Putin since then. The question is whether there is anything Biden can do to dissuade Saudi Arabia from being a recurring thorn in America’s side.

The implicit Saudi answer to that is yes — as long as Biden is replaced by a different president, preferably Donald Trump. The Saudi crown prince’s ties to Trump’s family are as intimate as his disdain for the Biden administration is obvious. Saudi Arabia is thus now part of a select group of countries that roots for one of America’s parties over the other. This includes Putin’s Russia, Viktor Orbán’s Hungary and Israel when Benjamin Netanyahu is its prime minister. In the new world disorder, America’s openness can often be its Achilles heel.

There are three reasons to think Prince Mohammed’s Saudi Arabia will pose a growing problem for Biden’s America. The first is financial. Biden’s most pressing challenge is to ensure the recent oil price fall does not go into reverse. That drop, which curbed Putin’s dollar earnings and improved Democratic chances in the upcoming midterm elections, had little do to with Saudi Arabia. It was mostly driven by China’s economic slowdown. After Biden’s visit, Prince Mohammed agreed to lift Saudi daily output by a token 236,000 barrels. But he and Putin earlier this month agreed to cut a third of that from the “Opec plus” quota. Further cuts are likely. The Saudis prefer it when oil is more than $100 a barrel. Prince Mohammed’s motive may be more monetary than geopolitical. But collateral damage to Biden is a bonus.

The second is the crown prince’s hostility to lectures from western liberals. Biden’s rhetorical contrast with Trump is like night and day. Biden divides the world into autocracies and democracies. Trump, whose first presidential trip abroad was to Saudi Arabia, has a predilection for strongmen. Prince Mohammed is fast becoming the autocrat’s autocrat. That is almost certainly why he opted out of Queen Elizabeth’s funeral on Monday. Skirting the protesters would have been awkward. Saudi Arabia’s recent jailing of two women activists for posting dissenting views on social media shows how little Prince Mohammed cares about Biden’s concerns. Both sentences — 45 years and 34 years — were extreme even by the standards of strongmen and could easily have been avoided. The crown prince seems to be making a point that Biden’s values hold no sway.

The final reason is that Prince Mohammed viscerally prefers a Trumpian US foreign policy to Biden’s. The crown prince’s ties to Jared Kushner, Trump’s son-in-law, go far deeper than their WhatsApp friendship. Last year Saudi Arabia’s sovereign wealth fund invested $2bn in Kushner’s private equity company even though Kushner’s sole prior experience was in his family’s real estate business.

A Saudi screening panel found Kushner’s operations to be “unsatisfactory in all aspects”. But it was overruled by Prince Mohammed. This probably saved Kushner’s venture. The Saudi fund accounts for most of its capital. Congress is investigating the deal. Kushner strongly defended Prince Mohammed after US intelligence agencies expressed “high confidence” that the crown prince ordered the operation that led to the gruesome 2018 murder of Jamal Khashoggi, a Saudi journalist and dissident. For Prince Mohammed, $2bn is a small risk to take for a huge potential return if Trump and his family regain the White House.

Biden’s frustration is that there is not much he can do to alter Prince Mohammed’s calculus. The west’s renewed clean energy ambitions threaten Saudi Arabia’s bottom line, as well as Russia’s. Most forecasts say fossil fuels will go into secular decline within the next ten years. It should be little surprise that the Saudis and other exporters want to squeeze what they can while it lasts. They have no shortage of customers, China at the forefront. When President Xi Jinping makes his expected state visit to Saudi Arabia later this year, he will doubtless exchange warm handshakes on the red carpet.

The headaches the Gulf’s ruthless young autocrat create for Biden’s America are specific to him and generic. Prince Mohammed stands out as one of the world’s most single-minded absolutists. Yet he also puts a face on the once-pliable areas of the world that no longer pretend to like America’s rules.

FT : China’s electric vehicle stocks hit the curb

China’s electric vehicle stocks hit the curb
Sales are strong yet shares are suffering, reflecting delisting concerns and rising costs

One of the best investment bets in China in recent years has been local electric car stocks. Aggressive carbon neutrality goals made the sector a haven amid government crackdowns spanning everything from tech to private tutoring.

On the surface, the numbers from these electric car makers are impressive. Total sales more than doubled this year. China is the world’s biggest and fastest-growing market for electric vehicles. Carbon goals and strict electric car production quotas mean the market will keep growing at a rapid pace. But investing in the sector can be more complicated than it seems.

Investor favourites in the region are split between two main camps. Chinese automobile giant BYD — the world’s second-biggest electric car maker after Tesla — is top of the class. BYD shares have returned nearly 500 per cent in the five years to its June peak this year.

Chasing behind are a trio of fast-growing start-ups: Nio, XPeng and Li Auto. These companies sold a combined 90,000 vehicles last year, rapidly expanding local market share.

Sales are strong. BYD’s global sales of new energy vehicles, which include battery electric cars and plug-in hybrids, more than tripled in the first half of the year. Nio, known locally as the Tesla challenger, recorded a more than 60 per cent increase in sales last month.

There is a strong home ground advantage. Local brands are popular in China, accounting for more than four-fifths of the market. Tesla, whose Shanghai factory expansion was completed this week, is still the only foreign brand that has made significant inroads into China’s electric car market.


There is potential for export and overseas production. Japan’s relative lag in the shift to electric cars and demand for small, low-cost vehicles make Chinese electric options a natural choice. BYD will start selling three electric models in Japan in January.

Yet stocks are suffering. Shares of BYD have fallen sharply in recent months after filings showed Warren Buffett’s Berkshire Hathaway trimmed its stake in the company. They trade at 39 times forward earnings, down from more than 100 times at the end of June.

Shares of US-listed XPeng are down more than two-thirds this year; Nio and Li Auto are down more than a fifth. These reflect several risks, including concerns of delisting, rising battery costs and research and development expenses required to keep up with changing technologies.

Profitability and margins have been weak. Nio posted a net loss in the first half, adding to three straight years of losses since 2019. Li Auto and XPeng also posted net losses this year.

Competition is fierce. There are more than 400 local electric car makers in China. Cash-rich state-owned traditional carmaker GAC Group has launched its own electric brand Aion. Geely Auto has set up electric group Zeekr to join the fray.

But the biggest challenge comes from outside the sector. The technology to make cars run on batteries is simple enough. But most companies lag behind in software capabilities, such as autonomous driving features, that give Tesla an edge.

That makes the recent entry of tech companies such as smartphone maker Huawei and internet search giant Baidu into the smart-car industry a significant threat. The first car to run with a Huawei operating system, the Aito M5, was launched this year. Baidu has launched a concept robocar using its intelligent driving software.

These companies have cash buffers from their traditional businesses to fall back on. If one takes over a local Chinese electric car maker, then significant disruption to sector rankings could be in the works.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:

  • SFIX -7.6%, ACB -1.4%

Other news:

  • GLT -14.8% (suspended the Company's quarterly cash dividend as part of its focused efforts to optimize the operational and financial results of the business)
  • TME -2.6% (successfully lists on Hong Kong Stock Exchange)
  • OSUR -1.8% (awarded CDC contract)
  • CLPT -1.3% (appoints new COO)
  • CNM -0.9% (to acquire Distributors Inc.)
  • UAL -0.8% (did not perform inspections on some jets according to WSJ)
  • NVS -0.7% (plans to petition the U.S. Supreme Court to uphold validity of the Gilenya (fingolimod) dosing regimen patent)

Analyst comments:

  • MU -2.5% (downgraded to Neutral from Buy at Mizuho)
  • WDC -2.1% (downgraded to Neutral from Buy at Mizuho)
  • CSCO -1.8% (downgraded to Equal Weight from Overweight at Barclays)
  • SQ -0.5% (downgraded to Neutral from Outperform at SMBC Nikko)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • COTY +3.9%, GIS +2.6%

Other news:

  • CLNN +5.3% (announces presentation of updated survival results from the Phase 2 RESCUE-ALS trial open-label extension)
  • CWEN +2.5% (Provides operational update on El Segundo Energy Center)
  • AIRC +2.4% (provides operating update)
  • ALPN +2.3% (prices offering of 13606000 shares of its common stock at $7.35 per share)
  • SLB +1.9% (to collaborate with Aramco)
  • SBGI +1.8% (major sports leagues in talks to buy Diamond Sports according to NY Post)
  • ATNM +1.8% (reports Iomab-B SIERRA Trial Database Lock Provides Corporate Update Highlighting Key Upcoming Milestones)
  • AROC +1.6% (mixed securities offering)
  • PBYI +1.6% (licensing agreement with Takeda)
  • IGT +1% (awarded contract in Ontario)

Analyst comments:

  • PBF +4.6% ( upgraded to Overweight from Neutral at JP Morgan)
  • EL +1.9% (upgraded to Buy from Neutral at Goldman)
  • ANET +1.6% (upgraded to Overweight from Equal Weight at Barclays)

>>> US Research Calls

Research Calls

  • Upgrades:
    • Arista Networks (ANET) upgraded to Overweight from Equal Weight at Barclays; tgt $131
    • Oxford Industries (OXM) upgraded to Neutral from Sell at Citigroup; tgt raised to $105
    • PBF Energy (PBF) upgraded to Overweight from Neutral at JP Morgan; tgt $43
  • Downgrades:
    • Arthur J. Gallagher (AJG) downgraded to Neutral from Overweight at Piper Sandler; tgt $195
    • Associated British Foods (ASBFY) downgraded to Neutral from Buy at UBS
    • Block (SQ) downgraded to Neutral from Outperform at SMBC Nikko; tgt lowered to $70
    • Cisco (CSCO) downgraded to Equal Weight from Overweight at Barclays
    • Micron (MU) downgraded to Neutral from Buy at Mizuho; tgt lowered to $56
    • Sotera Health (SHC) downgraded to Underweight from Overweight at JP Morgan; tgt lowered to $9
  • Others:
    • ADC Therapeutics (ADCT) initiated with an Overweight at JP Morgan; tgt $5
    • Adicet Bio (ACET) initiated with an Overweight at JP Morgan; tgt $23
    • Apollo Medical (AMEH) initiated with an Outperform at William Blair
    • Crocs (CROX) initiated with a Neutral at Exane BNP Paribas
    • Datadog (DDOG) assumed with an Outperform at Robert W. Baird; tgt $120
    • Dynatrace (DT) assumed with an Outperform at Robert W. Baird; tgt $49
    • Gossamer Bio (GOSS) initiated with a Neutral at JP Morgan; tgt $17
    • Intellia Therapeutics (NTLA) initiated with an Overweight at JP Morgan; tgt $85
    • Micron (MU) initiated with a Hold at Stifel; tgt $56
    • On (ONON) initiated with an Outperform at Exane BNP Paribas
    • PayPal (PYPL) added to US 1 List at BofA Securities
    • Steven Madden (SHOO) initiated with an Outperform at Exane BNP Paribas
    • Xencor (XNCR) initiated with an Overweight at JP Morgan; tgt $37

FT : French billionaire Xavier Niel builds 2.5% Vodafone stake

French billionaire Xavier Niel builds 2.5% Vodafone stake
UK-based telecoms group under pressure to pursue deals and streamline business

French billionaire Xavier Niel has scooped up a 2.5 per cent stake in Vodafone, paving the way for the telecoms entrepreneur to potentially shake up the underperforming UK group.

Niel, who bought the stake through his investment vehicle Atlas Investissement, hinted at his intent in a statement that said there were “opportunities to accelerate . . . the streamlining of Vodafone’s footprint and the separation of its infrastructure assets”, as well as improve profitability.

The unexpected move comes after Niel took his telecoms group Iliad private last year and picked up the pace of acquisitions in Poland and elsewhere to reach about 50mn active subscribers and €10bn in revenues.

It remains to be seen if the billionaire will add to his stake or ask for representation on the board, but he has already shown that he has a record of acting like an activist investor. He initially bought a small stake in French real estate group Unibail in 2020 and then quickly added to it, acting with an ally to oust the chief executive, change the group’s strategy and join the board.

“He would have to get a lot more involved to ask for a board seat,” said Robert Grindle, an analyst at Deutsche Bank. “By default, he’s an activist now . . . even if he doesn’t call himself one. Anyone who wants to buy the stock now [will] see catalysts.”

Niel’s investment in Vodafone comes after another French telecoms billionaire Patrick Drahi gradually built an 18 per cent stake in BT last year. That sparked widespread speculation that the veteran dealmaker may eventually try to wrest full control of the company.

Grindle added that the two billionaires were likely to have seen “lots of value” in telecoms assets that the “public markets were not valuing . . . right”.

The 2.5 per cent stake that Atlas has built is worth about £750mn at current market prices, although it was not disclosed whether the stake was all in shares or partly in derivatives.

Vodafone in February rejected an €11bn bid for its Italian business from Iliad, a provider in France, Italy and Poland owned by Niel, and private equity fund Apax. The offer represented about seven times earnings before interest, taxes, depreciation and amortisation.

Vodafone’s share price gained 2 per cent in early morning trading, but was still down 6 per cent in the year to date, at 108.5p.

The global telecoms group has been under pressure since it emerged that Cevian Capital, Europe’s largest activist investor, had built an unspecified stake in the company, and was angling for an overhaul of what investors believed to be an overly convoluted business model.

Cevian has called for the company to shed poorly performing parts of the business and complete mergers or acquisitions in markets that chief executive Nick Read has said he is looking to do deals in, namely the UK, Italy and Spain.

Read is also aiming to sell a significant stake in the group’s masts business, Vantage Towers, that was listed last year and has received interest from multiple private equity groups, according to a person briefed on the discussions.

Several Vodafone investors have said they are keen for Vodafone to sell a large stake in Vantage soon, which would free up cash to reduce debt and pursue deals in both core markets as well as those that are not performing as well. Other telecoms groups such as Altice and Deutsche Telekom have spun off towers businesses at rich valuations.

Last month, Vodafone agreed to sell its Hungarian business for $1.8bn to 4iG and Corvinus Zrt, a Hungarian state holding company.

In May, state-controlled Emirates Telecommunications Group announced that it had acquired a 9.8 per cent stake in Vodafone for about $4.4bn, one of the largest investments it had made in more than a decade.

Vodafone has been in talks to combine its UK operations with its domestic rival Three UK, the mobile operator owned by Hong Kong infrastructure conglomerate CK Hutchison, according to people briefed on the discussions.

FT : Investindustrial takes majority stake in luxury food retailer Eataly

Investindustrial takes majority stake in luxury food retailer Eataly
Private equity firm buys 52% of group with a €200mn investment

European private equity firm Investindustrial is buying a controlling stake in Eataly, the Italian luxury food and drink group, with plans to further expand the business around the world.

The firm said on Wednesday that it would acquire 52 per cent of the company, founded by Oscar Farinetti in 2007, with an investment of €200mn and share purchases from existing shareholders.

The remaining 48 per cent of the company will remain in the hands of current investors including the Farinetti family and Italian private equity firm Tamburi Investment Partners.

Nicola Farinetti, the founder’s son and current chief executive, will become the company chair and a new chief will be appointed.

“The investment will allow Eataly to retire net financial debt and maximise financial flexibility for the group’s global expansion plans,” Investindustrial said in a statement.

Eataly’s first store opened in Turin in 2007. It was soon followed by New York, Rome and Paris. In the immediate aftermath of the pandemic in 2021, another flagship store opened in central London.

Over the past 15 years, the company has opened two dozen stores, which sell luxury Italian food and wine, across the US, Europe, Asia and the Middle East.

Investindustrial and the other shareholders are looking at further expansion of the business through new flagship stores and other outlets in large cities across the world, according to a statement.

During the summer the private equity firm’s founder, Milan-born Andrea Bonomi, said Investindustrial was targeting food brands in Italy and the US because the sector had growth potential.

Earlier this year, the firm took over Italian food manufacturer La Doria, which delisted from the Milan stock exchange. It also announced the acquisition of US-based private label distributor, Treehouse Foods, and ingredient manufacturer Parker Foods.

“Eataly represents a unique and innovative player that has led the revolution of the concept of high-quality Italian food all over the world,” said Bonomi.

The private equity group, which manages more than €11bn in assets, has invested more than €2.5bn in the food sector over the past few years. Other investments include Italcanditi, an Italian ingredients maker, and Dispensa Emilia, a restaurant chain.

Eataly has long been seen as a potential domestic listing candidate. Speculation intensified at the end of last year after the Farinetti family modified the company’s statute to allow the company to issue so-called participative financial instruments, which are usually seen as a prelude to an initial public offering.

However, private equity investment is currently seen as a more profitable option for Italian family-owned companies seeking to expand internationally.

Investment by both buyout and venture capital firms more than doubled in the first half of 2022 compared with the same period in 2021, according to a report published this month by Aifi, the Italian private capital lobby group, and accountants PwC.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • AIRC +2.4%, COTY +1.9%, SBGI +1.8%, PBYI +1.6%, SLB +1.5%, TECK +0.7%
  • Gapping down:
    • SFIX -8.5%, ACB -3.6%, VACC -3.1%, ALPN -2%, OSUR -1.8%, TME -1.5%, CLPT -1.3%, BYND -1.2%, NVS -0.8%, UAL -0.5%