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A station passageway is crowded with commuters during rush hour in Tokyo on Tuesday.
Photo: AP/Eugene Hoshiko
Major companies such as Hitachi Ltd and NEC Corp said Tuesday they will continue to push work-from-home arrangements even though the state of emergency over the new coronavirus pandemic was called off the previous day.
Hitachi said around 70 percent of its employees on average have been working from home to reduce the risk of infection and curb the spread of the virus after the state of emergency was declared in April, and it will continue promoting teleworking to ensure business continuity in case a second wave of infections occurs.
Hitachi said it will ask its employees to work from home in principle through the end of June, except for such cases as infrastructure inspections. It aims to have 50 percent of its employees engaged in telework on average as the epidemic subsides, Senior Vice President Hidenobu Nakahata told an online press conference.
Prime Minister Shinzo Abe on Monday lifted the state of emergency still in place for Tokyo and four other prefectures, having ended restrictions for other parts of the country earlier in the month.
NEC also said it will continue to ask employees to work from home, in principle to reduce the risk of infection.
If an employee needs to come to the office, the company said they must adhere to anti-infection measures such as avoiding busy commuting hours.
Kobe Steel Ltd will also for the time being continue telework where possible, with the aim of halving the number of commuters from the pre-coronavirus crisis level, while Fujitsu Ltd seeks to keep the ratio of office commuters at 25 percent or lower.
At Meiji Yasuda Life Insurance Co, which reopened its offices nationwide from Tuesday, its 30,000 salespeople will refrain from meeting customers in person and will visit their homes only when customers agree.
Sony Corp, meanwhile, said it will gradually ease from June 1 its telework requirement, a measure taken since late March, as it implements precautionary workplace measures such as social distancing.
For the first half of June, it will try to keep the ratio of commuters at 20 percent or so and raise that level to around 30 percent from the third week of June.
Employees who joined the company in April but were asked to stay home will also be allowed to come to the office in stages from June 1.
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Tokyo stocks rose Tuesday, with the benchmark Nikkei index topping the 21,000 mark for the highest close in nearly three months, on hopes of reviving business activity a day after Japan lifted a nationwide state of emergency to combat the coronavirus pandemic.
The 225-issue Nikkei Stock Average ended up 529.52 points, or 2.55 percent, from Monday at 21,271.17, the highest close since March 5. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 32.53 points, or 2.17 percent, higher at 1,534.73.
All industrial categories gained, with air transportation, land transportation and transportation equipment issues as the leading advancers on expectations more people will start traveling.
In the currency market, the U.S. dollar remained firm against the yen on optimism stemming from an increasing number of countries moving to restart social and commercial activities after weeks of lockdowns and travel restrictions.
At 5 p.m., the dollar fetched 107.82-83 yen compared with 107.74-76 yen in Tokyo at 5 p.m. Monday. Financial markets in the United States and Britain were closed due to a national holiday.
The euro was quoted at $1.0934-0936 and 117.89-93 yen against $1.0876-0877 and 117.18-22 yen in Tokyo late Monday afternoon.
The yield on the benchmark 10-year Japanese government ended interdealer trading at 0.000 percent, unchanged from the previous day’s close, as buying of the safe-haven asset sparked by political unrest in Hong Kong offset selling on advances in Tokyo shares.
In the stock market, businesses, such as those involving travel and which were particularly hit by the government’s stay-at-home requests, drew buying.
“Hopes for rebuilding the economy prevailed in the market,” said Shingo Ide, chief equity strategist at the NLI Research Institute.
Market sentiment was also supported by the government’s plan to double the size of its economic package to shield the economy from the damage caused by the virus to over 200 trillion yen ($1.86 trillion), brokers said.
Remarks by Bank of Japan Governor Haruhiko Kuroda on Tuesday that the central bank would take more steps to cushion the impact of the pandemic added to market optimism, though he maintained his gloomy outlook about the health of the Japanese economy.
On the First Section, advancing issues outnumbered decliners 1,734 to 384, while 52 ended unchanged.
Retailers also benefited from the lifting of restrictions. Among such issues, department store operator Marui Group soared 110 yen, or 6.1 percent, to 1,903 yen, cosmetic provider Shiseido jumped 336 yen, or 5.2 percent, to 6,762 yen, while Fast Retailing, operator of Uniqlo casual fashion chain, extended 2,150 yen, or 3.9 percent, to 56,780 yen.
Fujifilm erased earlier losses to end 27 yen, or 0.6 percent, higher at 4,835 yen despite the government’s decision not to approve its Avigan anti-flu drug for the treatment of COVID-19 in May as anticipated, citing the need for more clinical testing.
Trading volume on the main section rose to 1,472.46 million shares from Monday’s 1,002.57 million shares.
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An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California. David McNew | Getty Images
The International Energy Agency believes the coronavirus pandemic has paved the way for the largest decline of global energy investment in history, with spending set to plummet in every major sector this year.
In the group’s annual World Energy Investment report, published on Wednesday, the IEA said that the unparalleled decline in worldwide energy investment had been “staggering in both its scale and swiftness.”
It warned the economic impact of the public health crisis could have “serious” implications for energy security and clean energy transitions.
“The historic plunge in global energy investment is deeply troubling for many reasons,” Fatih Birol, executive director at the IEA, said in a statement.
“It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” he continued. “The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”
Global spending on electricity set to overtake oil
To date, more than 5.5 million people across the globe have contracted the coronavirus, with over 346,700 deaths, according to data compiled by Johns Hopkins University.
The pandemic has meant countries have effectively had to shut down, with world leaders imposing draconian measures on the daily lives of billions of people.
The stringent restrictions, which have brought world travel close to a standstill, are expected to result in the worst economic downturn since the Great Depression in the 1930s.
At the start of 2020, the IEA said global energy investment was on pace for growth of around 2%, reflecting the largest annual rise in spending in six years.
But, after the Covid-19 crisis brought large swathes of the world economy to a halt in a matter of months, the IEA said it now expects global investment to tumble by 20% compared to last year.
To be sure, that’s a fall of nearly $400 billion year-on-year.
Meanwhile, the Paris-based energy agency said a combination of falling demand, lower energy prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by “well over” $1 trillion in 2020.
Oil accounts for most of this decline, the group continued, adding that, for the first time, global spending on oil was set to fall below the amount spent on electricity.
“Electricity grids have been a vital underpinning of the emergency response to the health crisis — and of economic and social activities that have been able to continue under lockdown,” the IEA’s Birol said.
“These networks have to be resilient and smart to ward against future shocks but also to accommodate rising shares of wind and solar power. Today’s investment trends are clear warning signs for future electricity security,” he added.
‘Lower emissions but for all the wrong reasons’
The overall share of global energy spending that goes to so-called clean energy technologies, such as renewables, efficiency, nuclear and carbon capture, utilization and storage, has been “stuck” at around one-third in recent years, the IEA said.
In 2020, it will jump toward 40%, they continued, before quickly dashing the hopes of climate activists hoping this could reflect a permanent change.
“In absolute terms, it remains far below the levels that would be required to accelerate energy transitions,” the group said.
“The crisis has brought lower emissions but for all the wrong reasons. If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment,” the IEA’s Birol said.
“The response of policymakers — and the extent to which energy and sustainability concerns are integrated into their recovery strategies — will be critical.”
Birol said the IEA planned to provide clear recommendations for how governments can quickly create jobs and spur economic activity by building cleaner and more resilient energy systems in an upcoming report.
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It is now clear that COVID-19 has presented the global economy with an unprecedented challenge. In the United States and Europe, efforts to control the virus through lockdowns are likely to lead to the largest decline in economic activity since the Great Depression in the US and Europe.1 And while safeguarding human lives is imperative, the toll on human livelihoods will also undoubtedly be significant.
Asian nations, like others, are focused on this dual mission. In these early stages, it is difficult to quantify the economic impact. McKinsey simulations suggest that in some likely scenarios, real global GDP may decline by 4.9 percent to 6.2 percent from the fourth quarter of 2019 to the second quarter of 2020 The World Bank’s latest report paints a bleak picture: under a worst-case scenario, East Asian economies would contract by 0.5 percent, China’s projected growth would slow to 0.1 percent, and 11 million people across the region would be forced into poverty It’s important to remember that this, above all, is a humanitarian challenge. Asia is home to 60 percent of the world’s population—and to around 35 percent of the world’s poorest people, according to 2019 World Bank data Pandemics hit the most vulnerable hardest. Asia’s emerging areas, particularly India and the nations of Southeast Asia, face unprecedented risks.
Yet as a region, Asia has come through crises before and emerged stronger from them. We have reason to believe it can do so again. In a postpandemic world, can Asia’s nations and companies play a major role in defining the next normal?
Asia’s resilience to disruption
In 2018, McKinsey Global Institute research on developing economies around the world singled out 18 long-term and recent outperformers. Asia figures prominently on the list, with all seven of the economies that achieved or exceeded 3.5 percent real annual per capita GDP growth for the entire 50-year period of the study: mainland China, Hong Kong, Indonesia, Malaysia, Singapore, South Korea, and Thailand. Even countries hit hard by the 1997 Asian financial crisis returned to positive per capita GDP growth within a year or two. Having absorbed their lesson, they were better prepared for the 2008 global financial crisis.
In an increasingly volatile world, Asian companies have demonstrated dynamism, speed, and agility, which have all contributed to the region’s macroeconomic stability. Asian companies have to be resilient: they operate in highly dynamic, fast-growing markets, against the same backdrop of digital disruption and rapidly evolving consumer demands that every organization currently faces. Today, 43 percent of the world’s largest companies (by revenue) have their headquarters in Asia. The region’s well-diversified, horizontally integrated conglomerates can pivot quickly in times of crisis.
The COVID-19 outbreak began in Asia—but so have early indications of containment, new protocols, and the resumption of economic activity. Although the risk of another outbreak remains, economic-activity indicators in China indicate that urban activities are returning to pre-outbreak levels. Traffic congestion and residential-property sales are close to where they stood in early January 2020, and air pollution and coal consumption have returned to 74 and 85 percent, respectively, of their levels on January 1.5 A recent McKinsey survey of 2,500 Chinese consumers indicates “cautious optimism”—a gradual regaining of confidence, which should increase spending. At this moment, strong public-health responses in China, Singapore, and South Korea appear to have been successful. Significant evidence indicates that the curve of cumulative confirmed COVID-19 patients in Asia is becoming flatter (exhibit).
Southeast Asia and India are still bracing for the full impact, and a resurgence of the virus remains a possibility. Nonetheless, it’s time to ask if the next normal could be emerging in Asia.
What will shape the next normal?
A shock of this magnitude will change business, society, and the global economic order in many ways. Contactless commerce, for example, could become the permanent norm for consumers as enforced behavioral change becomes an everyday habit. Supply chains may be reconfigured to remove vulnerabilities that have been exposed by the pandemic. Across all aspects of business performance, the crisis will reveal both weaknesses and opportunities to improve.
As our colleagues wrote recently, this “black swan” event will first test the resolve and resilience of all businesses. Some will become more productive and better able to deliver for customers. As Asia’s corporate sector continues to mature and push ahead with digital innovation, we expect that Asia’s businesses will have to reimagine themselves and prepare for reform. As companies in the region do so, they may be the world’s first to shape the next normal. What will that look like? Here are four dimensions that could define it.
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The following are questions and answers regarding the government’s plan to give 100,000 yen to everyone in Japan.
Q: Why is the government doing this?
A: Prime Minister Shinzo Abe has said the handout is meant to be a show of solidarity as the nation hunkers down for what could be a long fight against the novel coronavirus. It replaces an earlier plan to give 300,000 yen to households that suffer a big drop in income because of the outbreak. While the move was ostensibly tied to last week’s declaration of a nationwide state of emergency, the ruling coalition and opposition parties had been pushing Abe to cast a wider net.
Q: Who is eligible?
A: Anyone who is on the basic resident register as of April 27. That covers about 127 million people, including foreign nationals who have legally resided in the country for more than three months. Homeless people are also eligible, but they will have to become registered with a city or town. Be aware, you do need to send in an application.
Q: How do I apply?
A: An application form will be mailed to everyone that is eligible, and you can also apply online through the government website for My Number card holders with details on that to be announced later. In-person applications will be limited to special cases in order to reduce the risk of spreading the coronavirus. Whether the option to apply in English will be made available is still undecided, said an official at the Ministry of Internal Affairs and Communications. The head of household will be responsible for applying for everyone in the family, and the cash will be wired to his or her bank account as early as May.
Q: Who is paying for this?
A: The Finance Ministry says handing out 100,000 yen per person will cost a total of nearly 13 trillion yen, more than triple the 4 trillion yen earmarked for the initial plan to give 300,000 yen to struggling households. The difference will be paid for entirely with new government bonds, adding to Japan’s huge pile of debt.
Q: What do critics say?
A: Some have slammed the move as a not-so-cheap ploy to lift Abe’s support ratings, while others argue that the new plan should not be a replacement for the original, but carried out in addition to it to help those most in need. The handout has also been unfavorably compared to a similar government initiative in 2009 that tried, and largely failed, to boost consumption in the wake of the global financial crisis.
Disclaimer: This is originally posted by Kyodo News. HCCR is not a governmental body nor associated with any in this current situation. Please refer to government websites for more information or update.
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Photographer: Natan Dvir/Bloomberg
If you don’t have a college degree, it won’t hold you back from working for Tesla, Elon Musk tweeted on Sunday.
Musk is using Twitter to recruit for Tesla’s artificial intelligence team.
“Join AI at Tesla!” Musk tweeted Sunday. The artificial intelligence team “reports directly to me [and] we meet/email/text almost every day.”
What’s more, to work in Tesla’s artificial intelligence department does not require a specific degree.
“A PhD is definitely not required,” Tesla boss Elon Musk said on Twitter on Feb. 2. I “don’t care if you even graduated high school,” Musk said.
Instead, Musk is looking for those with a “deep understanding” of artificial intelligence. And while, “[e]ducational background is irrelevant,” all candidates “must pass hardcore coding test,” Musk said.
Musk’s expressed his opinion on the unimportance of degrees before.
“There’s no need even to have a college degree at all, or even high school,” Musk said during a 2014 interview with the German automotive publication Auto Bild about his hiring preferences more broadly.
“If somebody graduated from a great university, that may be an indication that they will be capable of great things, but it’s not necessarily the case. If you look at, say, people like Bill Gates or Larry Ellison, Steve Jobs, these guys didn’t graduate from college, but if you had a chance to hire them, of course that would be a good idea,” Musk said.
Instead, Musk said he looks for “evidence of exceptional ability. And if there is a track record of exceptional achievement, then it is likely that that will continue into the future,” he told Auto Bild.
Tesla needs artificial intelligence talent to work on its self-driving vehicle ambitions. Tesla vehicles are built with the hardware necessary to offer some current autopilot features and “full self-driving capabilities” in the future, according to Tesla’s website. The hardware will need to have various software upgrades to one day be able to operate as a self-driving vehicle.
On Feb. 2, Musk also tweeted that he is going to throw a “super fun” party at his house with the Tesla artificial intelligence and autopilot team.
The party will be in about a month, and invitations will go in the mail “soon,” Musk said.
Tesla did not immediately respond to CNBC Make It’s request for more information about the party.
Ideally, Musk would like the Tesla artificial intelligence recruits to work in the San Francisco Bay area in California or Austin, Texas, but “potentially any Tesla Gigafactory” would be okay, Musk tweeted Sunday.
Gigafactories are where Tesla makes its electric motors and battery packs. Currently there are Tesla gigafactories in Sparks, Nevada; Buffalo, New York; and Shanghai, China. In November, Musk announced a fourth factory will be built in Berlin, Germany.
Musk is looking to recruit talent at a time when Tesla is performing well financially. In January, the electric automaker’s stock had its best performance since May 2013.
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Uber CEO Dara Khosrowshahi. Photo by Bloomberg
Uber proved countless doubters wrong by showing, when it reported its third-quarter results last fall, that its ride-hailing business can make money. And as investors await the fourth-quarter numbers scheduled to be released Feb. 6, they’ve sent the stock soaring. It’s as though they think the worst is over for the ride-hailing giant.
Those optimists should think again. Even if Uber’s core ride-hailing business were to make significant financial strides going forward, our assessment is that it could take years before the cash generated from the business can justify the company’s current stock price of above $37.
Uber’s stock has rallied 42% in the past two months but our analysis, using a reverse discounted cash flow model, suggests Uber’s ride hailing business won’t be able to justify the current stock price for several more years. And even that assumes Uber’s optimistic projections about its long term results hold true.
That might seem like a harsh assessment. Even after the stock’s recent rally from its low of $26 in mid-November to its close on Tuesday of $37.60, Uber stock is trading 16% below its IPO price. That in turn was well below what investors expected the company to be worth when it went public. Most Wall Street analysts are much more bullish—among 39 analysts, the average and median near-term “price target” for the stock is $44 per share, according to S&P Capital IQ.
Of course, Wall Street analysts as a rule look for reasons for investors to buy stocks, not for reasons for them not to. But to be fair, based on some measures, shares of Uber look reasonably valued. At the current price, Uber is trading at about three times projected 2020 revenue to enterprise value. Lyft, its smaller U.S. ride-hailing rival, is trading at around 2.4 times the same multiple. Grubhub, probably the other closest comparison, is trading at 3.6 times.
But valuing stocks based on comparisons to other companies in similar businesses makes sense when there’s a decent number of comparisons—at least some of which have demonstrated a path to making money. Neither Lyft nor Uber has done that, so justifying one company’s valuation by referring to another’s isn’t the way to go in this case.
Grubhub may be a decent comp, but it is part of a crowded on-demand food-delivery market supercharged by venture capital, which is not a rational market. Also, the possibility that it may get bought is elevating its valuation.
On a related note, valuing Uber on a multiple of its total revenue is in our view a mistake. Uber’s food-delivery business, for instance, is losing money at an alarming rate. It’s not clear when Uber Eats will be able to make money, at least unless it merges with one or more of its competitors.
Ride Hailing Focus
That argues in favor of valuing Uber in segments, starting with its ride-hailing business—and doing so by calculating the present value per share of the cash it’s likely to generate over the next few years. That’s what we did. It has the virtue of honing in on what Wall Street sentiment doesn’t like about ride hailing: its giant losses and uncertainty about when they will come to an end.
The good news is that Uber has started to make money in ride hailing—not much, but a little bit. In the third quarter, it reported $631 million in earnings before interest, taxes, depreciation and amortization from ride hailing. This was excluding corporate overhead and technology costs to power its services. Uber reported $623 million of those overhead expenses overall. But ride-hailing accounts for only 82% of its overall revenue. So assuming that 82% of its overhead and technology is attributable to ride-hailing—$511 million—implies that Uber’s ride-hailing business had Ebitda of $120 million in the quarter.
Thus, Uber’s third-quarter performance translates to a net operating profit margin of 1% for the ride-hailing business, the first quarter in the black since the start of 2018—the earliest period for which Uber has disclosed such information. But to justify a price around $37-38, Uber would need at least a 13% to 14% net operating profit margin from around $20 billion in revenue, while growing at close to 20%, according to a valuation model known as a “reverse discounted cash flow” developed by equity research firm New Constructs, based in Nashville, Tennessee. We estimate Uber will get there in 2023, assuming it makes progress toward the long-term profit goals its executives outlined before the offering.
The New Constructs model calculates the economic earnings a company must generate to support a stock’s current market price. Economic earnings are basically a measure of profitability known as free cash flow—the cash generated from a company’s operations minus the cost of capital expenditures such as buying computer servers to run the business. New Constructs based the model on its analysis of the historical earnings and corresponding stock prices of thousands of companies.
We used the model and made some assumptions about the next few years to estimate when Uber’s per-share value would get close to where the stock is now. We assumed that revenue growth would slow from 25% in the coming 12 months to 18% by 2023—and that may be generous. One way Uber has maintained revenue growth lately is through raising prices, which has had the impact of slowing growth in terms of number of rides in the U.S. market.
We also assume a steady increase in the net operating profit margin to 16% by 023. That also may be generous. Recent legal and regulatory hits, as well as threats to its business, have raised questions about Uber’s ability to expand profit margins in the long run. For instance, the California law requiring companies to treat contractors as employees prompted Uber to experiment with letting drivers set their own prices and see the destination before accepting a trip. If widely adopted, this approach could mess with the efficiency of Uber’s service and squeeze its profit margin.
One reason why many Wall Street analysts argue Uber stock is undervalued is because they’re optimistic about Uber’s revenue and profit growth potential. For Uber executives and stock analysts, “the underlying assumption…is that if a company can achieve break-even, it obviously can continue profitable growth. But why?” said Len Sherman, an adjunct professor at Columbia Business School who has been a longtime critic of Uber’s valuation.
“No company has ever pulled off the epic turnaround on the scale Uber requires” to get to “sizable positive cash flows” without first shrinking itself by cutting unprofitable operations, Sherman added.
For this analysis, The Information put a $6 billion value for Uber’s minority equity stakes in other, privately held ride-hailing companies. That is down from the $12 billion or so value that Uber placed on those stakes around the time of its IPO. Uncertainties about some of those businesses, including Grab and Didi Chuxing, justify halving the earlier value.
The biggest hole in The Information’s analysis concerns Uber Eats, the food delivery app that makes up about 12% of Uber’s revenue. It’s extremely difficult to put a value on Uber Eats, given its growing losses and uncertainty about when those will end. The service likely lost $1.2 billion before taxes, depreciation and amortization in 2019, according to Uber’s results for the first three quarters of the year. The company said that in the third quarter of 2019, 15% of Uber Eats’ gross sales occurred in competitive regions and accounted for half of its Ebitda loss.
Uber is looking to offload its worst-performing Uber Eats operations, as it just did in India, so if we eliminate those poorly performing regions, that shrinks Uber Eats’ revenue by about $200 million for the year. That would mean the service could have generated nearly $1.2 billion in revenue and lost roughly $600 million in Ebitda terms. But applying 12% of Uber’s corporate overhead and tech costs to Uber Eats would increase that annual loss amount to at least $800 million.
So the question is, how much future value should we ascribe to Eats? One approach would be to play out some consolidation in its biggest market, the U.S., and assume that that would lessen the amount of money Uber Eats must spend to compete. It would be easier to assign a value to Uber Eats if it were to merge with a rival such as online food-ordering pioneer Grubhub. It is roughly the same size as Uber Eats in terms of revenue (though most of its business is based on the commission from taking orders rather than fulfilling the delivery), is marginally profitable, is growing half as fast as Uber Eats, and has a $5 billion market capitalization.
Considering that a merger might help both entities save money because they would primarily be competing with DoorDash, it could make sense to put a $2.5 billion to $5 billion value on Uber Eats as part of the combined entity, for the moment. We split the difference and assumed Uber owned a minority stake, worth $3.7 billion, in a food delivery unit.
Some analysts also have placed a combined value of more than $10 billion on Uber’s autonomous vehicle R&D and scooter and bike rental divisions. But we’d argue it is pointless to ascribe any value to these businesses, given how they’re performing. New data show that Uber’s rental divisions have lost money at a much faster rate than the startups it is competing against. And recent reporting shows the R&D group has no clear path to commercializing the nascent technology.
The only other question mark concerns the fast-growing Uber Freight business, which recently accounted for 6% of Uber’s revenue. But in the first nine months of 2019, its loss before interest, taxes, depreciation and amortization amounted to 31% of the Freight revenue. So it may be too early to calculate the potential value of Uber Freight.
Uber has had some success in shifting the perception of its core ride-hailing business from “can it ever make money?” to “how much money can it make?” Now the doubters will focus on its long-term value as a public stock—and for good reason. Given how much cash Uber’s core business will need to generate in the future, the company still has a mountain to climb to justify its stock valuation today.
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This image provided by Cruise shows a rendering of an unorthodox electric vehicle called “Origin,” being developed by GM’s Cruise subsidiary. Photo: Cruise via AP
General Motors’ self-driving car company will attempt to deliver on its long-running promise to provide a more environmentally friendly ride-hailing service in an unorthodox vehicle designed to eliminate the need for human operators to transport people around crowded cities.
The service still being developed by GM’s Cruise subsidiary will rely on a boxy, electric-powered vehicle called “Origin” that was unveiled late Tuesday in San Francisco amid much fanfare. It looks like a cross between a mini-van and sports utility vehicle with one huge exception — it won’t have any steering wheel or brakes. The Origin will accommodate up to four passengers at a time, although a single customer will be able summon it for a ride just as people already can ask for a car with a human behind the wheel from Uber or Lyft.
For all the hype surrounding the Origin’s unveiling, Cruise omitted some key details, including when its ride-hailing service will be available and how many of the vehicles will be in its fleet. The company indicated it will initially only be available in San Francisco, where Cruise has already been offering a ride-hailing service that’s only available to its roughly 1,000 employees.
By eliminating the need for a human to drive, Cruise theoretically will be able to offer a less expensive way to get around — a goal already being pursued by self-driving car pioneer Waymo, a Google spinoff that has been testing robotaxis in the Phoenix area for nearly three years.
Cruise had planned to have a robotaxi service consisting of Chevrolet Bolts working without human backup drivers by the end of 2019, but moved away from that last year after one of Uber’s autonomous test vehicles ran down and killed a pedestrian in the Phoenix suburb of Tempe, Arizona, during 2018.
Still aware of the fallout from that deadly crash, Cruise is promising “superhuman performance” from the Cruise, which GM hopes to manufacture at half the price of comparable vehicles using fuel-combustion engines. GM also expects to announce where the Origin will be made within the next few weeks, Cruise CEO Dan Amman said.
The Origin won’t be sold to consumers though. “It is not a product you can buy, but an experience you share,” Amman said.
The Origin represents another significant step for Cruise, which had only 40 employees when GM bought it in 2016 as part of its effort to catch up in the race to build cars that can drive themselves. Since then, Cruise has attracted more than $6 billion from investors, including $2.75 billion from Honda and $2.25 billion from Japanese tech investment firm SoftBank. Honda also helped develop the Origin.
GM currently values Cruise at $19 billion, fueling speculation that the subsidiary may eventually be spun off as a publicly traded company.
Whenever Cruise’s ride-hailing service makes its debut, it will still be chasing Waymo, whose work on self-driving car technology began inside of Google more than a decade ago.
Waymo’s Phoenix-area service already has given more than 100,000 rides, according to the company. It expanded beyond the test phase service 13 months ago with a ride-hailing app that now has about 1,500 active monthly riders, Waymo says.
By comparison, ride-hailing leader Uber now boasts about 103 million active monthly users with a service that relies on human drivers — a dependence that is the main reason the company has been losing money throughout its history. Despite the fatal 2018 crash that stoked the public’s worst fears about self-driving cars, Uber is still trying to build a fleet of robotic taxis as part of its question to become profitable.
Tesla CEO Elon Musk has also pledged that his company’s electric cars will be able to drive themselves without a human behind the wheel before the end of this year so they can moonlight as taxis when their owners don’t need the vehicles, but industry analysts doubt that promise will come to fruition.
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Jamie Dimon, Chairman and CEO of JP Morgan Chase. Adam Jeffery | CNBC
J.P. Morgan Chase announced on Tuesday the creation of its Development Finance Institution to boost private investment in emerging-market projects.
The lender said it can finance more than $100 billion annually from its investment bank and created a formal methodology to define projects that fit commercial and development targets. It also hired Faheen Allibhoy, an 18-year veteran of the World Bank-affiliated International Finance Corp., to lead the new group.
“The emerging markets are where the action is,” Allibhoy told CNBC. Places like Indonesia, Turkey, Mexico and Egypt are “countries that are building infrastructure and that are in need of capital, and they’re sizable economies.”
Development finance — which funds projects to boost economic growth and quality of life in emerging economies — will be a major topic as world leaders and CEOs gather this week at the World Economic Forum in Davos, Switzerland. It can include funding for infrastructure like bridges and wind farms or microfinance lending to entrepreneurs.
According to J.P. Morgan, there is a $2.5 trillion annual shortfall in investment to achieve the goals set by the United Nations to address climate change, health, education and food security in the developing world by 2030.
With its new business, the biggest U.S. bank hopes to close the gap by helping to turn development finance into a traded asset class, originating assets for distribution to investors. It will also connect public and private pools of capital, from pensions and family offices to philanthropies.
Daniel Pinto, co-president of J.P. Morgan and head of its corporate and investment bank, said in the announcement that the aim of the effort is to “increase engagement with clients and investors interested in financing critical projects and transactions in emerging markets.”
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Microsoft CEO Says U.S.-China Spat May Hurt Global Growth
Microsoft Corp’s chief executive officer said he worries that mistrust between the U.S. and China will increase technology costs and hurt economic growth at a critical time.
Using the $470 billion semiconductor industry as an example of a sector that is already globally interconnected, Satya Nadella said the two countries will have to find ways to work together, rather than creating different supply chains for each country.
“All you are doing is increasing transaction costs for everybody if you completely separate,” Nadella said in an interview with Bloomberg News Editor-in-Chief John Micklethwait at Bloomberg’s The Year Ahead conference in Davos. That’s a concern as the executive said the world is on the cusp of a revolution around technology and artificial intelligence.
“If we take steps back in trust or increase transaction costs around technology, all we are doing is sacrificing global economic growth,” he said.
The Trump administration is considering steps to further limit the ability of U.S. companies to supply Huawei Technologies Co., China’s flagship tech company, in addition to pressuring countries around the world to avoid using its equipment for 5G mobile networks.
The agreement signed last week between the U.S. and China was “not sufficient,” said Nadella, but represented “progress” on the issue of intellectual property protections for U.S. technology companies working with China.
To enable different countries to use technology from outside their borders, Nadella suggested a system that relies on verification. For example, Microsoft has set up technology centers where various governments can inspect the Windows source code to satisfy themselves as to the security of the product.
“There has to be a way for any country to be able to trust, through verification, the technology that they are using as part of a their infrastructure,” he said. “Mechanisms like that have to be in place, and then build trade on top of it instead of thinking of trade and trust as the same thing.”
Nadella said he worries about the development of two separate internets, noting that to some degree they already exist “and they will get amplified in the future” with massive technology companies already in place in China.
The viewpoint clashes with Microsoft co-founder Bill Gates, who has been skeptical about the idea that ongoing U.S.-China trade tensions could ever lead to a bifurcated system of two internets.
China and the U.S. are the two leading AI superpowers, however the cooling political relations between them have slowed the international collaboration.
Even amid the tensions, countries should find ways to establish global norms around cybersecurity — such as agreements not to hack each other’s citizens — privacy and responsible AI, Nadella said. “Despite whatever trade dynamic causes people to separate, you would hope people would recognize we all benefit from more global norms, not less.“ Earlier this month, in a blog post about his goals for the year, Nadella said these areas are essential to earn and sustain people’s trust.
Nadella also warned that countries that fail to attract immigrants will lose out as the global tech industry continues to grow. The CEO has previously voiced concern about India’s Citizenship Amendment Act, which bans undocumented Muslim migrants from neighboring countries from seeking citizenship in India while allowing immigrants from other religions to do so, calling it “sad.”
“Every country is rethinking what is in their national interest,” he said. Governments need to “maintain that modicum of enlightenment and not think about it very narrowly,” Nadella said, adding that “people will only come when people know you’re an immigrant-friendly country.“
However, Nadella said he remained hopeful. “I’m an India optimist,” he said. “The fact that there is a 70-year history of nation building, I think it’s a very strong foundation. I grew up in that country. I’m proud of that heritage. I’m influenced by that experience.”
Microsoft has recently unveiled plans to invest $1 billion to back companies and organizations working on technologies to remove or reduce carbon from the atmosphere, saying efforts to merely emit less carbon aren’t enough to prevent catastrophic climate change.
“We will now have to make sure all our data center operations are first consuming renewable energy,” Nadella said.
Microsoft and Amazon.com Inc., along with other technology companies, have been criticized for supplying software and cloud services to large oil and gas companies like Chevron Corp. and BP Plc. BlackRock Inc.’s Larry Fink has been trailed to work and public engagements by protesters decrying the investment firm for inaction on global warming and other issues.
Activists have been pushing for companies to stop working with the largest producers of greenhouse gases. BlackRock has said it will cut exposure to thermal coal as the world’s largest asset manager moves to address climate change.
Nadella declined to comment on whether Microsoft would stop working with the major carbon producers. “The energy transition is going to include all of us,” he said.