Mercedes-Benz will shift its focus to electric vehicles by 2025.

Daily Business Briefing

July 22, 2021, 8:51 a.m. ET

July 22, 2021, 8:51 a.m. ET

Credit…John Macdougall/Agence France-Presse — Getty Images

Mercedes-Benz will shift its focus entirely to electric vehicles in 2025 and be prepared to sell nothing but electric cars by 2030, the company said Thursday, adding a caveat that the transition depends on “market conditions.”

Mercedes thus joined a growing list of companies including General Motors, Stellantis and Renault that have declared their intention to hasten the demise of internal combustion engines in favor of battery powered vehicles with no tailpipe emissions.

Increasingly, they have little choice. The European Union will effectively ban new cars with internal combustion engines in 2035, while Britain, Norway and other countries have also set expiration dates for vehicles that run on fossil fuels.

Mercedes, the luxury carmaking division of Daimler, also faces pressure from Tesla, which has been stealing well-heeled buyers and is building a factory in Berlin.

Mercedes said it would invest 40 billion euros, or $47 billion, on electric cars, vans and light commercial vehicles by 2030. In 2025, the company will introduce three new electric vehicle platforms — collections of components and technology that can be shared among different models — and will no longer develop platforms for internal combustion engines.

The platform shift is significant because it allows Mercedes to exploit some of the design potential of battery powered vehicles, such as more interior space. Electric motors are smaller than internal combustion engines and do not require large transmissions.

Mercedes said that, working with partners, it would also establish a global network of plants to produce batteries and would produce its own electric motors.

“The EV shift is picking up speed — especially in the luxury segment, where Mercedes-Benz belongs,” Ola Källenius, the chief executive of Daimler, said in a statement. “The tipping point is getting closer and we will be ready as markets switch to electric-only by the end of this decade.”

But the company stopped short of promising not to sell any more cars with internal combustion engines. Some regions of the world by 2030 may not have the charging networks that make owning an electric vehicle practical.

“Mercedes-Benz will be ready to go all-electric at the end of the decade, where market conditions allow,” the company said in a statement.

  • Initial claims for state jobless benefits rose last week, the Labor Department reported Thursday.

  • The weekly figure, before seasonal adjustments, was about 406,000, an increase of 14,000 from the previous week. New claims for Pandemic Unemployment Assistance, a federally funded program for jobless freelancers, gig workers and others who do not ordinarily qualify for state benefits, totaled 110,000, up about 14,000 from the week before. The figures are not seasonally adjusted. (On a seasonally adjusted basis, state claims totaled 419,000, an increase of 51,000.)

  • New state claims remain high by historical standards but are one-third the level recorded in early January. The benefit filings, something of a proxy for layoffs, have receded as businesses return to fuller operations, particularly in hard-hit industries like leisure and hospitality.

  • More than 20 states have recently discontinued some or all federal pandemic unemployment benefits — including a $300 supplement to other benefits — even though they are funded through September. Officials in those states said the payments were keeping people from seeking work. But judges in Maryland and Indiana have blocked the early cutoff, and legal challenges are pending in three other states.

  • A survey of 5,000 adults conducted June 22-25 by Morning Consult found that those whose unemployment benefits were about to expire felt more pressure to find work. But of all those on unemployment insurance, relatively few — 20 percent of those who had worked full time, and 28 percent of those who had worked part time — said the benefits were better than their previous work income in meeting basic expenses.

  • The Labor Department’s employment report for June showed that the economy had 6.8 million fewer jobs than before the pandemic. A separate report found 9.2 million job openings at the end of May as businesses that had closed or cut back during the pandemic raced to hire employees to meet the reviving demand.

  • But there is a substantial amount of turnover, with far more workers quitting their jobs than are being laid off — a sign that many are jumping to positions that pay even slightly more. And the rush by businesses to staff up in lower-paying jobs means that many workers can afford to wait for a better deal.

Christine Lagarde, president of the European Central Bank.
Credit…Kai Pfaffenbach/Reuters

The European Central Bank updated its message to financial markets on Thursday, explaining in clearer terms than usual how the future path of inflation will determine changes to interest rates and other stimulus measures.

It was the first policy announcement since the central bank announced the results of its strategy review this month, and it means policymakers will allow emergency measures to persist even if inflation temporarily rises above 2 percent. The bank also said it would use its influence in the bond market to tackle climate change.

The central bank’s latest forward guidance, published Thursday, was changed to reflect the new strategy. Interest rates will “remain at their present or lower levels” until inflation is seen reaching 2 percent “well ahead” of the end of the central bank’s projection horizon, which is approximately three years, “and durably” for the rest of that period. Policymakers will also keep interest rates low until there is evidence that inflation will stabilize at 2 percent “over the medium term.”

“This may also imply a transitory period in which inflation is moderately above target,” the statement said.

The change in policy guidance comes as the rising number of coronavirus cases has led governments in the region to reimpose some restrictions, hoping not to derail the fragile economic recovery. On Thursday, interest rates and the pace of the central bank’s bond-buying program stayed the same.

The central bank’s president, Christine Lagarde, will speak to reporters at 2:30 p.m. in Frankfurt.

Previously, the central bank had been aiming for inflation below, but close to, 2 percent. Now it has a “symmetric” 2 percent target “over the medium term.”

Last week, data showed that the annual inflation rate in the eurozone was 1.9 percent in June, down from 2 percent in May. Business reopenings and supply chain disruptions are leading to price increases across Europe and the United States, and central banks are being pushed to explain when these increases might lead to a pullback in monetary stimulus. So far, policymakers have indicated they will withstand higher inflation as long as it is temporary. The statement from the European Central Bank on Thursday reiterates its desire to not withdraw stimulus prematurely.

The change in the central bank’s forward guidance is intended “to underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target,” the statement said.

As investors expect interest rates to stay low and negative for several years in Europe, the monetary policy path is diverging even more strongly from the United States, where policymakers expect to raise interest rates in 2023.

A protest in January at Robinhood’s headquarters in Menlo Park, Calif., after the app said it would limit trades of GameStop.
Credit…Ian C. Bates for The New York Times

Robinhood plans to sell as much as a third of its initial public offering, or $770 million of shares, directly to customers through its app. And anyone can participate in a special livestream of its investor presentations this Saturday.

The moves are highly unusual and upend the traditional I.P.O. process, Erin Griffith and Lauren Hirsch report for The New York Times. No company has ever offered so many shares to everyday investors at the outset; firms typically reserve just 1 or 2 percent of their shares for customers. And investor presentations usually take place behind closed doors with Wall Street firms.

“We recognize that for many of you this will be the first I.P.O. you have had a chance to participate in,” Vlad Tenev and Baiju Bhatt, Robinhood’s founders, wrote in its offering prospectus. They added that they wanted to put customers on an “equal footing” with large institutional investors.

Robinhood is also letting its employees sell up to 15 percent of their shares immediately upon its listing, rather than having them wait the traditional six months. That could add to volatile trading.

But the risks of opening up an I.P.O. are significant. Big professional funds tend to hold stock that they buy in an I.P.O., but there is little to stop everyday investors from immediately dumping Robinhood’s shares. And any technical problems could invite regulatory scrutiny and investor lawsuits, bankers said.

In 2006, the phone service provider Vonage tried to sell shares to its customers in its I.P.O. But a technical glitch left buyers unclear whether their trades had gone through until days later, when the stock had plummeted. Customers sued Vonage, and regulators fined the banks that ran the offering.

Major companies have stuck with their plans to sponsor the Tokyo Olympics, despite calls to cancel the event because of the pandemic.
Credit…Hiroko Masuike/The New York Times

Olympic advertisers are feeling anxious about the more than $1 billion they have spent to run ads on NBC and its Peacock streaming platform.

Calls to cancel the events have intensified as more athletes test positive for the coronavirus. The event is also deeply unpopular with Japanese citizens and many public health experts, who fear a superspreader event. And there will be no spectators in the stands.

For NBCUniversal, which has paid billions of dollars for the exclusive rights to broadcast the Olympics in the United States through 2032, the event is a crucial source of revenue. There are more than 140 sponsors for NBC’s coverage on television, on its year-old streaming platform Peacock and online, an increase over the 100 that signed on for the 2016 Summer Games in Rio de Janeiro, Tiffany Hsu reports for The New York Times.

Chris Brandt, the chief marketing officer of Chipotle, said that the situation was “not ideal,” but that the company still planned to run a campaign featuring profiles of Olympic athletes.

“We do think people will continue to tune in, even without fans, as they did for all kinds of other sports,” Mr. Brandt said. “It’s going to be a diminishing factor in terms of the excitement, but we also hope that the Olympics are a bit of a unifier at a time when the country can seem to be so divided every day.”

Ad agency executives said companies were regularly checking in for updates on the coronavirus outbreak in Japan and might fine-tune their marketing messages accordingly.

“Everyone is a little bit cautious,” said David Droga, the founder of the Droga5 ad agency, which worked on an Olympics campaign for Facebook showcasing skateboarders. “People are quite fragile at the moment. Advertisers don’t want to be too saccharine or too clever but are trying to find that right tone.”

A tax agreement is needed “for the continued success of the liberal international economic order,” said Itai Grinberg, a deputy assistant secretary at the Treasury Department.
Credit…Stefani Reynolds for The New York Times

The Biden administration made its case on Wednesday for why multinational corporations should support an international tax agreement aimed at cracking down on tax shelters, with a top official arguing that the deal would restore order to globalization and blunt the forces of protectionism and populism that have posed a threat to business in recent years.

The comments, by Itai Grinberg, a Treasury Department official who is representing the United States in the negotiations, offered a new rationale for the agreement, which would entail the largest overhaul of the international tax system in decades. If enacted, the deal would usher in a global minimum tax of at least 15 percent and allow countries to impose new taxes on the goods and services of the largest and most profitable corporations regardless of where the companies are based.

But the Biden administration sees the agreement as more than an end to the “race to the bottom” on corporate taxes that has been a boon to tax havens.

“We believe this deal is part and parcel of restoring the foundation for the continued success of the liberal international economic order as we have known it over the last 75 years,” Mr. Grinberg, Treasury’s deputy assistant secretary for multilateral tax, told the National Association for Business Economics.

The Biden administration has been pushing for the agreement as part of its plan to raise taxes on companies in the United States without making them less competitive around the world and to get dozens of countries to drop new digital services taxes that have targeted American technology companies. More than 130 countries have signed on to a framework of the deal, which is being negotiated through the Organization for Economic Cooperation and Development.

Although large companies have been anxious about the prospect of higher taxes, Mr. Grinberg argued that they had more to gain from a tax agreement. He suggested that a lack of clarity and consensus in the international tax system was leading to greater double taxation that, if left unchecked, could cause corporations to pull back cross-border investment.

“The effect of those diminished transactions would spread well beyond big companies and their shareholders, because the activity of multinationals is the backbone of the success of globalization,” Mr. Grinberg said. “And none of that would be good, because although it certainly has its flaws, globalization has brought benefits not just for multinational corporations but for people in the United States and around the world.”

The Biden administration has argued that its international tax proposals would bring more fairness to the United States and to economies around the world. They would do so, it says, by putting an end to a system that allows corporations to pay less tax than middle-class workers and by giving nations more tax revenue that they could spend on infrastructure and other public goods. Mr. Grinberg said this would be in the interest of corporations, arguing that the sense of unfairness was creating a landscape that is problematic for global businesses.

“Could globally engaged multinational business succeed if economic populism, protectionism and anti-immigrant sentiment were to become the order of the political day?” he said.

Much remains to be done between now and October, when international negotiators hope to complete the pact. Ireland, Estonia and Hungary have yet to join the agreement, and their resistance could block the European Union from moving ahead with the plan.

The Biden administration hopes that Congress will approve its proposed changes to the U.S. global minimum tax this year and that it will consider the proposal to allow other countries to tax America’s large multinational companies next year, after technical work on that plan is completed.

The tax negotiations have been a top priority for Janet L. Yellen during her first year as Treasury secretary. Mr. Grinberg has been working closely with Rebecca Kysar, another Treasury official, to shape the agreement and represent the United States in the talks.

In his remarks, Mr. Grinberg said it was important to ensure that the agreement included a dispute resolution system and a mechanism to make sure it was binding.

“Getting it right will be an essential part of encapsulating this deal in a multilateral convention,” he said.

Mercedes-Benz will shift its focus to electric vehicles by 2025. Source link Mercedes-Benz will shift its focus to electric vehicles by 2025.

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