15 February 2021

General Motors Races Ahead with EV Plans

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News shaping
the markets today

     

What’s happening: General Motors unveiled a redesigned Bolt electric car and a larger electric utility vehicle (EUV) on Sunday evening.

What happened: General Motors unveiled a refreshed and cheaper version of its Chevy Bolt Electric Vehicle, alongside the Chevy Bolt EUV.

The news comes just days after the Detroit-based automaker announced plans to go all-electric by 2035, faced by challenging global auto trends.

Why it matters: The auto industry had been witnessing a slowing trend since 2017. The pandemic did not help the cause, resulting in a contraction of around 16% in the number of vehicles sold in 2020, according to IHS Markit figures.

Global vehicle sales are expected to grow by between 7% to 9% in 2021 and 2022, according to analysts at S&P Global Ratings. While this spells a recovery from last year, it means light vehicle sales will remain around 6% below the 2019 volumes.

Against this backdrop, the growing popularity of EVs brings a ray of hope for automakers scrambling for market share. Global sales of EVs are expected to grow 70% in 2021, from an estimated 2.5 million units in 2020, and are projected to cross 12 million by 2025, representing a CAGR of over 50%, according to IHS Markit figures. China and Europe are expected to be the largest markets, followed by the US.

General Motors had launched Chevy Bolt, its first long-range electric vehicle, in 2016. Since 2017, the US auto giant has sold over 100,000 Bolt EVs globally. With the new EUV and the redesigned Chevy Bolt EV, the company said it plans to launch 30 new EVs globally by 2025, gradually phasing out gas and diesel engines.

Both the vehicles unveiled on Sunday evening are equipped with the company’s new semi-autonomous “Super Cruise” drive-assist system, which uses facial recognition technology to determine if the driver is paying attention to the road.

The new 2022 Bolt EV will be priced from $31,995, while the EUV will have a price tag of starting from $33,995.

What to watch: Shares of General Motors had come under pressure after the automaker warned of production disruptions due to a global shortage of semiconductor chips. Despite this, the stock has gained almost 29% year to date.

General Motors faces severe competition from pureplay EV makers, including Tesla and a host of Chinese automakers. On the other hand, unlike its rivals, the company has funded research and development by ploughing back profits, rather than issuing shares, which strengthens its positioning.

The Markets Today

     

Crude oil will be in focus today, after climbing past the $60 resistance level.

Context: WTI crude spiked more than 2% during the Asian session this morning, breaching the $60 barrier, to reach $60.77 per barrel.

Details: Crude oil prices rallied this morning, crossing the $60 per barrel milestone for the first time in over a year. Prices were fuelled by concerns around weather-related supply disruptions in Texas, Arizona.

The last time crude was above this level was in January 2020, before the pandemic-induced lockdowns and travel restrictions caused the oil market to collapse and even sent oil futures to negative territory.

Crude has maintained a general uptrend over the past few months, mainly on hopes of a recovery in the global economy due to the rollout of vaccines and initiatives taken by various governments to trigger economic activity. The Biden administration’s $1.9 billion coronavirus relief package has supported market sentiment so far this year.

Sentiment has also been lifted by news of a decline in daily covid-19 cases and deaths around the world and the gradual reopening of economies, after fears of new strains of the virus caused some concern.

Saudi Arabia’s announcement in January of production cuts in February and March have recently been supporting oil prices.

What to watch: Investors will keep an eye on the OPEC’s next meeting for any further production cuts. The Texas outage will remain in focus till the cold blast passes. Investors will also monitor the latest reports on stockpiles and coronavirus numbers.

Other Markets: European trading indices closed higher on Friday, with the Eurozone Stoxx 600, German DAX 30, French CAC 40 and FTSE 100 up by 0.64%, 0.06% 0.60% and 0.94%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Norway’s balance of trade, Hungary’s construction output, Eurozone’s balance of trade and industrial production, India’s balance of trade, Canada’s new motor vehicle sales and manufacturing sales and Russia’s industrial production.

 

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