Business

By David Shepardson

WASHINGTON (Reuters) – President Joe Biden said on Friday he plans to attend the Detroit auto show later this month as his administration touts a rising number of investments in electric vehicles and battery manufacturing.

“I’ll be there. I’m a car guy – as you kind of noticed,” Biden said at an event. The Commerce Department on Friday awarded $52.2 million to a Detroit regional program called the “Global Epicenter of Mobility” to help Michigan’s automotive sector transition to EVs and autonomous vehicles.

The Commerce Department said despite more than $5 billion in private investment the Detroit region’s “prospects are threatened by rising global competition in the electric and autonomous vehicle market, by the rapid pace of innovation in new mobility solutions and by an aging workforce that needs continuous reskilling to keep up with new products and technologies.”

The White House has heralded a string of recent major investment announcements from U.S. and foreign automakers to build new battery plants and electric vehicles.

This month’s Detroit auto show will be the first time the event has been held since 2019. The show, open to the public from Sept. 17 to Sept. 25, is expected to focus on the shift to EVs.

Biden wants at least 50% of new vehicles sold by 2030 to be electric or plug-in electric hybrids.

When he served as vice president in the Obama administration, Biden attended the Detroit auto show and was a strong advocate of the 2008-09 bailouts of GM and Chrysler, which is now part of Stellantis NV.

EV battery makers are looking to increase U.S. production as the country implements stricter regulation and tightens tax credit eligibility.

Japan’s Honda Motor Co Ltd said on Monday it will build a new $4.4 billion lithium-ion battery plant for electric vehicles in the United States with Korean battery supplier LG Energy Solution Ltd.

Also this week, Toyota Motor Corp said it will boost its planned investment in a new U.S. battery plant from $1.29 billion to $3.8 billion, partly in response to rising consumer demand for electric vehicles.

General Motors Co and LG Energy Solution said this week production had begun at their $2.3 billion joint-venture battery production plant in Ohio. The companies said last month they were considering a site in New Carlisle, Indiana, for a fourth U.S. battery cell manufacturing plant expected to cost around $2.4 billion.

(Reporting by David Shepardson in Washington; Editing by Matthew Lewis)

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BERLIN (AP) — Russian energy giant Gazprom said Friday that it can’t resume the supply of natural gas through a key pipeline to Germany for now because of what it said was a need for urgent maintenance work, just hours before it was due to recommence deliveries.

The Russian state-run energy company had shut down the Nord Stream 1 pipeline on Wednesday for what it said would be three days of work.

It said in a social media post Friday evening that it had identified “malfunctions” of a turbine and added that the pipeline would not work unless those were eliminated.

It was the latest development in a saga in which Gazprom has advanced technical problems as the reason for reducing gas flows through Nord Stream 1 — explanations that German officials have rejected as a cover for a political power play following Russia’s invasion of Ukraine.

Gazprom said it had identified oil leaks from four turbines at the Portovaya compressor station at the Russian end of the pipeline, including the sole operational one. It claimed to have received warnings from Russia’s industrial safety watchdog that the leaks “do not allow for safe, trouble-free operation of the gas turbine engine.”

“In connection with this, it is necessary to take appropriate measures and suspend further operation of the … gas compressor unit in connection with the identified gross (safety) violations,” the company said.

Gazprom started cutting supplies through Nord Stream 1 in mid-June, blaming delays to the delivery of a turbine that had been sent to Canada for repair. Canada has since allowed the turbine’s delivery to Germany, which has said that nothing stands in the way of it being sent to Russia other than Russia saying it wants the part.

In recent weeks, Nord Stream 1 has been running at only 20% of capacity.

Russia, which before the reductions started accounted for a bit more than a third of Germany’s gas supplies, has also reduced the flow of gas to other European countries which have sided with Ukraine in the war.

Natural gas is used to power industry, heat homes and offices, and generate electricity. Increasing the amount in reserve has been a key focus of the German government since Russia invaded Ukraine, to avoid rationing for industry as demand rises in the winter.

Germany’s storage facilities are now over 84% full.

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Follow all of AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine

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By Richa Naidu

LONDON (Reuters) -Laxman Narasimhan may have no experience of running coffee shops, but the outgoing CEO of British packaged goods group Reckitt will bring insight into the changing habits of consumers when he takes over at Starbucks.

At Reckitt, maker of Strepsils throat lozenges and Dettol floor cleaner, the 55-year old Narasimhan spearheaded a sweeping, but unfinished, corporate turnaround, while honing relationships with retailers ranging from Walmart to Tesco.

When he joins Starbucks in October, Narasimhan will have to adapt his focus to serving the millions of people who step into the coffee chain’s roughly 32,000 stores every day.

But his background, including a stint of several months as PepsiCo’s chief commercial officer in 2019, should ensure a smooth transition to Starbucks, analysts said.

“I don’t think he’s had material exposure to direct-to-consumer businesses or in running retail networks,” Credit Suisse analyst Eamonn Ferry said.

“He has no direct experience in coffee, so you could question that. However, he does hold a deep understanding of the consumer and this is far more important,” Ferry added.

The world’s biggest coffee chain is reworking its business model from a focus on cafes to mobile pickup and delivery, while facing higher costs for ingredients and labour.

Seattle-based Starbucks also faces a labour union drive, with more than 200 of its U.S. stores having unionized in the past year and staff pushing for improved benefits and wages.

Narasimhan, who also spent nearly two decades at consultancy and well-known turnaround firm McKinsey & Co, will have six months after joining to get to grips with the business before taking the helm as chief executive of Starbucks in April 2023.

His track record and eye for detail suggests he will use that time to study every facet of the business, analysts and investors said.

“Narasimhan was seen to have been doing a good job thus far,” Jack Martin, fund manager at Reckitt shareholder Oberon Investments, said, adding that he had “steadied the ship” following a relatively turbulent period under his predecessor.

REJUVENATION TO REINVENTION

At Starbuck’s, Narasimhan will oversee a “reinvention” plan, which the company says includes paying better wages for baristas, improving employee welfare and customer experience and re-imagining stores.

His record at Reckitt suggests he is prepared to take painful decisions early.

Soon after becoming Reckitt CEO in 2019, he commissioned a strategic review, vowing to spend 2 billion pounds ($2.3 billion) over three years to “rejuvenate” it.

Early in the plan, Reckitt took a hit to margins to fund new investments and refocus on hygiene, health and nutrition brands. That approach eventually proved popular with shareholders.

“Under Laxman, Reckitt has a newfound confidence – investors seem to be convinced that everything is going in the right direction,” Bernstein analyst Bruno Monteyne said.

“He radiates – oozes – confidence,” Monteyne added.

For Reckitt, Narasimhan’s exit leaves a big hole.

For now, longtime Reckitt board member and former British American Tobacco (BAT) chief Nicandro Durante will lead the maker of Lysol surface cleaner and Durex condoms.

“When Laxman made his intention clear…they thought moving quickly was best,” said Patricia O’Hayer, Reckitt’s global head of communications and government affairs. She noted that Durante steered BAT, a bigger company, through its own transformation.

($1 = 0.8654 pounds)

(Reporting by Richa Naidu; Editing by Matt Scuffham, Nick Zieminski, Alexander Smith and Louise Heavens)

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By David Shepardson

(Reuters) – General Motors Co said Friday it will offer all of its estimated 2,000 U.S. Buick franchise dealers buyouts as it moves to make the brand all-electric by 2030 in the United States.

The Wall Street Journal reported the news earlier, quoting Global Buick chief Duncan Aldred who is set to discuss the plans with dealers Friday in a virtual meeting. He noted shifting to EVs will require significant investments by Buick dealers.

“So if they want to exit the Buick franchise, then we will give them monetary assistance to do so,” Aldred told the newspaper.

Buick said in June it plans to introduce its first EV in 2024, but did not provide specifics.

“The future dealer requirements are a logical and necessary next step on our path towards electrification to ensure our dealers are prepared to properly sell and service these unique vehicles,” a GM spokeswoman told Reuters Friday.

Last year, GM’s Cadillac brand said it had thinned its dealer network as it shifts to EVs, saying it has nearly 40% fewer U.S. dealers than in 2018.

GM booked a total of $274 million in costs during 2020 and 2021 related to the effort to buy out Cadillac dealers who were not prepared to invest $200,000 to $500,000 per store in the equipment and training to support the brand’s shift to an all-electric vehicle lineup, planned by 2030.

Buick traces its roots back nearly 120 years — five years before GM’s 1908 founding — to an era when electric cars briefly outsold gasoline models in the United States. All Buicks sold back then were gasoline-powered.

Future Buick electric vehicles in the United States and China will carry the Electra name, which dates back more than 60 years, along with an alphanumeric designator.

(Reporting by David Shepardson)

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WASHINGTON (AP) — Federal health regulators remain unconvinced about the benefits of a closely watched experimental drug for the debilitating illness known as Lou Gehrig’s disease, even as they prepare to give its drugmaker a rare second opportunity to make a public case for the treatment.

Amylyx Pharmaceuticals’ experimental drug has become a rallying cause for patients with the deadly neurodegenerative disease, their families and members of Congress who are pushing the FDA to approve the drug.

But regulators said Friday that the drugmaker’s new analyses are not “sufficiently independent or persuasive” to establish its effectiveness. The agency posted its review ahead of a Wednesday meeting of its advisers, who will vote on whether to recommend approval.

In March, the same panel of neurological experts voted 6-4 that the company’s data failed to show a convincing benefit for ALS, or amyotrophic lateral sclerosis. It’s extremely rare for the FDA to call a second review meeting after its advisers have already voted.

The FDA will ask the panel to review several new statistical analyses, which the company says strengthen the case that its drug prolongs life and delays hospitalization and other severe complications. The FDA says the experts can take into account “the unmet need in ALS,” the disease’s seriousness and other factors specific to the terminal diseases.

ALS destroys nerve cells needed to walk, talk, swallow and — eventually — breathe. There is no cure and most people die within three to five years.

The FDA’s review reflects some of the biggest questions facing the agency, including: How strict should it be in enforcing approval standards for drugs against rare, fatal diseases? And how much weight, if any, should be given to outside appeals from patients, advocates and their political allies?

Typically, FDA approval requires two large studies or one study with a “very persuasive” effect on survival.

Amylyx’s data comes from one small, mid-stage trial that showed some benefit in slowing the disease, but which was marred by missing data, implementation errors and other problems, according to FDA reviewers.

Amylyx says that follow-up data gathered after the study concluded shows the drug extended life. When the company followed patients who continued taking the drug, they survived about 10 months longer than patients who never took the drug, according to a new company analysis.

But FDA said Friday the new approach “suffers from the same interpretability challenges” as Amylyx’s initial study and that the new analysis “is not independent data.”

The FDA does not publicly explain its rationale for holding meetings. But some outside analysts believe the agency is hoping that more input will strengthen its hand when it renders its final decision, expected by the end of the month.

Amylyx’s drug is a combination of two older drug ingredients: a prescription medication for liver disorders and a dietary supplement associated with traditional Chinese medicine. The Cambridge, Massachusetts, company has patented the combination and says the chemicals work together to shield cells from premature death. Its co-founders first hit upon the combination as Brown University students.

Some ALS patients already take both pills. FDA approval would likely compel insurers to cover the treatment.

The FDA will hear again from patients and advocacy groups, such as I AM ALS, which has lobbied the FDA and Congress for more than two years to make the drug available. The group’s founder, Brian Wallach, said ALS patients, physicians and researchers believe that the company’s data warrants approval.

“Patients do their homework— we know this isn’t going to cure us,” said Wallach, who was diagnosed with ALS in 2017 and spoke through an interpreter. “But we also know it might keep us here until the next drug comes along and that one might be a cure.”

Wallach currently takes the part of Amylyx’s treatment that is available as a dietary supplement.

Despite the negative review, there are several outside developments that could tip the FDA in the direction of approval.

In June, Canadian regulators approved the drug for ALS patients, the first country to do so. That decision puts FDA regulators in a “precarious position,” says bioethicist Holly Fernandez-Lynch.

“They typically like to be out ahead when making approval decisions,” said Fernandez-Lynch, who teaches at the University of Pennsylvania. “They like to make the argument that they are not a barrier to patients accessing things that might help them.”

Shares of Amylyx fell more than 20% in trading Friday afternoon after the FDA posted its review.

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Follow Matthew Perrone on Twitter: @AP_FDAwriter

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.

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(Reuters) – Bayer AG and some of its subsidiaries agreed to pay $40 million to settle claims over its alleged use of kickbacks and false statements related to the drugs Trasylol, Avelox and Baycol, the U.S. Department of Justice said on Friday.

The settlement arose from two whistleblower lawsuits filed by Laurie Simpson, a former Bayer employee who worked in its marketing department.

Bayer will pay $38.9 million to the United States and $1.14 million to 20 U.S. states and the District of Columbia, the Justice Department said.

(Reporting by Jonathan Stempel in New York)

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By Swathi Nair

BENGALURU (Reuters) – The German economy is on track to contract for three consecutive quarters starting from this one, according to a Reuters poll of economists, following a dramatic spike in gas prices after Russia slashed deliveries to Europe.

Europe’s largest economy and manufacturing powerhouse is among the most vulnerable to any cut-off in energy supplies or rising costs as its industrial sector relies heavily on Russian gas.

The Aug. 29-Sept. 1 Reuters poll showed Germany would see three consecutive quarters of negative growth, surpassing the definition of a technical recession which only requires two.

As most of the euro zone grapples with the energy crisis, medians in the poll suggested the German economy would shrink 0.1% and 0.3% in the third and fourth quarters this year, and 0.2% in the first quarter of next year.

That is a sharp turnaround from expectations of 0.2%, 0.3% and 0.4% quarterly growth as recently as July.

“Gas prices are moving from one astronomic high to the other and will lead to unprecedentedly high energy bills over the winter,” noted Carsten Brzeski of ING.

“Even without a complete stop to Russian gas, high energy and food prices will weigh heavily on consumers and industry, making a technical recession – at least – inevitable.”

The economy was then forecast to grow 0.4% in the second quarter followed by 0.6% and 0.5% growth in the following quarters next year.

On average, the German economy was expected to grow 1.5% this year and then slow to 0.1% next, median forecasts from 34 economists showed.

The energy crisis has already triggered a 400% surge in wholesale gas prices over the last year, hurting energy intensive sectors from metal output to fertilizer production.

With inflation rising to a near 50-year high of 8.8% in August and soaring energy bills eroding the purchasing power of households, pressure is building on the European Central Bank to go for bigger interest rate hikes.

Indeed, the latest Reuters poll showed economists were split between a 50 basis point or a jumbo 75 basis hike from the ECB at the Sept. 8 policy meeting. However, expectations were now rapidly shifting towards a larger move. [ECILT/EU]

Rising energy bills, devastating droughts and low water levels have worsened the cost of living crisis in the euro zone, signalling a painful recession during the winter.

(For other stories from the Reuters global economic poll:

(Reporting by Swathi Nair; polling by Milounee Purohit and Vijayalakshmi Srinivasan; Editing by Jonathan Cable and Jonathan Oatis)

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TOKYO (Reuters) -Japan’s Nissan Motor Co is still analysing a new U.S. law that restricts tax credits for electric vehicles to those assembled in North America, a company executive said on Friday.

“We believe that we need to further accelerate our efforts in electrification and localization, but we would like to take various measures based on a better understanding of the details,” said Joji Tagawa, chief sustainability officer.

Credits ended with the new law for about 70% of the 72 models that were previously eligible, according to the Alliance for Automotive Innovation, an industry trade group.

The Biden administration said in mid-August that about 20 models still qualify for tax credits of up to $7,500, which includes Nissan’s battery electric vehicle Leaf.

The auto industry group, however, said new restrictions on battery and mineral sourcing and price and income caps that take effect on Jan. 1 will make all or nearly all EVs ineligible.

Tagawa said Nissan needs to understand “intricate” details of the law including on procuring parts and rare metals for batteries as well as on vehicle assembly.

The Japan Automobile Manufacturers Association, a major Japanese auto lobby, said last month it was concerned about the law and would keep a close watch on developments.

(Reporting by Satoshi Sugiyama; Editing by Tom Hogue & Shri Navaratnam)

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TOKYO (AP) — Nissan will more aggressively push electric vehicles to take advantage of a new U.S. law that gives up to $7,500 in tax credits, the Japanese automaker said Friday.

President Joe Biden signed the landmark climate change and health care bill into law last month. The tax credit can be used to defray the cost of purchasing an electric vehicle that’s made in the U.S.

The Nissan Leaf electric car is among the models that qualifies, but, under the law, the vehicles must contain a battery built in North America with minerals mined or recycled on the continent to be eligible.

Chief Sustainability Officer Joji Tagawa acknowledged the qualification process was complex, while stressing Nissan was eager to take advantage of the law to alleviate costs to the customer.

“We are in the process of making a thorough analysis at the moment,” he told reporters in an online briefing, noting details of what Nissan might do were still undecided.

Tesla models, as well as the Ford F Series electric pickup, BMW X5 and the Jeep Wrangler plug-in hybrid are among the models that will be able to qualify for the tax credits.

Nissan Motor Co., allied with French automaker Renault, was among the first to bank on zero-emission all-electric vehicles with the Leaf, which went on sale in 2010. More than 600,000 Leaf electric cars have been sold worldwide so far.

Major automakers around the world have recently announced investments to speed up the move toward electric vehicles, as worries grow about climate change and gas prices.

Nissan said it’s trying to make its operations and products cleaner, safer and more inclusive, examining sourcing, production and sales, as well as its lineup. The company, based in Yokohama, Japan, will work with alliance partners and governments to achieve those goals, Tagawa said.

Nissan’s brand image was tarnished when Carlos Ghosn, a star executive for two decades at Nissan, was arrested in Japan 2018 on charges of underreporting his compensation and misusing company money. Ghosn jumped bail in December 2019, and now lives in Lebanon. He says he is innocent and was unfairly targeted by some at Nissan worried about Renault gaining greater influence.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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BEIJING/SHANGHAI (Reuters) – A senior Chinese securities regulator said on Friday that China will implement its audit agreement with the United States, and will strengthen communication with foreign institutional investors.

Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), also told a forum that the local watchdog will work with Hong Kong regulators to expand China-Hong Kong Stock Connect by making more stocks eligible under the cross-border scheme.

On August 26, Beijing and Washington reached an audit deal to allow U.S. regulators to vet accounting firms in China and Hong Kong.

(Reporting by Beijing newsroom; Editing by Shri Navaratnam)

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