More stories

  • in

    Constellation Brands to sell Svedka vodka to Sazerac as wine and spirits segment struggles

    Constellation Brands will sell Svedka vodka to Sazerac.
    The deal is expected to close in the coming months, but no transaction details were disclosed.
    Sazerac is a privately-owned, New Orleans-based alcoholic beverage company that owns brands like Buffalo Trace bourbon, Fireball Cinnamon Whisky, Southern Comfort.

    Constellation Brands Inc. Svedka vodka at a liquor store in the Upper East Side neighborhood of New York, US, on Friday, June 28, 2024.
    Bing Guan | Bloomberg | Getty Images

    Constellation Brands announced Tuesday it will sell its Svedka vodka brand to New Orleans-based spirits company Sazerac.
    The transaction is expected to close in the coming months, Constellation said in a press release. It did not disclose the value of the deal.

    “The actions we have taken over the past several years to reshape our wine and spirits portfolio support our efforts to accelerate the performance of that business,” said Constellation CEO Bill Newlands in the release. “This transaction is another step forward in seeking to ensure that our wine and spirits portfolio is optimized to succeed and to meet our growth objectives.”
    Constellation’s wine and spirits business has been dragging on the company’s strong beer portfolio, which includes Modelo and Corona.
    “We continue to face incremental category headwinds in our wine and spirits business, particularly in the lower-priced segments,” Newlands said on the company’s latest earnings call in October.
    In the second quarter, the company’s wine and spirits shipments dropped 9.8% year over year, the company reported. Net sales and operating income for the segment fell 12% and 13%, respectively.
    So far this year, wine and spirits has accounted for just 5% of Constellation’s volumes, but 17% of net sales. Of that, the large majority of new sales came from wine rather than spirits, with an 86% and 14% share, respectively.

    Constellation acquired Svedka when it bought Spirits Marque One LLC for $384 million in 2007.
    Sazerac, a privately-owned company, will add Svedka to a portfolio that includes Buffalo Trace bourbon, Fireball Cinnamon Whisky, Southern Comfort and many more global brands.
    Constellation’s spirits portfolio will continue to own including High West Whiskey, Mi Campo Tequila and Casa Noble Tequila.
    Though Constellation shares slid slightly in early trading, investors and analysts appeared to welcome the news.
    “While the existing Wine division remains, the divestment of SVEDKA is a clear positive for the segment’s future growth prospects,” said Bernstein analyst Nadine Sarwat. “It also signals that management is willing to make tough decisions to evolve the business, another positive for corporate governance.”
    Bernstein maintains a buy-equivalent rating on the stock and $325 price target on shares that currently trade around $237.
    Bernstein called the news “a clear positive for Constellation,” saying the company’s wine and spirits weakness has dragged on the beer business.
    Additional details around the transaction will be provided at the Morgan Stanley Global Consumer and Retail Conference on Dec. 3, the company said. More

  • in

    Frontier Airlines will install first-class seats as industry battles for high-paying flyers

    Budget carrier Frontier Airlines plans to install two rows of first-class seats at the front of its Airbus aircraft.
    The airline also plans to increase perks for its top-tier frequent flyers.
    Frontier CEO Barry Biffle said the carrier expects the initiatives will generate more than $250 million in revenue in 2026 and more than $500 million in 2028.

    Frontier Airlines planes are parked at gates in Denver International Airport (DEN) in Denver, Colorado, on August 5, 2023.
    Daniel Slim | Afp | Getty Images

    Frontier Airlines, one of the world’s biggest budget airlines, is adding first-class seats.
    Its change in strategy comes as as the industry is battling for customers who are willing to splurge on more personal space.

    Starting in September, Frontier plans to start ripping out the first two rows of its three-by-three economy seats to add four first-class seats, in a two-by-two configuration.
    The Denver-based airline is also revamping its loyalty program to offer complimentary seat upgrades to its gold level members and above, when available, and a free companion ticket for its higher-tier platinum and diamond-level members. In mid-2025, customers will be able to redeem their miles for seating upgrades and baggage fees.
    CEO Barry Biffle said he expects the new initiatives will bring in about $250 million in 2026 and more than $500 million in 2028.
    “While we have the lowest costs in the industry, we don’t have the best revenue model,” Biffle said in an interview.
    Biffle said the company’s biggest gaps in its revenue model came from not offering first-class seats and not having enough rewards for its loyalty program members. “This is going to be a game-changer,” he added.

    He said expects the new seats will be especially popular on some of Frontier’s cross-country flights.

    Read more CNBC airline news

    Frontier’s cabin changes come as the airline industry is racing to win over higher-paying customers, outfitting planes with more first-class or higher-end seats that fetch higher fares, turning up the pressure on budget airlines to come up with more spacious options.
    Those upgrades have come from behemoths like Delta and United, which account for most of the industry profits, and smaller carriers like JetBlue. Frontier will have to compete with carriers that offer other perks to sit at the front of the plane like full meals, but Biffle said that his airline’s best seats will beat them on price.
    The carrier in March announced it would start selling rows with blocked middle seats and Frontier plans to keep offering that option, a spokeswoman said.
    Southwest Airlines is planning to add extra-legroom seats and introduce seat assignments to increase revenue, switching course from the open-seating cabin it has flown for more than 50 years.
    Spirit Airlines, which filed for Chapter 11 bankruptcy protection last month, offers a “Big Front Seat” that is similar to a domestic first-class seat on its aircraft. More

  • in

    BlackRock expanding in private credit, buys HPS Investment Partners for $12 billion

    The deal, which is expected to close in mid-2025, comes during a boom for the private credit space.
    The transaction also creates “an integrated private credit franchise” with about $220 billion in assets, per BlackRock. HPS manages about $148 billion in assets.

    BlackRock said Tuesday it will acquire HPS Investment Partners for $12 billion in stock, as the world’s largest asset manager looks to grow its presence in the highly popular private credit space.
    “We have always sought to position ourselves ahead of our clients’ needs. Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private,” CEO Larry Fink said in a statement.

    The deal, which is expected to close in mid-2025, comes during a boom for the private credit space. Comparable publicly traded companies to HPS such as Blue Owl Capital and Ares are up 54.6% and 46%, respectively, for 2024. Those gains are well ahead of BlackRock’s 25.7% year-to-date gain.
    The transaction also creates “an integrated private credit franchise” with about $220 billion in assets, per BlackRock. HPS manages about $148 billion in assets. BlackRock oversees $11.5 trillion as of the third quarter.
    Sources told CNBC that HPS first sought to go public, which caught BlackRock’s attention as it looks to grow its alternative assets business. BlackRock earlier this year announced it would acquire Global Infrastructure Partners and private market data provider Preqin for $12.5 billion and $3.2 billion, respectively.
    The deal is also expected to raise BlackRock’s private market AUM and management fees by 40% and roughly 35%, respectively.
    Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world. More

  • in

    Shoppers hunt for deals, but Dollar General and Dollar Tree aren’t reaping the benefits

    Dollar General and Dollar Tree, which will report earnings this week, have cut their sales outlooks even as consumers look for deals.
    Low-income households, who tend to shop at the deep discounters, have been hit hardest by inflation.
    Company-specific problems such as messy stores, worker safety concerns and limited e-commerce businesses have also hurt the dollar stores.

    As shoppers look for value, dollar stores might seem to be logical destinations. But that penny-pinching mentality hasn’t been enough to lift sales for Dollar Tree and Dollar General.
    Shares of the deep discounters have plunged so far in 2024. The retailers have each cut their full-year forecasts because of weaker-than-expected sales. And both have had leadership shakeups: Dollar General and its former CEO Jeff Owens parted ways in October 2023, and Dollar Tree CEO Rick Dreiling stepped down Nov. 4. Dollar Tree is also exploring selling off Family Dollar, its more grocery-focused brand.

    Those results are a sharp turnabout for the dollar stores, which were once Wall Street darlings. The struggles have put scrutiny on the two retailers, which will report quarterly earnings this week.

    Dollar General and Dollar Tree stores
    Getty Images

    Peter Keith, a retail analyst for Piper Sandler, said a challenging mix of factors hurt the retailers. Lower-income customers, who tend to shop at the chains, are most vulnerable to economic changes such as inflation. Razor-thin operating models, such as lean staffing and low hourly pay, contributed to sloppy aisles and a poor customer experience, he said. And competition grew fiercer, as legacy retailers such as Walmart made significant investments in e-commerce to keep up with consumers’ changing habits during the pandemic, he said.
    “Dollar stores inherently are sort of convenient because they have a lot of locations, but they don’t have very strong digital offerings,” he said. “And I think that’s become a disadvantage in the current environment.”

    Arrows pointing outwards

    Shares of Dollar Tree and Dollar General have both fallen more than 40% this year, while the S&P 500 has gained more than 26% during the same period.

    Stretched shoppers

    For decades, dollar stores have drawn in shoppers by offering a wide array of items at simple prices and smaller sizes that fit a constrained household budget. Yet each of the dollar store banners has a different spin on strategy and assortment.

    Dollar Tree is made up of two store brands, its namesake and Family Dollar. Dollar Tree sells a lot of seasonal and discretionary items, such as party supplies and toys, at stores in suburban strip malls.
    Family Dollar, which Dollar Tree acquired in 2015 for nearly $9 billion, is found in more urban areas and sells more food and household staples. Family Dollar has been the weaker part of Dollar Tree. The company plans to close about 1,000 Family Dollar stores and is exploring a potential sale of the business.
    Dollar General focuses primarily on rural customers. It historically sought out small towns or residential areas where shoppers otherwise had to drive a long distance to get to a grocery store or a Walmart. In recent years, it’s debuted a new store concept, Popshelf, which sells more discretionary merchandise aimed at middle- and upper-income shoppers, such as makeup, candles and throw pillows.

    Though they deployed different strategies, both chains relied on store openings to fuel sales growth. The two retailers are the largest in the U.S. by store count. Dollar Tree has more than 16,000 stores, while Dollar General has nearly 20,000 locations across the U.S. Between the two brands, there is more than one dollar store for every 10,000 people in the U.S.
    They have many more stores than their rivals: Walmart has roughly 4,600 stores, and Target has nearly 2,000 locations across the country.
    Yet high inflation has tested their business models. About 60% of Dollar General’s overall sales come from households with an annual income of less than $30,000 per year, CEO Todd Vasos said at Goldman Sachs’ retail conference in September.
    Those frequent customers tend to feel the pinch first during challenging economic times.
    Vasos said in September that Dollar General saw “a pretty drastic slowdown” in the middle of the three-month period that ended Aug. 2. He said the drop-off “happened across every region, every division that we had, almost the same amount” — including its newest stores.
    And the past two years of high inflation have played out differently than in the Great Recession, Piper Sandler’s Keith said. During the roughly 2007-to-2009 period, middle- and upper-income households started shopping more at the dollar stores to stretch their budgets further.
    This time around, unemployment has remained low, and other value-focused retailers, including Walmart, have attracted those middle- and upper-income shoppers, Keith said.
    In the most recent fiscal quarter, most of Walmart’s market share gains came from households with annual incomes of over $100,000, CFO John David Rainey said.
    Warehouse clubs such as Costco and Walmart-owned Sam’s Club, online players such as Amazon and Temu, and private label-focused grocers Aldi and Trader Joe’s are also competing for — and sometimes stealing away the business of — price-conscious shoppers.
    Dollar General has acknowledged stiffer competition. “The guys in Bentonville [the Arkansas home of Walmart’s headquarters] took a little bit larger piece” of the retailer’s middle-income customers, Vasos said at the September conference.
    On Dollar Tree’s earnings call in early September, Chief Operating Officer Mike Creedon, who was recently named interim CEO, said the retailer had to cut its full-year outlook to reflect “how the challenging macro environment continues to pressure our customers.”
    He said Family Dollar’s core customer, who is lower income, “remains weak.” Yet he said Dollar Tree, a chain that draws a more diverse mix of customers, noticed a pullback from shoppers across middle and upper incomes in the recent quarter, as the toll of inflation, high interest rates and economic pressures mounted.
    Discretionary merchandise items, which tend to be more profitable than food or household essentials, were some of the worst sellers at Family Dollar in the most recent quarter, as shoppers bought fewer home decor, seasonal and beauty products, Creedon said on the earnings call.

    The store problem

    But some of the challenges for the dollar stores are more self-inflicted.
    Both companies have faced backlash on social media and agreed to pay millions of dollars in fines to federal regulators for the conditions of stores and warehouses, including cluttered aisles and blocked fire exits. Dollar General in July reached a settlement with the U.S. Department of Labor to pay $12 million in penalties for workplace safety concerns, on top of more than $21 million in fines from the federal Occupational Safety and Health Administration since 2017.
    Dollar Tree agreed to improve worker safety in a 2023 settlement with federal regulators after it had racked up more than $13.1 million in OSHA fines since 2017. In February, it pleaded guilty and agreed to pay nearly $42 million after inspectors found live and dead rodents in an Arkansas warehouse that stored food, drugs and cosmetics.
    Those safety violations can scare away customers who see those news headlines and notice when employees seem overworked and shelves are sloppy, Keith said.
    “No one wants to shop in what looks like a kind of a dirty, messy environment,” he said.
    Some of those problems date back to the Covid pandemic, said Alasdair James, who was Dollar Tree’s chief customer officer from early 2021 to early 2022. As the government paid out stimulus funds and the Covid virus spread, retailers struggled to fill jobs at their stores.
    Some Dollar Tree locations wound up with a single worker who was left to juggle all the duties, from checking people out to stocking shelves — resulting in messy stores that turned off shoppers, he said.
    Plus, vendors and consumer packaged goods companies prioritized big-box stores during the pandemic by making the more typical bulk sizes of items rather than the downsized, budget-friendly sizes sold by dollar stores, James said.
    He said those out-of-stocks and poorly staffed stores drove customers to rivals.
    Dollar Tree has also shaken up its pricing approach. During the pandemic, the retailer raised the price of most of its items to $1.25, and it has rolled out merchandise at higher price points, including $3, $5 and $7.
    In a statement, a Dollar Tree spokesperson said the “multi-price expansion at Dollar Tree, which we believe will be a long-term growth driver, continues to resonate with our customers.” He described the retailer as “a solution for families who may be feeling the financial strain of inflation,” including families who don’t live near a grocery store or pharmacy.
    Both companies also face a new risk under the administration of President-elect Donald Trump. Trump has pledged to roll out additional tariffs on imports from China, a source of many goods sold at the dollar stores.
    Dollar General declined to comment about the company’s challenges.
    It recently touted one strategy aimed at attracting more visits from holiday shoppers, though. Dollar General is promoting a “24 Days of Savings” event in December, where it offers a deal on a featured item each day. The promotions, such as discounted holiday mugs or 12-ounce packs of bacon, are only available in stores.
    — CNBC’s Ryan Baker contributed to this story. More

  • in

    Banks hit credit card users with higher rates in response to regulation that may never arrive

    Banks that issue credit cards used by millions of consumers raised interest rates and introduced new fees in response to an impending regulation that most experts believe will never take effect.
    Synchrony and Bread Financial have said that the moves were necessary after the Consumer Financial Protection Bureau in March announced a rule slashing what the industry can charge in late fees.
    Other banks, including Barclays and Citigroup, also boosted the interest rates on their store cards.

    A customer uses a credit card to pay for items January 28, 2022 at a retail shop in New York City. 
    Robert Nickelsberg | Getty Images

    Banks that issue credit cards used by millions of consumers raised interest rates and introduced new fees over the past year in response to an impending regulation that most experts now believe will never take effect.
    Synchrony and Bread Financial, which specialize in issuing branded cards for companies including Verizon and JCPenney, have said that the moves were necessary after the Consumer Financial Protection Bureau announced a rule slashing what the industry can charge in late fees.

    “They’re the two banks that have been most vocal about it, because they were going to be the most impacted by it,” said Sanjay Sakhrani, a KBW analyst who covers the card industry. “The consensus now, however, is that the rule isn’t going to happen.”
    The effect is that proposed regulation intended to save consumers money has instead resulted in higher costs for some.
    On Nov. 22, CNBC reported that rates on a wide swath of retail cards have jumped in the past year, reaching as high as 35.99%. Synchrony and Bread raised the annual percentage rates, or APRs, on their portfolios by an average of 3 to 5 percentage points, according to Sakhrani.
    On top of that, customers of the two banks have been given notice of new monthly fees of between $1.99 and $2.99 for receiving paper statements.

    Arrows pointing outwards

    Customers of Synchrony bank have received notices for new monthly fees for receiving paper statements, part of the industry’s response to a CFPB rule capping late fees.
    Source: Synchrony

    Bread, which issues cards for retailers including Big Lots and Victoria’s Secret, began boosting the rate on some of its cards in late 2023 “in anticipation” of the CFPB rule, Bread CFO Perry Beberman told analysts in October.

    “We’ve implemented a number of changes that are in market, including the APR increases and paper statement fees,” Beberman said at the time.

    Some pain, no gain

    The CFPB says the credit card industry profits off borrowers with low credit scores by charging them onerous penalties.
    In March, the agency introduced a rule to cap late fees at $8 per incident, down from an average of about $32. The rule would save consumers $10 billion annually, the regulator said.
    But banks and their trade groups have argued that late fees are a necessary deterrent to default and that capping them at $8 per incident would shift costs to those who pay their bills on time.
    The U.S. Chamber of Commerce, which calls itself the world’s largest trade group, sued the CFPB in March to halt the rule, arguing that the agency exceeded its authority. In May, days before the rule was set to take effect, a federal judge granted the industry’s request to halt its implementation.
    While the rule is currently held up in courts, card users are already dealing with the higher borrowing costs and fees attributed to the regulation.
    The higher APRs kick in for new loans, not old debts, meaning the impact to consumers will rise in coming months as they accumulate fresh debts to fund holiday spending. Americans owe a record $1.17 trillion on their cards, 8.1% higher than a year ago, according to the Federal Reserve Bank of New York.
    “Due to changes in regulatory conditions, we adjusted rates and fees to ensure that we can continue to provide safe and convenient credit to our customers,” said a spokeswoman for Stamford, Connecticut-based Synchrony.
    Customers can avoid interest and fees by paying off balances in full and opting out of paper statements, the spokeswoman said.

    Citigroup, Barclays

    The surge in borrowing costs will have a bigger impact on consumers with lower credit scores who are more likely to have store cards issued by Synchrony and Bread.
    Customers with poorer credit may be considered too risky to qualify for popular rewards cards from issuers including JPMorgan Chase and American Express, and are therefore more likely to turn to co-branded cards as alternatives.
    That’s why Synchrony and Bread were eager to mitigate the hit to their operations by increasing rates and introducing fees, according to analysts. The concern was that more of their customers would simply default on loans if late penalties shrank to $8, and the profitability of their businesses would take a dive.
    But other, larger banks have moved rates higher as well.
    Cards from Banana Republic and Athleta issued by Barclays each saw an APR jump of 5 percentage points in the past year. The Home Depot card from Citigroup had a rise of 3 percentage points, while the bank raised the APR on its Meijer card by 4 percentage points.
    Citigroup and Barclays representatives declined to comment.

    Capital One, which had warned earlier in the year that it would take steps to offset the hit from the CFPB rule, said that instead of changing its customer pricing it opted to hold back on making certain unspecified investments. The bank is in the process of acquiring rival card issuer Discover Financial.
    Even before it was set to take effect in May, the fate of the CFPB rule was considered murky, because litigation fighting it was filed in a venue widely seen as favorable to corporations seeking to beat back federal regulation.
    But after the election victory of Donald Trump, who has broadly pushed for deregulation across industries, the expectation is that the next CFPB head isn’t likely to keep the effort alive, according to policy experts.
    When asked if they would reverse the higher APRs and fees if the CFPB rule went away, Synchrony managers were noncommittal. The bank has to proceed as though it were happening, CFO Brian Wenzel told analysts in October.
    “People use the term ‘rollback,'” Wenzel said. “As a company, we haven’t spent any real time thinking about that.”
    — CNBC’s Gabrielle Fonrouge contributed to this report. More

  • in

    Jaguar reveals ‘Type 00’ concept car, first under controversial new brand identity

    Famed British carmaker Jaguar revealed its new vehicle design direction Monday night with the introduction of an all-electric concept car called “Type 00.”
    The vehicle features a minimalistic yet somewhat gaudy design.
    The new car is boxy with sleek lights and large wheels, a notably visual change from the brand’s current, sporty cars and SUVs.
    Jaguar is expected to produce several new electric vehicles over the coming years, including a four-door GT car that is expected to be revealed next year that resembles the concept car.

    Image of Jaguar Type 00 concept vehicle

    Famed British carmaker Jaguar revealed its new vehicle design direction Monday night with the introduction of an all-electric concept car called “Type 00.”
    The vehicle, pronounced “Type Zero Zero,” features a minimalistic yet somewhat gaudy design. It is boxy with sleek lights and large wheels, a notably visual change from the brand’s current, sporty cars and SUVs.

    Automakers routinely use concept vehicles to gauge customer interest in a design or show the future direction of a vehicle or brand. The vehicles are not meant to be sold to consumers.
    Jaguar is expected to produce several new electric vehicles over the coming years, including a four-door GT car that is expected to be revealed next year that resembles the concept car.

    Image of Jaguar Type 00 concept vehicle

    Jaguar is projecting a range of up to 430 miles on a single charge with its new production EV, with up to 200 miles of range in 15 minutes when rapid charging.
    The new concept vehicle comes weeks after Jaguar released an artistically flamboyant video meant to debut the company’s “Copy Nothing” rebranding.
    The video featured androgynous models of varying ethnicities and sizes posing in vibrant clothing in a brightly colored landscape. The 30-second clip was accompanied by new logos and fonts for the embattled car company, a part of Tata Motors-owned group Jaguar Land Rover.

    The rebrand and video went viral online, drawing widespread criticism on social media last month. The criticism ranged from commenters critiquing the company’s font choice and decision to remove the Jaguar animal logo — which has been featured on the car since the 1950s — to calling the company “woke” and saying it was abandoning its heritage.
    Critics also noted that the ad did not have a car in the video. The company defended its efforts despite the backlash, saying the “brand relaunch for Jaguar is a bold and imaginative reinvention and as expected it has attracted attention and debate.”
    The advertising campaign came after Jaguar in early November halted all new car sales in the U.K. as it prepares to relaunch as an electric-only company in 2026, part of a wider industry shift that is presenting numerous challenges for automakers.

    Image of Jaguar Type 00 concept vehicle

    Over the past few years, several automakers have announced plans to exclusively sell EVs, but many have backed off amid slower-than-expected adoption of the vehicles.
    “We need to re-establish our brand and at a completely different price point so we need to act differently. We wanted to move away from traditional automotive stereotypes,” Jaguar managing director Rawdon Glover told the Financial Times in an interview last month.
    Glover also condemned “the level of vile hatred and intolerance” expressed by some people commenting on the marketing video and denied it was “woke.”
    — CNBC’s Jenni Reid contributed to this report.

    Don’t miss these insights from CNBC PRO More

  • in

    GM to sell stake in battery cell plant to joint venture partner for roughly $1 billion

    General Motors plans to sell its stake in a $2.6 billion electric vehicle battery cell plant in Lansing, Michigan, to its joint venture partner LG Energy Solution, the automaker announced Monday.
    The Detroit carmaker said it expects to recoup its investment in the facility, which a source familiar with the plans said is anticipated to be roughly $1 billion.
    The automaker said the sale does not affect its overall ownership stake in the joint venture or its future plans for a separate joint venture plant with LGES rival Samsung SDI.

    General Motors revealed its all-new modular platform and battery system, Ultium, at its Tech Center campus in Warren, Michigan, on March 4, 2020.
    Photo by Steve Fecht for General Motors

    DETROIT — General Motors plans to sell its stake in a $2.6 billion electric vehicle battery cell plant in Michigan to its joint venture partner LG Energy Solution, the automaker announced Monday.
    The Detroit carmaker said it expects to recoup its investment in the facility, which a source familiar with the plans said is anticipated to be roughly $1 billion. The sale is part of a nonbinding agreement between the two companies that is anticipated to close during the first quarter of next year, GM said.

    The nearly completed, 2.8 million-square-foot plant in Lansing, Michigan, was expected to be the third battery cell facility of the joint venture, known as Ultium Cells LLC, following plants in Ohio and Tennessee that have already opened and are operational.
    The Lansing plant was announced in January 2022, and the two companies first announced their joint venture five years ago.
    GM’s move comes as the automaker attempts to right size production of EVs and confronts slower-than-expected consumer demand. It also comes amid uncertainty regarding federal incentives for manufacturing and purchasing EVs in the U.S. under President-elect Donald Trump.
    The automaker said the sale does not affect its overall ownership stake in the joint venture or its future plans for a separate joint venture plant with LGES rival Samsung SDI.

    GM CEO and Chairman Mary Barra and LG Chem Vice Chairman and CEO Hak-Cheol Shin at the automaker’s battery lab in Warren, Michigan, where the companies announced a new $2.6 billion joint venture on Dec. 5, 2019.

    “We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner,” GM Chief Financial Officer Paul Jacobson said in a release. “When completed, this transaction will also help LG Energy Solution meet demand by leveraging capacity that’s nearly ready to come online and it will make GM even more efficient.” 

    GM said the South Korean battery supplier will have immediate access to the Lansing facility to begin installation of equipment. The plant, which currently employs nearly 100 people, was expected to begin operating by the end of this year.
    Separate from the sale of its stake in the Lansing facility, GM on Monday announced it will extend a 14-year battery technology partnership with LGES to include the development of an emerging type of battery cell called prismatic cells.
    Prismatic cells are a flat, rectangular shape with a rigid enclosure, which allows for space-efficient packaging within battery modules and packs. GM said the cells are expected to reduce EV weights and costs, while simplifying manufacturing by reducing the number of modules and mechanical components.
    “We’re focused on optimizing our battery technology by developing the right battery chemistries and form factors to improve EV performance, enhance safety, and reduce costs. By extending our partnership with LG Energy Solution, we’re taking an important step towards these goals,” Kurt Kelty, GM vice president of battery cell and pack, said in a release.
    GM had previously said it planned to expand its battery cell technologies from its flat “Ultium” pouches to include other forms such as prismatic cells.

    Don’t miss these insights from CNBC PRO More

  • in

    This ‘stepping stone’ strategy helps parents boost their kids’ credit score. Here’s how it works

    Parents can add a child as an authorized user to their credit card account to help build a kid’s credit history and credit score.
    The strategy is generally best for kids in their later teenage years, maybe around 16 years old, or those in their early 20s, experts said.
    Parents may want to set certain parameters like spending restrictions and an end date, experts said.

    Images By Tang Ming Tung | Digitalvision | Getty Images

    Parents who want to help jumpstart their kid’s credit score and credit history can take one fairly easy step, money experts say: Add your child as an authorized user to your credit card account.
    The goal is to have a child build credit from a relatively early age by piggybacking off their parent’s — i.e., the primary account holder’s — good credit.

    The strategy is generally best for kids in their later teenage years, maybe around 16 years old, or even those in their early 20s, said Ted Rossman, a senior industry analyst at CreditCards.com.

    Parents can think of it as a “stepping stone” to building credit, he said.
    “It’s gotten harder to establish credit in your own name, and this is one of the tools to get around that,” said Rossman. “It can really help a lot.”
    Allowing kids to use a credit card — and showing them how to pay off the debt responsibly — can also “help them learn healthy credit card management skills early on,” said Andrea Woroch, a consumer finance expert.

    Why building credit is important

    Things to consider

    Mihailomilovanovic | E+ | Getty Images

    Parents should only try this authorized user strategy if they themselves have good credit, experts said.
    “As long as you pay your bill on time and don’t carry a hefty balance each month, your child will benefit from your positive credit history and credit score, helping them to establish and build credit,” Woroch said.
    They should also ideally have an end date in mind.
    Perhaps for one to three years, depending on the circumstances, Rossman explained.
    Importantly, this would not be a joint account. Legally, the primary accountholder is responsible for all the authorized user’s transactions — meaning a parent is on the hook if their kid misuses a credit card, perhaps by overspending or failing to pay their bill on time and in full each month, he said.

    Parents can set spending limits for authorized users, depending on their card provider, experts said.
    That means setting a relatively low credit allowance, maybe just enough for the teen to fill up their car’s gasoline tank or go to the movies a few times each month, they said.
    Parents don’t even have to give the card to their kids at all.
    “The credit benefits actually translate whether they use the card or not,” Rossman said.
    Ultimately, parents should make sure they “set clear rules and boundaries as to if and how they can use the card,” Woroch said. More