Raphael Stevens

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.
“In the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars,” he told CNBC.
Earlier on Thursday, the company posted record cash flow of 2.1 billion euros and announced a dividend.

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.
“We’ve seen competitors moving prices up and down, etc., etc. this is their decision. But I don’t think it’s a very healthy practice in the long term,” he told CNBC.

“As electric cars are ramping up in Europe, we need to have a healthy business, and so, in the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars.”
De Meo’s comments follow a string of aggressive price drops announced by automakers Tesla and Ford amid pressure to remain competitive in a burgeoning EV market.
Tesla threw down the gauntlet with its mid-January announcement of price reductions for U.S.-marketed models across the board and for its Model 3 and Model Y within Europe. Ford followed on Jan. 30 with price trims for its electric Mustang Mach-E crossover.
However, De Meo signaled that sales price volatility could erode consumer confidence in EV products.
“Our priority will be to defend the value for the customer,” he said. “Because those kinds of swings are kind of value destroying for the customer, think about residual value, etc.”

Renault’s long-term allies are joining the French automaker’s EV push, with Nissan earlier this month pledging to buy a stake of up to 15% in Renault’s electric unit Ampere as part of a broader overhaul of the companies’ 24-year union. Under the reshaped, previously lopsided alliance, Renault will reduce its shareholdings in Nissan from roughly 43% to 15%.
“My job is to make the Ampere case so interesting for them [Nissan and junior alliance partner Mitsubishi] that they will decide in their capital allocation meetings to put money there and not in an alternative project,” he told CNBC, adding that the investment was not a condition of the restructure.

Renault Scénic Vision concept car at Brussels Expo on January 13, 2023 in Brussels, Belgium. The Scénic Vision has an electric motor powered by a 40 kWh lithium-ion battery, that can be recharged by a 15 kW hydrogen fuel cell.
Sjoerd Van Der Wal | Getty Images News | Getty Images

Earlier on Thursday, Renault reported that its group operating margin doubled to 5.6% in 2022 from 2.8% a year prior, even as net income swung to a 700 million euro ($748 million) loss. It came after the company in May wrote off a 2.3 billion euro impairment linked to exiting its Russian positions.
Renault posted record cash flow of 2.1 billion euros last year, compared with its guidance of above 1.5 billion euros. Net income from continuing operations increased to 1.6 billion euros, from 549 million euros in 2021, while group revenues inched up to 46.4 billion euros in 2022, from 41.7 billion euros a year prior.
Renault shares were largely steady at 1 p.m. London time, down modestly in intraday trade at 42.96 euros.

Supply chain issues

De Meo said he sees ongoing longevity in the supply and logistical obstacles that have plagued automakers since the onset of the Covid-19 pandemic, especially linked to the yearslong global shortage of semiconductor chips.
“We think that, on the semiconductors, [it] is going to continue to be pretty much of a challenge for another couple of years, especially on the kind of semiconductors that we use in the automotive industry,” De Meo told CNBC, estimating that logistical and component hurdles led Renault to underproduce by 300,000 cars in 2022.
He forecast similar losses in 2023.
“So it’s going to stay there. But I think we are a little bit more prepared. We know how to find the parts and how to organize production to keep doing it. But we have to recognize that this is not going to be, again, a normal year,” De Meo added.
Despite this outlook and a “still challenging environment,” Renault targets a group operating margin at or above 6% in 2022, along with operational free cash flow at or above 2 billion euros.
It also put forward a dividend of 25 euro cents per share for fiscal 2022 — marking the company’s first payout proposal in four years, according to Reuters — due to be paid in May, if approved during the company’s annual general meeting in the same month.
Correction: De Meo forecast similar production losses in 2023. An earlier version misstated the year.

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Paramount Global said it added 9.9 million Paramount+ subscribers during the fourth quarter.
CEO Bob Bakish said to expect price increases for all of its Paramount+ plans in 2023.
The tough advertising market continued to weigh on earnings, as Paramount had warned, with fourth quarter revenue down 7%.

07 December 2022, Berlin: Pam Kaufman, President & CEO Paramount, joins us for the Paramount+ launch event. The Paramount+ streaming service is now available in Germany.
Jörg Carstensen | Picture Alliance | Getty Images

Paramount Global said it saw its streaming business grow during the fourth quarter, and announced plans to increase prices for Paramount+ this year.
Despite adding more streaming customers, Paramount reported its fourth-quarter revenue declined 7%, compared with last year, to roughly $5.9 billion as the weak advertising market weighed on the company.

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Paramount’s stock was down nearly 3% early Thursday.
The company previously warned of the soft advertising market, and on Thursday said ad revenue fell 5% as growth in political advertising was partially offset by the international market. Cord-cutting also played a role, with affiliate and subscription revenue dropping 4%.
Company executives on Thursday estimated the advertising market will bounce back in the second half of 2023.
Meanwhile, the company’s direct-to-consumer streaming business, which also includes free ad-supported streamer Pluto, saw an increase of 4%.
On a call with investors Thursday, Paramount management said 2023 will be its peak investment year for its marquee streaming service. Like its peers, Paramount has been focused on getting its streaming business to profitability in the near-future.

“Paramount+ remains an incredible value proposition for consumers,” CFO Naveen Chopra said Thursday.
The price increases will take effect when Paramount+ and Showtime combine later this year. CFO Naveen Chopra said Thursday the Paramount+ premium tier, which will include Showtime, will increase to $11.99 from $9.99, while its lower-priced tier, without Showtime content, will increase by $1 to $5.99.
The price increases and combination with Showtime will take place in the third quarter.
Paramount+ added 9.9 million subscribers during the fourth quarter, a record since the streamer was rebranded from CBS All Access in 2021. In total, Paramount+ reached nearly 56 million customers during the fourth quarter.
Pluto saw monthly active users grow by 6.5 million during the quarter, and global total viewing hours were up “strong double digits quarter-over-quarter.” Free streaming platforms like Pluto and Fox Corp’s Tubi have been bright spots for media companies.
The jump in Paramount+ subscribers was attributed to the airing of NFL Sunday games, which are simulcast with the company’s CBS broadcast network, as well as the addition of the box office winner “Top Gun: Maverick” in late December. Original programming that stemmed from the “Yellowstone” and “Criminal Minds” franchises also boosted subscriber growth.
CEO Bob Bakish on Thursday looked ahead to more franchise content debuting this year, particularly in theaters, such as the upcoming installments of “Scream,” “Transformers,” and “Mission: Impossible.”
Combining the Showtime and Paramount+ platforms will also help condense content spending, which has become a particular focus for media companies. Warner Bros. Discovery slashed content costs soon after its merger was completed.
Last week Disney said it would cut $5.5 billion in costs, including $3 billion on the content side. Disney’s returning CEO Bob Iger said on CNBC’s “Squawk on the Street” last week that he didn’t view general entertainment as a “differentiator,” particularly on pay-TV and streaming, and the company would lean on its franchise strength.
While Paramount has long talked about its reliance on franchises across both TV and film, Bakish said Thursday the company’s general entertainment assets — the company also owns a portfolio of cable-TV networks like Comedy Central and MTV — were part of its strengths.
“The general entertainment space may not make sense for everyone but it clearly makes sense for us when we look at our asset combination,” Bakish said, noting the company believed in its sports and general entertainment strategy when it first went to market with Paramount+.
Bakish said Thursday the company has long been doing what others in the media space are focusing on at the moment, such as a cheaper tier with commercials of Paramount+, the free ad-supported platform Pluto, and relying on its intellectual property.

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Consumer Reports is giving a big boost to EVs like the Tesla Model 3 and hybrids like Toyota’s models in its list of top auto picks.
The 2023 Consumer Reports 10 Top Picks for cars, trucks and SUVs includes seven vehicles that are either hybrid or fully electric.
Toyota builds four of the 10 models chosen for the list.

A Toyota RAV4 Prime electric car is recharged October 3, 2022 at a charging station at the town hall in Charlotte, Vermont.
Robert Nickelsberg | Getty Images

After years of being touted as a smarter option for car buyers seeking better fuel efficiency and lower costs, hybrids and EVs are getting a big endorsement from Consumer Reports. 
The 2023 Consumer Reports 10 Top Picks for cars, trucks and SUVs includes seven models that are either hybrid or fully electric.

“This really just shows how the market is changing,” said Jake Fisher, senior director of automotive testing at Consumer Reports. “Electrification, not just battery electric vehicles, but just electrification, is changing the market and making a lot of really great options.”
Consumer Reports selects top models at a variety of price points based on its testing of new vehicles, with an emphasis on affordability and safety. For 2023, the selection of hybrids and EVs highlight two advantages those types of vehicles often have over models with internal combustion engines: fuel efficiency and reliability. 
“With hybrids, you’re kind of being really easy on the engine, being really easy on the brakes, because you’re actually using the generator and the battery to kind of soften everything,” Fisher told CNBC. “There are less brake problems, less transmission problems, everything is kind of muted. Plus, when you look at the hybrids and who’s producing these hybrids, they generally are from very reliable automakers who have been using this technology for a long time.”

Consumer Reports’ top auto picks for 2023

Under $25,000:Toyota Corolla HybridToyota Corolla Cross$25,000-$35,000:Subaru ForesterToyota Camry HybridFord Maverick HybridNissan Leaf$35,000-$45,000:Hyundai Santa Fe HybridKia Telluride$45,000-$55,000:Lexus NX350hTesla Model 3Source: Consumer Reports

That explains why Toyota builds four of the 10 models chosen for 2023 Top Picks, including the Toyota Corolla Hybrid, Toyota Camry Hybrid and Lexus NX 350h. 

Those models are part of a wave of hybrids that have helped establish Toyota as the leader in this category. Last year, one out of every four vehicles Toyota sold in the U.S. was a hybrid. In the U.S., hybrids and EVs accounted for just over 10% of all vehicles sold last year, according to the auto research firm Edmunds.
Styling and performance of hybrids and EVs now make them more appealing than a few years ago.
“Today, you can really have it all. You can have something roomy, something comfortable, something fuel efficient,” Fisher said. He pointed to the Ford Maverick Hybrid which gets 37 miles per gallon as an example of a hybrid that is changing perceptions. “You don’t have to compromise as much as you had to do in the past.”
Tesla, which sells two out of every three EVs in the U.S., is back on the Top Picks list after being off it last year. Consumer Reports selected the Tesla Model 3 and the Lexus NX 350h as the best choices for vehicles priced between $45,000 and $55,000.
Meanwhile, Consumer Reports ranks BMW as the No. 1 auto brand, followed by Subaru and Mini.
“BMW builds many high-performing, full-featured and reliable models, so it’s not surprising to see it at the top of our brand rankings,” Fisher said in a release outlining Consumer Reports’ selections.

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5 Things to Know

Ford paused F-150 Lightning production due to a vehicle fire linked to a battery issue.
Cisco delivers strong earnings and a good outlook.
Sen. Bernie Sanders hints at a subpoena for Starbucks CEO Howard Schultz.

Traders work on the floor of the New York Stock Exchange. 

Here are the most important news items that investors need to start their trading day:

1. Muddling through

The bulls are mucking through an inconclusive week. Retail sales came in hotter than expected Wednesday, which should, in theory, feed worries that the Federal Reserve will keep raising rates until morale, er, inflation improves. But stocks still finished the day higher, albeit not by large margins. Investors will chew over more economic data Thursday: the January producer price index report, which gauges wholesale inflation; weekly jobless claims; and housing starts. Follow live markets updates.

2. Electric worry

Ford workers produce the electric F-150 Lightning pickup on Dec. 13, 2022 at the automaker’s Ford Rouge Electric Vehicle Center (REVC).
Michael Wayland | CNBC

Ford halted production and shipments of its fully electric F-150 Lightning pickup after one of the vehicles caught fire earlier this month due to a battery issue, the company said late Wednesday. Ford said it believes engineers have determined the cause of the fire, and that it expects an investigation into the matter to wrap up by the end of next week. Then, Ford said, it would make adjustments to the battery production process, which “could take a few weeks.” The developments come at a difficult time for Ford, which is attempting to turn around its business after posting a net loss for 2022, all while making the transition to EVs.

3. Cisco comes through

A sign bearing the logo for communications and security tech giant Cisco Systems Inc is seen outside one of its offices in San Jose, California, August 11, 2022.
Paresh Dave | Reuters

Computer networking company Cisco’s stock got a decent bump in off-hours trade after a strong earnings report. The company beat on the top and bottom lines, while also raising its forecast for the year. Cisco also said some of its logistics costs came down. Demand is also stable, according to Cisco, even as other tech companies contend with sliding demand for computers and pressures from a slumping ad market. But the company also reported some difficulties. For instance, its hardware and software backlogs are still much higher than usual, and it’s due to limited supply availability, according to CFO Scott Herren.

4. Here’s who helped SBF get out on bail

Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves following a hearing at Manhattan federal court in New York City, January 3, 2023.
Andrew Kelly | Reuters

Indicted FTX founder Sam Bankman-Fried secured his release on bond with the help of two academics at Stanford University. One of them, Stanford Law School dean emeritus Larry Kramer, said he’s close with SBF’s mother and father, who are professors at the law school. “Joe Bankman and Barbara Fried have been close friends of my wife and I since the mid-1990s,” Kramer told CNBC. Andreas Paepcke, a research scientist at the school was the other guarantor whose name was under seal until a federal judge decided otherwise, following a motion by several media outlets, including CNBC. Paepcke didn’t respond to a request for comment. SBF, who has been charged with sweeping fraud and conspiracy counts, was released on a $250 million bond in December. His parents also signed on as guarantors.

5. Sanders vs. Schultz

Senator Bernie Sanders (I-VT) (L), Starbucks CEO Howard Schultz
Reuters (L) | Getty Images (R)

Howard Schultz will soon step down as Starbucks CEO – for the third time – but Sen. Bernie Sanders wants to haul him in front of lawmakers anyway after the executive turned down an invitation to testify next month. While Sanders didn’t outright say he would try to subpoena Schultz, he hinted that it could be in the works. “One way or another, he will be there,” the senator told reporters Wednesday. Sanders, a self-described democratic socialist who favors unions, chairs the Senate’s Health, Education, Labor and Pensions Committee. The panel has scheduled a March 9 hearing on Starbucks’ labor practices. Schultz, who’s also a big shareholder in the coffee giant, has been leading Starbucks’ efforts to counter a unionization push among its baristas, even as the company touts progressive initiatives.
– CNBC’s Sarah Min, Michael Wayland, Jordan Novet, Rohan Goswami and Amelia Lucas contributed to this report.
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