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    Starbucks will discontinue Oleato olive oil drinks at U.S. cafes in early November

    Starbucks will pull its Oleato olive oil-infused drinks from U.S. menus in early November.
    The company made the decision to remove the drinks from domestic menus before new CEO Brian Niccol arrived, but it aligns with his strategy to simplify the chain’s complex menu, according to a company spokesperson.
    Some social media users had complained that the mix of coffee and olive oil had a laxative effect.

    Starbucks’ Oleato coffee beverages.

    Starbucks’ controversial line of olive oil-infused drinks will leave U.S. stores in early November.
    The decision to remove the Oleato drinks from domestic menus predates newly installed CEO Brian Niccol, who arrived at Starbucks in early September, a company spokesperson said. However, it aligns with Niccol’s strategy to simplify menus as part of a broader turnaround scheme to go “back to Starbucks,” the spokesperson said.

    Bloomberg first reported the news of the drinks’ departure.
    Starbucks is set to report its fiscal fourth-quarter earnings after the bell on Wednesday. In a preliminary release of its results, the company said its sales fell for the third consecutive quarter as weak demand in the U.S. and China weighed on its performance.
    Wall Street has high hopes for Niccol’s leadership, including ending the outsized influence of former CEO Howard Schultz, who hatched the idea for the Oleato line.
    The lineup of Oleato drinks infused Partanna olive oil into Starbucks’ Caffe Latte, Iced Shaken Espresso and cold foam. Baristas steamed the olive oil with oat milk for the latte, shook it in the iced espresso drink and infused it in vanilla sweet cream foam to top cold brews.
    Schultz imagined the Oleato line after a trip to Italy, where he saw Sicilians drinking olive oil as a daily ritual. He, too, began drinking olive oil alongside his daily coffee and decided that Starbucks should try to mix the two together. Ahead of the reveal, he teased the idea as “alchemy” and a “game-changer.”

    Oleato means “with oil” in Italian, according to Starbucks.
    Starbucks first launched the line in Italy, then brought it to stores in Southern California in spring 2023. A nationwide launch followed in January.
    But it does not seem as though customers agreed with Schultz’s high opinion of the drinks. Early reviews in the U.S. press were largely negative, and some social media users complained the drinks had a laxative effect.
    Cafes in China, Italy and Japan will continue to serve the Oleato drinks.

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    $2 billion marina development aims to turn Fort Lauderdale into ‘mini Monaco’

    A team of developers, including Related Group and Rok Acquisitions, is launching a $2 billion development at Fort Lauderdale’s largest marina.
    The new development, at the Bahia Mar marina, will include a hotel and condo towers, along with a beach club, restaurants and retail space, according to the plans.

    Renderings of plans for a new development at the Bahia Mar marina in Fort Lauderdale, Florida.
    Courtesy: ArX Creative

    A team of developers including Related Group is launching a $2 billion development at the largest marina in Fort Lauderdale, Florida, aiming to create a “mini Monaco,” according to executives.
    The new development at the Bahia Mar marina will include a hotel and condo towers, along with a beach club, restaurants and retail space, according to the plans.

    “Fort Lauderdale — and South Florida in general — has been waiting for a true destination that has a Monaco-like feel,” said Nick Perez, president of the condominium division for Related Group. “We have the deep water marina, we have the restaurants, but we don’t have this five-star resort that encompasses everything. So this is kind of what the market has been missing.”

    Renderings of plans for a new development at the Bahia Mar marina in Fort Lauderdale, Florida.
    Courtesy: ArX Creative

    Miami-based Related Group, controlled by billionaire Jorge Perez, is teaming up with Tate Capital and Rok Acquisitions on the project. The development will span nearly 40 acres of land and water, with multiple condo towers and a St. Regis hotel with about 200 guest rooms, according to the plans. The hotel will replace the existing DoubleTree hotel on the site.
    The development caps years of failed efforts to redevelop Bahia Mar, a sprawling yacht marina that has helped make Fort Lauderdale the yacht capital of the U.S. The Bahia Mar is also host to the Fort Lauderdale International Boat Show, the nation’s largest yacht show, which starts Wednesday.
    The Bahia Mar land is owned by the city of Fort Lauderdale and leased to an entity led by developer Jimmy Tate and his family. Plans by the Tates and Rok Acquisitions to develop the property were stalled for years by Fort Lauderdale residents and local officials, who opposed the large scale of the project. The new plan called for scaled-down buildings and more public amenities.

    Renderings of plans for a new development at the Bahia Mar marina in Fort Lauderdale, Florida.
    Courtesy: ArX Creative

    Along with the condo towers and hotel, the plan calls for 88,000 square feet of waterfront commercial space, with restaurants, boat docking, a public park along the Intracoastal and a 25-foot-wide pedestrian promenade. The marina will have slips for yachts up to 350 feet.

    Perez said since 65% of the visitors to the Fort Lauderdale International Boat Show are from overseas, mainly Europe and Latin America, the development will draw from a global clientele of yacht owners and boating enthusiasts.

    Renderings of plans for a new development at the Bahia Mar marina in Fort Lauderdale, Florida.
    Courtesy: ArX Creative

    “There is no facility in South Florida where you can have a residential unit, have a hotel, amazing food and beverage and your mega yacht or regular yacht, whatever kind of boat you own, literally in your backyard,” he said.
    The project is scheduled to open sometime in late 2029. Douglas Elliman will be marketing the residences, which will start at $4.4 million for the condos. More

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    Biogen tops estimates, raises profit guidance as Alzheimer’s drug Leqembi gains traction

    Biogen reported third-quarter revenue and adjusted earnings that topped expectations.
    The company also raised its full-year profit guidance.
    Sales of its breakthrough Alzheimer’s drug, Leqembi, along with new rare disease and depression treatments, helped offset a year-over-year decline in revenue for the company’s multiple sclerosis products. 

    A test tube is seen in front of displayed Biogen logo in this illustration taken on, December 1, 2021.
    Dado Ruvic | Reuters

    Biogen on Wednesday reported third-quarter revenue and adjusted earnings that topped expectations while raising its full-year profit guidance, as sales of its breakthrough Alzheimer’s drug, Leqembi, and other new products gain traction. 
    Biogen now expects full-year adjusted earnings to come in between $16.10 and $16.60 per share, up from a previous forecast of $15.75 to $16.25 per share. The biotech company still anticipates 2024 sales to decline by a low-single-digit percentage. 

    Leqembi, which Biogen shares with the Japanese drugmaker Eisai, became the second drug proven to slow the progression of Alzheimer’s to win approval in the U.S. last summer. The therapy’s launch has been gradual due to bottlenecks related to diagnostic test requirements, regular brain scans and finding neurologists, among other issues. 

    More CNBC health coverage

    Still, uptake of Leqembi has been increasing over the last few quarters. The treatment brought in $67 million in sales for the third quarter, including $39 million from the U.S. 
    Wall Street analysts had expected global sales of $50 million for Leqembi, according to estimates compiled by StreetAccount. The drug posted just $10 million in sales last year following its launch. 
    It is unclear how many patients are currently taking the drug. Leqembi, along with Biogen’s new rare disease and depression treatments, helped offset a year-over-year decline in revenue for the company’s multiple sclerosis products. 
    Here’s what Biogen reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

    Earnings per share: $4.08 adjusted vs. $3.79 expected
    Revenue: $2.47 billion vs. $2.43 billion expected

    Biogen booked sales of $2.47 billion for the quarter, which is down around 3% from the year-earlier period. 
    The drugmaker posted net income of $388.5 million, or $2.66 per share, for the period ended Sept. 30. That compares with a net loss of $68.1 million, or 47 cents per share, for the same period a year ago. 
    Adjusting for one-time items, including certain restructuring charges and costs associated with intangible assets, the company reported earnings of $4.08 per share.

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    Eli Lilly stock tumbles 10% after drug giant misses estimates and slashes profit guidance

    Eli Lilly on Wednesday fell short of profit and revenue expectations for the third quarter, weighed down by disappointing sales of its blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro.
    The drugmaker also slashed its full-year adjusted profit guidance to a range of $13.02 to $13.52 per share.
    Skyrocketing demand for injectable weight loss and diabetes drugs has forced both Eli Lilly and its main rival, Novo Nordisk, to invest billions to increase manufacturing capacity.

    Lilly Biotechnology Center is shown in San Diego, California, U.S. March 1, 2023.
    Mike Blake | Reuters

    Eli Lilly on Wednesday fell short of profit and revenue expectations for the third quarter, weighed down by disappointing sales of its blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro, and slashed its full-year adjusted profit guidance.
    The company’s stock tumbled 10% in premarket trading. Shares of its main rival, Novo Nordisk, fell roughly 3%.

    Eli Lilly now expects full-year adjusted earnings of between $13.02 and $13.52 per share, down from previous guidance of $16.10 to $16.60 per share. The drugmaker cited a $2.8 billion charge recorded during the third quarter and related to its acquisition of bowel disease drugmaker Morphic Holding as denting its results.
    Eli Lilly also lowered the high-end of its revenue outlook for the year and now expects sales of between $45.4 billion and $46 billion. The company’s previous guidance called for revenue of as much as $46.6 billion.
    Here’s what Eli Lilly reported for the period ended September 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

    Earnings per share: $1.18 adjusted vs. $1.47 expected
    Revenue: $11.44 billion vs. $12.11 billion expected

    The September period was Zepbound’s third full quarter on the U.S. market after winning approval from regulators nearly a year ago. The weekly injection raked in $1.26 billion in sales for the period, below the $1.76 billion that analysts expected, according to StreetAccount.
    Meanwhile, Mounjaro posted $3.11 billion in revenue for the third quarter, more than double what it booked in the same period a year ago. But analysts expected $3.77 billion in sales for the diabetes treatment, according to StreetAccount.

    Demand in the U.S. has far outpaced supply for Lilly’s incretin drugs, such as Zepbound and Mounjaro, over the last year. Both treatments mimic certain gut hormones to tamp down a person’s appetite and regulate their blood sugar.
    The popularity of those injectable drugs has forced both Eli Lilly and Novo Nordisk to invest billions to increase manufacturing capacity for the treatments.
    Eli Lilly’s supply woes began to ease earlier this year. As of Wednesday, the Food and Drug Administration’s drug database said all doses of Zepbound and Mounjaro are available in the U.S. after extended shortages. Still, the agency warns that patients may not always be able to immediately fill their prescription for those drugs at a particular pharmacy.

    In an interview with CNBC, Eli Lilly CEO David Ricks said the third-quarter performance of Zepbound and Mounjaro “is not a function of supply.” The company said third-quarter sales of the drugs were negatively impacted by inventory decreases among wholesalers.
    Ricks also said the company pushed back plans to advertise and promote Zepbound due to customer service levels. The drugmaker will begin those efforts in November, he said.
    “When people go and they can’t get their medicine, they’re very frustrated. They tell us that. So we didn’t want to send more people to do that necessarily,” Ricks said.
    Eli Lilly has said it expects incretin drug production in the second half of 2024 to be 50% higher than it was during the same period last year. And Ricks said Wednesday the company expects “even greater” expansions in manufacturing capacity at the end of the year and 2025.
    For the third quarter, Ely Lilly recorded net income of $970.3 million, or $1.07 per share, compared with a net loss of $57.4 million, or 6 cents per share, during the third quarter of 2023.
    Excluding one-time items associated with the value of intangible assets and other adjustments, Eli Lilly posted earnings of $1.18 per share for the most recent quarter.
    Revenue was up 20% year over year to $11.44 billion.
    The FDA’s decision to remove tirzepatide, the active ingredient in Zepbound and Mounjaro, from its shortage list has drawn fierce opposition from compounding pharmacies that make customized and sometimes cheaper alternatives to Eli Lilly’s branded drugs. Compounding pharmacies are calling for the FDA to reconsider its decision, as both Eli Lilly and Novo Nordisk attempt to crack down on unapproved versions of their top-selling drugs.
    Ricks told CNBC the company agrees with the FDA that Zepbound and Mounjaro are no longer in shortage, adding, “We have stock.” He added that compounded versions of Eli Lilly’s branded drugs are not regulated by the FDA, raising questions about their safety and efficacy. 
    This story is developing. Please check back for updates. More

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    China’s Xiaomi delivers 20,000 EVs in October, just months after launching its first car

    China’s Xiaomi said Tuesday that it had delivered more than 20,000 SU7 EVs in October as it ramps up production for its electric car venture in a fiercely competitive market.
    Xiaomi on Tuesday also announced it was taking preorders for the high-end sports version, SU7 Ultra, starting at 814,900 yuan ($114,304), ahead of the product release in March 2025.
    Citi analysts raised their forecast for Xiaomi car deliveries to 250,000 vehicles next year, up from 238,000 previously expected.

    Chinese smartphone company Xiaomi on Tuesday announced a sports car version of its SU7 electric sedan would begin preorders for the equivalent of more than $110,000.
    Luna Lin | Afp | Getty Images

    BEIJING — China’s Xiaomi said Tuesday that it had delivered more than 20,000 SU7 EVs in October as it ramps up production for its electric car venture in a fiercely competitive market.
    The Chinese company, which is largely known for its smartphones and home appliances, reiterated plans to deliver 100,000 SU7 vehicles by the end of November. Xiaomi first revealed plans to make cars in 2021 and began building a dedicated manufacturing plant the same year.

    The company released the basic version of the SU7, its first car, in late March for about $4,000 less than Tesla’s cheapest car — Model 3 — in China at the time. Tesla subsequently cut the car’s price by about $2,000. Xiaomi has delivered more than 75,000 SU7 cars to date, including October’s figures.
    Chinese rivals Xpeng and Nio took about six years to produce 100,000 electric cars, while it took Tesla 12 years.
    While Xpeng delivered a monthly record of more than 20,000 cars in September, with about half owed to its newly launched, lower-cost brand Mona, Nio has struggled to keep monthly deliveries above 20,000 cars.
    Zeekr, an electric car brand founded by automaker Geely, has claimed it produced more than 100,000 vehicles in 1.5 years. It delivered a record 21,333 cars in September.
    Data on other Chinese electric car companies’ deliveries for October is expected Friday.

    “News of 20k deliveries in October confirms that [Xiaomi] is going to be a force to reckon with in the world’s largest EV market,” said Brian Tycangco, an analyst at Stansberry Research.
    He said Xiaomi’s electric car gross profit margins in August were similar to Xpeng’s that month, and have likely improved since, given ramped up production.
    Xiaomi on Tuesday also announced it was taking preorders for the high-end sports version, SU7 Ultra, starting at 814,900 yuan ($114,304), ahead of a product release in March 2025. The company claimed that within 10 minutes, it received more than 3,600 preorders, each requiring a 10,000 yuan deposit.
    The new model and its touted achievements on the Nurburgring race track in Germany will likely help Xiaomi sell more of its premium SU7 Max car, which costs just 299,900 yuan, Citi analysts said in a report. They now expect Xiaomi to deliver 250,000 cars next year, up from 238,000 previously forecast.
    Xiaomi claimed a prototype of the SU7 Ultra this week became the fastest four-door sedan to complete the German race track.
    Citi analysts increased their price target on Xiaomi to 30.60 Hong Kong dollars ($3.94), up from 22.70 HK dollars. They also raised forecasts for the company’s smartphone shipments, following the launch of Xiaomi’s flagship Mi 15 device Tuesday — the first phone to use Qualcomm’s newest chipset.

    Stock chart icon

    Tesla’s Model Y was the best-selling battery-powered electric car in China in September with 48,202 vehicles sold, according to data from Chinese car industry site Autohome. The Model 3 ranked 8th with nearly 24,000 cars sold.
    BYD’s lower-priced models accounted for most of the other top 10 bestsellers in the battery-only category. Xiaomi’s SU7 ranked 17th last month with 13,559 cars sold, the data showed.
    Xiaomi currently only sells its cars in China. The company told CNBC earlier this year it would take at least two to three years for any overseas launch.
    — CNBC’s Sonia Heng contributed to this report. More

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    Chipotle misses revenue estimates as same-store sales growth disappoints

    Chipotle Mexican Grill on Tuesday reported mixed quarterly results as earnings beat expectations but revenue fell short.
    The burrito chain’s same-store sales rose 6%, just shy of StreetAccount estimates of 6.3%.
    For the full year, Chipotle reiterated its outlook that same-store sales will grow by a mid- to high-single-digit percentage.

    A customer holds a bag of food outside of a Chipotle restaurant in New York on Jan. 12, 2024.
    Angus Mordant | Bloomberg | Getty Images

    Chipotle Mexican Grill on Tuesday reported mixed quarterly results despite another quarter of higher traffic to its restaurants. 
    Shares of the company fell 3% in extended trading.

    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

    Earnings per share: 27 cents adjusted vs. 25 cents expected
    Revenue: $2.79 billion vs. $2.82 billion expected

    Chipotle reported third-quarter net income of $378.4 million, or 28 cents per share, up from $313.2 million, or 23 cents per share, a year earlier. 
    The company’s food and beverage costs increased during the quarter, in part due to Chipotle’s decision to reemphasize generous portions after social media-fueled backlash over the size of its burrito bowls this summer.
    Excluding items, the company earned 27 cents per share.
    Net sales climbed 13% to $2.79 billion. 

    Same-store sales rose 6%, just shy of StreetAccount estimates of 6.3%. Traffic to restaurants increased 3.3% in the quarter, continuing the chain’s streak of bucking an overall slump in foot traffic across the industry. While many consumers have opted to eat out less, Chipotle has benefited from having a wealthier customer base that is willing to pay more for its burritos and bowls. 
    “We’re seeing growth from all income cohorts at present,” interim CEO Scott Boatwright said on CNBC’s “Closing Bell: Overtime” on Tuesday.
    While demand was weaker at the start of the third quarter, Boatwright said sales accelerated throughout the period, particularly as Chipotle reintroduced its smoked brisket. The limited-time menu item is currently the most expensive protein, topping even the chain’s steak and beef barbacoa options.
    Boatwright, formerly Chipotle’s chief operating officer, stepped in to lead the company after former CEO Brian Niccol departed in late August to pilot Starbucks’ turnaround. On the company’s conference call on Tuesday, Boatwright reassured investors that the chain’s strategy is not changing despite the leadership shake-up.
    “I have worked alongside our talented executive team to craft and evolve our successful strategy, and we will continue to execute against it,” he said.
    Digital sales accounted for 34% of the chain’s quarterly food and beverage revenue.
    The company opened 86 new locations during the quarter, 73 of which included a “Chipotlane” dedicated to online order pickup.
    Chipotle is also investing in new equipment to improve its preparation and cooking. The company plans to roll out new produce slicers to all restaurants by next summer. Chipotle has also added dual-sided grills to 74 restaurants and will announce early next year its strategy to add the equipment to new and existing restaurants.
    For the full year, Chipotle reiterated its outlook that same-store sales will grow by a mid- to high-single-digit percentage. The company also anticipates it will open between 285 and 315 new restaurants this year.
    Looking to 2025, Chipotle plans to open between 315 and 345 new locations. More than 80% of those restaurants will include a Chipotlane.

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    McDonald’s executives say E. coli outbreak is ‘behind us’

    McDonald’s CEO Chris Kempczinski told investors that the company views the E. coli outbreak linked to its Quarter Pounder burgers as “being behind us.”
    The outbreak isn’t expected to have a material impact on the company’s business, CFO Ian Borden said.
    McDonald’s is bringing Quarter Pounder burgers — sans slivered onions — back to the roughly 900 restaurants affected by the outbreak.

    McDonald’s Chris Kempczinski speaks about fresh beef expansion at a McDonald’s event in Oak Brook, Illinois.
    Richa Naidu | Reuters

    A week after health authorities publicly linked a deadly E. coli outbreak to McDonald’s Quarter Pounder burgers, the company’s CEO, Chris Kempczinski, told investors that the situation is now behind them.
    “How we’ve handled the issue, now that we’re moving … we view it as being behind us,” Kempczinski said on the company’s call Tuesday.

    During his prepared remarks, he said that the “situation appears to be contained.”
    On Sunday, McDonald’s said Quarter Pounder burgers would return to roughly a fifth of its U.S. footprint where the company had pulled the menu item following the outbreak. That amounts to roughly 3,000 restaurants, the company told CNBC Tuesday.
    Health authorities didn’t detect any E. coli in the burger’s fresh beef patties, but the Food and Drug Administration is still investigating the slivered onions that are used in Quarter Pounders as the likely source. McDonald’s has stopped sourcing onions from the supplier indefinitely, and around 900 locations will serve the Quarter Pounder sans slivered onions.
    McDonald’s saw daily sales and traffic to its U.S. restaurants turn negative in the days immediately following the outbreak announcement as consumers reacted to the news, CFO Ian Borden said. He added that the company isn’t anticipating a material impact to the business.
    Now McDonald’s is focused on reassuring diners and returning to the higher sales it had been seeing earlier in October, fueled by its $5 value meal and the launch of the Chicken Big Mac.

    “What I would say is we certainly believe the most significant events are behind us, and the work to do right now is focused on restoring consumer confidence, getting our U.S. business back to that strong momentum that I just talked about,” Borden said.
    On Tuesday, McDonald’s reported U.S. third-quarter same-store sales that increased 0.3% over the prior-year period, reversing a decline during the second quarter but slightly weaker than the 0.5% growth projected by StreetAccount estimates.
    McDonald’s beat Wall Street’s estimates for its quarterly earnings and revenue, but its overall same-store sales fell 1.5%, fueled by weaker demand in key international markets.
    Shares of McDonald’s fell as much as 2.5% in premarket trading on Tuesday but recovered during the conference call. The stock was roughly flat when the markets opened.
    Earlier on the call, Kempczinski apologized to customers for the situation.
    “The recent spate of E. coli cases is deeply concerning, and hearing reports of how this has impacted our customers has been wrenching for us,” Kempczinski said. “On behalf of the entire system, we are sorry for what our customers have experienced. We offer our sincere and deepest sympathies, and we are committed to making this right.”
    As of Friday, 75 health cases across 13 states have been tied to the outbreak, including one death of an older adult.
    At least three lawsuits have already been filed against McDonald’s by victims of the outbreak.
    Clarification: This story has been updated to clarify that McDonald’s is returning the Quarter Pounder to roughly 3,000 locations after pulling the menu item following an E. coli outbreak. About 900 restaurants will serve the burgers without slivered onions.

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    Harris vs. Trump: Auto insiders weigh in on both candidates, top issues

    Michigan and its automotive industry remain critical to the presidential election, as Vice President Kamala Harris and former President Donald Trump campaign in the state.
    Auto executives and lobbyists told CNBC that they’re preparing for all outcomes in the election — and electric vehicles, trade, tariffs, China, emissions regulations and labor are their top issues.
    Officials expect a Harris victory to be a continuation, but not a copy, of the past four years under President Joe Biden, while they think Trump would likely return to policies and actions from his first presidential term.

    New Ford F-150 trucks go through the assembly line at the Ford Dearborn Plant on April 11, 2024 in Dearborn, Michigan. 
    Bill Pugliano | Getty Images

    DETROIT — The automotive industry has become a crucial topic during the 2024 presidential election as Michigan — home of the Motor City and 1.1 million automotive jobs — remains a critical swing state.
    Vice President Kamala Harris, former President Donald Trump, and their running mates and supporters have made Michigan a second home in recent weeks as the campaigns attempt to win over undecided voters in the Great Lakes State.

    Since 2008, whichever candidate has won the state has moved into the White House, including Trump in 2016 and President Joe Biden in 2020.
    “Michigan’s 16 electoral votes have helped thrust Autos into the debate. Between Trump’s hyperactive and contradictory statements and Harris’ quieter views lay deep differences but also convergence,” Jefferies analyst Philippe Houchois wrote in an investor note Monday.
    While major automakers and suppliers have shied away from publicly endorsing either presidential candidate, executives and lobbyists from several companies spoke to CNBC on the condition of anonymity to discuss how they’re preparing for each candidate, as well as a likely divided Congress.
    Electric vehicles, trade, tariffs, China, emissions regulations and labor are among the top issues automakers are monitoring, according to industry executives and policy experts.

    Harris vs. Trump

    Officials expect a Harris victory to be a continuation, but not a copy, of the past four years under Biden. They think she would potentially be more understanding of businesses, but there are concerns.

    Some of her policies and potential appointments are unclear, experts said, and her alignment with the United Auto Workers, particularly union President Shawn Fain who has been a combative foe to automakers, is concerning to some.

    US Vice President and Democratic presidential nominee Kamala Harris greets union workers as she tours an International Union of Painters and Allied Trades training facility in Macomb, Michigan, on October 28, 2024. 
    Drew Angerer | AFP | Getty Images

    If Trump wins reelection, automotive industry officials largely expect that he’ll return to policies and actions from his first presidential term, but those stances could be potentially more aggressive than they were before.
    If he’s in office, insiders expect he would roll back or eliminate tightening federal emissions and fuel economy like he did during his first term; renew a battle between California and other states that set their own standards; and potentially enact funding changes to the Biden administration’s key Inflation Reduction Act of 2022 legislation.
    Officials said it would be difficult for Trump to completely gut the IRA, but he could defund or limit EV subsidies through executive orders or other policy actions.
    Automakers, suppliers and other auto-related companies are preparing for both outcomes as well as a split in Congress, insiders said.

    Republican presidential nominee and former U.S. President Donald Trump speaks as he visits a campaign office in Hamtramck, Michigan, U.S. October 18, 2024. 
    Brian Snyder | Reuters

    “There’s no perfect scenario. Both candidates offer some opportunities and challenges,” said a leading lobbyist and public policy expert for a major automaker. “Everyone in our business has to look at the gamut of scenarios.”
    Some Wall Street analysts speculate legacy automakers — specifically the “Detroit” companies General Motors, Ford Motor and Chrysler parent Stellantis — would benefit most with Trump and Republican control of Congress.
    EV startups such as Rivian Automotive and Lucid Group would benefit more with a Democratic win, largely due to expected plans involving EVs and fuel economy requirements. That’s despite Tesla CEO Elon Musk’s continued support for Trump.

    Emissions regulations

    The most imminent issues for automakers are fuel economy and emissions regulations, specifically regarding 2026 model year regulations for California and several states that follow them such as Washington, Oregon and New York.
    Current requirements under the “Advanced Clean Cars II” regulations of 2022 call for 35% of 2026 model year vehicles, which will begin to be introduced next year, to be zero-emission vehicles. Battery-electric, fuel cell and, to an extent, plug-in hybrid electric vehicles qualify as zero emission.
    The California Air Resources Board reports 12 states and Washington, D.C., have adopted the rules; however, roughly half have them starting for the 2027 model year. They are part of CARB’s Advanced Clean Cars regulations that include mandating 100% of new vehicle sales be zero-emission models by 2035.

    Only 11 states and the District of Columbia had an EV market share above 10% to begin this year, according to the Alliance for Automotive Innovation, a trade association and lobby group that represents most major automakers operating in the U.S.
    Officials said regardless of who wins the White House, many automakers will push for the CARB mandates to be postponed. They also would expect Trump to roll back or freeze the Corporate Average Fuel Economy, or CAFE, standards for model years 2027-2031.
    Several automotive insiders said they expect Harris would work on a middle ground for such standard with the automakers, much like Biden, to an extent, has done.

    EVs, IRA

    Electric vehicles and the U.S. policies supporting them, such as the Inflation Reduction Act, are top of mind for automotive industry executives and lobbyists. There could be major changes in regulations and incentives for EVs if Trump regains power, which has placed the industry in a temporary limbo.
    “Depending on the election in the U.S., we may have mandates; we may not,” Volkswagen Group of America CEO Pablo Di Si said Sept. 24 during an Automotive News event. “Am I going to make any decisions on future investments right now? Obviously not. We’re waiting to see.”

    Electric vehicles transformed from a popular talking point for Democrats four years ago to a rallying call for Republicans.
    Republicans, led by Trump, have largely condemned EVs, saying that they are being forced upon consumers and that they will ruin the U.S. automotive industry. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of the vehicles.
    In contrast, Democrats, including Harris, have historically supported EVs and related incentives.
    Harris hasn’t been as vocal about backing EVs lately amid slower-than-expected consumer adoption of the vehicles and consumer pushback. She has said she does not support an EV mandate such as the Zero-Emission Vehicles Act of 2019, which she co-sponsored during her time as a senator, that would have required automakers to sell only electrified vehicles by 2040.
    Lucid Group CEO Peter Rawlinson told CNBC on Monday that regardless of which presidential candidate wins the election, he believes America’s EV industry is still in its infancy and needs to continue to be “nurtured.”
    Rawlinson, whose company has the most efficient EVs on sale, also argues the IRA should favor not just the size of a battery, like it currently does, but the efficiency of the vehicles.
    “That’s effectively incentivizing electron-guzzling EVs,” he said. “It actually incentivized to put more batteries in and be less efficient.”

    Trade/tariffs and China

    Led by fears of China’s automotive industry expanding globally, both Trump and Harris have expressed intentions to review the U.S. North American trade deal, formally known as the United States-Mexico-Canada Agreement.
    The deal, which replaced the North American Free Trade Agreement, or NAFTA, was negotiated under Trump’s first term in office and took effect in 2020. However, the former president and Democrats have said it needs to be improved to better support American automotive production.
    While Trump touted the deal when it was renegotiated, Harris was one of 10 U.S. senators who voted against USMCA at the time.
    GM CEO Mary Barra last week said the automaker is “paying careful attention” to the election, including how potential changes in trade and tariffs could impact the company.
    “We have and we’ll continue to engage constructively with the policymaking process regardless of the election outcome. When you look at the number of jobs created in the U.S., even with some vehicles that are manufactured outside, a lot of them are in our partners from an ally perspective,” she said. “It’s a very complex situation.”
    Tariffs are central to Trump’s plan for the auto industry. He has said he would be willing to increase tariffs dramatically to prevent Chinese automakers from importing cars into the U.S. from factories in Mexico.
    Chinese automakers are not currently doing that, but are expected to attempt to use that method of importing in the years ahead, as they expand sales and build localized production plants in the country.

    Harris has reportedly called Trump’s tariff proposals “a sales tax on the American people.” The vice president hasn’t outlined any specific changes she’d make to the current tariff structure if elected, including on Biden’s announcement of raising the tariff rate on EVs imported from China from 25% to 100%.
    Non-U.S.-based automakers, which together account for 48% of U.S. production and 52% of USMCA production, look more positively leveraged to Harris winning, according to Jefferies.

    Labor

    Of the many issues regarding the automotive industry, officials who spoke to CNBC were nearly unanimous regarding labor: They’re concerned a Harris win would continue to mean increased power for organized labor.
    Biden, followed by Harris, gave the United Auto Workers and Fain — the union’s president — more spotlight than any previous presidents in modern times, including a speech at the Democratic National Convention.
    The UAW arguably has more political clout than any time in a generation, led by Fain and his top advisors who he brought in from outside the union’s ranks. But there has been a divide in the UAW and other unions regarding the historically Democratic-backed organizations and their members.

    While the Teamsters declined to endorse a candidate due to a divide in the union, UAW leaders not only endorsed Harris but have been a driving force for her election campaign in Michigan and other states.
    The UAW last week said internal polling showed increasingly “strong support for Kamala Harris over Donald Trump, with Harris’ lead over Trump surging in the last month.”
    Meanwhile, Trump and Fain have consistently criticized one another over the past year, as the union attempts to organize as many auto plants as possible following major contract gains won during negotiations last year with the traditional Detroit automakers.
    Blue-collar workers such as UAW members were viewed as crucial supporters for Trump’s first presidential election over Democratic candidate Hillary Clinton in 2016.
    — CNBC’s Michael Bloom contributed to this report.

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