Tesla Motors, the youngest and smallest publicly traded US car maker, wants its Model S to qualify for China’s electric car subsidies that the government said will remain more valuable than initially planned.
Ben Kallo of Robert W Baird & Co and Craig Irwin at Wedbush Securities say China’s extension of incentives, which Tesla’s car does not get as a US import, nevertheless creates favourable conditions ahead of the start of Model S sales next month.
“We understand we don’t qualify for direct subsidies,” says Diarmuid O’Connell, Tesla’s vice president of business development.
“We’re hoping the government will consider the role Tesla can have in catalysing electric vehicle adoption in China and extend those incentives to Model S as well.”
Tesla, which quadrupled in value last year, began rising again last month after the company said its shipments of Model S saloons in the fourth quarter of last year and revenue were 20 per cent higher than it had expected.
The founder and chief executive Elon Musk also said last month China, where sales begin next month, may match US volume as early as next year.
The 10-year-old car maker named for the inventor Nikola Tesla has a market capitalisation of about US$24.1 billion, just behind France’s Renault, at $25.5bn and ahead of South Korea’s Kia Motors’ $20.4bn market value.
Mr Musk and JB Straubel, Tesla’s chief technical officer, briefed customers in Europe this month about plans for the Model S and Model X crossover, and its strategy for China is being well received, says Mr Kallo, who rates the shares outperform.
“All the news following around Elon and JB Straubel kind of got it started, and all the positive news in China is also having a positive impact.”
China confirmed this week that electric-vehicle incentives will be higher this year than previously announced as part of efforts to curb worsening air pollution.
Subsidies are being cut by only 5 per cent this year, instead of an initial 10 per cent target, and will be further decreased by 10 per cent in 2015 instead of 20 per cent, China’s finance ministry said in a joint statement with the national development and reform commission, technology and industry ministries.
“The better than expected change in Chinese EV [electric vehicle] subsidies is helping the stock,” says Mr Irwin, who rates Tesla outperfrom. “This doesn’t fundamentally impact Tesla, given they are not eligible for the subsidies yet, but is a headline positive.”
Tesla’s Model S will be priced from 734,000 yuan (Dh444,871) in China when deliveries begin, the company has said. That is about 50 per cent higher than the US price to cover shipping costs, taxes and import duties that run as much as 25 per cent, Mr Musk said.
The company is scheduled to release fourth-quarter financial results on February 19. Analysts on average estimate the company will post a profit, excluding some costs, of 18 cents a share, according to data compiled by Bloomberg. The net loss may narrow to $2.4 million, while sales may more than double to $668.6m.
Meanwhile, Toyota said yesterday it is recalling 1.9 million hybrid Prius cars globally – more than half of the total built so far – for a software glitch that could cause the vehicle to stall.
Toyota said 997,000 Prius cars in Japan, some 713,000 in North America, another 130,000 in Europe and the rest in other regions are being recalled for a problem in the software that is used to control the hybrid system.
No accidents or injuries have been reported related to the problem.
The software could cause transistors to become damaged, causing warnings lights to go off, driving power to be reduced or the car to stop. The recalled vehicles were manufactured between March 2009 and this month.
The Japanese car maker suffered enormous recalls starting in 2009, affecting more than 14 million vehicles for problems including floor mats, accelerator pedals and brakes.
In the non-electric vehicle segment, General Motors, which lost its title as China’s largest foreign car maker last year, said deliveries rose 12 per cent in its biggest market on demand for Buick and Wuling vehicles.
Total sales rose to a record 348,061 units in China last month, the Detroit-based company said this week. Buick monthly deliveries gained 16 per cent to surpass 100,000 units for the first time, led by the Excelle line, according to GM.
The company, overtaken by Volkswagen in China last year, plans to spend $11bn through 2016 to expand in the world’s largest car market, with four new assembly plants boosting annual capacity to 5 million vehicles.
The car maker is under new local leadership, with Matthew Tsien taking over this year as the head of China operations from Bob Socia, who retired.
SAIC-GM-Wuling, which produces Wuling and Baojun vehicles, is introducing a compact hatchback and a new multi-purpose vehicle under the Baojun brand, along with a 4x4 in 2015, Raymond Bierzynski, its executive vice president, said in November.
GM announced plans in April to introduce nine 4x4 models in China over the next five years to capitalise on increasing demand.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
Need to know
Unlike other mobile wallets and payment apps, a unique feature of eWallet is that there is no need to have a bank account, credit or debit card to do digital payments.
Customers only need a valid Emirates ID and a working UAE mobile number to register for eWallet account.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
