Will BMW and China bury Tesla and Elon Musk?

The German car group BMW has been producing and selling cars in China since 1994. Since then, China has become the second largest economy in the world just years away from dethroning the United States while in purchasing power parity (PPP) the Chinese gross GDP exceeds its US counterpart since 2014 according to IMF data.

According to Chinese state media, BMW is now considering selling Chinese production overseas, which was previously reserved for the Chinese domestic market. As part of a redefinition of the general rules of the Chinese government’s industrial and automotive policy, the BMW X3 electric vehicle would not only be produced in China but also exported to third markets, explained Thomas Becker, vice president of governmental affairs with BMW Group, to Chinese news agency Xinhua.

Customer demand for our X vehicles continues to be very highJuly sales of BMW X3 increased 52.3% – and now we’ve increased production capacity by localizing the BMW X3 in China and South Africa,” said Pieter Nota, Member of the Board of Management of BMW AG responsible for Sales and Brand BMW. If such evolution remains to be confirmed, BMW believes that the Chinese government is supporting it, this way addressing logically a message to its American competitor Tesla (TSLA).

The latter, whose stock price fell from USD 379 to USD 300 over August 7-20, 2018, seems in great difficulty following the complicated statements of its CEO Elon Musk. Burning a lot of cash and lacking capital to ensure production capacity in line with its objectives, Tesla could well see these very compromised if BMW produces in China electric vehicles for export worldwide. In addition to a presumably easier access to the resources needed to produce the batteries, BMW has an experience, a reputation and a production capacity incomparable to that of Tesla.

“If BMW and China get along, other automakers will take the same path and when it happens, the future of Tesla will darken more,” said an analyst of the automotive sector. As evidence, in the first five months of the year 2018, sales of BMW i, BMW iPerformance and MINI Electric vehicles jumped 41.0% to total 46,849.

Brussels is optimistic but Greece still has reason to doubt

After eight years of an economic and social crisis that seemed endless, the European Union (EU) authorities in Brussels have largely welcomed the exit of Greece from its third and last aid plan.

“The far-reaching reforms that Greece has achieved have laid the foundation for a sustainable recovery: it must be nurtured and maintained to enable the Greek people to reap the benefits of their efforts and sacrifices. Europe will continue to stand with Greece,” said EU Commissioner for Economic and Financial Affairs Pierre Moscovici.

With forecasts of economic growth at 2% for 2018 and 2019, Greece enjoys a higher growth rate than major European economies such as France. Inside the country, Cyceon correspondents posted a much more moderate optimism, recalling that unemployment remains very high at 21.5% and that precariousness always strongly undermines the quality of life of all age groups, especially among young people and retirees.

Also, the massive sale of large parts of the public service to the private sector since 2011, the continued weight of the public debt at 191.1% against the GDP and the announcement of new austerity measures by Prime Minister Alexis Tsipras are as many elements which greatly reduce the satisfaction expressed in Brussels.

According to Cyceon, the Greek political scene is not as stable as it seems, especially with the difficulties related to the migration crisis that could quickly resurface after the decision of Germany to return migrants to Greece.

In the Horn of Africa, the UAE asserts its strategic ambitions

Saudi Energy Minister Khalid Al Falih, also Chairman of Saudi Aramco, estimates that about USD 1 trillion worth of investments have been canceled or postponed since oil prices dropped in mid-2014 when the barrel was still trading higher than USD 100.

While downward pressure on oil prices could persist according to Saudi sources, the United Arab Emirates (UAE) announced its commitment to build an oil pipeline linking the port of Assab (Eritrea) to the capital Addis Ababa (Ethiopia).

This information was made public in that same city during a meeting on August 10, 2018 between Ethiopian Prime Minister Abiy Ahmed and Emirati Minister for International Cooperation Reem Al Hashimy. This meeting followed Ahmed’s state visit in July 2018, during which he met again with Mohamed bin Zayed Al Nahyan, Crown Prince and Minister of Defense of Abu Dhabi.

Like the extension of their diplomatic mission in Astana (Kazakhstan), the UAE thus confirms their willingness to play an increased diplomatic role, not only economic, while maximizing their opportunities for international cooperation in Africa in a context of increased competition with Iran and Qatar.

Indeed, Abu Dhabi uses a military base in Assab to conduct operations in Yemen, across the Red Sea. Also, this pipeline linking Eritrea and Ethiopia is part of the dynamic of an agreement signed by the two African nations on July 7, 2018 that “ended the state of war” that lasted since the border conflict (1998-2000).

In this context, it is for Abu Dhabi to help stabilize the Horn of Africa sustainably so as not to favor the settlement of other competitors and to catch profitable opportunities through, for example, the joint exploitation of oil resources located in south-west Ethiopia, a landlocked country of 102.4 million inhabitants with growth potential deemed significant by the Emirati and Saudi business communities.