Merger News

PSA, FCA agree to $47 billion merger, create 4th largest automaker

Chairman of the Managing Board of Groupe PSA Carlos Tavares (left) and FCA CEO Mike Manley (right) share a congratulatory handshake after signing the historic combination agreement

Photo courtesy of Fiat Chrysler Automobiles N.V.

On Halloween, news broke that PSA and FCA had agreed in principle to merge. Now the merger is official with both parties having signed a binding merger agreement in a deal worth approximately $47 billion.

The merger creates the fourth largest global original equipment manufacturer by volume and the third largest by revenue. Using 2018 tallies, the two companies accounted for a combined 8.7 million vehicle sales.

This deal allows flexibility of production and future technologies development that both parties were seeking. PSA had previously made it known that it was looking to expand into the Americas, an area where FCA excels in production and sales. FCA has widely been reported as falling behind other automakers in its development and implementation of battery, autonomous, and safety technology.

Click here to see the brands caught up in the merger.

A news release issued by the companies indicated that there are no plans to close any factories and that the company expects to be cash flow positive from the get-go.

The release also touted the company's plans to deliver "higher customer satisfaction." The 2018 American Customer Satisfaction Index, which surveys car owners on their overall service and product experience with specific auto brands, found that Ram was FCA's most satisfying brand for customers, with a 14th place ranking. Jeep came in at 18th, and Fiat at 25th, while Dodge and Chrysler were at the bottom placing 27th and 28th, respectively.

The new company's board will consist of 11 members. PSA's Carlos Tavares will be the company's CEO and a member of the board while FCA's John Elkann will be chairman of the board. No announcement has been made as to the role of Mike Manley, who has been leading FCA following CEO Sergio Marchionne's sudden death in July 2018, though FCA confirms that Manley will still have a role in the company.

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Nuts & Bolts

 
 

Audi vehicles equipped with the MIB 3 infotainment system can take advantage of the technology.

Photo courtesy of Audi AG

Audi has partnered with iHeartRadio to deliver Hybrid Radio to owners of select 2021 model year Audi vehicles. The result is an industry-first experience.

Models that are equipped with Audi's MIB 3 suite of infotainment technology will be able to take advantage of Hybrid Radio, which allows listeners with an Audi Connect Prime or Plus subscription not switch between broadcast and digital radio signals when they have entered or exited radio signal territories for uninterrupted listening.

iHeartRadio Audi The new technology allows you to take your local radio station with you when you leave its broadcast zone.Photo courtesy of Audi AG

When the vehicle is cycled off and on again, it is able to retain the radio station, picking up the digital radio channel via internet connection.

"The ability to bring Hybrid Radio® to Audi customers would not be possible without pioneers like iHeartRadio embracing this technology," said Pom Malhotra, director, Connected Services, Audi of America. "Audi advances progress through technology, and we are thankful to be able to collaborate with iHeartRadio to continue bringing new conveniences to our customers."

"Radio has always been the consumer's No. 1 choice for companionship in the car," said Michele Laven, president of Strategic Partnerships Group for iHeartMedia. "The innovative functionality Audi is introducing via their Hybrid Radio® experience allows yet another way for that companionship to be seamlessly extended beyond the range of the broadcast signal keeping the consumer connected to their favorite station, no matter where the road takes them."

Hybrid Radio is available to Audi customers at no additional cost as part of their subscription.

It uses the integrated 4G LTE Wi-Fi hot spot. Verizon is Audi's wireless connectivity provider.

Models equipped with the MIB 3 system are arriving at U.S. dealerships this month.

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General Motors anticipates having $4 billion in returns from its investment.

Photo courtesy of Nikola Corporation

General Motors (NYSE: GM) is expanding its stake in an alternative fuels future. The auto industry giant is receiving a $2 billion equity stake in Nikola (NASDAQ: NKLA) for in-kind contributions relating to the engineering and manufacturing of the company's hydrogen-powered pickup truck, the Badger.

The deal includes putting GM's hand in the full product planning process including engineering, validating, and homologating the Badger for both battery electric and fuel cell electric vehicle variants.

Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn't dream of a better partnership than this," said Nikola Founder and Executive Chairman Trevor Milton.

Nikola Badger Nikola has revealed renderings of its hydrogen- and battery-powered pickup truck. Photo courtesy of Nikola Corporation

"By joining together, we get access to their validated parts for all of our programs, General Motors' Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule."

Nikola says that the engineering and manufacturing process would have cost the company $4 billions in battery and powertrain costs over 10 years and $1 billion in engineering and validation costs. Through its $2 billion investment, GM expects to receive inn excess of $4 billion in benefits between the equity value of the shares, contract manufacturing of the Badger, supply contracts for batteries and fuel cells, and EV credits retained over the life of the contract.

Nikola will utilize General Motors' Ultium battery system and Hydrotec fuel cell technology. General Motors debuted the Ultium battery system earlier this year. It will be an integral part of the company's lineup in the future including the GMC Hummer EV pickup and SUV and Cadillac Lyriq.

Nikola Badger The Nikola Badger powered by hydrogen fuel cell technology will include a water tap in its cabin. Photo courtesy of Nikola Corporation

Nikola is expected to introduce the Badger in early December. Badger is expected to enter production by the end of 2022. Deposits are currently being accepted for the model. Early in the reservation process, Milton divulged that 1,500 people per day were reserving the truck.

Another side of the Nikola business deals with tractor trailer technology. General Motors will be the exclusive supplier of fuel cells globally (outside of Europe) to Nikola for Class 7/8 trucks. This will allow Nikola to validate and scale to a possible multi-billion dollar operation.

Nikola remains an independent company. The investment is subject to customary antitrust regulatory approval and closing conditions. The parties anticipate closing the transaction prior to Sept. 30, 2020.

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