U.S. was right — Europe has become a ‘hostage’ to Russia over energy, analysts warn

Published

3 years ago

October 7, 2021

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Russian Prime Minister Vladimir Putin back in 2011.

FABRICE COFFRINI | AFP | Getty Images

LONDON – After Russia rode to Europe’s rescue and offered to increase gas supplies to the region amid soaring prices, experts said one thing had become abundantly clear: Europe is now largely at Russia’s mercy when it comes to energy, just as the U.S. had warned.

Natural gas contracts hit new highs in Europe this week — and regional benchmark prices are up almost 500% so far this year — with heightened demand and a squeeze in supply putting pressure on the energy sector as the weather turns colder.

Prices seesawed on Wednesday, hitting new highs before retreating after Russian President Vladimir Putin stepped in, offering an increase in Russia’s gas supplies to Europe.

Market analysts said the move showed that Europe was increasingly vulnerable to Russia, which is waiting for Germany to certify the controversial Nord Stream 2 gas pipeline project which will bring more Russian gas to Europe via the Baltic Sea.

The $11 billion pipeline has now been completed much to the annoyance of the U.S. which has long-opposed the project, warning for years during its construction that it compromises Europe’s energy security and that Russia could seek to use energy supplies as leverage over the region.

The Obama and Trump administrations galvanized bipartisan opinion against the pipeline and President Joe Biden too announced sanctions against companies involved in the project, but these were waived in May in what was seen as an attempt by the U.S. to rebuild ties with Germany.

‘Energy blackmail’

“Europe has now left itself hostage to Russia over energy supplies,” said Timothy Ash, emerging markets senior sovereign strategist at Bluebay Asset Management, in a research note Wednesday, calling the situation “unbelievable.”

“[It’s] crystal clear that Russia has Europe (the EU and U.K.) in an energy headlock, and Europe (and the U.K.) are too weak to call it out and do anything about it,” he said, calling it a form of “energy blackmail.”

“Europe is cowering as it fears [that] as it heads into winter Russia will further turn the screws (of energy pipelines off) and allow it to freeze until it gets its way and NS2 is certified.”

Putin used a televised government meeting on Wednesday to offer an increase in supplies to Europe. He also chided the region for canceling many of its long-term gas contracts in exchange for spot deals, saying the Kremlin was ready to negotiate new long-term contracts for gas sales.

Many experts believe that Russia has withheld gas supplies to Europe on purpose, in a bid to speed up Germany’s certification of the Nord Stream 2 pipeline. Russia has refuted this, however, with Putin’s spokesman Dmitry Peskov denying on Wednesday that Russia has had any role in Europe’s energy crisis.

Nonetheless, Russia’s Deputy Prime Minister Alexander Novak noted on Wednesday that the expected German certification of the controversial pipeline could help cool prices.

Specialists pose for a picture after welding the last pipe of the Nord Stream 2 gas subsea pipeline onboard the laybarge Fortuna in German waters in the Baltic Sea, September 6, 2021.

Axel Schmidt | Nord Stream 2 | via Reuters

Seeking a speedy certification for Nord Stream 2, Ash believed, had been “Moscow’s game plan all along” adding that “markets are really naive if they think Moscow will do anything to ease the European gas crisis anytime before NS2 is certified.”

Germany’s energy regulator shows no sign of certifying the pipeline just yet, saying on Tuesday that the pipeline must show it would not break competition rules by limiting which suppliers used it, according to Reuters, and fines could be dealt out if it started pumping Russian gas to Germany without securing necessary approvals.

Mike Fulwood, senior research fellow at the Oxford Institute for Energy Studies, agreed that any decision to supply more gas to Europe by Russia was “political” and tied to the certification of the pipeline.

“Basically, [the situation for Russia is] if you approve Nord Stream 2, we’ll get some gas to send down Nord Stream 2 to show we were true to our word,” he told CNBC Thursday.

Bilal Hafeez, CEO and head of research at Macro Hive, told CNBC’s “Street Signs” on Thursday that he also believed Russia was using the situation to its advantage.

“I do think Russia has used this energy crisis to take advantage of the situation here and to try to force an acceleration in the use of the pipeline and in some ways there’s some evidence to suggest they might have held back supply through pipelines through Ukraine, in order for Germany and the EU to accelerate the use of the Nord Stream 2 pipeline.”

EU wary

Soaring prices have placed the issue at the top of the EU agenda with leaders calling for more energy independence — given nearly 90% of the bloc’s supplies are imported, with Russia one of the primary sources of imports along with Norway, according to European Commission data.

The pipeline has critics in Europe, with Ukraine hurt and angry at the pipeline deal with Russia, as it means its own pipelines are bypassed and it will lose valuable gas transit fees as a result. Poland too, feeling vulnerable from a more assertive neighbor Russia, says the pipeline only serves to strengthen Russia.

In July, they issued a joint statement in which they slammed the pipeline, saying “the decision to build Nord Stream 2 made in 2015 mere months after Russia’s invasion and illegal annexation of Ukrainian territory, created security, credibility and political crisis in Europe.”

Europe’s gas supply has long been a thorny subject. It has often soured relations between the U.S. and EU, with the former chastising Germany (the EU’s largest importer of Russian gas, even before the NS2 pipeline) for signing up to the gas project with Russia.

Experts see the battle over Europe’s gas supply as something of a proxy war between the U.S. and Russia, with both vying to gain market share in the region with their supply of natural gas (Russia) and liquefied natural gas (the U.S.)

Experts agree that Europe needs to diversify its sources of energy away from Russia.

“The more Europe diversifies its supply the less risk there is,” Fulwood said, adding that there were attempts to source an increasing amount of LNG from the U.S. “We’ve seen in the last few years a big increase in liquefied natural gas imports in Europe, notably from the U.S. market,” he noted.

Commenting on the wider gas market and supply constraints affecting other gas producers around the world, Fulwood described the situation that gas markets were experiencing as “a perfect storm of demand recovery from Covid and a tight supply situation.”

“There’s been a temporary lack of supply and some of those logistics will start to ease but it won’t be ’til next year so for the next few months we’re really at the mercy of the weather,” he said.

Environment

Genesis wants a bigger slice of the US luxury market with new EVs en route

Published

3 hours ago

November 22, 2024

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Genesis wants a bigger slice of the US luxury market with new EVs en route

If you haven’t noticed, Genesis is quickly making a name for itself in the US. The luxury automaker now has 60 sales outlets as it expands into new US states. With new EVs launching, Genesis is eyeing a bigger share of the US luxury market.

Hyundai Motor Group’s Genesis brand is quietly emerging as a powerhouse in the US luxury market. Genesis marked its entry into the luxury segment in 2008 as a Hyundai-branded model.

In 2015, Hyundai announced Genesis would become an independent luxury brand. Since launching its first vehicle in the US, the luxury brand’s sales have surged from 7,000 in 2016 to over 69,000 last year. It even outsold Nissan’s Infiniti.

According to Genesis, this is just the start. The Korean luxury brand wants an even bigger slice of the market as it eyes rivals like Porsche.

A big reason behind the brand’s confidence is its new lineup of stylishly electric models. Genesis sells three EVs in the US: The GV60, Electrified G80, and Electrified GV70.

After introducing the Electrified GV70 just last year, the electric SUV is already Genesis’ top-selling EV in the US. According to Kelley Blue Book, Genesis sold 2,343 electric GV70 models in the US through September.

Genesis-Electrified-GV70-NACS — 2026 Genesis Electrified GV70 update (Source: Genesis)

Altogether, the luxury brand’s EV sales reached over 4,600 through the first nine months of 2024, topping Porsche (4,291) and Volvo (3,644).

Genesis made a statement at the LA Auto Show, unveiling the updated 2026 Electrified GV70. The luxury electric SUV now includes more range and an NACS port so drivers can charge at Tesla Superchargers. It will go on sale in the first half of 2025.

Genesis-US-luxury-EV-market — Genesis at the 2024 LA Auto Show (Source: Hyundai Motor Group)

Meanwhile, Genesis showcased its new GV60 Magma Concept at the event, its first dedicated high-performance EV. The brand sees its Magma performance brand rivaling that of Geman luxury brands like Mercedes AMG, BMW M, and Audi RS.

The Genesis GV60 Magma EV will launch next year, spearheading the brand’s “expansion into the realm of high-performance vehicles.”

Genesis enhanced the battery and motor while fine-tuning the chassis, thermodynamics, and profile for more power and efficiency.

It also features an aggressive new design, sitting much lower and wider than the current GV60 model. Genesis added a Magma-exclusive sound system to give it a sports car-like feel in the cockpit.

Genesis-G80-EV-Magma — Genesis G80 EV Magma Concept (Source: Genesis)

In April, we got our first look at the G80 EV Magma concept, which could be a potential challenger to Tesla’s Model S Plaid and the Porsche Taycan GT Turbo.

The luxury brand is expected to launch its flagship electric three-row SUV next year, the GV90. Genesis previewed the ultra-luxury EV in March after unveiling the Neolun concept.

Genesis now has 60 sales bases in the US, with new stores in Washington, Minnesota, New York, and Florida. It’s also building 30 in Canada as it expands its presence in the North American luxury market.

The luxury brand is opening a new dedicated design center in California. The “Genesis Design California” will open in the first half of 2025 as it builds out its US network.

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Environment

No, BYD is not taking over NIO as fake rumors claim

Published

6 hours ago

November 22, 2024

admin

No, BYD is not taking over NIO as fake rumors claim

A rumor spreading like wildfire on social media claims BYD will be taking over NIO (NYSE: NIO) as the EV giant gobbles up market share in China. The rumor was posted by a suspected BYD employee, but NIO is denying the claim.

BYD acquiring NIO would be a massive move as China’s leading EV maker continues to dominate the market. But that’s not going to happen.

According to CnEVPost, NIO’s assistant vice president for branding and communications, Ma Lin, denied the rumors that BYD is taking over the company on Friday.

Ma posted a screenshot on social media asking BYD’s general manager of branding and PR, Li Yunfei if the person who posted the fake rumor was an employee.

Earlier today, the suspected employee claimed BYD and NIO were setting up a joint venture. In a Weibo post, the suspect said BYD would have majority control of the partnership with a 51% share while NIO would get the remaining 49% ownership.

Ma told Li that if it was, in fact, a BYD employee, he needed to issue an official clarification and apologize. If not, they can get the police involved together. Li also denied the rumors, saying the claim was seriously untrue.

BYD-taking-over-NIO — NIO Onvo L60 electric SUV at the 2024 Guangzhou International Auto Show (Source: NIO Onvo)

NIO denies rumors that BYD is taking over the company

This is not the first time rumors surfaced that BYD will be taking over NIO, but because it is a suspected employee, the post has garnered more attention.

BYD is on a major hiring spree as it ramps up production to meet the higher demand. The EV giant now has over 900,000 employees, making it by far the largest A-share listed company in China.

After selling over 500,000 vehicles for the first time in a single month in October, BYD’s surge is heating up as the EV giant expands overseas for growth.

October was BYD’s fifth consecutive record sales month as it closes in on auto leaders like Ford in global deliveries.

NIO is also gaining momentum, with sales topping the 20,000 mark for the sixth straight month in October. With output of its new lower-priced Onvo L60 electric SUV ramping up, NIO expects to continue seeing higher demand.

Ma said on Friday that NIO’s “recent situation is quite good.” The company’s head of PR added, “Cash flow turned positive in the third quarter, gross profit improved in October, earning an extra RMB 100 million, and Onvo (deliveries) will exceed 10,000 in December.”

NIO is launching its third brand, Firefly, with deliveries kicking off in the first half of 2025. The company expects sales to double next year as it works to become profitable by 2026.

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Environment

Hyundai recalls more than 145,000 EVs

Published

7 hours ago

November 22, 2024

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Hyundai Motors is recalling 145,235 EVs and other “electrified” vehicles in the US, citing concerns about a loss of driving power, the National Highway Traffic Safety Administration (NHTSA) said on Friday.

The NHTSA announced this morning that the recall affects selected IONIQ 5 and IONIQ 6 EVs, as well as certain luxury Genesis models, including the GV60, GV70, and G80 electrified variants, from the 2022-2025 model years, Reuters reported.

2025-Hyundai-IONIQ-5-prices — 2025 Hyundai IONIQ 5 (Source: Hyundai)

It looks like the issue stems from “the integrated charging control units in these vehicles, which may become damaged and fail to charge the 12-volt battery. This malfunction could lead to a complete loss of drive power, posing safety risks for drivers,” the NHTSA stated.

If you’re an owner of one of these Hyundai models dating 2022-2025, stay tuned. Hyundai has not yet provided a timeline as to when affected vehicles will be repaired.

To make that happen, the company’s dealers will inspect and replace the charging unit and its fuse if necessary, NHTSA said. Free of charge, of course.

Importantly, no crashes, injuries, fatalities, or fires due to this issue have been reported in the US, Hyundai reported.

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