Porsche Is Building a Tesla Competitor
The Porsche Mission E concept car unveiled in September at the Frankfurt auto show.
Photographer: Chris Ratcliffe/Bloomberg
- Board approves production of battery-powered sports car
- First purely electric Porsche to come out at end of decade
Porsche committed to making its first all-electric vehicle, taking on Tesla Motors Inc. with a model that’s set to accelerate faster than the German company’s 911 sports car and recharge in 15 minutes.
Porsche green-lighted a 1 billion-euro ($1.09 billion) project to produce the battery-powered sports car, which will be manufactured near division headquarters in Stuttgart and create 1,000 jobs, the Volkswagen AG unit said Friday in a statement. The model, based on the low-slung Mission E concept unveiled in September at the Frankfurt auto show, will enter showrooms at the end of the decade, it said.
“With Mission E, we are making a clear statement about the future of the brand,” Chairman Wolfgang Porsche said in the statement. “Even in a greatly changing motoring world, Porsche will maintain its front-row position with this fascinating sports car.”
The step is part of efforts by Volkswagen, Europe’s largest automaker, to move beyond a scandal over rigged car-emissions tests. Chief Executive Officer Matthias Mueller, who ran Porsche until late September, has vowed to accelerate and widen development of electric cars amid a reorganization that delegates more decision-making to the Volkswagen group’s brands and regional units.
While global sales of all-electric vehicles have yet to take off, manufacturers are positioning themselves for any growth in demand stemming from tighter environmental rules. Tesla CEO Elon Musk said in a presentation at a Paris conference on climate change this week that regulators need to take action to discourage carbon emissions.
Porsche caused a stir at the Frankfurt show with the four-seat Mission E electric sports-car concept, whose acceleration to 100 kilometers (62 miles) per hour in less than 3.5 seconds beats the 911’s 4.2 seconds to reach that speed. The new electric vehicle will complement a lineup comprising the 911, the smaller Cayman sports car, the Boxster roadster, the four-door Panamera coupe and the Cayenne and Macan sport utility vehicles. Porsche’s high-performance 918 Spyder, a plug-in hybrid supercar, has been sold out as production was limited to safeguard exclusivity.
The division is set to sell more than 200,000 vehicles for the first time this year, driven by demand for the $52,600 compact Macan. Palo Alto, California-based Tesla, maker of the battery-powered Model S sedan and Model X SUV, is targeting 50,000 to 55,000 deliveries in 2015.
The 600-horsepower Mission E will be designed to drive more than 500 kilometers before needing a recharge, Porsche said. The battery can reach 80 percent of capacity in about 15 minutes, about half the time needed to recharge Tesla’s Model S, which has a version capable of traveling as far as 528 kilometers.
OPEC Maintains Crude Production as Group Defers Output Target
OPEC Agrees to Increase Daily Production Target
- Production target set at 31.5 million barrels a day: Delegate
- Oil output ceiling doesn't include new member Indonesia
OPEC set a record oil-output ceiling of 31.5 million barrels a day, a level that’s in line with the group’s most recent production estimate. Crude fell as much as 3.6 percent in New York.
The increase from a previous target of 30 million barrels doesn’t include production from Indonesia, which joined the group after a break of almost seven years, according to a delegate with knowledge of the matter, who asked not to be identified because the decision hasn’t been made public.
The Organization of Petroleum Exporting Countries sent crude prices reeling a year ago when it decided to maintain output as it sought to force higher-cost producers to scale back their operations in an oversupplied market. Saudi Arabia, OPEC’s biggest producer and architect of the current policy, has remained opposed to a production cut unless countries outside the group cooperate. OPEC also needs to prepare for increased shipments from Iran when international sanctions are lifted.
“This decision reflects the consensus going into the meeting of OPEC’s policy for prices needing to find a floor to deter new non-OPEC supply projects,” Gareth Lewis-Davies, London-based energy strategist at BNP Paribas SA, said by phone. “The higher quota reflects the realpolitik of accommodating Iran.”
Iranian Production
Crude slumped about 38 percent in the last year, with global benchmark Brent crude headed for its lowest annual average in a decade after reaching a six-year low of $42.23 on Aug. 24. Brent fell 2.3 percent to $42.84 a barrel at 3:09 p.m. London time Thursday, while West Texas Intermediate crude dropped 3 percent to $39.83.
OPEC has pumped more than its collective target of 30 million barrels a day the past 18 months, data compiled by Bloomberg show. The group pumped about 31.4 million barrels a day in October, according to its market report.
Iran won’t accept any production curbs until it restored about 1 million barrels a day of output, Oil Minister Bijan Namdar Zanganeh said on Friday before sitting down with his OPEC counterparts. Saudi Arabia said it didn’t feel obliged to cut production, which is running close to a record.
The OPEC meeting in Vienna has entered a second session, according to two delegates familiar with the matter, who asked not be identified.
Squeezing Incomes
OPEC’s policy is squeezing incomes for its members, whose combined annual revenue could fall to $550 billion from an average of more than $1 trillion in the past five years, the International Energy Agency said Nov. 10.
“The OPEC member countries have lost so much money,” Zanganeh said Thursday in the Austrian capital.
Venezuela, whose foreign currency reserves are at the lowest level in 12 years, led calls for a reduction in output, supported by Ecuador. Iran is poised to boost output after sanctions over its nuclear program are lifted and it won’t seek permission from OPEC to do so, Zanganeh said last month. OPEC requires consensus among members to alter its output ceiling.
Global oil stockpiles have risen to record levels as Saudi Arabia, Russia and Iraq boosted supply, the IEA said on Nov. 13. The market is oversupplied by as much as 2 million barrels a day, Zanganeh said this week, equivalent to about 2 percent of global output.
Iran Joins Saudi Arabia Shunning Output Curb at OPEC Meeting
How Quickly Can Iran Boost Oil Output?
- Saudi Arabia says Iranian return will do `nothing' to market
- Venezuela minister warns of catastrophe for oil prices
Iran joined Saudi Arabia in saying it would keep on pumping despite oil prices hovering near a six-year low, giving the strongest signal yet that OPEC wouldn’t act at the group’s meeting in Vienna to curb the global supply glut.
As ministers from the Organization of Petroleum Exporting Countries gathered in Vienna, Iran said it would boost shipments after the expected lifting of international sanctions next year and wouldn’t accept any curbs until it restored about 1 million barrels a day of output. Saudi Arabia said it didn’t feel obliged to cut production, which is running close to a record.
Bijan Namdar Zanganeh at the OPEC meeting
Photographer: Lisi Niesner/Bloomberg
“We don’t expect OPEC to do anything,” Iran’s Oil Minister Bijan Namdar Zanganeh said on Friday as the group’s ministers sat down to discuss policy, including how to fit new member Indonesia into its output ceiling. "It seems that the global market will grow demand” amid oversupply of 1.5 million to 2 million barrels a day, he said.
With oil prices near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
Saudi View
The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, participate. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.
Saudi Arabia is willing to cooperate with anyone to re-balance the market, Oil Minister Ali al-Naimi told reporters on Friday after OPEC ministers arrived to discuss policy. The pressure isn’t solely on Saudi Arabia for output cuts, he said, adding that Iran’s return will do “nothing” to the market as demand for oil will strengthen next year.
OPEC May Surprise by Cutting Crude Production: Lennox
Increasing Demand
“Demand is going to increase anyway,” according to al-Naimi, who said Saudi Arabia hasn’t cut investment. “Nothing has been curtailed. We have a responsibility to maintain our 12.5 million-barrels-a-day capacity.”
Russia, Mexico and other big producers outside OPEC have given no indication they would agree to any OPEC-led output cuts. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.
Venezuela is proposing taking 1.5 million barrels a day of production out of the market.
“All the countries, including the Saudis,” are very worried, Venezuela’s Energy Minister Eulogio Del Pino told reporters on Friday, citing a decline in oil prices after the past three OPEC meetings. “We estimate that in the second quarter of next year, inventories will reach 100 percent and we see a catastrophe in the prices"
Informal Gathering
Ecuador Oil Minister Carlos Pareja said an informal meeting of his OPEC counterparts on Thursday -- unusual in recent years and held in a hotel rather than at the group’s headquarters -- was "difficult.”
Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut at the meeting on Thursday. A solution to the market slump requires a global effort as OPEC pumps less than half the world’s oil, Kachikwu said on Friday in a Bloomberg TV interview in Vienna. Despite differences of opinion among members, OPEC has “common purpose” to find a solution to the price rout.
The divisions are a sign of how a year of low prices -- and the prospect of more months of cheap oil -- are hurting OPEC nations. The group’s annual revenue may fall to $550 billion from an average of more than $1 trillion in the past five years, the International Energy Agency said Nov. 10.
Conciliatory Tone
Iran has repeatedly said OPEC should reduce production to make room for its return to the market. OPEC pumps four-in-10 barrels worldwide.
Faced with dismay among members unable to balance their books, Saudi Arabia has adopted a conciliatory tone, promising to listen to all before a policy decision is made. OPEC watchers said the divisions make it more likely the group will re-affirm its current production ceiling of 30 million barrels a day on Friday.
"OPEC is likely to stay on course on December 4," said Gary Ross, chairman of New York based consultancy Pira Energy. OPEC needs consensus among all its members before changing the group’s output target.
The official ceiling is, however, largely symbolic as countries produce above it. OPEC pumped 32.1 million barrels a day in November, exceeding its target for an 18th month, according to a Bloomberg survey of companies and analysts. The overproduction is likely to worsen next year as Iran plans to pump an additional 500,000 barrels a day within weeks of international sanctions being lifted.
Indonesia Return
"We expect OPEC will likely maintain its production ceiling at the current level or adjust it upward slightly to reflect Indonesia’s re-joining the group while maintaining the goal of retaining market share in general," said oil consultancy Wood Mackenzie Ltd.
Indonesia, which left OPEC in 2008, has returned to the group. The country pumps roughly 800,000 barrels a day, so including it would bring OPEC’s official ceiling nearer to 31 million barrels a day.
Brent crude closed on Wednesday at $42.49 a barrel, the lowest since 2009, when demand slumped during the global financial crisis. Brent futures climbed 1.9 percent at $44.67 as of 1:40 p.m. in London on Friday. International oil traders have said that unless OPEC reverses course, supplies will continue to overwhelm demand for months.
If OPEC keeps its production stable, Brent crude could drop below $40 a barrel in the short term, said Deshpande Abhishek, oil analyst at Natixis SA. “We are looking at an oversupplied market in 2016 that will put a lid on prices,” he said on the sidelines of the OPEC meeting in Vienna.
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