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tv   Bloomberg Markets European Close  Bloomberg  July 13, 2021 11:00am-12:00pm EDT

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johnson and alix steel. ♪ guy: tuesday the 13th. 30 minutes to the close. this is what you need to know out of europe this hour. volkswagen accelerating towards higher returns as batteries and software drive profits. big aspirations in the united states. ceo herbert diess will join us later this hour. the bank of england removes pandemic restrictions on british banks, allowing them to significantly increase dividends. the ecb much more cautious, signaling it will take steps to avoid excessive payouts. speaking in washington, the u.k. trade chief downplaying the chances of a u.s. trade deal by the end of this year. we will hear from her in just a moment. let's take a look at where we are with u.s. markets, european
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markets first. the stoxx 600 down by 0.1%. the dollar is on the front foot on the back of that cpi number in the united states. alix: let's get to that cpi number. definitely higher than expected, the highest recorded since 2008. but the bond market is telling you it is transitory, and all you have to look at is the curve. five 30's, flatter by about 100 basis points -- by about four basis points. you have front end yields rising and back in the yields going lower. that means inflation now may be a hike sooner than we thought, but overall, the inflationary input is transitory. that is helping the nasdaq. you are still having the nasdaq 100 tech stocks continue to outperform. the bank of america fund managers survey says that is still the overcrowded trade we saw in the first six months of last year, and it continues to be. is there a shakeout inevitable? financials down by about 1%.
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you have goldman sachs, j.p. morgan. they have great trading numbers. are we at the peak of that when loan demand just isn't there yet? those are the stories percolating in the u.s. guy: let's talk about what is happening with the delta story as well because the virus is not something we can or right now. boris johnson last night urging citizens to exercise caution, even as he moves ahead with plans to ease covid restrictions next week. meanwhile, the leaders of france and germany both encouraging their citizens to get vaccinated as quickly as possible as the delta variant continues to rip across the continent. pm johnson: this pandemic is not over. >> for our unity and protection, we must aim to vaccinate all french people because this is the only way to return to normal life. >> we have in fact still a low amount of cases, a low infection rate, but it is increasing, and the r number is over one again, and this is to do with the delta variant. pm johnson: this disease
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continues to carry risks for you and your family. we cannot simply revert instantly from monday the 19th of july two life as it was before covid. >> from early august, the health test will not only apply in cafes, restaurants, shopping centers, hospitals, retirement homes, and medical or social establishments, but also in planes, trains, and coaches for long journeys. >> we will not go the way that france has proposed. we have said that there will be no compulsory vaccination. guy: vaccination hugely important. sam fazeli joining us now. just getting the u.k. data. 36,630 more cases on july 13. there is data out of the netherlands as well, last week reporting 8541 cases. this week, 51,000, nearly 52,000
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cases. the leaders are pushing the vaccinations and pushing them hard, for understandable reasons. my question to you, is the virus back in charge in europe? bob: -- sam: i think in certain places, if you think about spain , holland, greece, portugal, when you look on a per capita basis, you do have a situation where you are seeing a meaningful resurgence. the u.k. is obviously leaving the whole thing when you look at a per capita basis. germany, as chancellor merkel said, is actually pretty good in terms of the numbers. but everybody is rising. there's no question. that is because people are a bit more relaxed, mixing a bit more. that is certainly what we are seeing the results off. the netherlands is showing that in spades. alix: a lot of people i notice came back from greece here in the u.s. there's also a rising case count in the u.s. as well as vaccination rates slow.
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is the u.s. a couple of weeks behind now europe? sam: i need to be careful, we need to be careful when we look at the united states, in that there are massive disparities between some states and others, and even pockets within states where there are significantly lower numbers of vaccinations compared to other areas. you can see that data on the vaccine tracker. you can see the wide disparity. a reason that we have to look at it is different, unfortunately there is a correlation between low vaccination rates and high infection rate. guy: we talked about this last night, and i want to get your take for our tv audience. the delta variant is now increasingly dominant. to what extent does that undermine the case for current travel restrictions? why can't i go to the united states when the delta variant is
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strong there? why can't u.s. citizens come here in the same way? we are all dealing with the same variant now. or is the fear that another one is on the way? sam: i think you are right, i think we need to get on with this. need to get together and figure out how to deal with this situation when it comes to managing the requirement for travel, etc. you have this odd situation where you're going to be tested, you are likely going to be vaccinated before you come. if not, your risk as a traveler is lower, especially when the variant exists. there's always this worry that you you will have a variant to
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worry about. but i would say that we should really revisit a lot of this and figure it out soon. alix: sam fazeli, bloomberg intelligence. the u.k. now has over 2900 people in the hospital with covid-19 as of today. we are joined now by sylvain broyer, chief emea economist at s&p global ratings. is this an accurate conversation to be having amid the confusion over travel and open economies? dr. broyer: the question is what thorman's -- is what authorities would do in reaction to the delta variant. it is clear the very end continues to spread in europe, and at the same time, hospital
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admissions remain very low. if you take a look at the situation of the u.k. today, the number of hospital admissions, five times lower for the same number of covid inflation then default vaccination complaints. this success on the vaccination to change the reaction function and to bring the economy less under lockdown than before. there's the compare/contrast between the reaction of the u.k. in france to the delta variant. france tightening the rules because france is lagging peers in terms of bags and nations -- in terms of vaccinations, while the u.k. is ahead, and the british government can keep the
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base of the economy. guy: how should we think about how the consumer is going to reacting, how the popularity is going to be reaction? we had seen a shift in tone from the u.k. government, recognizing that people are worried about what is happening here. do you thing as economists, you need to rethink the way people are going to be spending? there was this expectation that the reopening trade would only accelerate when people were fully release. at that actually going to happen ? dr. broyer: we see is that the economies are strongly responsive to the easing of restrictions. especially look at the relief of the lead gdp for the u.k. in the three months to may, we have an increase of almost 4% driven by retail sales. you have a lot of excess savings in europe.
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as soon as the economy reopens, the small amounts of inflation we have right now is due to the fact that demand is resuming faster than supply. alix: does that continue to hold true? what stood out to me in goldman sachs earnings was they downgraded gdp growth for this year to about 6.8% from a 7% handle. it is still 6.8%, so it is still obviously quite good. but i wonder if we are underestimating the follow-through, at what point do you have to rethink growth estimates in europe in particular? dr. broyer: we were not as optimistic as goldman for the u.s. economy. we expect the u.s. economy to
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grow by 6.7% this year and 4% next year. so there might be some divergence, but we have a really good, trusting background now. we have the longest extension on record, especially for the -- largest expansion on record, especially for the u.s. economy, resuming. we have removed fiscal stimulus and no deep scarring after, so there are some reasons to be positive. guy: let's talk about the ecb. we heard from christine lagarde. she spoke to my colleague francine lacqua over the weekend, sounding quite positive in some ways, talking about the opportunity that a new framework would give her. in terms of how divided you think the ecb is going to be going forward, when do you think the taper is going, given what you found is a reasonably
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optimistic picture in terms of the recovery and the delta fading into the background. ? dr. broyer: that is a good question. probably the ecb has a bit more time for tapering than before. . the new reaction function is yet to be discovered, so it will be very interesting to listen for christine lagarde at the monetary policy meeting of july. given sue trim work it -- even -- the target for inflation is a bit higher. saying that qe will remain above will mean that the risk of
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having the ecb starting discussing not only tapering, but reshaping of the balance sheet, that is why yields are going lower. guy: thank you very much, indeed. always appreciate your time. sylvain broyer joining us from s&p global ratings. coming up, the u.k. wants "the rate deal -- "the right deal" with the united states. there's no rush to clinch a trade deal with washington. annmarie hordern spoke a little earlier. we will hear about that conversation next. this is bloomberg. ♪ loomberg. ♪
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>> i have never set a deadline for any trade negotiation because the important thing is to get the right deal that works for both countries. i think there's a huge amount we can meet and do together. the u.s., the u.k., and china, the biggest world trading partner. there are huge opportunities to build a close relationship. that is why i am going to the west coast to meet leading figures from the tech industry, many politicians on the west coast as well. i'm interested in getting the right kind of deal that serves both of our countries rather
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than being in a hurry to do it. guy: that was the u.k. international trade secretary speaking to bloomberg's annmarie hordern on the sidelines of her meeting with the ustr. anne-marie joins us now. we were told that a trade deal with the united states would be fairly straightforward. it is beginning to sound like it will be anything but. the trade secretary talking about the right deal. how close are we? annmarie: the first thing is the timeline. speaking to "the telegraph," someone close to the secretary of state for trade has said they don't think anything can happen until after the u.s. midterm elections in november 2022, so nothing before 2023. she did not want to give a timeline, and what she's talking about is having a more comprehensive agreement, and she made the point that the united kingdom only did just a trade
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deal with australia, and that took a year. we are expecting this to take a lot more time. she kept talking about making sure they get the tax base on board. the biden administration are focused on foreign policy about china and really domestic is going to be about their own and for structure and fiscal spending plans. alix: to that point, what are some of the holdouts? i would not have thought the u.k. was going to be a holdout on tech. annmarie: i don't think it is specifically a holdout. before the biden administration, it is top of the agenda. it is really a reversal of what we saw under former president trump and current prime minister boris johnson. boris johnson campaigned on the fact that one of the best things i come for brexit -- one of the best things to come was for brexit. alix: thanks for that interview. really appreciate that.
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coming up, supply chain bottlenecks leaves inflation that's we saw, but -- leaves us with inflation. mark manduca will join us. this is bloomberg. ♪
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guy: pepsico was talking about it. it is in the inflation data for everyone to see. there are inflationary impulses within the united states, much of it being driven by what is happening with freight rates. pepsico talking about that in its numbers a little earlier on. i expect you will hear freight costs being mentioned through this earnings season on a lot of calls. you can see what is happening on the chart that goes back to 2016. those are actually truck rates
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in the united states. as you can see, this is where we are now, this huge spike. the idea is as we go into next year, that may start to fade. that is the transferor nature potentially about -- the transitory nature all of this. one thing tuned to this is the xpo. it had its investor day today. mark manduca, xpo chief investment officer, joining us now. what are you telling investors about what the environment is going to look like going forward for logistics, for rates? are they going to stay elevated? how does the business compensate? mark: thank you so much for your time today. a couple of things. you mentioned the broader supply. clearly we manage 900 or so warehouses. there are complete problems no doubt in the global supply chain right now. i agree with you on that.
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but the most prevalent issue is we are seeing shortages of containers partially driven by imports rising, and obviously exports falling. that has been driven, as you know, by consumer buying patterns that have been changing. until those buying patterns rivers, until you start going to the cinema again rather than buying goods online, and until our flying patterns change, you will know that half of the world's available cargo capacity flies in the belly of passenger planes, so as long as those aren't flying, you will have a bit of a logjam in the system. the system right now is jammed from arm to arm, so i don't see it changing anytime soon. alix: are you noticing any kind of demand we at any point -- demand weakness at any point as prices continue to rise? have we had that come were consumers or businesses say i can't pay that, forget it? mark: this is a very different type of problem. it is not a consumer drought as much as it is a shift in buying
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patterns. so the demand is definitely there. across both sides of the u.s. and u.k., it is increasing the becoming a problem for our customers. inflation volatility from our side of the fence clearly drives our customers want to outsource to third party logistics providers like us. labor inflation causes people to want to have more information and robotics. it actually serves our purposes and make sure the ends source market becomes the outsource market. less of a demand problem. guy: what does this need for margins? you talk about the need to automate. that is obviously going to improve margins. but what do you see going forward in terms of the infusion of models now fading?
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how do you get this new spin out you're going to be doing from xpo? how do you get margins within your business up to the numbers that deutsche is enjoying? mark: you're right, there's a lot of incitement -- a lot of excitement post investor day about the type of business we have on our hands. we are a global leader in the space, and would have been very worthy. we are a rare breed of business, and we can manage those inflation problems primarily because they are worded in our contracts. we have inflation passed through on the vast majority of our contract. so it doesn't really feature as an issue for us. if anything we are providing a real asset, the works through our top line and helps us if anything. this is a rare breed of business, as i mentioned. high revenue growth and investment on capital of 28%.
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we are reducing cash flow as an e-commerce play. it is rare to see our type of is this in the market. guy: always a pleasure. thank you very much. you see it any pepsico numbers today. everybody is talking about, as you just heard, lack of containers, lack of trucks because you can't buy the new ones because of the ships, because of the chips, and you can't get the drivers. alix: at what point does it start actually hurting demand, where you see a point where you can't pay it? we are not there yet. when do you get there? alix: here is going to be the critical thing. can you pass that on? that is going to be a factor that every business is going to have to grapple with. this is bloomberg. ♪
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guy we: are wrapping up the tuesday session. equity markets skipping a tiny bit. you need to be aware of where we are. i keep coming back to this point. 46072. the european equity markets are flying sideways, grinding higher over last couple of days. the top end of the recent range, flooring around record highs. not much action at the headline level. you have to take a step back and see the context of what is happening. we are about to start the reporting season. european markets poised at the upper end of the range. that is interesting. the ftse down. the dax down fairly. the cac 40 down more, but flatlining today. we are trying to get a gauge on what is happening. what is the catalyst that could take is higher. let's take you to what is happening in the foreign exchange market, as well as the commodity market.
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the dollar on the back of the cpi numbers. that is interesting. that will have a ripple effect into the u.s. markets. euro-dollar still trading with a 1.18 handle. only just. still a few longs. they start to get cleared out. a lot of people talking about the fact that are looking to sell at any strength. that is not worked out but we have not seen big moves down. table 1.3840. brent $75.85. keep an eye with the commodity space. let's look at what is happening with the grr. rotation into the markets. media, telecom, technology. that is the way the bid is. food and beverage doing relatively well. we have seen the telecom sector doing reasonably well. technology outperforming in the united states. nokia a big feature. the bottom end of the market,
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banks. the u.k. bank of england taking a much more benign attitude towards the reintroduction of dividends, basically taking the guardrails away. the ecb -- you are seeing differences in terms of the way the banks are performing. energy is down, real estate and trading lower. let's talk about some of the single stocks. nokia kept cost under control. demand starting to pick up. they are talking about raising four year guidance. a real pop higher for nokia. will be talking about volkswagen later. a historic opportunity in the united states to reestablish itself in that market. we will talk to herbert diess, the ceo volkswagen later in the hour. then let's talk about the u.k. banks. banks generally on the back foot. as they say, difference of
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opinion between the bank of england and the ecb in terms of the way dividends will be paid. alix: let's dig deeper into that. alison williams joins us now. on the one hand you have the ability for as much capital as you want for banks and the u.k. and the u.s.. what will be the competitive landscape as they try to work it out? alison: i do not cover u.k. banks, but our regulatory analyst has said that the u.k. regulator does expect some caution with regard to dividends. as you said in the u.s., we have banks broadly allowed to return to paying out as you can according to your capital requirement. we have still seen a differentiation. if we look at something like wells fargo, they have said they
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will look at their dividend differently than before the pandemic. they will look at it as a ratio of pretax, pre-provision profit, meaning they will eight nor reserves in the volatility there. that means a lower ratio. by contrast we have someone like morgan stanley who doubled their dividend and increase their payout to the higher end of the range, a 45% dividend ratio. that is more similar to someone like blackrock. they are signaling the fact they have turned around their business, and looking at themselves more as an asset manager. as a contrast to the swiss peers , the contract says even though they are a big wealth manager and earn a significant share from that business, they do not want to go back to the sort of 45% to 50% dividend they had offered investors because of some of the extreme volatility.
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they will wait themselves by buybacks. there is a question of total paybacks but then there is a dividend question and what is interesting is the different approaches, not just by the regulators but by the banks themselves they are taking in terms of looking at the payouts to investors. guy: one of the fears in the u.k. and in the euro zone is that banks will paper dividends over loans. -- will favor dividends over loans. they will try and continue to protect the balance sheet by not lending as much at a time the economy needs that procyclical push from the banking sector. is that a fear? are people talking about the fact banks will not lend as much coming out of the crisis, both in the united states and in europe? alison: i would say that while we do see headlines around that, the banks have had huge deposit
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growth and are looking to make more loans. when we talk globally across the financial team, it is the lack of loans and the lack of demand that is the issue for banks. banks would like more than anything to be putting out -- using these huge deposit bases they have gathered to make loans to customers. the demand is not there because of the stimulus we have had. if you look at the results from jp morgan and you can see bank of america and wells fargo also trading weekly on this. the issue is the fact that customers are spending, but they are paying off that spending out of balances and not borrowing. that is very specific to jp morgan and citigroup, which we expect to hear from tomorrow. also on the business side of things from wells and bank of america.
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we hear from our global team that this is something we are seeing and a lot of the developed markets in terms of we have had a lot of the stimulus, and that has helped to bridge the gap for a lot of customers and corporations. one of the negative effects is we are not seeing the loan growth. alix: basically everyone has the money they need. corporations flush with cash, individuals flush with cash. do we have any color on what area might turn first? alison: i think if we look across the universe, one of the areas where we could see some revival is the commercial business. we will get a line of sight on that tomorrow from banks like bank of america and wells fargo. the utilization rates are extremely low again. think about year ago we saw these massive drawdowns and then we saw banks raising money and
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paying them back on the large corporate side. on the consumer side of things, we have $2 trillion in balances. it seems like that will be a little bit of an impediment to the large corporate access to capital markets. we have the consumers with a lot of stimulus. some of the middle-market we could see demand. a lot of it will depend on as we go through the second half, and that is what banks have been guiding to all along is the potential pickup in the second half as some of the stimulus effects do start to fade. guy: will leave it there. alison williams of bloomberg intelligence. the european caution is understandable. unlike the u.s., the euro zone does not have the same capital markets you guys have over there . as a result the bank channel is so much more important. bank lending is so much more important come as a result of which, for the transmission mechanism swear banks need to
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lend, that is behind the ecb cautious. it is saying just keep a lid on things and away we are not sitting in the states. it is a different market structure behind that. alix: what about the savings rates? are the savings rates in europe like what we see in the u.s.? guy: the saving rates have been built up but it is different in the way we rely on the banking sector in a completely different way. corporations, even relatively medium-sized business, large and medium-sized businesses still reline their banks for credit and individuals are the same. it is a much more important channel for monetary policy transmission. over there is about the credit market. you see businesses have been able to go to the credit markets and raise money. that is the role the banks play in europe. a very different narrative. you want to make sure those banks are lending as we come out of this because it will be
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apsley critical. i appreciate -- it will be absolutely critical. i appreciate demand might not be there now but it will be as we see the acceleration. alix: which is what brings us back to the top of the show at the delta variant. you need the reopening to continue to feel left. if you do not have the demand on the loans -- guy: that caution is there. people are worried about the delta variant. let's talk about where european markets have finished. these are the final numbers. an incredibly uneventful session at a headline level. churn below the surface but we are right up there. in arctic season the markets are flirting with records on a daily basis. alix: volkswagen wants to take on tesla. we will talk to jeffrey's head of global autos fully push --
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this is bloomberg. ♪
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ritika: this is "the european close." coming up, area on the huffington -- arriana huffington. this is bloomberg. we check in on the bloomberg first word news. senate democrats have put legalizing marijuana on the legislative agenda. bloomberg learned chuck schumer, and senator cory booker of new jersey will release a draft of the marijuana bill tomorrow. it would remove are one of from the federal list of controlled substances. that could be a difficult vote for some democrats for more conservative states.
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the biden administration will warn american companies the risk of operating in hong kong. bloomberg has learned those risks will include china's ability to gain access to data company store there. another concern is a new law that lets beijing impose sanctions on anyone who enables foreign penalties to be implement it against chinese group. international energy agency warns oil markets will tighten significantly unless the opec-plus coalition -- there is a deadlock between saudi arabia and the uae. brent crude is now trading at close to a two year high. treasury secretary janet yellen ex-pence to get some health and pushing congress to get that global tax agreement. janet yellen tells bloomberg businesses are likely to provide crucial support that may be needed to overcome republican opposition. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. alix: thank you so much.
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volkswagen ceo herbert diess unveiled his company's plans for global strategy. i a 10% market share in the u.s.. very aggressive in the eb market . i want to get more perspective from philippe houchois who has a buy rating for volkswagen. a lot of this is to catch up with tesla and become the real competitor. did what you see today do that? philippe: what we saw today is very much what we heard before. what is different is we were trying to catch up with tesla. now everybody is doing the same thing, pursuing a similar strategy. it is not just about tesla, it is about the industry migrating to a different way of making autos and getting customers to use their car differently and make more money out of it. it is not just between tesla and volkswagen. it is across the industry. guy: tesla trades on very
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different multiples. how do you get to those multiples? philippe: i will give credit to volkswagen. there were more open than most. they are more discrete about production -- combustion engines will eventually fade away and disappear. startups like tesla have no legacy issues. for them growth is net growth. for volkswagen, when you sell ev's you stop selling -- you stop selling ice so it is a -- you start tricking assets in your balance sheets, whether it is to make engines or debt. you will not have the multiple tesla has and that will take many years. alix: how are they doing in china? in terms of manufacturing
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electric vehicles and selling it? there are also local manufacturers that are full steam ahead. philippe: absolutely. there was a dark spot in the past few weeks. it seems like the sales of the new id was disappointing. what could be said today on the call was june was much better. talking about doubling in june intimate. these are taking off now. it is interesting because china is -- the electrification story in china is the leveler. it puts the traditional carmakers on the same footing as the startup with tesla or the chinese carmakers. you are mentioning the ambition of doing tesla with market share in the u.s. for volkswagen. the u.s. is way behind in terms of penetration of ev. investment will start soon.
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the registration will help as well. that is the opportunity to catch up. they are playing defense in china, they will play be -- they will be playing offense in the u.s.. guy: let's talk about how they manage that strategy. what a they need to do in the united states to make that a reality? philippe: the plan they have is going to be converted to make ev's. we need the biden plan to become more tangible. we know the ambitions. we will find out what the pace will be. from there volkswagen is not waiting for the regulation to be formulated. it is going to be for ngm will play defense and volkswagen will play offense. -- ford and gm will play defense
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and volkswagen will be playing offense. alix: will be talking to herbert diess in a moment. what questions would you be asking? philippe: how do you transition from one part to another? they talk aloud about -- they talked a lot about the battery product. the issue is how you go from -- there is so much revamp. most use the more cautious approach of using some of the shells for what they do in house. volkswagen is going to be pushing a very aggressive strategy. one thing i thought we would hear about but did not was how cars are sold. you and i had been looking at the internet for years. when cars are connected, they know even more about us. the business model is moving towards more retail, and
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carmakers are using cars to try to reach out directly to us. having a different relationship. that is something herbert diess talk about today and you might want to ask him. guy: we will certainly put that to him. we have not ask you about chips. they will exert a scene of get influence over the sector. they are talking about the second half being a factor. when you think we are done with this? philippe: it is a while. we saw in toyota a few weeks ago and now and volkswagen, q2 was ok but shortfall continues into q3. i think it will stay with us all of this year and most of next year as well. there was no demand destruction in autos. the chip demand remained strong. chip capacity did not increase enough. chip manufacturers who stepped
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two more prop -- moved up to more profitable products and that left the industry hi and try. -- high and dry. i do not think we will see capacity match demand until the end of 2022. it is something our industry is now more open about. guy: this is going a lot longer than all of a suspected. philippe, thank you very much. philippe houchois of jeffries. coming up, more and volkswagen strategy and we will hear from dr. herbert diess joining us next. this is bloomberg. ♪
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guy: big news out of vw's strategy day. the company sees a historic chance to expand in the united states and that strategy driver, also the company boosting profit targets due to enhanced sales
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from battery and software. joining us is volkswagen ceo dr. herbert diess joining us from company headquarters in germany. thank you very much indeed for your time today. you have big ambitions in the united states. you're looking to take significant market share. how are you going to do this? what kind of assets are you going to need in the united states? what kind of platforms will you be building? mark: i think -- dr. diess: i think we have a historic opportunity to grow our market share in the u.s.. we are baked in china, over 20% market share. same situation in europe. we have been lagging behind in the u.s.. the u.s. is a country we love and our brands are well-established, but we missed out on many opportunities. if we go back to the 60's and 1970's, then we were in a steady decline. we recovered.
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we have been growing our market share with the newest car line both focusing on suv's. the u.s. is becoming an electrified country. the biden administration appends electrification. we have been advancing into fast charging. we are an investment phase which will be converted to electric car production. in the background you see -- very nicely received in the united states. it comes with many new products. iconic products, products in the united states is coming back to many more products. we have to use that opportunity and do the utmost to make sure we get back to the position we wanted to be as an auto manufacturer. alix: good afternoon.
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you have only confirmed local production of the id for suv in the u.s.. i wonder if they're going to be other models -- you talk about more models -- that will be made locally, and you can give me a timeframe? dr. diess: we are currently working on our u.s. strategy and our team is working on that. many ideas we have to prioritize. more markets from local production in the united states and we will know which models this will be latest in the fourth quarter. guy: who are you going to take market share away from in the united states? dr. diess: everyone is starting with a white sheet of paper. the electric market will be different than the ice market. we start from scratch. we have new competitors.
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tesla being the most serious and the most successful. it will depend a lot on the electrification strategy of the other market participants. we feel strong, we are early. we have a wide range of cars. we are coming with electric cars from the premium sector. porsche, audi. we should become relevant. alix: we just spoke to an analyst who said you are playing offense, but defense in china. can you talk about issues with the uptick of the id4 electric suv in china. give us some perspective on how you will compete more aggressively? dr. diess: we are absolutely aggressive in china. we use the transition into ev not easy for us. we are the biggest car manufacturer in china with over
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23% market share. the second most important company for 8% or 9%. we are good in china. to get into this position -- everyone wants the market share of us. we are investing heavily. last year we found it two subsidiaries where we own majority, one for audi and one for volkswagen. we are ramping up our development resources there before the 2000 r&d engineer software capabilities. we are not at all defensive. we are very aggressive in china. the introduction of new models is taking momentum now. days are picking up. we have good oil intake. i am confident we will
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step-by-step get back to our market share position in the energy world. guy: the chinese authorities are taking an aggressive stance when it comes to the other ship of data. you are investing heavily into software. your cars will generate a great deal of it going forward. how are you going to manage that relationship? dr. diess: we have to accept there are different ecosystems. china will be different to the rest of the world and the united states, probably even europe. we have totally legal different setups in europe when it comes to data and data privacy. i think we have to deal with different ecosystems. we are working with different technology players on both sides , in china and the u.s. we are big enough to ramp up those skills

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