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Weekly Roundup - AWS Data Centers in Germany, Ford’s Cost-Reduction Strategy and Honda’s Investment in EV

Yulia Fedorova

17 May 2024

The Allianz Trade Global Survey 2024 reveals that artificial intelligence will significantly transform global trade. Surveying over 3,000 companies across eight countries, it examined factors like government policy, geopolitics, tariffs, and AI advancements. AI is expected to boost global exports by up to 0.2 percentage points and benefit sectors such as computers, electronics, and robotics. It will also enhance global value chains, reduce costs, increase export opportunities, and accelerate cross-border digital trade. However, rapid technological changes and regulatory discrepancies, especially in data policies, may pose challenges and exacerbate the digital divide between large and small companies, as well as wealthy and poorer countries.

Source: Allianz Trade Global Survey (2024)

Amazon Web Services announced on Wednesday its plan to invest 7.8 billion euros through 2040 to establish a cloud computing infrastructure tailored for Europe. This initiative aims to enhance data privacy by storing data on servers within the European Union, particularly benefiting government entities and customers in highly regulated sectors. AWS intends to set up several data centers in Brandenburg, Germany, by the end of 2025, making them accessible to all customers. This significant investment is also projected to bolster the local German economy by supporting an average of 2,800 full-time jobs each year across various businesses. Additionally, AWS recently revealed its partnership with Telefonica Germany to transition one million 5G customers to its cloud platform, starting from later this month.

Ford Motor has initiated a comprehensive approach to cut costs across its electric vehicle supply chain. This initiative is a direct response to competitive market pressures, including significant price cuts by Tesla and other manufacturers, aimed at maintaining consumer interest in a high-interest rate environment. Liz Door, Ford's chief supply-chain officer, has made a broad call to action for suppliers to engage in crafting cost-reduction strategies that will enable the production and sale of more affordable EVs. This includes a particular focus on models like the Ford F-150 Lightning, Transit electric van, and Mustang Mach-E SUV. The urgency of these measures is underscored by Ford's recent financial performance, which showed a $1.3 billion operating loss in its EV and software division for the first quarter, with anticipated pretax losses ranging between $5 billion and $5.5 billion for the year. Despite these challenges, Ford remains committed to its long-term strategy of developing affordable, smaller EVs and, in the interim, boosting sales of hybrid vehicles, which continue to enjoy consumer preference over fully battery-powered options.

Honda has significantly reinforced its commitment to electric vehicles by doubling its investment to ¥10 trillion by March 2031, reflecting a steadfast dedication to electric mobility despite recent market fluctuations in EV sales. CEO Toshihiro Mibe remains optimistic about the role of EVs in achieving carbon neutrality and emphasizes the importance of focusing on long-term goals rather than short-term market changes. The company plans to allocate ¥6 trillion towards enhancing EV production capabilities and another ¥4 trillion on batteries and software development by fiscal 2030. Honda's strategy includes introducing seven global EV models by 2030 and ten models for China by 2027, aiming to build a strong EV brand. Furthermore, Honda announced a significant investment in new EV and battery plants in Ontario, Canada, expected to commence operations in 2028, with the support of Canadian government subsidies. The automaker is also investing a record ¥1.2 trillion in research and development for fiscal year 2023 to advance its EV technology and infrastructure, following a record high net profit of ¥1.1 trillion for fiscal year 2023. Honda is actively pursuing industry partnerships, including strategic collaborations with Nissan in EV and AI technologies, and with Sony for battery EV production, with the first model expected in North America by spring 2026. Honda aims to phase out gasoline-powered models entirely by 2040, committing to a future lineup consisting solely of EVs and hydrogen-powered fuel cell vehicles.

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