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Shares of EV start-up Lucid jump on new reservations, 2022 production

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Electric vehicle start-up Lucid on Sept. 28, 2021 said production of its first cars for customers has started at its factory in in Casa Grande, Arizona.

Lucid

Shares of Lucid Group jumped by more than 5% during afterhours trading before retreating to about even after reporting its first quarterly financial results as a public company.

The electric vehicle start-up announced a notable increase in vehicle reservations and confirmed its production target for next year, while reporting a net loss of $524.4 million in the third quarter.

Lucid, which went public via a SPAC deal in July, reported it has lost $1.5 billion through the first nine months of the year.

The company on Monday said it has more than 17,000 reservations for its Air sedan, up from 13,000 through the third quarter. The reservations through September represented an order book of $1.3 billion, the company said.

Lucid also confirmed its 20,000 vehicle production target for next year, but said hurdles remain for achieving those plans.

“We remain confident in our ability to achieve 20,000 units in 2022,” Lucid CEO Peter Rawlinson said in a press release. “This target is not without risk given ongoing challenges facing the automotive industry, with global disruptions to supply chains and logistics.”

Rawlinson said the automaker was taking steps to mitigate supply chain hurdles and still planned to launch less expensive versions of Lucid Air through 2022.

The automaker’s revenue in the third quarter was $232,000 largely from a battery deal with the Formula E electric racing league, Lucid CFO Sherry House told Wall Street analysts Monday during a call. She said the company will begin recording revenue from vehicle sales and report details of its sales beginning for the fourth quarter.

Shares closed at $44.88 per share, up 2.2%. The stock price remains below its 52-week high of nearly $65 a share in February when it was reported that Lucid was nearing a deal with blank-check company Churchill Capital IV Corp. to go public.

Read more about electric vehicles from CNBC Pro

Shares of Lucid are up by more than 80% since the company went public through a reverse merger with Churchill in July. The largest daily increase of 31% occurred late last month when the company confirmed customer deliveries of the Lucid Air Dream Edition were beginning.

“I feel great about our stock price,” House told CNBC during a phone interview. “The run up that we’ve had, where it is today and also the growth trajectory, frankly, that’s in front of us. I see that we’re being regarded as a technology company with a platform that’s extensible across lots of vehicle variants and sustainable tech.”

Rawlinson echoed those remarks: “I think what is happening in our stock value reflects our status as a tech company more than a car company.”

The all-electric Air sedan on Monday was named MotorTrend’s car of the year, a coveted award in the automotive industry. It marks the first time that the initial product from a new automotive company has received the award, according to the publication.

In total, Lucid has said it plans to deliver 520 customer-configured Lucid Air Dream Editions, followed by production of lower-priced models. Lucid told investors in July that it expects to produce 20,000 Lucid Air sedans in 2022, generating more than $2.2 billion in revenue, according to an investor presentation.

The Dream Edition is a $169,000 special edition of its flagship sedan, with an industry-leading range of up to 520 miles, according to the EPA. Pricing for an entry-level version of the car, the Lucid Air sedan, starts at $77,400 before an up to $7,500 federal tax credit for plug-in vehicles.

Lucid is among a handful of EV start-up companies to go public through deals with SPAC companies since last year. But unlike many of its SPAC peers, Lucid is actually generating revenue and producing vehicles. It also has thus far avoided any federal probes into potentially misleading statements to investors unlike others such as Nikola, Lordstown Motors and Canoo.

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Shell to buy power from world’s ‘largest offshore wind farm’

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Offshore wind farm.

davee hughes uk | Moment | Getty Images

Shell said Wednesday it had signed a deal to purchase power from a development dubbed “the world’s largest offshore wind farm.”

The 15-year power purchase agreement relates to 240 megawatts from Dogger Bank C, the third and final phase of the 3.6 gigawatt Dogger Bank Wind Farm, which will be located in waters off the coast of northeast England.

The agreement builds upon a previous deal to purchase 480 MW from Dogger Bank A and B, meaning that its combined offtake will amount to 720 MW.

On Wednesday, Dogger Bank Wind Farm announced it had also agreed 15-year power purchase agreements for Dogger Bank C with Centrica Energy Marketing & Trading, SSE Energy Supply Limited and Danske Commodities.

“The commercial power agreements provide a route to sell the green energy generated by the third phase of the wind farm into the GB electricity market when it enters commercial operation,” it said.

Dogger Bank A and B represents a joint venture between Equinor, SSE Renewables and Eni, with the companies holding stakes of 40%, 40% and 20% respectively.

This month, it was announced Eni would also acquire a 20% stake in Dogger Bank C, with Equinor and SSE Renewables each holding on to a share of 40%. This deal is slated for completion in the first quarter of 2022.

“Once the three phases are complete, which is expected by March 2026, Dogger Bank will be the largest offshore wind farm in the world,” Dogger Bank Wind Farm says.

Despite making deals related to renewable energy, Shell remains a major player in oil and gas. It has pledged to become a net-zero emissions energy firm by 2050.

In February, the business confirmed its total oil production had peaked in 2019 and said it expected its total carbon emissions to have peaked in 2018, at 1.7 metric gigatons per year.

In a landmark ruling earlier this year, a Dutch court ordered Shell to take much more aggressive action to drive down its carbon emissions and reduce them by 45% by 2030 from 2019 levels.

The verdict was thought to be the first time in history a company has been legally obliged to align its policies with the 2015 Paris Agreement. Shell is appealing the ruling, a move that has been sharply criticized by climate activists.

In October, billionaire activist investor Dan Loeb called on the business to break up into multiple companies to strengthen its performance and market value.

Shell acknowledged Loeb’s letter to clients calling for the company to split, saying it “regularly reviews and evaluates the Company’s strategy with a focus on generating shareholder value. As part of this ongoing process, Shell welcomes open dialogue with all shareholders, including Third Point.”

More recently, in mid-November, Shell said it would move its head offices to the U.K. from the Netherlands, and ditch its dual share structure. Under these plans, the firm’s name would change from Royal Dutch Shell plc to Shell plc.

“The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive,” Andrew Mackenzie, the company’s chair, said at the time.

—CNBC’s Sam Meredith and Chloe Taylor contributed to this article.

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Ethiopian PM Abiy Ahmed joins frontline as conflict against rebels intensifies

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Ethiopian Prime Minister Abiy Ahmed Ali and his wife Zinash Tayachew take part in a memorial service for the victims of the Tigray conflict organized by the city administration, in Addis Ababa, Ethiopia, on November 3, 2021.

Ethiopian Prime Ministry Office | Anadolu Agency | Getty Images

Ethiopian Prime Minister Abiy Ahmed has reportedly traveled to lead his security forces from the frontlines in the war effort against advancing Tigrayan rebels.

Abiy, who won the Nobel Peace Prize in 2019, announced on social media on Monday that he would personally “mobilize to the front to lead the defense forces,” and urged Ethiopians to “rise up for (their) country.”

State-affiliated news outlet Fana reported on Wednesday that Abiy had left for battle, with Deputy Prime Minister Demeke Mekonnen Hassen taking charge of the government in his absence.

Abiy will be joined by Olympic heroes Haile Gebrselassie and Feyisa Lilesa, both of whom have declared their intent to assist in the fight against an alliance of rebel groups led by the Tigray People’s Liberation Front (TPLF).

The prime minister served in the Ethiopian army during the 1998-2000 border war with Eritrea and obtained the rank of lieutenant colonel. As leader, he later ended nearly two decades of tension between the neighboring countries by signing a landmark peace deal in 2019.

Upon assuming office in 2018, Abiy sought to stabilize the country by centralizing power in the federal government, a move that alienated the TPLF, which benefited under the previous devolved system and put it on a collision course with the new administration that has been exacerbated in recent years.

A year of fighting between Ethiopian National Defence Forces and the TPLF and other rebel groups has caused a humanitarian crisis and killed thousands, while displacing more than 2 million people, according to the U.N.

A genuine fight, or a ‘PR stunt’?

Earlier this month, nine anti-government factions announced the formation of an alliance dubbed the United Front of Ethiopian Federalist and Confederalist Forces, threatening to march on the capital Addis Ababa.

The TPLF has said it is advancing toward the capital, a claim denied by the Ethiopian government. A media and communications blackout across much of the north of the country has rendered it difficult for such claims to be independently corroborated.

Robert Besseling, CEO of geopolitical risk consultancy Pangea-Risk, told CNBC on Wednesday that Abiy’s dramatic move to the front was likely a “PR stunt to stir up patriotic or ethnic sentiment to counter the Tigrayan advance.”

He said there are very few federal troops on the frontline for Abiy to command, with government-supporting militias in the northern Amhara holding back opposition groups.

People hold lit candles in a memorial service for victims of the Tigray conflict organized by the city administration, in Addis Ababa, Ethiopia, on November 3, 2021.

Minasse Wondimu Hailu | Anadolu Agency | Getty Images

“I also ask where the supposed ‘frontline’ is located and where Abiy intends to join it. That said, the move to the frontline will stir nationalism and probably boost recruitment of civilians to join the army and militias,” Besseling said.

“If the Tigrayans are held outside of Addis, Abiy will claim credit and receive a political dividend.”

With the prime minister heading to battle and citizens being urged to take up arms, the outcome of the conflict will also have significant ramifications for the country’s economic future.

Ethiopia’s export-driven industries, ESG profile and key policy reforms will remain on tenterhooks, according to a client research report published Wednesday by political risk consultancy Verisk Maplecroft.

Rebels unlikely to seize the capital

Pro-government forces were forced to withdraw from Tigray state in June this year after their control over the region deteriorated, despite early signs of success when fighting first broke out in November 2020.

However, Verisk Maplecroft suggested that there is little binding the nine anti-government groups comprising the rebel coalition beyond opposition to Abiy, meaning it could prove a “fractious and short-lived arrangement.”

“The military momentum is currently with the rebels, but we do not expect the immediate collapse of the Ethiopian military nor the fall of the capital,” the Verisk client note said.

Amhara militia men, in combat alongside federal and regional forces against the northern region of Tigray, receive training in the outskirts of the village of Addis Zemen, north of Bahir Dar, Ethiopia, on November 10, 2020.

EDUARDO SOTERAS/AFP via Getty Images

“The Ethiopian National Defense Force is regularly resupplied with military equipment by international allies from the Persian Gulf and likely retains the capacity to halt the rebel advance.”

Verisk Maplecroft believes the TPLF-led coalition has little genuine intention of assailing the capital since a static siege like this would limit its mobility, which has helped its cause in the fighting so far.

Instead, analysts believe threats to Addis will continue in a bid to draw Abiy to the negotiating table, a strategy that looks increasingly perilous in light of recent events.

Abiy designated the TPLF a terrorist organization in May this year, hampering prospects of a negotiated settlement, and has struck a defiant and combative tone in light of the rebels’ aggression.

Supply chains in jeopardy

Verisk Maplecroft analysts noted that consumer goods supply chains feeding into western markets are already feeling the effects of the conflict, with a number of multinational clothing companies suspending operations, and warned that the situation may deteriorate further.

“The TPFL and its allies will look to put pressure on the government to enter into negotiations by seeking to disrupt the flow of goods dependent on the country’s principal export route, the Addis-Djibouti railway and road network,” they said.

“If the rebels were to either seize or disrupt this transport corridor, the country’s export-orientated industries would find their only reliable export route cut-off. “

Export-oriented Ethiopian manufacturers will also lose tariff-free access to the U.S. market from Jan. 1 after the country was suspended from the African Growth and Opportunity Act (AGOA) earlier this month, on allegations of human rights violations by state forces.

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Olaf Scholz replaces Angela Merkel as German chancellor

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German Chancellor Angela Merkel (R) and German Minister of Finance Olaf Scholz attend a cabinet meeting at the German chancellery on August 19, 2020 in Berlin, Germany.

Pool | Getty Images News | Getty Images

A coalition deal has been announced in Germany after almost two months of talks following the country’s inconclusive federal election in September.

Olaf Scholz, the center-left Social Democratic Party’s candidate, will be Germany’s next chancellor, replacing Angela Merkel who has led Germany for 16 years.

The agreement between the SPD, the Greens and the Free Democratic Party, will see them govern together in a three-way coalition for the first time. The alliance has been described as a “traffic light” coalition in reference to the parties’ traditional colors.

Christian Lindner, the head of the pro-business FDP, is set to be the next finance minister, according to the deal which was announced Wednesday afternoon and will now be voted on by the different parties. The Green Party’s co-leaders, Annalena Baerbock and Robert Habeck, are poised to take on the roles of foreign minister and economy and climate minister, respectively.

“The first traffic light [in Germany] was erected in Berlin in 1924 in Potsdamer Platz. At that time, it was still an unusual technology. ‘Can it work?’ people asked skeptically,” Scholz told a press conference in Berlin on Wednesday, according to a Reuters translation.

“Today, the traffic light is indispensable when it comes to regulating things clearly and providing the right orientation and ensuring that everyone moves forward safely and smoothly. My ambition as chancellor is that this traffic light alliance will play a similarly groundbreaking role for Germany,” he added.

Debt brake remains

The draft coalition agreement covers a wide range of climate policies — including plans to adopt a climate protection program by the end of 2022, utilize all suitable roofs for solar energy and the intention to align an expansion of its power network with a new renewables target.

Germany will try to dedicate 2% of its land surface to wind power infrastructure and will continue to exclude nuclear power from its energy mix, a policy that deviates from the policy of its neighbor France. The agreement also stated that Germany would stop funding renewable energy once its coal exit was achieved.

It said immigrants shall be eligible to apply for German citizenship after five years in the country and Scholz confirmed Wednesday that Germany will keep its constitutional debt brake — this basically forces leaders to present budgets without structural deficits or a very limited deficit.

The new coalition said it would launch a parliamentary investigation into the Afghanistan evacuation operation. The country will remain part of NATO’s nuclear-sharing agreement under the new government, the deal noted, and the Greens will have the right to nominate the country’s European commissioner if the EU Commission’s president is not from Germany, as is currently the case with Ursula von der Leyen.

‘Traffic light’ coalition

The parties have vowed to modernize Germany, which is Europe’s largest economy, with a priority placed on the transformation into a greener, more digitalized economy, as well as infrastructure investment.

German businesses are anxious to see what this transformation means for them in reality, in terms of energy prices and business costs.

Outgoing leader Angela Merkel’s conservative alliance, the Christian Democratic Union and Christian Social Union, will now see itself go into opposition.

Holger Schmieding, chief economist at Berenberg Bank, described the alliance as a “continuity coalition.”

“New faces need not mean a major change in policies. We expect the new government to continue the gradual tilt towards more government spending on pensions and investment as well as a green transformation that has been the hallmark of the last eight years of Merkel’s 16-year reign as chancellor,” he said in a note Wednesday.

Like Merkel’s “grand” coalition of center-right CDU-CSU and center-left SPD, the new government includes parties from both sides of the political divide, he noted.

“In terms of numbers, the centre-left (SPD and Greens) is much stronger and the centre-right (FDP instead of CDU/CSU) much weaker in the new government than before. But on many issues, notably domestic and European fiscal policies, the FDP often advocated a harder line than Merkel did. As a result, we always expected the compromises struck between the new coalition partners to be quite similar to what a continuation of the old government would have delivered.”

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