Not only electric vehicles (EVs) but electric trucks have also grabbed the attention of the automakers around the world. Due to its emission-free nature and cost-effective maintenance feature, electric trucks are slowly gaining traction in the auto space.

German auto major Volkswagen AG has made a huge investment in this space. Similarly, Tesla Inc. (TSLA Quick QuoteTSLA - Free Report)   announced its plan to launch heavy-duty semi truck, with a 500-mile range, for longer distance. Recently, Daimler AG announced its plan to launch a fully-electric semi-trailer truck, the production of which will start in 2021. However, the success of electric trucks will hugely depend on the availability of batteries along with its capacity and range.

Alongside activities on the electric truck front, the week also saw Tesla making an announcement to downsize its workforce by around 9% to lower costs for becoming sustainably profitable, without compromising on its Model 3 sedan production goals. This downsizing will not impact the ability of the company to achieve the Model 3 production target in the near future.

(Read the previous roundup here: Auto Stock Roundup for Jun 7, 2018)

Recap of the Week’s Most Important Stories

1.    In a big development, General Motors Company (GM Quick QuoteGM - Free Report) and Honda Motor Co., Ltd. (HMC Quick QuoteHMC - Free Report) signed an agreement to work together to develop batteries for EVs, mainly for the North American market. This agreement will take into account new advanced battery components — including cell and module — in turn, promoting plans of both auto majors to move to all-electric vehicles in the future. The companies will come together to save costs, using General Motors’ next-generation battery system.

General Motors and Honda already work in tandem on zero-emission fuel cell vehicles. In fact, these companies have formed the industry’s first manufacturing joint venture to produce an advanced hydrogen fuel cell system by 2020. The integrated development teams are working to deliver a more affordable commercial solution for fuel cell and hydrogen storage systems.

Besides these ongoing joint developments and production of fuel cells, the latest battery component collaboration will enable both automakers to take a step toward all EVs. (Read more: General Motors, Honda to Develop Electric Vehicle Batteries)

General Motors currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    Per Reuters, Daimler announced that it will launch a fully-electric semi-trailer truck, the production of which will start in 2021. The 18-wheeler and 250-mile ranged Freightliner eCascadia is meant for regional deliveries and port services.

In addition to this, Daimler also launched a medium-duty Freightliner eM2 106, designed for local deliveries, with a range of up to 230 miles. In late 2018, the company plans to deliver 30 prototypes of the two models for field-testing by the customers.

Further, Daimler announced the opening of a new research center in Portland, which will work on research and development (R&D) of autonomous freight trucks. The center will work along with the company’s other centers situated in Germany and India.

In order to develop Daimler’s truck operations, R&D investment of more than €2.5 billion ($2.9 billion) will be made in 2018 and 2019. Out of the total amount, around 20% will be used for electrification, connected vehicles and autonomous driving technology. (Read more: Daimler Announces Launch of Electric Truck in 2021)

Daimler currently carries a Zacks Rank #2.

3.    Tesla has made the announcement to downsize its workforce by around 9% to reduce expenses. This will also aid it to become sustainably profitable without compromising on its Model 3 sedan production goals. Per Reuters, this layoff decision is in sync with the carmaker’s strategy to simplify its management structure.

The chief executive officer, Elon Musk informed that the job cuts mostly include the salaried staff and this won’t affect the workers in the production assembly lines. In other words, this downsizing will not impact the ability of the company to achieve the Model 3 production target in near future.

Albeit rising sales, Tesla remains a loss-making company. The loss is expected due to significant investments made toward developing new vehicles and technologies along with the establishment of a retail network. It is expected that the company may find it difficult to achieve sustained net profits until Model 3 enters full-scale production. The latest move to cut down employment is in sync with the company’s efforts to lower costs and become profitable without backtracking from Model 3 production goals. (Read more: Tesla Plans to Lay Off Employees to Boost Profitability)

Tesla currently carries a Zacks Rank #2.

4.    Toyota Motor Corporation (TM Quick QuoteTM - Free Report) is set to invest $1 billion in Grab, the Singapore-based ride-hailing transport service, to bolster the existing partnership to expand mobility services, per Reuters. The investment made by this Japanese carmaker is the largest-ever by a vehicle maker in the global ride-hailing space.

Grab offers ride-hailing, ride-sharing and logistics services in Southeast Asian nations, including Malaysia, Singapore, Thailand and Indonesia. In early 2018, Grab acquired Southeast Asian operations of Uber, the San Francisco, CA-based ride-sharing company. Toyota’s investment will allow Grab to broaden its range of services, including digital payments and food delivery, into the region.

Toyota informed that by strengthening the partnership, it anticipates achieving connectivity for Grab’s rental-car fleet across Southeast Asia while offering myriad services to the drivers. Alongside Grab, Toyota will develop services that are more secure and lucrative for its customers. (Read more: Toyota to Invest $1B in Singapore's Ride-Hailing Firm Grab)

Toyota currently carries a Zacks Rank #2.

5.    Volkswagen was fined €1 billion ($1.18 billion) by German authorities over diesel emission scandal, per Reuters. This is one of the highest fines leveled against a company by the German authorities. This German automaker accepted the allegations and shouldered responsibility for that.

Volkswagen failed to adequately supervise activities of the engine development department. This resulted in 10.7 million diesel vehicles with illegal emission-controlling software being sold worldwide. In fact, the auto giant is grappled with the same scandal since 2015, which surfaced in the United States. The German automaker has already paid $20 billion in fines and civil settlements in the United States.

This penalty is the latest blow to the German auto industry, which is grappling with diesel emission scandals. Recently, another German vehicle giant, Daimler has been ordered by the government to recall about 240,000 cars, fitted with prohibited emission-control devices.

Volkswagen currently carries a Zacks Rank #3 (Hold).

Performance

Last week, all companies in the space recorded an increase in share prices, except Toyota. The maximum increase was witnessed by Tesla. The minimum increase was recorded by Ford Motor Company (F Quick QuoteF - Free Report) in the past week.

In the past six months, the maximum rise has been recorded by Advance Auto Parts, Inc. (AAP Quick QuoteAAP - Free Report) while shares of Harley-Davidson, Inc. (HOG Quick QuoteHOG - Free Report) have declined the most.

What’s Next in the Auto Space?

Watch out for the usual news releases of other auto companies over the next week.

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