# Anthropic Finalizing $15 Billion Pre-IPO Credit Facility

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 4 Sep 2026, 24 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/f07a5c9a-aee4-4439-9f26-b4bb011390ae/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Nathan Hager and Caroline Hepker -Bailey Lipschultz, Bloomberg News Senior Equities Reporter, discusses Anthropic being set to finalize an expansion of its revolving credit facility to $15 billion, according to people familiar with the matter, before the artificial intelligence firm’s public filing for its highly anticipated IPO. Morgan Stanley is leading the process, with Goldman Sachs Group Inc. and JPMorgan Chase & Co. also having prominent roles on the facility, along with Citigroup Inc. -Anurag Rana, Senior Tech Analyst for Bloomberg Intelligence, discusses leadership changes at Adobe. Adobe Inc. named Anil Chakravarthy as its next chief executive officer, with Chakravarthy moving into the post on Dec. CEO Shantanu Narayen will become executive chair, and David Wadhwani, who ran Adobe’s creative business, will leave the company. The selection of Chakravarthy comes as Adobe faces increasing questions about whether it will be toppled from its post in the age of AI, with generative AI making it easier to produce visual media without Adobe’s expensive products. -Poonam Goyal, Senior U.S. E-Commerce and Retail Analyst at Bloomberg Intelligence, discusses Lululemon earnings. Lululemon Athletica Inc. lowered its full-year outlook for a second straight quarter, with sales now projected to be in a range of $10.35 billion to $10.5 billion. The company reported its first decline in comparable sales since the pandemic and trimmed its outlook for earnings per share, with shares of Lululemon tumbling 19.5% in New York. -Craig Trudell, Bloomberg Managing Editor of Global Business Coverage, discusses the latest at Volkswagen. Volkswagen AG's supervisory board backed a restructuring that calls for 50,000 additional job cuts and a smaller industrial footprint. The measures approved include slimming the vehicle lineup by as much as half by 2035 and tightening investment, with €135 billion of capital expenditure and research and development spending over 2027 through 2031. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts.
[0:05] Speaker 3: Radio.
[0:06] Speaker 2: News.
[0:09] Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[0:13] Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[0:16] Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
[0:19] Speaker 4: you get your podcasts or watch us live on YouTube.
[0:24] Speaker 5: There is going to be a lot of attention on
[0:26] Speaker 5: the tech space. Always is the march to highly anticipated
[0:32] Speaker 5: initial public offerings for both Anthropic and OpenAI continues. Who's
[0:37] Speaker 5: going to blink first? Who's going to get on the
[0:40] Speaker 5: initial public offering going forward? Let's bring in Bailey Lipschultz
[0:45] Speaker 5: to talk more about this because there has been some
[0:47] Speaker 5: news as far as Anthropic's upcoming IPO is concerned. Bailey
[0:51] Speaker 5: is a senior equities reporter for Bloomberg News. Nice to
[0:54] Speaker 5: see you once again, Bailey. So the news is that
[0:57] Speaker 5: Anthropic is set to expand its revolving credit facility from
[1:02] Speaker 5: a target of $ 10 billion to $ 15 billion. Why is
[1:08] Speaker 5: this important ahead of the.
[1:11] Speaker 3: IPO?
[1:12] Speaker 2: It's important because... It shows that this IPO is going
[1:16] Speaker 2: to happen sooner than later. And it's also important because
[1:19] Speaker 2: as we broke out last night, not only is it
[1:23] Speaker 2: a very large revolving credit facility, as you had mentioned,
[1:26] Speaker 2: they'd been targeting $ 10 billion. We put that out last month.
[1:30] Speaker 2: When you compare it to SpaceX's, it's larger than what
[1:32] Speaker 2: they had, which was $ 5 billion before their IPO. So
[1:35] Speaker 2: three times as large.
[1:36] Speaker 1: So that's a big deal. It's also a big deal because.
[1:39] Speaker 2: Now you're getting a lay of the land of what
[1:41] Speaker 2: the IPO mandates should be. So this deal was led
[1:44] Speaker 2: by Morgan Stanley, Goldman Sachs, JP Morgan, Citigroup had key
[1:49] Speaker 2: roles in it. Barclays and Wells Fargo also had key
[1:52] Speaker 2: roles in it. So that's notable if you're at those
[1:54] Speaker 2: banks or you have relationships with those banks from an
[1:56] Speaker 2: IPO perspective. And as we broke out, it kind of
[1:58] Speaker 2: expands in the so-called second line, B of A, Deutsche Bank, RBC,
[2:02] Speaker 2: and UBS. And again, that does matter because now people
[2:06] Speaker 2: can kind of get a sense where their sales relationships
[2:08] Speaker 2: are going to pay off if they're trying to get
[2:10] Speaker 2: a piece of this IPO. And also from those banks,
[2:13] Speaker 2: it's a big step for what will be a potentially
[2:16] Speaker 2: record-setting fee event from their ECM desk. So again, this was,
[2:21] Speaker 2: as we reported last night, being finalized, probably is finalized
[2:24] Speaker 2: by now since ECM. It's about noon on Friday, and
[2:27] Speaker 2: that sets the table really for this offering.
[2:31] Speaker 5: The memories are still fresh of the competition, the touting
[2:35] Speaker 5: around the SpaceX IPO. There were mock-up rockets in the
[2:40] Speaker 5: lobbies of Goldman Sachs and Morgan Stanley with the banners.
[2:45] Speaker 5: I mean, talk about the anticipation going into Anthropic here,
[2:50] Speaker 5: potentially the first of the big chatbot startups to go public.
[2:56] Speaker 2: No, there's a lot of excitement. And you referenced those
[2:59] Speaker 2: spaceships that we saw. And I remember going through Morgan
[3:01] Speaker 2: Stanley's offices and kind of laughing because it's just huge.
[3:04] Speaker 2: And it seemed like a beauty pageant as opposed to
[3:06] Speaker 2: the normal, like, welcome to X company sign. It's like
[3:09] Speaker 2: a three foot by three foot sign. This was an
[3:13] Speaker 2: entire branding event. And we saw that promotion from Goldman
[3:16] Speaker 2: Sachs that they were lead left. And Morgan Stanley saying, oh, well,
[3:19] Speaker 2: we're stabilization agent, which means something if you are in
[3:21] Speaker 2: the IPO world, but for the rest of the world
[3:23] Speaker 2: really means nothing. This is highly anticipated, Nathan, because again,
[3:26] Speaker 2: to your point, the first relative to the other LLMs,
[3:30] Speaker 2: namely OpenAI, and again, why it matters is the scale
[3:35] Speaker 2: of growth that we've seen and reported on this company,
[3:37] Speaker 2: and we'll see when they publicly file, where you're talking
[3:40] Speaker 2: about ARR, as much as that can be debated, over
[3:44] Speaker 2: $ 65 billion. There aren't many companies in the world that
[3:47] Speaker 2: really generate that kind of growth when you look at
[3:50] Speaker 2: where Anthropic was three months ago, a year ago. And
[3:53] Speaker 2: so there's so much excitement, so much of anticipation around
[3:56] Speaker 2: what the valuation target will be, what the ultimate filings
[3:59] Speaker 2: even will show, and how people can kind of position
[4:02] Speaker 2: around what, again, is going to be another likely record-setting
[4:07] Speaker 2: event when it seems like just a few months ago
[4:09] Speaker 2: we were only talking about SpaceX and how that is
[4:11] Speaker 2: going to impact the entire market.
[4:13] Speaker 5: Yeah, so many zeros behind these IPO numbers, potentially. And
[4:19] Speaker 5: at the same time, you know, Anthropic has been butting
[4:22] Speaker 5: heads with the federal government. We just talked with Commerce
[4:24] Speaker 5: Secretary Howard Lutnick saying that Anthropic's found religion since then. And,
[4:29] Speaker 5: you know, hearing from OpenAI CEO Sam Altman as well,
[4:33] Speaker 5: talking about the potential PR issues that artificial intelligence has
[4:38] Speaker 5: as well. Maybe they need to sell the benefits of
[4:41] Speaker 5: AI a little better to the public as opposed to investors.
[4:46] Speaker 5: How does that potentially affect an IPO?
[4:48] Speaker 2: Well, I think it's a big discussion. And obviously, we
[4:52] Speaker 2: saw this with a number of companies, depending on the industry,
[4:54] Speaker 2: sometimes under scrutiny, other times under scrutiny. kind of riding
[4:57] Speaker 2: the high of what the administration maybe is pushing forward.
[5:00] Speaker 2: And I think it'll be an interesting discussion when we
[5:02] Speaker 2: do see them formally on the road. So something that'll
[5:04] Speaker 2: probably take place, call it late September, maybe into early October,
[5:08] Speaker 2: where they're able to really craft the narrative. Because right now,
[5:11] Speaker 2: so much of these conversations are happening behind closed doors
[5:14] Speaker 2: and it's about positioning when they're ultimately on the road.
[5:16] Speaker 2: And when we do see IPOs being priced, what does
[5:19] Speaker 2: that bring from some of the members of Congress hypothetically?
[5:22] Speaker 2: And what does it ultimately mean for individual investors to Again,
[5:26] Speaker 2: it kind of goes back to the debate of Wall
[5:27] Speaker 2: Street isn't emblematic of the rest of the nation. Same
[5:30] Speaker 2: thing with D.C. So it'll be interesting to see how
[5:33] Speaker 2: these different themes can be kind of either put against
[5:37] Speaker 2: each other or layered over one another.
[5:39] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[5:46] Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[5:50] Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[5:53] Speaker 4: Auto with the Bloomberg Business app. Listen on demand wherever
[5:56] Speaker 4: you get your podcasts or watch us live on YouTube.
[6:00] Speaker 5: All right. Well, let's move on to one of the
[6:02] Speaker 5: big stock stories that we're watching this morning. That would
[6:05] Speaker 5: be Adobe. The creative software maker reports earnings next week
[6:10] Speaker 5: before the inflation data come out. But We also saw
[6:15] Speaker 5: a long-awaited leadership change that now has that stock down
[6:20] Speaker 5: nearly 7%. Let's bring in Anurag Rana to talk more
[6:24] Speaker 5: about what's going on with Adobe. Anurag is Senior Tech
[6:27] Speaker 5: Analyst for Bloomberg Intelligence. Great to speak with you, Anurag.
[6:31] Speaker 5: Of course, we've been waiting for this announcement for quite
[6:35] Speaker 5: some time here, and it looks like maybe there's a
[6:38] Speaker 5: sense that one of the contenders for Shantar Narayan's job
[6:42] Speaker 5: is may have been passed over with Anil Chakravarty, the
[6:46] Speaker 5: marketing analytics software guy, getting the nod. What do you
[6:51] Speaker 5: make of the decision here and the stock reaction?
[6:55] Speaker 6: So you go back and let me see the history
[6:57] Speaker 6: of Adobe of what's happened in the last two years.
[7:00] Speaker 6: This is the poster child of a software company being,
[7:04] Speaker 6: you know, hurt by free AI tools. Now that hasn't happened,
[7:07] Speaker 6: but the market obviously has written it off that Adobe
[7:10] Speaker 6: is going to be one of the casualties of new
[7:12] Speaker 6: AI models. And that's the reason we think Shantanu decided
[7:16] Speaker 6: to step down and, you know, move on and appoint
[7:19] Speaker 6: a new CEO. Now, the two contenders that we have is,
[7:22] Speaker 6: as you mentioned, it was David Valdwani on one side
[7:25] Speaker 6: and it was Anil Chakraborty on the other side. Now,
[7:28] Speaker 6: Anil runs the smaller of the bigger two divisions of Adobe,
[7:32] Speaker 6: and the division is not Creative Cloud, the one where
[7:35] Speaker 6: we have the most of the disruption. It's just like
[7:38] Speaker 6: what happens in a particular boardroom. One of them got
[7:41] Speaker 6: the job and the other one didn't. I think all
[7:44] Speaker 6: of us or a lot of us in the market
[7:47] Speaker 6: thought that the executive that was running the Creative Cloud
[7:51] Speaker 6: portfolio would get it because that's where the disruption risk is. Now,
[7:55] Speaker 6: it's very much likely when the board looked at everything,
[7:58] Speaker 6: you know, Anil has experience of running a public or
[8:00] Speaker 6: a big, large company before. He was the CEO of
[8:03] Speaker 6: Informatica before he came over to Adobe. So that could
[8:06] Speaker 6: have been reasons or some other reason. But I think
[8:09] Speaker 6: there is a little bit of disappointment with investors. Now,
[8:12] Speaker 6: you know, I would also want to mention that it's
[8:15] Speaker 6: possible that somebody was expecting somebody from outside to come in.
[8:18] Speaker 6: Maybe that's the reason. But one of the other things
[8:21] Speaker 6: is that the stocks actually had a 35%, 40% run previously.
[8:24] Speaker 6: from its lows over the last few months, ever since
[8:28] Speaker 6: we have seen kind of a reversal between the semi
[8:30] Speaker 6: and the software trade. So this could be another sellout
[8:33] Speaker 6: because of that. So there are multiple factors here.
[8:36] Speaker 3: Okay.
[8:37] Speaker 7: Anirag, what is Adobe in the AI world in terms
[8:42] Speaker 7: of their business?
[8:44] Speaker 6: So, so far, we have not seen any deterioration in
[8:47] Speaker 6: their fundamentals because of free AI tools. Now, that is
[8:50] Speaker 6: going to happen really in our view on the lower
[8:52] Speaker 6: end of it. So if there is somebody on the
[8:54] Speaker 6: lower end, let's say if I was using their Lightroom,
[8:57] Speaker 6: which is $ 9. 99 a month for a period of 12 months,
[9:01] Speaker 6: I may decide, you know what, the Google tools are
[9:03] Speaker 6: free enough and that's good. But so far, what we
[9:06] Speaker 6: have not seen is serious photographers, seriously creative people are
[9:11] Speaker 6: abandoning Adobe's tools and going out for free tools. So
[9:14] Speaker 6: that's the first thing. What Adobe has done to counter
[9:17] Speaker 6: this threat is it has its own AI tools that
[9:20] Speaker 6: people can use. And then as they use a lot
[9:23] Speaker 6: of it, they can move on to the higher subscription
[9:25] Speaker 6: package where they can do Creative Cloud. You can store
[9:29] Speaker 6: that document. You can do a lot more with it
[9:31] Speaker 6: on the cloud. So there are elements of usage for
[9:36] Speaker 6: them using AI tools themselves that they are really pushing aggressively.
[9:40] Speaker 6: And we will see how that shapes up over the
[9:42] Speaker 6: next couple of years.
[9:43] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[9:50] Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[9:54] Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[9:57] Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
[10:00] Speaker 4: you get your podcasts or watch us live on YouTube.
[10:05] Speaker 5: You are listening to Bloomberg Intelligence. Paul Sweeney is taking
[10:08] Speaker 5: a much deserved long Labor Day weekend off. Scarlett Fu
[10:12] Speaker 5: is going to be back shortly. So it's me, Nathan
[10:14] Speaker 5: Hager in Washington. along with Caroline Hepker taking you through
[10:18] Speaker 5: the rest of the hour. And Caroline, I'm not going
[10:20] Speaker 5: to ask you what you wear at the gym. That
[10:22] Speaker 5: would be inappropriate. But it seems like a number of
[10:26] Speaker 5: consumers or not enough consumers are taking Lululemon with them
[10:30] Speaker 5: to the yoga mats. The Athleisure company, the Yoga Wear company,
[10:35] Speaker 5: has cut its full year outlook for the second straight quarter.
[10:39] Speaker 5: Shares right now down more than 17%. That's actually off
[10:45] Speaker 5: session lows. Tough job ahead on this Jobs Friday for
[10:50] Speaker 5: incoming CEO Heidi O'Neill to turn this company around. Let's
[10:55] Speaker 5: bring in Poonam Goyal to talk more about this. Poonam,
[10:58] Speaker 5: the senior U.S. e-commerce and retail analyst for Bloomberg Intelligence,
[11:03] Speaker 5: who covers this company so ably quarter to quarter. Poonam,
[11:08] Speaker 5: The struggle continues to be real at Lululemon. What's it
[11:12] Speaker 5: going to take to turn this company around?
[11:15] Speaker 3: It's going to take a lot of work, and it's
[11:17] Speaker 3: not a guaranteed turnaround. As Heidi steps in next week,
[11:22] Speaker 3: there's a lot to fix here, starting with product, innovation, traffic,
[11:28] Speaker 3: brand heat, and getting the customer the right assortment. So
[11:33] Speaker 3: there's a lot of moving pieces. She also has some
[11:36] Speaker 3: holes to fill in terms of her executive team because
[11:39] Speaker 3: there were some recent departures. So a lot of moving pieces.
[11:44] Speaker 3: I don't see how this will happen immediately. I'm skeptical
[11:48] Speaker 3: that it will happen in the next six months and
[11:52] Speaker 3: we'll have to see what plan she puts forward. She
[11:54] Speaker 3: is a product person, right? She comes from Nike, but
[11:57] Speaker 3: Nike and Lululemon are very different yet alike. So we'll
[12:01] Speaker 3: have to see what she has plans for, but it
[12:03] Speaker 3: will not be an easy climb. Yeah.
[12:06] Speaker 7: Lululemon's shares dropping to an eight year low. I just
[12:10] Speaker 7: had to look up the cost of those famous yoga
[12:12] Speaker 7: pants between 88 bucks and 128 bucks. Oh, is that all?
[12:19] Speaker 7: And there's a lot of competition. And in Europe, you know,
[12:22] Speaker 7: where I sit most of the time, Adidas and Nike,
[12:26] Speaker 7: they've seen this kind of cycle also of trying to
[12:31] Speaker 7: grab the consumer, having the zeitgeist.
[12:34] Speaker 3: What does it take?
[12:35] Speaker 7: I mean, I was looking at the tennis this week.
[12:38] Speaker 7: It was all about, you know, have the right shoe,
[12:40] Speaker 7: the right fashion. Is actually at leisure high fashion now?
[12:48] Speaker 3: So there's a few things that you have to look at. One, yes, absolutely,
[12:51] Speaker 3: you have to get the right performance. So when you
[12:53] Speaker 3: think about yoga wear and you think about performance wear,
[12:56] Speaker 3: there's two ways to look at it. When you're looking
[12:58] Speaker 3: at it for women specifically, it's about performance, it's about fit,
[13:02] Speaker 3: and it's about style. All three of them need to
[13:05] Speaker 3: come together. And they did for Lululemon several years ago.
[13:08] Speaker 3: That's not the case today. Nike and Adidas, largely male-dominated brands,
[13:14] Speaker 3: are also now... making a much bigger push into women's.
[13:18] Speaker 3: And they have done a good job, but they focus
[13:21] Speaker 3: on performance first. Nike Skims was its first attempt to
[13:26] Speaker 3: really focus on the fashion per se cycle of yoga
[13:30] Speaker 3: wear or athletic wear, as you call it. And I
[13:33] Speaker 3: think the competition is just getting deeper and smarter. And
[13:37] Speaker 3: It's harder to differentiate between product today than it was
[13:41] Speaker 3: a long time ago. The other thing is people want
[13:44] Speaker 3: things that aren't stuck to them, right? So the away
[13:48] Speaker 3: from body trend is rising and it's not big enough
[13:52] Speaker 3: to offset what had been the legging trend. So there's
[13:57] Speaker 3: a lot of moving pieces here. And I think it's
[14:00] Speaker 3: a combination of macro micro that's really driving the shortfall.
[14:05] Speaker 5: It gets to one of the issues that I think
[14:07] Speaker 5: a lot of consumers, maybe a lot of investors had
[14:10] Speaker 5: about Lululemon over the last couple of years, the see-through
[14:13] Speaker 5: leggings issue. Has Lululemon gotten past that? And if not,
[14:18] Speaker 5: how can it?
[14:20] Speaker 3: Yeah, it's definitely moved past that. And you're talking about
[14:22] Speaker 3: the Align leggings and when they were see-through several years ago,
[14:25] Speaker 3: they moved past that. We saw that in the results
[14:28] Speaker 3: with double-digit gains for several years past that. That's not
[14:31] Speaker 3: the issue today. The issue is how is Lululemon better
[14:35] Speaker 3: than what's out there? And I don't have an answer
[14:37] Speaker 3: for that. I don't think they are. So how did
[14:40] Speaker 3: they get better? And that's what Heidi has to answer.
[14:42] Speaker 3: What is she going to fix? And are customers going
[14:45] Speaker 3: to come back with that same enthusiasm? When you walk
[14:50] Speaker 3: the mall several years ago, and this is when malls
[14:52] Speaker 3: were kind of falling and traffic was weak, the two
[14:55] Speaker 3: stores that were always crowded, or three stores, I should say,
[14:58] Speaker 3: in the mall whenever I went, was the Apple store,
[15:01] Speaker 3: the Sephora store, and the Lululemon store. Today, Sephora's still crowded,
[15:07] Speaker 3: Apple's still crowded, but Lululemon is not. So how do
[15:09] Speaker 3: we fix that?
[15:10] Speaker 6: Yeah.
[15:11] Speaker 7: Well, I was in all of those stores in Manhattan
[15:14] Speaker 7: this week. This is nuts. And I was also in
[15:18] Speaker 7: the Nike store, in fact, and saw the skims, the
[15:21] Speaker 7: kind of... And it was interesting. They are still in
[15:24] Speaker 7: the kind of skin-tight... mold, aren't they? And sort of
[15:28] Speaker 7: high fashion, very bright colors. Anyway, what about the global business?
[15:32] Speaker 7: What about China for Lululemon? I mean, China is surely
[15:36] Speaker 7: massively important for so many US businesses. It's been tough there.
[15:41] Speaker 3: It is absolutely important for Lululemon and everyone else. So
[15:45] Speaker 3: a 4% increase in China, not what anyone had expected,
[15:49] Speaker 3: down in constant currency. They're blaming it on the Tmall
[15:52] Speaker 3: promotions that they had and the comparisons with that. They
[15:55] Speaker 3: do expect China to accelerate and so do we on
[15:59] Speaker 3: the heels of following that promotion and not having the compares.
[16:03] Speaker 3: But that said, it's not accelerating as it was. So
[16:05] Speaker 3: there is some slowdown there. And I wonder if the
[16:08] Speaker 3: slowdown is to blame on just the carryover from North
[16:11] Speaker 3: America where the product isn't good enough. And we also
[16:15] Speaker 3: have to remember that there's another thing happening in athleisure, right?
[16:19] Speaker 3: And this is something that we haven't talked about as much,
[16:21] Speaker 3: but it's the GLP-1s. So as more and more consumers
[16:24] Speaker 3: are taking GLP-1s, they're not going to the gym as much, right?
[16:29] Speaker 3: They're not exercising as much. So does that mean that
[16:31] Speaker 3: they need fewer athleisure wardrobes? And that's just something that
[16:37] Speaker 3: we're looking at very early on. But that could be
[16:40] Speaker 3: a very small part of just the shortfall that we've
[16:43] Speaker 3: seen in athleisure, not just at Little Lemon, but broadly.
[16:46] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[16:53] Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[16:57] Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[17:00] Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
[17:04] Speaker 4: you get your podcasts or watch us live on YouTube.
[17:08] Speaker 7: I want to talk about a major story out of Europe.
[17:11] Speaker 7: This is VW slashing jobs, Volkswagen, the board backing a
[17:16] Speaker 7: sweeping restructuring. How is it really going to play out, though?
[17:22] Speaker 7: Where are those jobs cuts going to come? Craig Trudell
[17:26] Speaker 7: is Bloomberg's Managing Editor of Global Business Coverage. Really lovely
[17:30] Speaker 7: to have you on the program. So this is the
[17:32] Speaker 7: big question, isn't it? It's thousands of job cuts, but
[17:36] Speaker 7: are they really going to happen in Germany or is
[17:38] Speaker 7: it going to be outside of Germany?
[17:40] Speaker 8: That is sort of the perpetual question with Volkswagen. And
[17:43] Speaker 8: it's long been a well-established fact that this is a
[17:47] Speaker 8: company that has way more employees than any other major
[17:50] Speaker 8: auto manufacturer. And that so many of those employees are
[17:55] Speaker 8: concentrated in Germany. And that sort of perpetuates in part
[17:58] Speaker 8: because you have a situation where the Works Council and
[18:02] Speaker 8: the German state of Lower Saxony have this very powerful
[18:06] Speaker 8: labor political alliance and that sort of adds up to
[18:10] Speaker 8: this exercising of unique sort of veto over management when
[18:15] Speaker 8: they do choose to act, which we're seeing Oliver Bluma,
[18:19] Speaker 8: the current CEO, at least making yet another attempt.
[18:24] Speaker 5: Of course, this company has been at the center of
[18:27] Speaker 5: the automotive industry, arguably throughout Europe for decades in a
[18:31] Speaker 5: country that's the economic powerhouse of Europe. To have this
[18:35] Speaker 5: kind of retrenchment now, this slim down, what does it
[18:39] Speaker 5: say about the overall automotive industry in Europe, Craig?
[18:43] Speaker 8: I think the big thing that's sort of hanging over
[18:46] Speaker 8: everybody's heads in Europe at the moment is just the
[18:50] Speaker 8: sort of unending rise of the Chinese manufacturers. You've already
[18:54] Speaker 8: had a situation where this is an extremely crowded market.
[18:59] Speaker 8: Decades ago with the Japanese companies, the Toyotas and Hondas
[19:03] Speaker 8: and Nissans moving in, and the Koreans following suit, you've
[19:07] Speaker 8: had Chinese companies like BYD, like Geely come in quickly.
[19:13] Speaker 8: There was some pushback with an attempt to try and
[19:17] Speaker 8: tariff electric vehicles, but that was a fairly narrow application
[19:22] Speaker 8: of higher duties. And what you've seen those manufacturers do
[19:26] Speaker 8: in response to that is say, OK, we won't come
[19:28] Speaker 8: in with fully electric vehicles. We'll come in with plug-in
[19:31] Speaker 8: hybrid vehicles that aren't subject to those tariffs. And so
[19:35] Speaker 8: it's a sort of one-two punch of you're not achieving
[19:39] Speaker 8: your environmental goals and you're not being effective in really
[19:43] Speaker 8: keeping those manufacturers at bay.
[19:46] Speaker 7: Yeah, look at Cherry's J.Coup. I mean, they're everywhere on
[19:48] Speaker 7: the streets of London, aren't they? In a remarkably short
[19:52] Speaker 7: space of time. And they're also a very affordable price
[19:56] Speaker 7: point for consumers. What is VW's car makeup looking like now?
[20:02] Speaker 7: Because the other thing that we have to layer into
[20:05] Speaker 7: this are the regulations in the EU and the UK.
[20:08] Speaker 7: looking to phase out the sale of petrol and diesel
[20:12] Speaker 7: only vehicles. There's a bit of a wrangle about when
[20:15] Speaker 7: they're going to do it.
[20:16] Speaker 8: Absolutely. I think that's part of another sort of aspect
[20:20] Speaker 8: of how and why we get to this place of
[20:24] Speaker 8: this company having so many employees and so much layers.
[20:27] Speaker 8: You haven't necessarily seen the really sort of difficult, painful
[20:33] Speaker 8: cuts that you would need to make to do away
[20:36] Speaker 8: with the combustion engine aspects of the business. And meanwhile,
[20:40] Speaker 8: you've had all of this addition of attempts to stand
[20:44] Speaker 8: up a battery division within the company, software as well.
[20:49] Speaker 8: And despite the fact that you've seen failures on both
[20:52] Speaker 8: of those fronts, you haven't necessarily seen and ability on
[20:56] Speaker 8: this company to be able to sort of address the
[20:59] Speaker 8: fact that they've kind of swung and miss. And so
[21:01] Speaker 8: you have a lot of employees at divisions like Cariad,
[21:05] Speaker 8: which is on the software side, but also the sales
[21:09] Speaker 8: business that has a lot of staff and yet not
[21:12] Speaker 8: much to show for it in terms of output or
[21:14] Speaker 8: things actually going into these vehicles.
[21:17] Speaker 5: You know, there is, as Caroline mentioned, that push away
[21:21] Speaker 5: from gasoline-powered vehicles toward electrics. It's almost the opposite side
[21:26] Speaker 5: of the coin in this country. I've been thinking about
[21:30] Speaker 5: the difficulty that the ID.Buzz, a car that I was
[21:35] Speaker 5: really looking forward to test driving, has had in this
[21:38] Speaker 5: country gaining traction here. Talk a little bit about the
[21:41] Speaker 5: challenge in the U.S. for VW when it comes to
[21:45] Speaker 5: what drivers in this country are looking for.
[21:47] Speaker 7: Are you going to have to tell me what the
[21:48] Speaker 7: vehicle is? Yeah.
[21:53] Speaker 1: So, so I think it's the old VW bus, VW bus. Yeah.
[21:57] Speaker 3: Yeah.
[21:58] Speaker 8: Came to market and it looked really neat, but the
[22:01] Speaker 8: range was, was pretty disappointing. They had an embarrassing recall
[22:05] Speaker 8: right off the bat, having to do with like seatbelts
[22:07] Speaker 8: that didn't go far enough across the back seats, which seemed,
[22:10] Speaker 8: you know, really hard to believe that, that a manufacturer
[22:13] Speaker 8: could get that so wrong. But absolutely, I think Volkswagen
[22:17] Speaker 8: is far from alone, I should say, in really having
[22:20] Speaker 8: a very difficult time with keeping straight what does the U.S.
[22:25] Speaker 8: want in terms of regulation, because we couldn't have had
[22:31] Speaker 8: a more extreme swing from Trump 1 to Trump. where
[22:35] Speaker 8: he was slashing fuel economy rules to Biden, who put
[22:39] Speaker 8: in place the Inflation Reduction Act, really wanted manufacturers to
[22:44] Speaker 8: go sort of no holds barred and 50-50 electric and combustion.
[22:49] Speaker 8: Now we're going all the way back to, and then
[22:52] Speaker 8: some actually, to just completely eviscerating the rules. And it's
[22:55] Speaker 8: really hard to keep up with that as a manufacturer
[22:57] Speaker 8: that operates over, makes these product decisions with the next
[23:02] Speaker 8: decade in mind.
[23:03] Speaker 4: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
[23:08] Speaker 4: and anywhere else you get your podcasts. Listen live each weekday,
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[23:18] Speaker 4: and the Bloomberg Business app. You can also watch us
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