Automotive R&D:

Chinese EV maker has world’s largest workforce

EV maker BYD Company, Shenzhen, China, announced last week that it now has the world’s largest R&D workforce of any automaker following its latest hiring spree. The company now has more than 900,000 employees, adding nearly 200,000 in 2024 alone. Of these positions, more than 110,000 are involved in its R&D operations. BYD has recruited nearly 50,000 college graduates over the past two years to bolster its R&D operations. BYD’s joint venture brands, at the same time, are cutting positions amid China’s intensifying EV price war. With its low-cost models, BYD is seeing higher demand. The company sold more than 373,000 new energy vehicles in August 2024, setting a new sales record for the third consecutive month. BYD says it is doubling down on R&D with heavy investments in smart driving, connectivity, and battery tech. The company now plans to open plants in Turkey, Mexico, Brazil, and Pakistan as it enters new markets.

GM and Hyundai announce potential partnership

RDW Index member General Motors, Detroit, and Hyundai Motors, Seoul, announced last week that they are exploring a partnership that could mean savings on items like steel and electric vehicle (EV) battery materials or even result in the joint development and production of cars. The automakers have entered into a non-binding agreement to discuss ways to develop vehicles together, including gasoline, electric, and hydrogen-powered cars. GM has delayed several EV projects and plans to add several hybrid models in North America after deciding to forego this technology about ten years ago.

Northvolt cuts jobs to streamline business

EV battery maker Northvolt, Stockholm, announced last week that it will cut jobs as part of a broad cost-savings plan to streamline the business following a period of aggressive expansion. The company has struggled through sharply slowing EV adoption in Europe, concerns over new trade tariffs, the withdrawal of some government incentives, and a sluggish rollout of charging infrastructures. The company has built a battery factory in northern Sweden. At the same time, another is underway in southern Sweden in partnership with Volvo Car, and additional sites are still being planned for Germany and Canada.

Pharmaceutical R&D:

Moderna cuts spending by $1.1B

Biopharm Moderna, Cambridge, Massachusetts, announced last week that it will cut its R&D spending by $1.1 billion in 2027 to $3.6 billion to $3.7 billion, down from an expected $4.8 billion at the end of 2024. Moderna spokesperson said they will “sunset” some studies and not start others. The company’s latent product portfolio has effectively been put on hold. The announcement hurt the company’s stock, which has dropped by about 40% since earlier this year. Analysts said that with a restructured R&D budget, the company’s non-respiratory assets will play a more significant role in shaping the company’s drug pipeline and face increased pressure to reach commercialization. The company’s breakeven target has also been moved from 2024 to 2028.

Roche opens new center in Basel, Switzerland

RDW index member Roche, Basel, Switzerland, announced last week that it has opened a new R&D center in Basel with a combined investment of $1.3 billion. Its Pharma Research and Early Development Centre is the company’s largest single investment in recent years. The four high rise buildings are divided into smaller three-story units to create research biotopes of about 140 researchers from different disciplines. The aim of the facility is to develop new blockbuster drugs, highly profitable products with sales more than $1 billion. Roche has been redesigning its research campus in the Kleinbasel district over the past 15 years, investing about $4 billion in the process, in addition to similar investments in nearby campuses.

Global R&D and economic trends:

The Fed’s interest rate decision imminent

The Federal Reserve’s looming interest rate decision is expected on Wednesday, September 18. The big question among analysts is not whether it will happen but more about what size the rate reduction will take — start small or begin big. Since the Fed can make several rate cuts over the next couple of months, they could cut rates by the traditional 0.25 percentage point or by a larger 0.5 point. The number of cuts made over the next several months is going to be more important than whether the first is 0.25 or 0.50.

China pushes to open economy

China announced last week that it has deepened its push to further open its economy, eliminating restrictions on the manufacturing sector and expanding opportunities for foreign investment in the health sector. The Chinese government will reduce its list of industries off-limits to foreign investors to 29 from 31 and fulfill its pledge of zero restrictions on the manufacturing sector, per the National Development and Reform Commission and the Commerce Ministry. The new list takes effect November 1, 2024, and removes the requirement for Chinese majority control in publication printing businesses and lifts the ban on investment in Chinese herbal medicine production.