Due to slowing demand for electric vehicles and the initial public offering (IPO) market reaching a ten-year low in 2023, both Volkswagen and Renault canceled plans to sell shares in their electric vehicle businesses. Volkswagen has postponed plans to seek outside investors for its battery unit PowerCo, and Renault on Monday canceled plans to list its electric vehicle and software unit Ampere.
Volkswagen decided to suspend the listing of its battery unit because PowerCo is facing doubts about its ability to mass-produce batteries. The company has no longer prioritized selling stakes or listing the PowerCo business this year or next.
According to people familiar with the matter, the situation is still evolving and VW may still move forward with the plan if the market improves.
VW said electric vehicles are not growing as fast as expected, but investor interest in PowerCo remains high.
There are many challenges in the transformation process of electric vehicles. As the automotive industry continues to change, there are operational risks for automakers dealing with unfamiliar technologies. Volkswagen's struggles with internal software development have delayed several key models and led to the ouster of CEO Herbert Diess in 2022.
Across the market, automakers including Volkswagen AG, General Motors Co.
In addition, Tesla's price war and extensive purchase preferential policies have also put pressure on automakers.
At the same time, the current IPO market is in a soft phase. With interest rates soaring, 2023 is shaping up to be the worst year for initial public offerings in more than a decade, according to data compiled by Bloomberg.
Under multiple pressures, Renault also canceled the listing plan of its electric vehicle and software unit Ampere on Monday due to a lack of market interest in listing and the slowdown in the popularity of electric vehicles.
Renault Chief Executive Luca de Meo is seeking a valuation of up to 10 billion euros ($10.8 billion) for the company, nearly as much as Renault's market capitalization. De Meo, who has led the company's turnaround, also said improved cash flow means there is no longer a need to raise additional funds by selling shares.
Analysts at Kepler Cheuvreux said in a note that several other listed stocks in the electric vehicle field have performed poorly recently, saying: "We have been skeptical of this potential IPO plan for a long time, and the decision to switch is positive."
De Meo responded to reporters and analysts on a conference call late Monday, saying, "Does the context affect the decision-making? That is one of the factors. It would be irresponsible to go completely blind and not look left and right."
It is reported that the Ampere IPO was originally part of Renault's complex reforms to separate battery-powered vehicle production from the traditional internal combustion engine department. Less than a week after Tesla forecast "significantly lower" growth this year, the company's stock price fell to an eight-month low.