Both Volkswagen and Renault have cancelled plans to launch their electric vehicle businesses** due to slowing demand for electric vehicles and the initial public offering (IPO) market reaching a 10-year low in 2023. Volkswagen has postponed plans to seek outside investors for its battery division Powerco, and Renault also canceled plans to go public on Monday for its electric vehicle and software unit, Ampere.
Volkswagen has decided to suspend the listing of its battery division because Powerco is facing doubts about whether it can produce batteries on a large scale, and the company has no longer prioritized ** equity or listing the Powerco business this year or next.
According to people familiar with the matter, the situation is still changing, and if the market improves, Volkswagen is still likely to move forward with the plan.
Volkswagen said that the growth rate of electric vehicles is not as fast as expected, but investor interest in Powerco remains high.
The transition to electric vehicles is fraught with challenges. In the ever-changing automotive industry, automakers are at operational risk when dealing with unfamiliar technologies. Volkswagen's struggles with in-house software development have delayed several key models and led to the release of its CEO Herbert Diess in 2022**.
Across the market, automakers, including Volkswagen, General Motors and Ford, are downgrading their EV ambitions after several years of rapid growth, with orders slowing due to disappearing subsidies, lack of charging infrastructure and high EVs**.
In addition, Tesla's first-class war and a wide range of preferential purchase policies have also put pressure on automakers.
At the same time, the current IPO market is in a period of weakness. Data compiled by Bloomberg shows that 2023 had its worst year for IPOs in more than a decade as interest rates soared.
Under multiple pressures, Renault also canceled the launch of its electric vehicle and software division Ampere on Monday, due to a lack of interest in the market and a slowdown in the adoption of electric vehicles.
Renault CEO Luca de Meo is seeking a valuation of up to 10 billion euros ($10.8 billion) for the company, almost on the same level as Renault's market capitalization. De Meo, who has led the company's turnaround, also said that the improved cash flow means that additional funding is no longer needed through ** shares.
In a note, Kepler Cheuvreux analysts noted the recent underperformance of several other EV listings, saying: "We were skeptical about this potential IPO plan early on, and the decision to pivot is positive."
De Mayo told reporters and analysts at a conference later on Monday, "Does the context influence the decision? This is one of the factors, and 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 a complex overhaul of Renault to separate battery-powered vehicle production from the traditional internal combustion engine division. Less than a week after Tesla**'s growth rate "significantly reduced" this year, the company's share price fell to an eight-month low.