Across the world EV sales are making car manufacturers reassess their targets and plans, which looks set to slow the transition to electric personal transport
Volkswagen AG has confirmed a report by Bloomberg that it is pushing back plans to seek outside investors for its battery unit. It follows slower demand for electric vehicles dims prospects for the business, with the industry facing an increasingly daunting reality in the EV transition.
Europe’s biggest carmaker has also put talks with investors on the backburner as it faces doubts it can make its own batteries at scale, people familiar with the matter said, declining to be named detailing internal matters, according to the initial news report. The company is no longer prioritising stake sales or a potential listing of the PowerCo business this year or next, they said.
The German carmaker’s PowerCo unit, meant to bring electric-vehicle battery production in-house, could still hit the stock exchange in the future, Volkswagen told Dow Jones Newswires on Tuesday. Worldwide EV growth is steady if not as steep as expected, the company said, adding that raw-material prices are volatile.
“We are willing to open the capital structure and continue to evaluate our options against the backdrop of the market environment,” the company said. “The interest we see from investors remains high. An IPO is a tangible option in the future.”
VW preference shares turned negative following the news, falling as much as 1%. Its stock is down 1.9% over the past year, giving the manufacturer a valuation of €64 billion ($69.3 billion).
The situation remains fluid and VW could still move forward with the plans if the market improves, according to some unconfirmed reports. Initial public offerings had their worst year in 2023 in more than a decade, according to data compiled by Bloomberg, following the surge in interest rates.
Adding to the sense of the battery-car market stumbling, Renault SA on Monday (January 30) canceled plans to list its Ampere EV and software arm because of a lack of appetite for listings and slower EV uptake.
At VW’s capital markets day in June, Chief Executive Officer Oliver Blume said an initial public offering was a tangible option at the right time. Volkswagen said it’s still preparing for “investor readiness from 2024 onwards,” according to a statement to Bloomberg News.
The hold-up is a reminder of the operational risks for carmakers tackling unfamiliar technologies in the shifting auto industry. VW’s struggles to develop software in-house have dealt the carmaker several model setbacks and contributed to the ouster of CEO Herbert Diess in 2022. Across the market, automakers including VW, General Motors and Ford are dialing back their EV ambitions after a few years of surging growth, with orders slowing due to disappearing subsidies, a lack of charging infrastructure and high EV prices.
On PowerCo, VW is willing to “open the capital structure and continue to evaluate our options against the backdrop of the market environment,” the carmaker said in an email. The ramp-up of EVs is not as steep as expected, but investor interest in PowerCo “remains high,” VW said.
Reevaluating plans for PowerCo’s long-term funding is another step back from an ambitious push to challenge Tesla Inc. started by Diess. Set up in 2022, the unit plans to invest €20 billion in battery plants to supply cells for 3 million EVs annually.
PowerCo has started construction on two factory sites in Europe, where higher energy prices have clouded investment decisions for many industrial players. Output is due to start in Germany next year and in 2026 in Spain, and early works are underway at a third site in Canada.
