Renault Group has announced that it has canceled the initial public offering (IPO) of its electric division, Ampere. This is a major strategic turnaround for the group and a sign of the EV sector’s difficulties in attracting investors.
Renault justifies the decision in its statement by pointing out that “the current market conditions are not ready for an IPO and to serve the interests of the Group, its stakeholders, and, of course, Ampere.”
In his message to the press, Renault Group and Ampere CEO Luca de Meo underlines that Renault doesn’t need fresh funding to finance the Ampere development. “We have enough resources to pursue the project and to absorb the losses that Ampere will generate until it becomes profitable,” de Meo said.
The break-even with Ampere is planned for 2025. “The expected results for 2023 confirm that the Group can generate enough cash sustainably to assure its future,” the press release emphasizes.
Renault is doing better again after a couple of tough years. Last year, it launched the separate entity of Ampere, transferring some 11,000 employees and the necessary means and logistics to the new division.
The IPO was planned to raise more money for this electric upstart, estimated to be worth 8 to 10 billion euros- the same as the entire Renault Group. But the problem is that the stock market hesitates about ‘electric’ investments.
The EV market in Europe is still good but slowing down, while the same market in North America struggles to take off. Even Tesla, the stock market’s top success story, faces more difficulties.
Because of the ‘explosion’ of the EV car market in recent years, Ampere reckons it can sell 300,000 EVs in 2025 and more than a million after 2030. To realize this, Ampere wants to attain a €10 billion turnover from 2025 onward, with the total turnover of the Renault Group being €46 billion in 2022. The annual growth rate for Ampere should turn around 30%.
“The decision to abandon an IPO for the moment has no impact on the financial perspectives of Groupe Renault or on the capitalization strategy,” the Group management assures.
“The planned investments of Alliance partners Nissan and Mitsubishi are not endangered,” said CFO Thierry Piéton. Microchip giant Qualcomm’s planned investment, on the other hand, depended on the IPO. “We will have to see what this means to them and if they still want to participate, maybe in another way,” Piéton stipulated.
Renault still thinks it is well-armed to confront the following years. “We will be anti-cyclic because of our huge model offensive with ten different products shortly,” explains de Meo. “Thanks to Ampere, we will reduce EV costs by 40%. The new electric Twingo will cost 40% less to produce than the coming Renault 5,” he promised.
With a projected price tag between €15,000 and € 20,000 for the new Twingo – also feasible because of the new platform to be shared with other manufacturers (Volkswagen has already shown some interest) – Renault thinks it is prepared for the battle with Tesla and the Chinese in the lower segments.