Renault’s logo is seen at the Viva Technology conference on innovation and startups at the Porte de Versailles exhibition center in Paris, France, June 15, 2023. REUTERS/Gonzalo Fuentes/File Photo Acquire License Rights
PARIS, Nov 15 (Reuters) – Renault (RENA.PA) will try to lure dubious investors on Wednesday before launching its electric vehicle (EV) unit Ampere, a key building block in its CEO’s electric vehicle (EV) redesign Luca de Meo French car manufacturer.
De Meo has been targeting a valuation of 8 billion euros to 10 billion euros ($8.6 billion to $10.7 billion) for Ampere’s initial public offering (IPO), which has already been postponed once and is now scheduled for spring 2024.
Slower demand for electric vehicles, choppy markets and increasing Chinese competition have complicated de Meo’s plans. Sources close to the matter told Reuters last month that its hoped-for price looked too ambitious at this point.
Two of the sources said Renault was unlikely to go ahead with the IPO if the valuation falls below 7 billion euros, and one said the limit could be closer to 6 billion euros.
UBS analysts have valued Ampere at just €3 billion to €4 billion, and others have questioned the rationale for listing the electric vehicle business to raise capital.
On Wednesday, De Meo will make his case for what could be the first attempt by a traditional automaker to capture value from an electric vehicle business through an initial public offering.
The presentations “should be an opportunity for management to reinforce investors’ still unclear understanding of the benefits of separating engineering, software and manufacturing between internal combustion engines (ICE) and battery electric vehicles (BEVs),” Jefferies analysts said in a statement Notice.
“With no discernible value placed on Ampere and market sentiment on electric vehicles being poor, we enter this week’s event confident that there is more upside than downside, particularly as Renault considers IPO alternatives,” such as cashing out its 28 percent stake in its long-time ally Nissan, currently worth around 4.5 billion euros.
As part of his pitch later today, de Meo will unveil the launch of a small, affordable electric vehicle, as cheaper Chinese rivals force global automakers to offer cheaper models.
Renault was a pioneer in developing electric vehicles in the 2010s but has since fallen behind more agile and focused rivals such as Elon Musk’s Tesla (TSLA.O).
In the first nine months of 2023, Renault brand electric vehicle sales fell about 5% in Europe, after rising 2.5% in the first half, weighed down by limited supply.
The Zoe and Twingo models are reaching the end of their life cycle and the Scenic and R5 versions will not come onto the market until next year.
The electric Megane, Renault’s flagship, is well behind Tesla’s Model Y, with 14,220 cars sold in France from January to September – or 1% of the passenger car market. That’s less than half of the 29,291 Model Ys sold in the same period.
($1 = 0.9330 euros)
Text by Silvia Aloisi, editing by Mark Potter
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