By Gilles Guillaume
PARIS (Reuters) – Renault will try on Wednesday to fire up doubtful investors ahead of a planned market listing of its electric vehicle (EV) unit Ampere, a key plank of CEO Luca de Meo’s revamp of the French automaker.
De Meo has targeted a valuation of 8-10 billion euros ($8.6-10.7 billion) for the initial public offering (IPO) of Ampere, which has already been delayed once and is now slated for spring 2024.
Slower demand for EVs, choppy markets and increased Chinese competition have complicated de Meo’s plans, with sources close to the matter telling Reuters last month his hoped-for price tag looked over-ambitious at this stage.
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 cut-off point could be closer to 6 billion euros.
UBS analysts have valued Ampere at just 3-4 billion euros, and others have questioned the rationale of listing the EV business to raise funds.
On Wednesday, De Meo will argue his case for what could be the first attempt by a traditional automaker to unlock value from an EV business via an IPO.
The presentations “should be an opportunity for management to raise investors’ still unclear understanding of the benefits of separating engineering, software and manufacturing between ICE (internal combustion engine) and BEV (battery electric vehicles),” Jefferies analysts said in a note.
“With no identifiable value assigned to Ampere and low EV market sentiment, we go into this week’s event confident there is more upside than downside, especially if Renault considers IPO alternatives,” such as cashing in on its 28% stake in long-time ally Nissan, currently worth around 4.5 billion euros.
As part of his pitch, de Meo is due to unveil during the day the launch of a small affordable EV, as cheaper Chinese rivals force global carmakers to come up with less pricey models.
Renault was a pioneer in developing EVs in the 2010s, but has since fallen behind more agile and focussed competitors including Elon Musk’s Tesla.
Over the first nine months of 2023, Renault brand EV sales fell by around 5% in Europe, having been up 2.5% in the first half, weighed down by a limited line-up.
Zoe and Twingo models are reaching the end of their lifecycles, and the Scenic and R5 versions will not come to market before next year.
The electric Megane, Renault’s flagship car, is badly trailing Tesla’s Model Y, with 14,220 cars sold in France over January-September – or 1% of the passenger car market. That is less than half the 29,291 Model Ys sold over the same period.
($1 = 0.9330 euros)
(Writing by Silvia Aloisi; Editing by Mark Potter)
