IPO Market Slump and Electric Vehicle Demand Slowdown
The electric vehicle industry, which had been racing down a smooth road, is now facing consecutive brakes. As the enthusiasm for the electric vehicle market cools, French automaker Renault announced on the 29th (local time) that it has decided to cancel the initial public offering (IPO) of its electric vehicle business unit, Ampere.
Renault stated, "We believe that the current stock market conditions do not meet the requirements to proceed with the IPO for the greatest benefit of the Renault Group, its shareholders, and Ampere."
The company explained that the recent slowdown in electric vehicle growth across Europe influenced the decision to withdraw the IPO. However, it still expects the electric vehicle market to maintain a dominant position in Europe due to decarbonization regulations. Luca de Meo, Renault's Chief Executive Officer (CEO), said, "Electric vehicles are already a train that has left the station," adding, "Ampere will be one of the driving forces for Renault to become a champion of decarbonization."
Renault had planned to establish Ampere as a separate legal entity for its electric vehicle division and list it on the stock market earlier this year. At the end of last year, CEO de Meo expressed confidence in Ampere as a rival to Tesla and Chinese electric vehicles in an interview with major foreign media, projecting a post-IPO valuation of up to 10 billion euros (approximately 14.422 trillion KRW). However, this valuation was comparable to Renault's market capitalization, and there were opinions at the time that it was overvalued.
Meanwhile, with Ampere withdrawing its IPO, there is speculation that alliance partners Nissan and Mitsubishi might halt their electric vehicle investments. Thierry Pieton, Renault Group's Chief Financial Officer (CFO), stated, "Nissan and Mitsubishi still have investment options, but whether they will continue investing requires discussion." However, Renault maintains that it has strong internal cash generation capabilities and does not need an IPO for capital raising.
Bloomberg reported, "According to our own compiled data, last year the global IPO market fell to its worst level in over a decade due to a sharp rise in interest rates," adding, "Many automakers delayed new model launches, rental companies reduced vehicle purchases, and demand for electric vehicles cooled."
Recently, the global electric vehicle market has stalled due to increased electric vehicle penetration, price competition, recession concerns, and cuts in European subsidies. Tesla, a leading player, issued a pessimistic forecast during its earnings announcement on the 24th, stating that this year's growth rate could be significantly lower than last year's, causing its stock price to fall to an eight-month low. Ford Motor Company reduced production of its electric pickup truck, the F-150 Lightning, and Swedish electric vehicle maker Polestar announced a 15% global workforce reduction considering market conditions.
Additionally, the European IPO market has been stagnant for the past two years. Last year, European IPO proceeds shrank to one-third. There were expectations that Ampere, the largest IPO candidate this year, would be a turning point, but ultimately the IPO plan was withdrawn.
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