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The boss of Renault said the company’s new electric vehicle division could fetch an initial public offering price of up to €10bn when it floats in the first half of next year, as he hit out at the unrealistic valuations placed on recently listed EV start-ups.
Luca de Meo also warned Europe’s car industry is being held back by the region’s over-cautious investors, as mainstream carmakers struggle to compete with what he considered ridiculous valuations offered by US investors to lossmaking EV start-ups.
The French carmaker is spinning out its electric vehicle and software arm as a separate unit called Ampere, with plans to hold a European IPO in the first half of 2024.
Although Renault has not confirmed its pricing ambitions for the unit, speaking to the Financial Times at the Munich auto show, de Meo said the business could be worth “eight, nine, 10 billion [euros]” when it lists.
Polestar, the EV brand part-owned by Volvo and China’s Geely, was valued at $21bn when it listed last year. Vietnam’s VinFast listed earlier this year with a value of $23bn. Yet some analysts have valued the Ampere business at only €5bn, while others have questioned the need to carve out the business at all.
“If European investors care about the future of Europe they better put money into this, instead of putting question marks all over the thing,” said de Meo.
“I don’t know what European investors are doing, but if they want to protect Europe [they should back] projects like this one, where someone has the guts to have a substantiated, holistic response to the challenge that the Chinese and Americans are giving us.”
The IPOs of Polestar and VinFast involved mergers with special purpose acquisition companies, allowing the companies to float their shares with substantially less scrutiny than traditional stock market listings. While Nasdaq-traded Polestar’s market capitalisation has fallen to just under $7bn, VinFast, which is also listed on Nasdaq, stands at about $68bn after shooting up to a high of $190bn just after its IPO last month.
“Look at the valuation of European companies,” de Meo added. Referring to BMW’s market capitalisation of €62bn, he asked: “Do you think that VinFast can be worth more than BMW? Let’s be serious.”
The Ampere deal is part of a radical overhaul by de Meo, who joined as chief executive in 2020, that included the carmaker spinning off its engine business in partnership with China’s Geely and Saudi Arabia’s Aramco.
De Meo said splitting the units was vital because making electric vehicles was a “different sport” to traditional vehicles. He added that Renault, listed in France, is only worth €11bn, roughly equal to the value of its Nissan stake and the value of its bank that finances car purchases.
“I have nothing to lose” in floating the EV unit, he added.
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