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The backstory: Renault, a French automotive giant with roots dating back to 1899, is gearing up for a major move – the public debut of its electric vehicle (EV) arm, Ampere, expected in early 2024. But the company faces some challenges. A price war triggered by Tesla and uncertainties from disappointing initial public offerings (IPOs) – think Arm and Birkenstock – loom over Renault. Plus, there’s the competition in the market from Chinese EV makers and an overall slower demand for EVs.
Internally, an overhaul with its alliance with Nissan and the scandalous exit of former CEO Carlos Ghosn has added complexity. Competing against giants like Stellantis NV, Renault faces challenges, including a drop in EV market share across 28 European countries due to the discontinuation of the Zoe model.
More recently: Renault's Megane E-Tech, intended to rival Tesla's Model 3, sold about 35,000 cars by September, falling short of its annual target of 100,000. The important Ampere IPO also experienced delays.
In June, CEO Luca de Meo took over as the future chairman and CEO of Ampere and a committee led by Jean-Dominique Senard to oversee the potential Ampere IPO.
The development: On Wednesday, Renault held an investor day to lay out plans for Ampere. The company’s eyeing a revenue surge to €10 billion (US$10.8 billion) by 2025, triple from where it stands. It’s targeting €25 billion (US$27.1 billion) by 2031, with the break-even point firmly set for 2025. As part of this plan, Renault is gearing up to launch a smaller, more affordable EV model.
To deal with delayed IPO plans, CEO De Meo highlighted the company's financial strength to fund Ampere's growth independently. Plus, there are already investment deals with Nissan and Nissan and Mitsubishi, which will go through whether there’s an IPO or not.
De Meo emphasized the preference for a speedy IPO and offering earlier dividends. He also said the company would scrap the public listing if valuations fall short, and sources close to the matter said that it was setting a red line at 7 billion euros (US$7.6 billion) to even consider going public. Meanwhile, analysts, including UBS, are skeptical about Ampere's valuation, suggesting a range of €3 to €4 billion (US$3.2 to US$4.4 billion).
Renault also introduced a new EV, the Twingo Legend, priced under €20,000 (around US$21,800). Positioned to compete against Tesla and cheaper Chinese models, Renault finance chief Thierry Pieton aims to make EVs more accessible by cutting production costs.
"We are working hard for the IPO but I am not a kamikaze," said Renault CEO Luca de Meo last week. "I am not going to put it on the market at a discount."
"Ampere is a project for the long term and the IPO is one piece of the puzzle," said de Meo.
"We need more tangible evidence new model prices at 20,000-25,000 euros are (1) successful and (2) profitable," said UBS analysts, referring to Renault's new model.
"Luca has a roadmap, he gave Renault a direction and the quality of Renault cars is amazing these days," said Pierre-Olivier Essig, an analyst at AIR Capital in Geneva. "The IPO may not be a great idea right now, given where markets stand, but ultimately I think Luca will succeed."