Porsche IPO dust settled, or will continue to "blood transfusion" for the development of Volkswagen electrification

The time of the Porsche IPO that has been publicized for a long time has settled the important dust.

A few days ago, Volkswagen announced that the Volkswagen Group (hereinafter referred to as the "Volkswagen Group") issued a statement saying that it was discussing with Porsche Holding Company about the potential IPO plan of its luxury brand Porsche. To this end, Volkswagen and Porsche Automotive Holdings negotiated a framework agreement to lay the groundwork for a potential IPO at Porsche.

Subsequently, Volkswagen Finance Officer Arno Antlitz revealed that the Volkswagen Group will release the latest news on Porsche's listing plans and progress to the market at the end of this summer. Porsche is likely to conduct an IPO as soon as the fourth quarter of 2022. It also means that Porsche will be the first luxury car brand to complete an IPO after Ferrari, Aston Martin and Volvo.

The dust has settled on the "Profit Cow" independent IPO

Wall Street predicts that if Porsche cars are eventually listed independently, with a valuation of about 60 billion to 85 billion euros, and the current market value of the entire Volkswagen Group is 112 billion euros, then Porsche's market value will almost recreate a Volkswagen group. As soon as the news came out, the shares of Volkswagen and Porsche Holdings both rose sharply, rising by more than 14% at one point.

In fact, the news about Porsche's IPO has a long history, as early as early February 2021, the German "Manager Magazine" reported that volkswagen group is considering various ways to boost the company's market value, including the independent IPO of its Porsche brand. Regarding the listing of the Porsche brand, Porsche and the Pièch family behind it have always been its fans. At the end of 2021, the news of Porsche's IPO came out again. The Volkswagen Group's vision is not whimsical, after all, Ferrari's success story is in front of us, Porsche's chief financial officer Lutz Meschke has admitted that this can unlock corporate value and replicate Ferrari's success.

It is reported that the largest shareholder of the Volkswagen Group is Porsche Automotive Holding AG (Porsche SE), which is in the hands of the Porsche family and the Piëch family. The two families hold a 31.4% stake in the Volkswagen Group and 53.3% of the voting rights through porsche SE. Sources said that if Porsche and the Pië family sell the Volkswagen stake, it can raise about 15 billion euros, after the sale, Porsche and the Piët family will continue to be the largest shareholders of the Volkswagen Group. In May 2021, people familiar with the matter revealed that if Porsche is listed separately, Porsche and the Pierch family are ready to directly invest in Porsche.

When asked about his thoughts on Porsche's listing, Volkswagen CEO Herbert Diess said: "Although Volkswagen is still evaluating the possibility of Porsche listing, expanding battery capacity is the company's top priority. He also said that the Volkswagen Group has been evaluating plans and projects that are conducive to the development and implementation of the company's strategy and increase the value of the company, but did not comment further.

Porsche can be called the "profit cow" of the Volkswagen Group, and Porsche's high bicycle profit margin is almost 10 times that of the Volkswagen brand. Under the dual pressure of the global automotive market being severely tested by the epidemic and the lack of cores, Porsche's annual sales exceeded 300,000 units for the first time, reaching 301915 units, up 11% year-on-year from 2020. Among them, Porsche China completed 95,671 new car deliveries, an increase of 8% year-on-year. The increase in sales volume has also contributed a lot of profits to the parent company. Volkswagen's third-quarter earnings report shows that in the first three quarters of 2021, Porsche sold 209,000 vehicles, accounting for 3.23% of Volkswagen's sales in the same period. During the same period, Porsche generated an operating profit of approximately EUR 3.4 billion, equivalent to more than RMB24 billion, accounting for 34% of the operating profit of Volkswagen's overall automotive business.

"Blood transfusion" for Volkswagen's electrification transformation

Such a strong premium ability also makes the capital market extremely optimistic about Porsche's prospects, which is why it has obtained ultra-high market value forecasts.

The reason why volkswagen group chose Porsche IPO is the key period of volkswagen group's comprehensive electrification transformation. "For us, the Porsche IPO was a turning point and further ignited our momentum to transition to electric vehicles." Herbert Diess, CEO of volkswagen group, said bluntly.

As early as the 2016 shareholders' meeting, Müller, then CEO of Volkswagen Group, announced strategic plans such as "Together-Strategy 2025" and "Roadmap E", officially opening the electrification transformation of Volkswagen Group. But the "elephant turn" is not easy, and although Volkswagen has made strategic adjustments early on, the process has been slow. The ID.3, which was once regarded by Volkswagen as comparable to Tesla Model 3, was originally scheduled to be listed at the end of 2019, but finally it was launched in 2020 because of a large number of software problems in ID.3. Manager Magazine has reported that hundreds of software testers find 300 software vulnerabilities a day, and more than 10,000 technicians are solving them.

On July 13, 2021, the Volkswagen Group once again announced the 2030 NEW AUTO strategy, accelerating the transformation into a "software-driven mobility service provider". At the same time, volkswagen group also released the 2030 strategy. The strategy shows that by 2030, the Group will reduce the carbon footprint of each vehicle over its entire life cycle by 30% compared to 2018. At the same time, the share of pure electric vehicle models is expected to rise to 50%. By 2040, all new vehicles sold in the Group's major markets around the world will be close to zero emissions. By 2050 at the latest, the Group will be carbon neutral.

Volkswagen Group said: "The core business of the future is to gradually shift the profit and revenue source of the automotive industry from fuel vehicles to pure electric vehicles, and to software and services driven by autonomous driving technology. In the next 10 years, the fuel vehicle market will shrink by more than 20%. ”

The Porsche brand has developed a similar comprehensive transformation strategy. Bloomberg Intelligence analyst McDine said in a report that Porsche plans to account for 50% of Porsche's overall sales by 2025 for pure electric or plug-in hybrid models; by 2030, almost all models except the 911 model will be fully electrified.

But this premise is that a large amount of money is required. To achieve the transformation, the Volkswagen Group proposes that investment in electric vehicles, autonomous driving and related future technologies will increase to about 73 billion euros by 2025, reaching about half of the group's expenditure budget of 150 billion euros over the next five years. Porsche, on the other hand, plans to invest 15 billion euros in electrification and digital transformation, and provide 80% of all-electric or hybrid models by 2030.

Nowadays, the development of electrification has swept the global auto market, and at the same time, it has also set off a frenzy in the capital market, and this transformation is bound to attract more players to enter the game, and this move of the Volkswagen Group is obviously to prepare for its protracted battle of electrification transformation. Industry insiders told the "China Times" reporter: "After the success of Porsche's IPO, this huge amount will be used for the research and development of electrified models, which will also accelerate the process of Volkswagen electrification." ”

Responsible Editor: Li Yan'an Editor-in-Chief: Yu Jianping