Spin-off and independent listing into a traditional car company towards full electrification is an important step

Another traditional car company has joined the army of spin-offs.

Recently, some analysts said that Renault Group is exploring a spin-off and public offering plan for the electric vehicle business, and it is expected that Renault Group will form a new company of its electric vehicle and Mobilize car sharing business, and consider IPO in 2023.

It is understood that following the withdrawal of the fuel passenger car business from the Chinese market in 2021, Renault Group's performance has achieved a turnaround. In 2021, Renault Achieved Revenue of EUR 46,213 million, up 6.3% year-on-year, and net profit of EUR 967 million.

"After returning to profitability and cutting costs, we are looking at plans to split the electric vehicle business and the internal combustion engine business." Renault CEO Luca de Meo said the plan would be part of the Renaulution revival plan's "Chapter II" revival plan and would have to be discussed with shareholders first. "At the same time, we have begun to prepare for the full transition to electric vehicles in 2030."

In fact, with the advent of the new wave of modernization, multinational car companies Daimler AG, Volkswagen Group, and Ford Motor have split their businesses and operated independently, while the traditional domestic car companies SAIC, Dongfeng, Changan, GAC, Geely, Great Wall and other brands have launched independent new energy vehicle brands and actively carried out listing financing.

Auto analyst Zhang Xiang told the "China Business Daily" reporter that the current automotive industry is undergoing drastic changes, traditional fuel vehicle companies and new energy vehicle companies in the capital market valuation difference is very large, such as Tesla and other new energy vehicle companies sales although only a fraction of the traditional car companies, but new energy vehicles represent the future, and these new energy vehicle companies are indeed in the forefront of intelligence, so their valuation is far more than the traditional car companies. Under this circumstance, the spin-off of traditional car companies is more conducive to financing and accelerating the development of their new businesses. Secondly, for brands after independence, they can also operate better.

Renault Group may spin off the electric vehicle business

Despite the impact of the epidemic and the lack of cores, Renault achieved revenue of 46.213 billion euros in 2021, up 6.3% year-on-year; net profit reached 967 million euros, compared with a loss of 8.046 billion euros in the same period last year, compared with 19 million euros in the same period of 2019. At the same time, the operating free cash flow of the automotive division also turned from negative to positive at EUR 1,272 million, compared to EUR 4,551 million in the same period last year.

Previously, Luca de Mayo released a new strategic plan "Renaulution", which is intended to promote the transformation of the Renault Group and make performance adjustments. The financial performance targets in the new strategic plan include free cash flow of €3 billion from 2021 to 2023, R&D expenses and capital expenditures as a percentage of revenues of 8% to 9%, and reductions of more than €2 billion by 2022.

In April 2020, Renault announced a new strategy for the Chinese market. In view of the decline in the domestic automobile market and the operating conditions of Dongfeng Renault, Renault Group has reached an agreement with Dongfeng Motor Group Co., Ltd. to transfer the shares held by Renault Group in Dongfeng Renault Automobile Co., Ltd. to Dongfeng Motor Group Co., Ltd. Dongfeng Renault Automobile Co., Ltd. was officially renamed Dongfeng Motor (Wuhan) Co., Ltd. and will stop carrying out business activities related to the Renault brand. At the same time, Renault will shift its focus to light commercial vehicles and electric vehicles.

Renault Group's "eWays ElectroPop" plan points out that by 2025, 10 new pure electric vehicles will be launched, and the sales of electric vehicle models will account for more than 65%, and by 2030, the sales of electric vehicles will account for 90% of Renault's entire product line.

In terms of product launch, Renault Group will launch the new Megane E-Tech Electric and Kangoo Van E-Tech Electric models in the next step. According to the plan, by 2025, Renault Group will launch at least four pure electric models.

At present, due to the impact of the international situation, the continuous shortage of semiconductors and supply chain bottlenecks, Renault Group is also facing more challenges, so Renault Group may carry out new reforms. It is reported that Renault executives are planning to meet with Nissan executives, the first meeting between the two sides since the outbreak of the new crown pneumonia epidemic. According to people familiar with the matter, the topics of the executives of the two sides will include new plans for a separate listing of Renault's electric vehicle business, as well as finding potential new partners for the internal combustion engine business. People familiar with the matter also revealed that the discussion of Renault Group's withdrawal from the Russian market will also become an important topic of the meeting. Some analysts said that by spinning off the electric vehicle business, adjusting the organizational structure may also help Renault accelerate the realization of the goal of transformation.

It is worth noting that in February 2022, the news that Renault Group may split its electric vehicle business and internal combustion engine business into two "separate entities" has already been announced, that is, the electric vehicle business and technology will be concentrated in France, while the internal combustion engine, hybrid vehicle and transmission will be produced outside France.

Car companies have begun a major change in spin-offs

In the wave of the new four modernizations, traditional car companies are undergoing a major change of spin-off.

This year, Daimler AG officially changed its name to Mercedes-Benz Group AG. It is understood that this name change is the third name change in Daimler's history, which means that this is a major change in daimler.

Daimler AG announced that in order to unlock its full potential in the field of electrification and intelligence, the company underwent a structural transformation and split the Daimler truck business and the passenger car business into two separate companies. The renamed Mercedes-Benz Group will focus on the automotive and van sectors and focus on the transition to electrification, while Daimler Trucks will focus on the development of heavy trucks.

Immediately after Daimler, the Volkswagen Group also made a move. The Volkswagen Group has announced the independent listing of Porsche twice in a week, and the long-rumored Porsche IPO has finally made substantial progress. Volkswagen Group issued a statement saying that Volkswagen and Porsche Automotive Holdings have reached a framework agreement to ensure that Timejet may be listed independently as early as the fourth quarter of 2022.

In addition, Ford Motor also officially announced that it will launch a new revolution. In Ford's planning, Ford Blue, as a company operating the fuel vehicle business, its main responsibility is to make Ford's existing chassis bigger and stronger, and become the current source of ford profitability, providing ford with vehicle hardware engineering and manufacturing support. Ford Model e, as an electric vehicle company, is the core of Ford's future-oriented business growth, responsible for the development of software, intelligent networking technology and services for Ford's companies.

In addition, the domestic traditional car companies SAIC, Dongfeng, Changan, GAC, Geely, Great Wall and other brands have launched their own independent new energy vehicle brands, and a number of traditional car companies have revealed that they intend to spin off the new energy business and go public. For example, Geely Holding Group announced the establishment of Extreme Kr Intelligent Technology Company; SAIC Motor will operate the R brand independently; Sharon Automobile, a car product that great wall has fully invested in; and Sharon Automobile, a car product that great wall has fully invested in; CHN, an intelligent electric vehicle technology platform jointly built by Changan Automobile and Huawei and NINGDE Times, has launched a new high-end emotional intelligent electric vehicle Avita 11, and achieved full market-oriented operation, independent operation and independent development.

Zhang Shulin, deputy director of the Automobile Department of the former Ministry of Machinery Industry, former executive vice president and secretary general of the China Association of Automobile Manufacturers, said that the establishment of subsidiaries by traditional car companies is nothing more than several reasons: "First, the difference between new energy vehicles and traditional cars is gradually expanding, on the one hand, the body structure is more lightweight, the power system is comprehensively changed, the level of intelligence is also higher, the overall technology development is getting faster and faster, and the degree of specialization is getting higher and higher; on the other hand, the marketing and after-sales mode of new energy vehicles has also changed greatly compared with traditional cars. From 2B more to 2C, after-sales maintenance has also changed from 4S shop fixed point maintenance to OTA remote upgrade. Based on the expansion of these differences, the original production system and marketing system are no longer enough to support the development of new energy vehicles, so we must start again. ”

Liu Shengbo, an expert in investment and financing in the automobile industry, told reporters that the development of the automotive industry has its own laws. The spin-off of the automotive sector is the trend of the future, and free competition is more conducive to improving the overall competitiveness of the group, while also expanding revenue. And independent listing means independent development, there will be more possibilities.