Renault abandons Ampere IPO on the stock market: financial markets applaud

Renault shares rose 5% to 36 euros this morning, a day after Ampere’s IPO was announced, before settling up 1.27% at 34.74 euros on Tuesday evening. The French manufacturer announced yesterday that it will cancel the launch of Ampere, its subsidiary uniting the group’s electrical and electronic activities, “given current market conditions and higher than expected cash flow levels”, Renault stated in its press release.

On Tuesday, all analysts seemed relieved:

“It is a pragmatic decision in an unfavorable context both in the markets and in the automotive sector,” commented Oddo BHF in a note published today, adding that “in the face of limited investor appetite for this IPO project and an increasingly solid financial situation at the producer level, achieving a sale was less of a priority.”

The same story for analysts at Stifel and Jefferies. The first judged this decision ” positive » for Renault and second respect “that an organic solution avoids disruptive management at a critical time for the industry.”

Ampere: Renault’s plan to generate historic margins in electric cars

“Pure players” less popular

Because in recent months, “pure players”, in other words, niche manufacturers like Tesla, are no longer popular. Following its disappointing results, the US manufacturer saw shares plunge 15% on the stock market the following day, before rallying slightly over the past two days, but still remains below the $200 mark, far from the $300 mark last July. And this trend is expected to continue.

“This is due to an increasingly difficult market for electric vehicles with strong price and product competition, weakening growth and demand dynamics for electric vehicles and widespread uncertainties around subsidies (…) which do not contribute to stimulating investor appetite for activity. “clean players” in electricity”, he explained Berenberg analysts in a note.

The sudden end of electricity subsidies in Germany meant a significant slowdown in sales of electric cars in the country, – 47.6% in December.

Electric car: Ampere, Renault’s risky bet

Especially since the IPO could also give this sign that “Ampere and Renault are one and that the other entities of the group have no value”, an analyst told us last November.

Renault should have listed the Ampere two or three years ago, just after the Covid pandemic. HAS At the time, market euphoria reigned, fueled by rising car prices with a shortage of supply, and competition from Chinese cars on the old continent was almost non-existent. », reports Arnaud Aymé, specialist in the automotive industry at Sia Partners.

Cancellation is not final

However, if this analyst report was received rather well, it is difficult to know what will happen to the shares bought by Nissan and Mitsubishi, which announced investments of 600 million euros and 200 million euros respectively. If both manufacturers were to retain their participation and their contract was not linked to Ampere’s IPO, the amount of this investment remains unknown. ” Nobody understands what’s going on there “, sighs Arnaud Aymé. For their part, the Japanese manufacturers responded platonically to AFP: “All our cooperation is maintained and we continue to negotiate with Renault.”

And for good reason, if Renault has announced that it has enough cash to finance its projects until 2026 and the launch of the Twingo, thanks to very satisfactory results and also sales of Nissan shares, what will happen? Ampere is actually aiming A turnover of 25 billion euros in 2031 and an operating margin of more than 10% from 2030. Renault will have to consider listing the Ampere in order to finance projects beyond 2026 and achieve its targets. They have already dismantled the activity and mobilized the people on the project », notes Arnaud Aymé.

With its new Twingo, Renault is taking on the challenge of a cheap electric car

Before that, Ampere’s 11,000 employees will be fully mobilized to develop new models of the group’s electric entity, namely the Mégane, which is already on the market, the Scenic and R5 in 2024, the R4 in 2025 and also the Twingo for 2026. And a little later in the day, Volkswagen announced that it is still considering the launch of PowerCo, its electric battery subsidiary. However, the German manufacturer did not specify the date of this IPO, only invites “Investors to be ready from 2024”.

For Arnaud Aymé, this is only one aspect of communication. “On the one hand, Renault had a more precise project, but they preferred to cancel and reorient their teams. On the other hand, the contours of the Volkswagen subsidiary are more vague and no firm date has been communicated. In both cases, the result is the same: there is no IPO at this time. »