Volkswagen AG (VW) has stopped preparations for the planned IPO of its traction battery subsidiary PowerCo this year or next. The cancellation of the IPO is due to falling demand for electric vehicles, which raises doubts about the prospects of this business. writes Bloomberg.
The automaker also put talks with investors on hold amid doubts about its ability to produce batteries on a large scale, sources told Bloomberg.
Sources do not rule out an IPO of the PowerCo division if the market situation improves. According to Bloomberg, 2023 IPOs were the worst in more than a decade after interest rates soared.
VW commented on the PowerCo situation in an email to Bloomberg, saying it was prepared to “continue to evaluate its own options based on market conditions.” Growth in electric vehicle sales wasn’t as strong as expected, but investor interest in PowerCo “remains strong,” VW said.
PowerCo has started construction of two power plants in Europe, where higher energy prices have dampened investment optimism among many industry players. Battery production is scheduled to begin in Germany next year and in Spain in 2026. Work is also underway at the company’s third plant in Canada. If VW stays on track, PowerCo will supply half of the automaker’s battery needs by 2030 and grow into a 20,000-job behemoth. By then, more than 70% of the automaker’s sales in Europe and more than 50% in North America are expected to be pure electric vehicles.
It was announced on Monday that Renault SA has canceled plans for an initial public offering of its former electric vehicle division Ampere EV due to unfavorable market conditions.