Volkswagen should put stock market plans for PowerCo on hold

Volkswagen is reportedly uncertain about its ability to implement its planned battery production to the intended extent, as per sources cited by Bloomberg news agency. Consequently, the opening of its battery subsidiary, PowerCo, to external investments is likely delayed, with talks on hold with potential investors, as reported by Bloomberg. Moreover, Volkswagen is deprioritizing the possibility of a stock market listing for PowerCo this year or the next.

While the situation has not been conclusively decided, sources suggest that Volkswagen may reconsider the plans when market conditions improve. Volkswagen, when questioned by the news agency, confirmed its intention to “open up the capital structure and continue to evaluate our options against the background of the market environment” starting this year. Although the growth in the electric car market has not met expectations, Volkswagen noted sustained investor interest in PowerCo.

At the VW Capital Markets Day in June, Volkswagen CEO Oliver Blume indicated that an IPO for the battery subsidiary was a concrete option when the timing is right. Founded in 2022, PowerCo plans to invest 20 billion euros in battery plants to supply cells for 3 million electric vehicles annually, requiring substantial capital.

Since its establishment a year and a half ago, PowerCo has secured three locations for cell factories in Salzgitter, Valencia, and St. Thomas in Ontario, Canada, all currently under construction. Production is slated to commence in Salzgitter in 2025, followed by the other two plants in 2026 and 2027. By 2030, PowerCo aims to construct and operate battery cell factories with a total production capacity of 240 GWh in Europe alone.

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If Volkswagen continues with its plans, PowerCo is expected to fulfill half of the carmaker’s battery needs by 2030, evolving into a significant entity with 20,000 employees, according to Bloomberg. By that time, over 70 percent of Volkswagen’s sales in Europe and more than 50 percent in North America are anticipated to be fully electric.

Notably, Volkswagen is not the only automaker reconsidering stock market plans, as Renault recently announced the cancellation of the IPO for its Ampere electric car division, citing unsuitable current stock market conditions.

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