Volkswagen plans to sell a minority stake in Porsche in the fourth quarter to fund its foray into the electric car market. Porsche has hired more than a dozen banks to push the IPO. According to public information, the IPO could value Porsche at as much as $95 billion. Earlier, the Volkswagen Group issued a statement saying that the boards of directors of Volkswagen and Porsche Holding have reached a framework agreement, in which it is clear that Porsche will be listed independently.
Volkswagen-owned Porsche plans to launch a new electric luxury sport-utility vehicle (SUV) to boost profits in the coming years. The brand is trying to win over investors ahead of its initial public offering (IPO).
According to Porsche CEO Oliver Blume, the crossover, code-named K1, will be built in Leipzig around 2025, and it may be positioned higher than the Cayenne to become the flagship SUV in the family. Porsche says the K1 will incorporate the Mission R technology shown at the International Automobile Association in Munich last year. In addition to the new high-performance battery, the Mission R has a 920-volt power system that reduces charging time.
Porsche provided no other details about the future high-end electric SUV, which will be assembled at the same factory as the outgoing Macan EV.
Oliver Blume said in a statement: “While we are clearly positioned in the luxury segment, we benefit from significant economies of scale. We are particularly targeting higher-margin segments and aim to tap new Sales opportunities.”
Notably, Porsche’s CEO has previously accelerated the company’s electric vehicle goal of 80 percent of its vehicles being electrified by 2030. By 2025, half of all new Porsche sales are expected to come from sales of electric vehicles, either fully electric or plug-in hybrids, he said. By 2030, the share of fully electric vehicles should exceed 80%.
Porsche is way ahead of other luxury sports car brands when it comes to electrification. In 2021, Porsche’s electric vehicle sales will account for 13.7%, an increase of more than 10.6% over the previous year. Ferrari won’t launch its first electric car until 2025.
Citing expert research, the company said the luxury vehicle market will see strong growth in the coming years, with battery electric vehicles (BEVs) and sport utility vehicles (SUVs) in particular the main growth drivers. “We are well positioned to benefit from these trends,” said Porsche CFO Lutz Meschke. “Porsche is a market leader in sports SUVs and fully electric luxury vehicles.”
Before the IPO, Porsche also provided guidance on future performance targets. The company said it is targeting an EBITDA margin of up to 27% for its automotive business by 2026, up from 24.5% last year. Lutz Meschke pointed out that Porsche is targeting revenue of up to 39 billion euros this year and a return on sales of up to 18 percent, up two percentage points from last year. Over the long term, returns will climb above 20%.
Porsche’s previously announced results show that the company’s sales in 2021 will be 33.1 billion euros, an increase of 4.4 billion euros over 2020. Porsche’s 2021 operating profit rose 27 percent to 5.3 billion euros compared to 2020.
Volkswagen plans to sell a minority stake in Porsche in the fourth quarter to fund its foray into electric vehicles. Porsche has hired more than a dozen banks to push the IPO. According to public information, the IPO could value Porsche at as much as $95 billion.
But there are also concerns about the macro environment, making it difficult for the auto industry to ramp up production after global supply chains were thrown into disarray and semiconductors faced shortages. Tesla Inc, the world’s best-selling electric car maker, has lost about a third of its value this year, while Ferrari shares have fallen nearly 23 percent year to date.
In addition, investors are concerned that the listing structure has failed to make Porsche more independent from its parent company. “Porsche is not a safe bet in a recession because it’s not as exclusive as Ferrari,” said Bernstein auto analyst Daniel Roeska. “If you don’t change governance, let Porsche decide. What’s best for you, rather than making decisions at the group level, then you’re not maximizing shareholder value.”
