Renault SA’s electric-vehicle venture is set to be profitable as soon as 2025 with the company readying the Ampere unit for an initial public offering.
(Bloomberg) — Renault SA’s electric-vehicle venture is set to be profitable as soon as 2025 with the company readying the Ampere unit for an initial public offering.
The French carmaker also expects to break even on free cash flow by then before raising results to a double-digit operating profit margin by the end of the decade, Renault said late Monday. Chief Executive Officer Luca de Meo will take on the additional roles of CEO and chairman of the electric-vehicle arm.
Renault last year outlined ambitious plans to split its EV and legacy combustion-engine business, as well as a deal with partner Nissan Motor Co. to rebalance their decades-long alliance. De Meo is trying to raise funds for EV development and narrow the gap with larger rivals such as Stellantis NV.
Nissan has pledged to buy as much as 15% of Ampere, with junior alliance partner Mitsubishi Motors Corp. considering an investment. Qualcomm Inc., the largest maker of smartphone processors, will also back the business. The unit will have about 10,000 employees, with about one-third engineers and significant software know-how.
Price Cuts
Even as Renault gives an upbeat outlook for Ampere, the business faces several challenges as de Meo works to bring it to market. Price cuts in Europe from US rival Tesla Inc. risk denting demand for a new model touted as key for the carmaker’s turnaround, the fully electric Megane E-Tech. To fend off the competition, Renault is reintroducing a lower-priced version featuring a smaller battery.
“The Ampere split is important to gain speed in the EV transition — but does Renault need an IPO?” Bernstein analyst Daniel Roeska wrote in a note. “We worry that the plan for an Ampere IPO was set years ago in a very different climate, and we would encourage the Renault team to re-examine their plans given current developments.”
Ampere is targeting a 30% compound annual growth rate until 2030 as well as a cost reduction of 40% on a car-by-car basis when its next generation of vehicles rolls off productions lines from 2027, the manufacturer said.
Read more: Renault Sees Nissan Executive Exit Speeding Up Alliance Deal
A listing could go ahead as soon as the fourth quarter and Renault has already selected investment banks to work on the planned share sale, Bloomberg reported in April. The unit will hold a capital markets day during the second half of the year.
(Updates with analyst comment in sixth paragraph.)
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