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Amid challenging market conditions and competitive pressure, Renault (EPA:) is setting ambitious financial goals for Ampere, its electric vehicle (EV) and software division. The company announced today that it aims to generate over €10 billion ($10.9 billion) in revenue by 2025. This announcement comes as Renault prepares for an initial public offering (IPO) of the Ampere unit in April-May 2024, with a targeted valuation between €8 billion and €10 billion.
Luca de Meo, Renault’s CEO, is actively working to bolster investor confidence in Ampere, particularly in light of recent concerns over sluggish EV demand and heightened competition from Chinese manufacturers. Despite these challenges, the company remains steadfast in its plans but has indicated that it may reassess the IPO if valuations fall below €7 billion, as per inside sources.
The company is also preparing to introduce a new cost-effective electric vehicle designed to compete with more affordable Chinese models. This move is crucial as some of Renault’s current EV models like the Zoe and Twingo are phasing out, with replacements such as the Scenic and R5 set to launch next year. Meanwhile, sales figures show that the electric Megane has sold 14,220 units, lagging behind Tesla (NASDAQ:)’s Model Y. This reflects a 5% dip in European sales but a slight 2.5% increase in the first half of the year, capturing just 1% of the passenger car market share.
In anticipation of Ampere’s IPO, Renault has transferred its 28.4% stake in Nissan (OTC:) into a special fund as an alternative to direct funding from the public markets. Furthermore, investment commitments from partners Nissan and Mitsubishi Motors (OTC:) could inject up to €800 million into Ampere. Tech giant Qualcomm (NASDAQ:) is also considering an investment in the venture.
Today’s strategic updates come as part of de Meo’s broader restructuring plans for Renault which involve separating its internal combustion engine (ICE) operations from its battery electric vehicle (BEV) functions. The CEO is expected to present his case for the IPO while highlighting the benefits of this separation and showcasing Ampere’s potential within the rapidly evolving EV landscape.
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