Volkswagen’s Battery Unit Halts Public Offering Plans

Bloomberg reported on Tuesday that Volkswagen AG has delayed plans to attract external investors for its battery division. The delay is due to lower-than-expected demand for electric vehicles and challenges faced during the industry’s transition to electric mobility.

Reason for Delay

Sources familiar with the matter, who requested anonymity, stated that the company also postponed discussions with potential investors due to concerns about its capacity for mass-producing batteries.

Impact on Stock

As a result, VW did not prioritize a stock sale or public offering for its PowerCo unit this year or next. Consequently, VW’s preferred shares showed a decline of up to 1%, reducing the company’s market value to €64 billion ($69.3 billion) over the past year.

Future Considerations

Company officials mention that conditions are volatile and that VW may reconsider its strategy if the market improves. According to Bloomberg’s data, 2023 saw the weakest number of new public offerings in over a decade, largely due to increased interest rates.

Industry Trends

Renault SA also halted its plans to go public with its electric vehicle division, Ampere EV, and its software department due to insufficient interest and a slowing transition to electric vehicles.

CEO’s Remarks

Despite VW CEO Oliver Blume’s comments in June that a public offering could be a viable path when the timing is right, VW is now focusing on preparing for investor participation from 2024 onwards.

Challenges Faced by Industry

Automakers such as VW, General Motors (GM), and Ford (F) are reevaluating their electric vehicle projects due to declining orders caused by the removal of government incentives, inadequate charging infrastructure, and high electric vehicle prices.

Future Plans

VW stated that it remains open to changing the capital structure of PowerCo and will continue to evaluate its options in light of market conditions. Despite the setbacks, PowerCo has begun constructing two facilities in Europe and plans to start production in Germany next year and in Spain by 2026, with initial steps being taken for another plant in Canada.

Standardized Battery Cells

PowerCo aims to create standardized battery cells that can be used in most of the company’s electric vehicle platforms. While this strategy could yield significant benefits if successful, it also carries substantial risks.

Research Initiatives

Volkswagen is also researching solid-state battery technology that could enhance the performance and reduce the costs of electric vehicles through its partnership with QuantumScape Corp. in the United States.