Renault’s Ampere unit poised for growth amid IPO plans and market challenges

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In a bid to energize skeptical investors, French carmaker Renault has unveiled ambitious plans for its electric vehicles unit, Ampere. The company projects a substantial increase in revenue, aiming to more than triple its earnings to 10 billion euros ($10.8 billion) by 2025. This announcement comes ahead of Renault’s planned initial public offering (IPO) for Ampere next spring, a move that has faced obstacles due to slower demand for electric vehicles (EVs), volatile markets, and heightened competition from Chinese counterparts.

Renault’s financial targets for Ampere include a revenue goal of 25 billion euros by 2031, achieving break-even in 2025, and attaining an operating margin of at least 10% starting in 2030. These targets were presented at an investor day in Paris, showcasing the company’s strategic vision for the electric vehicle sector.

Despite challenges in the EV market and concerns about the IPO’s valuation, Renault’s CEO, Luca de Meo, expressed confidence in the growth of Ampere. He highlighted the company’s substantial cash reserves, emphasizing that Renault could finance Ampere’s expansion without relying on the IPO. However, de Meo stressed that the IPO remains the preferred option as it would enable Renault to accelerate development and distribute dividends sooner. He also clarified that if the valuation of Ampere was deemed too low, the IPO plan could be scrapped.

“We are not crazy,” de Meo assured reporters, signaling a pragmatic approach to the IPO decision.

Sources close to the matter revealed that Renault might reconsider the IPO if the overall valuation for Ampere falls below 7 billion euros. De Meo, however, refrained from specifying a red line for the IPO valuation, keeping the company’s options flexible in the face of market uncertainties.

In addition to its strategic plans for Ampere, Renault unveiled the launch of a new electric vehicle, the Twingo Legend, priced at less than 20,000 euros. This move is part of Renault’s broader initiative to make electric vehicles more accessible in Europe, addressing the increasing competition from more affordable Chinese models. Thierry Pieton, Renault’s finance chief, stated, “We want to democratize EVs in Europe. We will reduce our costs to lower our prices, while improving our margins at the same time.”

Renault’s dual focus on expanding its electric vehicle unit and introducing competitively priced models reflects the dynamic landscape of the automotive industry, where sustainability and affordability are becoming key drivers of consumer demand. As the company navigates the challenges of the EV market, the success of Ampere’s IPO and the reception of the Twingo Legend will serve as crucial indicators of Renault’s strategic positioning in the evolving world of electric mobility.

(Source: Gilles Guillaume | Silvia Aloisi | Kirsten Donovan | Reuters | Automotive News Europe)

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