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Volkswagen AG is Considering Listing its Porsche Unit to Fund its EV Push

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【Summary】​German automaker Volkswagen AG is considering listing a portion of its Porsche unit to fund the automaker’s transition to electric vehicles, according to sources that spoke with Reuters on Thursday. German business publication Manager Magazin reported the news earlier and said Volkswagen could list as much as 25% of Porsche, a stake that could be valued at 20 billion to 25 billion euros (US$24-30 billion).

Eric Walz    Feb 18, 2021 2:30 PM PT
Volkswagen AG is Considering Listing its Porsche Unit to Fund its EV Push

German automaker Volkswagen AG is considering listing a portion of its Porsche unit to fund the automaker's transition to electric vehicles, according to sources that spoke with Reuters on Thursday.

The Porsche brand is one of the most storied nameplates in the auto industry. For the most part, has not pivoted from its sports car roots as a subsidiary of parent Volkswagen, with the exception of the electric Porsche Taycan sedan.

"Those considerations exist," the source told Reuters about the possible listing, but the idea was still far from being discussed in committees within the company. However the source cautioned that discussions are only preliminary and won't likely happen this year, if at all.

Volkswagen declined to comment. Top shareholder Porsche Automobil Holding SE, which owns 31.4% of Volkswagen and 53.1% of the group's voting rights, also declined to comment on speculation.

German business publication Manager Magazin reported the news earlier, which pushed up Volkswagen shares by as much as 5.7%. The monthly magazine said Volkswagen could list as much as 25% of Porsche AG, a stake that could be valued at 20 billion to 25 billion euros (US$24-30 billion).

Some analysts believe the entire stake of Porsche could be worth as much as 100 billion euros (US$120 billion), which is more than the current market cap of its parent Volkswagen which is roughly US$113 billion.

The Porsche brand dates back to 1948.

Volkswagen acquired a 49.9% stake in Porsche in Dec 2009 and Volkswagen officially became its parent company on Aug 1, 2012 after purchasing the remaining stake for 4.46 billion euros ($5.58 billion). 

Porsche is one of eight brands under the Volkswagen Group umbrella. Others include Volkswagen, Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT and Škoda. 

The news comes after rival Daimler AG announced it was spinning off its truck unit Daimler Trucks. 

Volkswagen can benefit financially from selling off a portion of its Porsche unit as the automaker looks to electrify its model lineup.

In 2019, Volkswagen announced plans to invest 60 billion euros ($66.12 billion) by 2024 to develop electric and hybrid cars as well as digital technologies. Most of the investment will go towards developing new electric models, as the company looks to electrify its global model lineup.

Volkswagen said at the time it was investing 33 billion euros in developing new electric models, while the rest the company said would go towards hybrid vehicles and digital services. With the massive investment, Volkswagen is looking to reinvent itself as an electric brand.

However, these massive investments won't pay off until Volkswagen can sell millions of electric vehicles while still remaining profitable, which is also an issue facing segment leader Tesla. But listing a portion of its Porsche unit could help VW fund its initiatives in electrification.

Porsche achieved record sales in the U.S. for 2020, cumulating 10 years of consecutive growth in North America. The brand sold 61,568 vehicles in the U.S. in 2020, which was a record high, despite the economic fallout of the global pandemic.

resource from: Reuters

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