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Volkswagen Starts Talking Numbers For Porsche IPO

The German luxury performance brand could be listed before the end of the year.

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Porsche’s potential initial public offering is taking shape, sanctions against Russia are already hitting automakers that produce there, and this year’s 24 Hours of Le Mans just got considerably less interesting. All that and more in this Friday edition of The Morning Shift for February 25, 2022.

1st Gear: VW Could Float More Than $10 Billion Of Porsche As Soon As The Fourth Quarter

Earlier this week news broke that Volkswagen, which is owned by Porsche (the holding company), is preparing to list Porsche (the car company) on the stock market. On Thursday we got a little more insight into the details of how the theoretical initial public offering will play out, courtesy of Reuters:

In case of an initial public offering, the share capital of Porsche AG would be equally split into preferred and ordinary shares and up to a quarter of the preferred stock would be placed on the market, Volkswagen said, confirming an earlier Reuters story.

This implies a potential placement and free float of up to 12.5% of Porsche AG’s total share capital, or more than 10 billion euros ($11.2 billion) when using a valuation of around 90 billion.

Ordinary shares, which would solely be owned by Volkswagen and Porsche SE under the plans, would not be publicly listed, a spokesperson said.

“The automotive industry is changing fundamentally. Volkswagen is determined to play a leading role in a world of zero-emission and autonomous mobility,” Volkswagen Chief Executive Herbert Diess said.


Volkswagen also indicated this could all go down as soon as the fourth quarter of 2022. Conditions are very favorable for auto conglomerates to spin off flagship brands like Porsche into independent companies. As Barron’s notes, luxury marques tend to trade much higher than their revenue compared to mainstream ones:

Sports car brands can achieve higher valuations than traditional auto makers. Ferrari stock, for instance, trades for about 41 times estimated 2022 earnings. Volkswagen stock trades for about 6 times earnings.


Couple that with EV manufacturer IPOs trending through the roof — and Porsche being one of the earlier adopters, at least as far as legacy performance carmakers go — and it makes a lot of sense why such a move would be attractive to Volkswagen. Of course, absolutely none of this will make the whole corporate structure between the two names nor their histories any easier to digest.

2nd Gear: Military Invasion, Economic Sanctions And A Supply Chain Crisis All In One

Renault is already planning to stop production at its Moscow facility next week, per Reuters:

French carmaker Renault will suspend its car assembly plant in Moscow next week due to “forced change in existing logistic routes” that are causing component shortages, it said on Friday.

Renault said that Moscow production will stop on Feb 28-March 5, adding that “increased border controls in transit countries” were also making it difficult to secure enough components. It did not name any countries.

The carmaker said it is looking at options to resume operations as soon as possible.

Russia happens to be Renault’s second best-selling market after France. Get used to these stories, because we’re probably going to see a lot of them. Speaking of...

3rd Gear: Also, Lada

Russia’s AvtoVAZ, which happens to be owned by Renault and owns Lada, will halt assembly lines on Monday. Unlike Renault however, it expects to be up and running again the next day. From Reuters, by way of Automotive News Europe:

Russia’s biggest automaker AvtoVAZ may suspend some assembly lines at its Togliatti plant in central Russia on Monday for a day due to a persistent global shortage of electronic components.

AvtoVAZ, controlled by French automaker Renault, plans to resume its Togliatti operations in full on Tuesday, it said.

The company declined to comment on new U.S. sanctions on the Russian economy, saying it continued to monitor the situation.

Any sanctions imposed on Russia for its actions in Ukraine by the U.S. and allies could affect Renault Group, Volkswagen Group and Stellantis. All three have significant operations in Russia.


I suppose now would be the opportune time for Putin to launch the Kalashnikov car.

4th Gear: Stellantis Says It Costs 1.5x As Much To Make An EV

Stellantis CEO Carlos Tavares revealed a number of things on the company’s latest earnings call. Among them, apparently it costs Stellantis up to 1.5 times more to build an EV versus a car with an internal-combustion engine. From Motor Trend:

It costs 40-to-50 percent more to build an electric vehicle than a traditional vehicle with an internal combustion engine, according to Tavares. It’s a cost that can’t be completely absorbed by the automaker if it ever hopes to turn a profit, nor can the full extra cost of manufacturing be passed onto the consumer in MSRP. Tavares says Stellantis must reduce internal costs, and bargain with suppliers that manage 85 percent of the vehicle parts chain.


This isn’t the first time Tavares has gone out to talk up the expense of building EVs.

Tavares went on to note that Stellantis’ scale will make it easier to bridge that gap. It’s also possible that EV production costs will slide significantly over the next five years, as more of the market is tooled to produce them and critical components, like batteries. In the meantime though, while I’m sure neither Stellantis nor customers will shoulder the full cost here, I have a hunch which side will get the raw end of the deal.


5th Gear: Peugeot Will Miss Le Mans

Peugeot’s wingless 9X8 Le Mans Hypercar will not be ready in time for the biggest event of the endurance racing calendar, reports:

Peugeot technical director Olivier Jansonnie explained the decision to postpone the car’s competitive bow “will afford us the time we need to achieve the necessary level of reliability” before the car is effectively frozen by the homologation through 2025.

He added: “This way, our planning will enable us to put the full weight of our teams and resources behind our own test sessions, without the disruption of racing at Spa-Francorchamps and Le Mans.

“Both operationally and from a reliability perspective, Le Mans is the most difficult race on the calendar. We will begin with some shorter races, which will allow us to progressively get up-to-speed in the championship.


The article notes that the soonest the 9X8 may now make its competition debut is at the World Endurance Championship’s round in Monza on July 10. Thus, it seems like the 24 Hours of Le Mans may be another wash in 2022, at least as far as the battle for overall victory is concerned. Thankfully we can count on some actual competition for Toyota next year.

Reverse: “Dodge used a pair of space-suited presenters from the imaginary planet ‘Omni’ to promote the car.”

The 1978 Chicago Auto Show kicked off 44 years ago today, on February 25. Here were the highlights, courtesy of 365 Days of Motoring:

Visitors to the Chicago Auto Show flocked to see the Mercedes-Benz C-111 sport coupe equipped with a turbocharged 5 cylinder diesel engine, that set three world records, averaging 156.5 mph for 10,000 miles. Additionally that year, Oldsmobile offered its Starfire Firenza, Holiday 88 coupe and sport-painted Cutlass Supreme. Buick showed a 75th anniversary Riviera, and Chrysler introduced its subcompact front-drive Dodge Omni/Plymouth Horizon. Dodge used a pair of space-suited presenters from the imaginary planet “Omni” to promote the car. Concept cars on show included the American Motors Crown Pacer, American Motors Gremlin GT, Chevrolet Black Sterling. Dodge Big Red and Ford Corrida by Ghia.


This was of course mere weeks before Earth-Omni relations deteriorated to an irreconcilable place due to Consumer Report’s indictment of the Omni and Horizon’s handling characteristics, which is why we haven’t enjoyed any diplomatic relationship with the Omnesian government since.

Neutral: What Should Replace Sochi On The F1 Calendar?

With the announcement that the Russian Grand Prix will not go ahead this morning, things look ripe for Istanbul Park to once again wind up on the schedule for the third year in a row, due to complete circumstance and being F1's perennial alternate delegate of a track. Turkey tends to produce solid racing, but is there another circuit you’d rather see fill the vacancy? “No track” is an acceptable answer too, since there are too many races now.