Volkswagen battery unit delays IPO until factories running, unified cell in use

Volkswagen battery unit IPO plans on hold: Volkswagen's battery unit has deferred any plans for an initial public offering (IPO) until its manufacturing facilities are operational and its standardised battery cell is fully deployed, the division's chief informed Reuters, effectively pushing back any potential IPO until after 2026.

Thomas Schmall's statements offer the clearest insight yet into when the leading European carmaker might decide to list its PowerCo battery business on the stock market, following initial steps such as securing external investments or forging strategic alliances with other cell manufacturers.

"In a subsequent phase, an IPO remains a possibility. Nonetheless, this consideration will only arise once our factories are operational and the standardised cell is in full use," he explained to Reuters.

Volkswagen established its battery unit as a separate entity in mid-2022, committing 20 billion euros ($21.7 billion) with partners to construct plants capable of producing 240 gigawatt hours of capacity by 2030. The strategic move aimed to enhance control over the supply chain and narrow the gap with Tesla.

The unit, targetting 20 billion euros in revenue by the decade's end, has announced plans for three battery cell factories in Salzgitter, Valencia, and Ontario, scheduled to commence operations in 2025, 2026, and 2027, respectively.

It aims to deploy its unified cell, a singular cell design featuring three different chemistries, in at least 80 per cent of its electric vehicles by 2025, setting 2026 as the earliest feasible timeline to meet Schmall's conditions for a potential listing.

PowerCo has refrained from specifying a timeline for a potential IPO, only stating its intention to prepare the business for investors by 2024.

Additionally, Schmall has ruled out the establishment of another plant in Europe for the time being, citing competitive and cost-related concerns.

"Currently, this option is not being considered, given both competitive dynamics and cost considerations," he asserted.

Interest in electric vehicles (EVs) among capital markets has waned due to slower sales growth and accumulating financial losses, with smaller firms like Polestar and Fisker struggling to secure financing for EV development.

Last year's IPO market experienced its lowest level of activity since 2016, as elevated borrowing rates hindered investor participation.

"Public market investors prioritise cash flow," remarked Chris Burns, CEO of anode material supplier Novonix. He stressed the importance of early offtake agreements and robust partnerships with automakers for battery cell manufacturers to establish trust from the outset.

"The sentiment is quite negative... it's not an opportune moment," echoed Andy Leyland, founder of battery supply chain consultancy SC Insights.

(With Reuters Inputs)