EV startups struggle to cut costs, Porsche IPO seeks $85 billion valuation
Welcome to this episode of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an automotive technology consultancy that helps entrepreneurs raise capital and maximize the value of their business.
On Friday the fifth of this week, there’s a tale of two cities when it comes to recent automaker announcements in public markets.
First, Porsche AG has aligned investor interest in its initial public offering at a valuation of up to $85 billion, signaling that one of the biggest listings ever in Europe is set to continue despite market headwinds.
Volkswagen AG’s luxury brand has secured pre-orders that exceed the shares on offer at a valuation of between 60 billion and 85 billion euros. Porsche plans to announce plans to float in Frankfurt in the first week of September after supervisory board approval, barring unexpected market shocks.
Of all the brands, Ferrari continues to be by far the most profitable automaker. Its operating margin fell from 21.4% in 2020 to 25.5% last year. Based on the numbers, the company earned an incredible $106,000 per unit sold in 2021.
Ferrari has a current market cap of $37 billion.
Compared to Ferrari’s operating margin of 26%, Porsche sits internally at 15%, meaning Porsche remains one of the most profitable automakers in the world.
Juxtapose Porsche’s expected valuation and market reception to the challenges facing two of the new upstart EV automakers.
Electric vehicle startups that promised to disrupt the auto industry are now scrambling to contain costs and spend money quickly to bring vehicles to market, amid parts shortages and rising prices for raw materials.
First, Lucid Motors has filed a new bid of up to $8 billion as the luxury electric vehicle maker seeks to bolster working capital at a time when supply issues have crippled production.
The company, which has a market capitalization of around $27 billion, halved its electric vehicle production forecast earlier this month, blaming supply chain and logistical issues.
California-based company Lucid, which went public via a SPAC transaction in 2021, had secured the $4.4 billion it needed through the end of 2022, but would not wait until then to raise more cash. .
In addition to Lucid’s challenges, Nikola also returns to the well. Nikola said he could sell shares to raise up to $400 million, as the electric truck maker seeks to complete its acquisition of battery technology company Romeo Power and ramp up production amid rising costs.
Nikola struggles with higher labor and raw material costs due to decades-long high inflation and the Russian-Ukrainian war.
Nikola last month received investor approval to increase the number of authorized shares to 800 million from 600 million after repeatedly delaying its annual shareholder meeting to seek more proxies in favor of the proposal.
It’s an interesting time in automotive, as brands like Porsche are doing exceptionally well, while some of the newer electric-only brands continue to struggle.
I am thrilled to announce that I will be hosting one of two “super sessions” at the National Automobile Dealers Association show in January on the main stage.
Please plan to join me on Thursday, January 26, as I have the pleasure of moderating five outstanding dealerships to get their perspective on “The Future of Automotive.”
I will be joined on stage by amazing panelists, including:
- Liza Borches, CEO of Carter Myers Automotive
- Dinos Constantine, COO of Holler-Classic Automotive Group
- Michael Dunlap, Vice President and Partner of Schomp Automotive Group
- Bill Feinstein, President of Planet Honda
- Andrew Walser, CEO of Walser Automotive Group.
I hope you can join us on the NADA Main Stage on Thursday January 26th on the Main Stage as our session kicks off at the NADA Convention.
The future of automotive retail has finally been released.
The book is my attempt to provide the industry with a framework for the various threats and opportunities swirling around and offers practical advice on how best to navigate the next 5-10 years.
In the book, I argue that our industry is going to see more change in the next 10 years than it has seen in the past 100.
You can find the new book on Amazon or just go to FutureofAutomotiveRetail.com.
If you have the opportunity to read it, write to me and tell me what you think. at Steve@automotiveventures.com. I would like to discuss it with you.
So that’s your weekly Friday the 5th, a quick recap of the big deals in automotive technology over the past week.
If you’re a young automotive tech entrepreneur looking to raise cash, or an entrepreneur trying to decide if and when to raise cash or sell your business, I’d love to talk to you.
Thanks for tuning in to CBT News for this week’s Friday Five, and see you next week!
Did you like this episode of Friday 5? Please share your thoughts, comments or questions regarding this topic by submitting a letter to the editor here, or contact us at [email protected]
Be sure to follow us on Facebook, LinkedIn and TikTok to stay up to date.
While you’re here, don’t forget to subscribe to our email newsletter for all the latest automotive industry news from CBT News.