Volvo Is Going Public

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Image for article titled Volvo Is Going Public

Photo: Volvo

Volvo wants to raise billions, Tesla had another strong quarter, and GM dropped a silly lawsuit against Ford. All of that and more in The Morning Shift for October 4, 2021.

1st Gear: Volvo’s Doing An Initial Public Offering

The Wall Street Journal’s sources say that it might value the company at something north of $25 billion, which is, of course, a fraction of Tesla’s current market capitalization of around $767 billion. But Volvo is not chasing Tesla so much as trying to do its own thing and build a sustainable business long-term. There are similarities, though, in that Volvo is going public to help fund its electric ambitions.

Volvo said it aims to raise about 25 billion kronor, equivalent to $2.86 billion, from the issue of new shares. Geely will also sell an unspecified number of its shares as well, according to marketing material. Volvo didn’t provide a target valuation of the entire company following the IPO, or say what percentage stake Geely would retain.

The proceeds of the IPO will go toward financing Volvo’s efforts to transform its fleet into a fully electric one. It will also invest in battery supply in Europe, the U.S. and China and in the in-house production of electric motors.

The Wall Street Journal first reported that Volvo was finalizing its IPO plans and was expected to disclose them as early as Monday.

A listing would represent one of the car industry’s most dramatic turnarounds. Ford Motor Co. , weakened by the global financial crisis, sold the Swedish company to Geely for $1.8 billion in 2010.

We heard in March that this might be a thing, so it is not altogether surprising. Godspeed, Volvo, out here trying to be one of the only good car companies.

2nd Gear: Polestar, Meanwhile, Is Volvo But A Bit … More

News broke last week that the EV-maker Polestar — co-owned by Volvo and Geely — would be going public too, but not via the traditional means of an IPO, like Volvo plans to do, but via merger with a special-purpose acquisition company, the favorite means of shady EV startups.

Today, Automotive News took stock of the situation, saying that the plan after that is to put the pedal to the floor.

The new financial posture should help Polestar, which launched in late 2017, with its aggressive growth plans. It looks to grab a 2.3 percent share of the global premium market by 2025. The automaker has two models on the market but plans to launch three more by the end of 2024.

It also expects to more than double the global markets in which it operates, going from 14 to 30 in about two years.

“Our business plan has been set around a growth plan that needs a certain funding,” Polestar CEO Thomas Ingenlath told Automotive News last week.

A large part of that funding will come from the roughly $1 billion Polestar will raise from the SPAC.

Without that capital, “we would have to find it somewhere else, or we would have to scale down and change our plan,” Ingenlath said.

Because of Geely’s track record with Volvo, Polestar is one of the only automakers doing the SPAC thing that I have any confidence in. Also, the Polestar 2 just seems like a great car that Polestar isn’t trying to overhype.

3rd Gear: Tesla’s Delivery Numbers For The Third Quarter Were Good

Tesla is making a habit of this despite headwinds like the pandemic and global chip shortage that have stymied other automakers. On Saturday, Tesla said it delivered 241,300 cars in July, August, and September. That is a global number that includes 9,275 Model Ss and Xs, with the rest Model 3s and Ys. Tesla does not break down that number by region or model beyond that.

That number also was higher than Wall Street analysts expected, according to Bloomberg.

The results beat an average estimate for deliveries of 223,677 from 12 analysts surveyed by Bloomberg and also surpassed the average projection of 221,952 that Tesla sent to investors. The latest results were higher than than the company’s previous record for 201,250 vehicles in the second quarter.

“With the chip shortage a major overhang on the auto space and logistical issues globally these delivery numbers were “eye popping” and speaks to an EV demand trajectory that looks quite robust for Tesla heading into 4Q and 2022,” said analyst Dan Ives of Wedbush Securities in a note to clients Saturday.

Shares of the EV market leader closed Friday little changed at $775.22. The stock is up less than 10% so far this year and trails the broader S&P 500, which it joined last year.

Tesla’s numbers compare favorably with the rest of the industry, which saw U.S. vehicle sales slump in the latest three-month period due to limits on production from supply chain shortages. General Motors Co., which idled key truck plants in September, took the biggest blow, with sales in its home market dropping by a third in the latest quarter.

Tesla is becoming more and more consistent, to the extent that it isn’t surprising anymore when it hits its marks. The next big thing will be when it doesn’t.

4th Gear: GM Has Resolved A Lawsuit Against Ford

GM sued Ford in July, saying that the name of Ford’s semi-autonomous tech — BlueCruise — amounted to an infringement on GM’s trademark on its own semi-autonomous tech, called Super Cruise. Also on Cruise, the name of GM’s robo-taxi thing. Well, that’s all now been resolved, according to the Detroit Free Press. It’s unclear if any money changed hands as a result.

On Sunday night, GM told the Free Press the lawsuit had been resolved amicably, but declined to release any final terms. A Ford spokesman said the settlement is still in process, but made a comment that indicated future use of the word BlueCruise may continue on future Ford cars.

The comments come after lawyers for the automakers filed a notice of settlement with U.S. District Court Northern District California on Friday saying the parties are working out terms of a settlement. The notice requested a conditional dismissal and the two sides have 60 days to report back to the court if they’re unable to come to an agreement.

On Sunday evening, GM spokesman Darryll Harrison told the Free Press, “The parties have resolved the case and related proceedings amicably and will have no further comment.”

Ford spokesman Mike Levine could not confirm that any settlement terms have been finalized and said, “We’re planning to settle the lawsuit with GM and have no further comment at this time.”

When asked to clarify GM’s statement in light of the fact that the terms have not been fully finalized, Harrison said, “Our on-the-record stands.”

I hope the lawyers involved here are pleased with their work.

5th Gear: Audi CEO Agrees The Chip Shortage Is Bad

This is the kind of thing you would say to your boss when that project you’ve been working on simply isn’t coming together.

Via Reuters:

“We had a very strong first half in 2021. We do expect a much weaker second half. We really have trouble,” Markus Duesmann told Reuters ahead of the Reuters Events Automotive conference, calling the situation “a perfect storm”.

[…]

“We are dealing with it pretty well I would say,” Duesmann, who also sits on the management board of Volkswagen, said. He said the group was seeking closer ties with chipmakers and that the carmaker would emerge stronger from the crisis.

“But at the moment it’s a day-to-day troubleshooting process,” he said.

I joke but Audi is a not-small part of Volkswagen’s profits, and I’m sure everyone there is alarmed. The degree to which the entire industry was caught flat-footed on this continues to surprise me.

Reverse: Balloon Corps

I was not previously aware of this bit of Civil War history.

Image for article titled Volvo Is Going Public

Photo: Volvo

Volvo wants to raise billions, Tesla had another strong quarter, and GM dropped a silly lawsuit against Ford. All of that and more in The Morning Shift for October 4, 2021.

1st Gear: Volvo’s Doing An Initial Public Offering

The Wall Street Journal’s sources say that it might value the company at something north of $25 billion, which is, of course, a fraction of Tesla’s current market capitalization of around $767 billion. But Volvo is not chasing Tesla so much as trying to do its own thing and build a sustainable business long-term. There are similarities, though, in that Volvo is going public to help fund its electric ambitions.

Volvo said it aims to raise about 25 billion kronor, equivalent to $2.86 billion, from the issue of new shares. Geely will also sell an unspecified number of its shares as well, according to marketing material. Volvo didn’t provide a target valuation of the entire company following the IPO, or say what percentage stake Geely would retain.

The proceeds of the IPO will go toward financing Volvo’s efforts to transform its fleet into a fully electric one. It will also invest in battery supply in Europe, the U.S. and China and in the in-house production of electric motors.

The Wall Street Journal first reported that Volvo was finalizing its IPO plans and was expected to disclose them as early as Monday.

A listing would represent one of the car industry’s most dramatic turnarounds. Ford Motor Co. , weakened by the global financial crisis, sold the Swedish company to Geely for $1.8 billion in 2010.

We heard in March that this might be a thing, so it is not altogether surprising. Godspeed, Volvo, out here trying to be one of the only good car companies.

2nd Gear: Polestar, Meanwhile, Is Volvo But A Bit … More

News broke last week that the EV-maker Polestar — co-owned by Volvo and Geely — would be going public too, but not via the traditional means of an IPO, like Volvo plans to do, but via merger with a special-purpose acquisition company, the favorite means of shady EV startups.

Today, Automotive News took stock of the situation, saying that the plan after that is to put the pedal to the floor.

The new financial posture should help Polestar, which launched in late 2017, with its aggressive growth plans. It looks to grab a 2.3 percent share of the global premium market by 2025. The automaker has two models on the market but plans to launch three more by the end of 2024.

It also expects to more than double the global markets in which it operates, going from 14 to 30 in about two years.

“Our business plan has been set around a growth plan that needs a certain funding,” Polestar CEO Thomas Ingenlath told Automotive News last week.

A large part of that funding will come from the roughly $1 billion Polestar will raise from the SPAC.

Without that capital, “we would have to find it somewhere else, or we would have to scale down and change our plan,” Ingenlath said.

Because of Geely’s track record with Volvo, Polestar is one of the only automakers doing the SPAC thing that I have any confidence in. Also, the Polestar 2 just seems like a great car that Polestar isn’t trying to overhype.

3rd Gear: Tesla’s Delivery Numbers For The Third Quarter Were Good

Tesla is making a habit of this despite headwinds like the pandemic and global chip shortage that have stymied other automakers. On Saturday, Tesla said it delivered 241,300 cars in July, August, and September. That is a global number that includes 9,275 Model Ss and Xs, with the rest Model 3s and Ys. Tesla does not break down that number by region or model beyond that.

That number also was higher than Wall Street analysts expected, according to Bloomberg.

The results beat an average estimate for deliveries of 223,677 from 12 analysts surveyed by Bloomberg and also surpassed the average projection of 221,952 that Tesla sent to investors. The latest results were higher than than the company’s previous record for 201,250 vehicles in the second quarter.

“With the chip shortage a major overhang on the auto space and logistical issues globally these delivery numbers were “eye popping” and speaks to an EV demand trajectory that looks quite robust for Tesla heading into 4Q and 2022,” said analyst Dan Ives of Wedbush Securities in a note to clients Saturday.

Shares of the EV market leader closed Friday little changed at $775.22. The stock is up less than 10% so far this year and trails the broader S&P 500, which it joined last year.

Tesla’s numbers compare favorably with the rest of the industry, which saw U.S. vehicle sales slump in the latest three-month period due to limits on production from supply chain shortages. General Motors Co., which idled key truck plants in September, took the biggest blow, with sales in its home market dropping by a third in the latest quarter.

Tesla is becoming more and more consistent, to the extent that it isn’t surprising anymore when it hits its marks. The next big thing will be when it doesn’t.

4th Gear: GM Has Resolved A Lawsuit Against Ford

GM sued Ford in July, saying that the name of Ford’s semi-autonomous tech — BlueCruise — amounted to an infringement on GM’s trademark on its own semi-autonomous tech, called Super Cruise. Also on Cruise, the name of GM’s robo-taxi thing. Well, that’s all now been resolved, according to the Detroit Free Press. It’s unclear if any money changed hands as a result.

On Sunday night, GM told the Free Press the lawsuit had been resolved amicably, but declined to release any final terms. A Ford spokesman said the settlement is still in process, but made a comment that indicated future use of the word BlueCruise may continue on future Ford cars.

The comments come after lawyers for the automakers filed a notice of settlement with U.S. District Court Northern District California on Friday saying the parties are working out terms of a settlement. The notice requested a conditional dismissal and the two sides have 60 days to report back to the court if they’re unable to come to an agreement.

On Sunday evening, GM spokesman Darryll Harrison told the Free Press, “The parties have resolved the case and related proceedings amicably and will have no further comment.”

Ford spokesman Mike Levine could not confirm that any settlement terms have been finalized and said, “We’re planning to settle the lawsuit with GM and have no further comment at this time.”

When asked to clarify GM’s statement in light of the fact that the terms have not been fully finalized, Harrison said, “Our on-the-record stands.”

I hope the lawyers involved here are pleased with their work.

5th Gear: Audi CEO Agrees The Chip Shortage Is Bad

This is the kind of thing you would say to your boss when that project you’ve been working on simply isn’t coming together.

Via Reuters:

“We had a very strong first half in 2021. We do expect a much weaker second half. We really have trouble,” Markus Duesmann told Reuters ahead of the Reuters Events Automotive conference, calling the situation “a perfect storm”.

[…]

“We are dealing with it pretty well I would say,” Duesmann, who also sits on the management board of Volkswagen, said. He said the group was seeking closer ties with chipmakers and that the carmaker would emerge stronger from the crisis.

“But at the moment it’s a day-to-day troubleshooting process,” he said.

I joke but Audi is a not-small part of Volkswagen’s profits, and I’m sure everyone there is alarmed. The degree to which the entire industry was caught flat-footed on this continues to surprise me.

Reverse: Balloon Corps

I was not previously aware of this bit of Civil War history.

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