Volkswagon To IPO Porsche: An EV Move
Is this something the legacy automakers are going to start doing?
VW announced that it will spin off Porsche, holding an IPO for the company. It is believed to have a value of up to $84 billion.
In this video I discuss how this might be a move legacy automakers start to follow. By focusing their attention on the brands that have a strong EV presence, they can then spin them off and have them start anew. This is a way to create "offspring" while the host, the legacy ICE company withers and dies.
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This is a practice Harvard Business professor Clayton Christiansen (now deceased) described at length in his excellent book Innovator’s Dilemma.
then they would only focus on electric cars and leave aside high-end sports vehicles
That would be an interesting take but I would not be surprised. As the shift to EV continues, it's a market that is unavoidable and not all of the stuff in the main company will work out in the new environment.
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Summary:
The video discusses the news that Volkswagen is planning to launch Porsche into an IPO, which raises questions about the future of luxury automobile manufacturers in the EV world. The focus is on Porsche's success with the Taycan, their transition to electric vehicles, and the potential impacts on legacy automakers. The speaker also explores the strategy of spinning off EV divisions into separate companies to thrive independently without legacy burdens.
Detailed Analysis:
The video opens with the announcement that Volkswagen plans to initiate an IPO for Porsche, marking a significant development in the automobile industry. Porsche's success with the Taycan, accounting for a notable portion of their sales, is highlighted, positioning them as a premium EV brand akin to Ferrari. The valuation of Porsche is estimated to be between $60 billion and $84 billion, indicating substantial market potential.
The speaker delves into Porsche's impressive transition to electric vehicles, with aggressive targets like aiming for 80% of sales to be electric by 2026. This move is seen as a commendable effort within the VW group's EV transition, potentially setting a precedent for other legacy automakers. There is speculation on whether other companies might follow a similar path of spinning off EV divisions into separate entities to untangle from legacy obligations and focus on future technologies.
The possibility of legacy automakers like General Motors adopting a similar strategy, such as spinning off Cadillac with a strong EV portfolio, is discussed. The potential financial benefits of such a strategy, including windfalls from IPOs and reinvestment in other brands for further EV development, are outlined. This approach aims to enable legacy companies to thrive in their traditional ICE vehicle segment while nurturing standalone EV ventures unencumbered by legacy constraints.
The speaker emphasizes that while Porsche may excel in the luxury EV niche market, it is unlikely to dominate the broader automobile industry currently led by companies like Tesla. Comparisons in market capitalizations are drawn between Porsche's potential $80 billion as a standalone entity and Tesla's far higher valuation, highlighting the differences in market positioning and scale between the two companies.
In conclusion, the video presents a thought-provoking analysis of the evolving landscape in the automobile industry, showcasing Porsche's EV success, VW's strategic move with the IPO, and the potential implications for legacy automakers considering similar strategies to navigate the shift towards electric mobility.