Carmaker Renault canceled plans to take its electric vehicle unit, Ampere, public.
The French company said in a Monday (Jan. 29) press release that “current equity market conditions” are not conducive to an initial public offering (IPO). Instead, Renault will continue to fund the development of Ampere until that company breaks even next year.
“Today, we took a pragmatic decision,” said Renault CEO Luca de Meo in the release. “We are all focused on executing our strategy and building our track record to create value for all our stakeholders.”
The company had been seeking a valuation of 8 billion euros (about $8.7 billion) to 10 billion euros (about $10.8 billion) for Ampere, nearly as much as Renault’s 10.1-billion-euro (about $10.9 billion) market value, Bloomberg reported Monday.
“We didn’t think the IPO made much sense to begin with,” said Bernstein automotive analyst Daniel Roeska, per the report. “The decision shows that Renault is willing to adapt the execution of its strategic plan and is listening to market feedback.”
Roeska in October wrote an open letter to Renault management urging them to rethink the IPO, the report said. There has been an ongoing downturn in the European IPO market, with proceeds for new listings down by more than a third last year.
The news comes as other companies rethink their EV plans as the market for the vehicles cools. For example, car rental company Hertz announced Jan. 11 that it was selling 20,000 EVs from its U.S. fleet — amounting to one-third of its global supply — and replacing them with internal combustion engine vehicles.
The reason? EVs are more expensive than traditional autos to repair and operate, Hertz said, and the company has seen weak customer demand for the vehicles.
PYMNTS’ Karen Webster wrote earlier this month that the automotive ecosystem and the government are in “a mild state of panic now over the consumer’s growing EV ambivalence.”
Consumers have concluded that EVs take too long to recharge and have inadequate range, leading innovators to try to make charging stations more entertaining and manufacturers to search out better batteries, Webster wrote.
“In the meantime, OEMs should shift their focus from getting people to buy EVs to getting people to buy their cars, making them smarter, safer and more fun to drive. And then their EV models, once the fundamental problem of battery life can be solved,” Webster wrote.