Porsche Could Be Worth Up to $85 Billion
Photo: Porsche
Porsche’s IPO valuation may be as much as $85 billion, California officially approves new rules banning the sale of new gas powered cars by 2035, and new Mercedes-Benz electric vehicles have started rolling off the production line in the United States. All that and more in The Morning Shift for Friday, August 26, 2022.
1st Gear: Porsche’s IPO Is Gonna Be Huge
Porsche has reportedly got investors lined up for its initial public offering at a valuation of nearly $85 billion, according to Bloomberg. The IPO right now is set for the first week of September, and some big name investors are on board. T Rowe Price and Qatar Investment Authority have already showed interest. From Bloomberg:
The high demand in the so-called shadow order book — which is built up ahead of the formal bids collected during the IPO roadshow — is a good sign for the listing that market observers hope will re-open Europe’s nascent IPO market.
Many European and U.S. institutional asset managers that typically invest in major German IPOs have so far shied away from making firm commitments due to corporate governance concerns, the people said. Still, Porsche has enough demand to nearly fill the shadow order book at the top end of the range and is oversubscribed at the lower end, the people said.
IPO investors will be sold preferred shares in Porsche that don’t carry voting rights. The powerful billionaire Porsche and Piech clan, which controls VW through voting stock, would receive a special dividend to fund buying a blocking minority stake in Porsche.
The outlet reports that some fund managers are a bit weary that Oliver Blume, who once helmed the brand, will now be at the head of Volkswagen. That company will still have the bulk of the shares in Porsche. Volkswagen’s current market capitalization is … $85 billion.
2nd Gear: California EV Love
California has officially approved new regulations that are set to ban the sale of new gasoline-powered cars and trucks by 2035. The move is obviously being done to combat climate change and speed up the rest of the nations move toward electric vehicles.
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It’s reported that members of the California Air Resources Board (CARB) voted to formally adopt the rules at a meeting held yesterday in Sacramento.
Despite the move, many within the auto industry feel that it will be hard to get to California’s target, because of a slow build of EV charging networks and raw materials being scarce to make batteries. From the Wall Street Journal:
“These are complex, intertwined and global issues well beyond the control of either CARB or the auto industry,” said John Bozzella, president of the Alliance for Automotive Innovation.
The regulations, which apply to sales of new cars, pickup trucks and SUVs, would establish annual thresholds for the share of zero-emission vehicles auto makers must sell in the state each year, starting at 35% in 2026, and ramping up to 68% by the 2030 vehicle model year and 100% by 2035.
While EV sales still account for only around 6% of U.S. new-vehicle sales, they surpassed 16% in the second quarter in California, which has long been a pioneer in EV adoption.
Sales of electrics have been growing faster than the broader vehicle market as auto makers introduce new models, even as EV prices have risen amid inflationary pressures.
The WSJ reports that the rules would avoid the equivalent of about 915 million barrels of oil between 2026 and 2040.
“This is an actual, legally enforceable requirement, and it is incredibly ambitious,” Liane Randolph, the chair of CARB, told the publication.
This is also a good reminder that when automakers complain about stuff like this usually they are being disingenuous, if not making up a bunch of worries outright.
3rd Gear: Mercedes Goes Electric in the U.S.
Mercedes’ 6 million-square-foot factory in Vance, Alabama now has its first new EVs rolling off the production line. Specifically, the plant is making the EQS SUV, or Mercedes electric GLS.
In the next couple of years, the entire plant may be switching over to building EVs, according to Automotive News. Right now, the only electric vehicle it’s making is the EQS SUV, but soon that’ll be joined by the EQE SUV, which is based on the smaller GLE crossover.
The plant in Vance will be making EQEs for all markets other than China, and it’s expected to produce over 100,000 electric vehicles next year. That’s still a lot less than its annual capacity of 305,000. From Automotive News:
Much is riding on the Alabama plant as Mercedes pivots into an all-electric brand around the world in markets that are ready for the switch.
It launched its all-electric EQ subbrand with the debut of a battery-powered S-Class sedan last fall.
The U.S.-built EQS SUV will be joined in the lineup this year by the EQB compact crossover and the EQE midsize sedan. Next year, the portfolio gets expanded with the arrival of the EQE midsize crossover.
Right now, Mercedes says it is still working on future EV sourcing plans.
Mercedes expects EVs to account for about half of its U.S. sales by 2030, executives revealed at the brand’s national dealer meeting earlier this year. And next year, Mercedes aims to sell up to 45,000 EQ-brand electric vehicles here.
There’s even a possibility Mercedes-Benz could start sourcing more and more EV powertrain components in the U.S. It’s almost like big legislation like the Inflation Reduction Act matters.
4th Gear: Elon Musk
It’s now been well-documented that Elon Musk impregnated one of his top Neuralink executives, but a new report offers a wrinkle in the case, in that the pregnancy might not have occurred because of sex. Shivon Zilis, who reported directly to Musk, had twin babies last November. She has since told some colleagues that she wasn’t involved romantically with Musk, according to Reuters’ sources. Instead, the children were conceived through in vitro fertilization.
Usually having a child with a subordinate would cause waves within a company for the CEO, but that doesn’t seem to be happening this time. From Reuters:
Neuralink’s 62-page employee handbook, a copy of which was seen by Reuters, prohibits dating, “personal relationships” and “close personal friendships” between employees in a direct supervisory relationship to avoid any conflicts of interest.
But the facts presented by Musk and Zilis’ relationship are so unusual that the corporate governance experts who reviewed the policy for Reuters expressed divergent views on whether they thought the entrepreneur had violated it by having children with his subordinate through IVF.
“Whatever lawyer wrote this language did not contemplate this situation,” said Nell Minow, vice chair of corporate governance consultancy ValueEdge Advisors, referring to the Neuralink code of conduct.
She added that the situation appeared to “fall between the cracks” of the policy’s intent to avoid conflicts of interest due to relationships between employees.
It’s unclear whether Musk or Zilis disclosed their relationship — whatever it was — to the company’s people operations manager.
Neuralink has accepted Zilis’ description of a non-romantic relationship, and she continues in her role as director of operations and special projects, a source familiar with the company’s handling of the matter said. In the weeks since the disclosure of their having children, Musk and Zilis have also continued working together, taking the helm at internal and external company meetings, according to two people with direct knowledge of the matter.
I don’t know. Whatever this whole thing is, it gives me the ick.
5th Gear: Apple CarPlay Is Gunning For Automaker Interfaces
Apple’s latest version of CarPlay is meant to take over every screen on a car’s dashboard, and because it’s Apple, CarPlay will also gain access to a river of data. It’s being reported that car manufacturers may not be too keen on the idea. From Automotive News:
Where drivers view extending iPhone functions into the dashboard as a matter of convenience, automakers and tech companies see a big dollar battleground. McKinsey & Co. estimates vehicle data will be worth up to $400 billion annually by 2030. Fortune Business Insights predicts the global connected-car market will grow from nearly $60 billion in 2021 to more than $190 billion in 2028.
As cars have become more connected, automakers envision vehicle data as an essential and profitable component of their future business plans. They want to sell services such as pay-per-mile insurance and route-based offers from retailers.
Right now, experts believe that only smaller and newer automakers will be into giving Apple full control of the in-vehicle experience.
Yet Apple said it was “working with automakers around the world” when it introduced the new version of CarPlay at its annual Worldwide Developer Conference in June. The tech giant displayed 14 major car company logos including major brands such as Ford, Mercedes-Benz and Honda. It said the new version will be available in vehicles starting late next year.
It’s reported that 98 percent of new vehicles now come with CarPlay. On top of that, 79 percent of buyers will only consider a vehicle if it comes with the feature.
Reverse: This Won’t Make Anyone Angry In The Comments
Neutral: Have Fun This Weekend
There isn’t very much summer left. Do your best to take advantage of the little warm weather we’ve got in front of us. I’ll be inside packing up my shit ahead of moving, but that’s just me. Do what I’d rather be doing. Go to a beach. Touch grass. See some birds.
