Wen | You Niu Finance
After Geely Automobile decided to terminate its trip to science and technology innovation board, Volvo once again revealed its trend in the capital market.
According to media reports, in an interview with the media on June 30th, samuelson, CEO of Volvo Cars, revealed that Volvo’s listing process has made good progress, and it may land on the Nasdaq Stockholm Stock Exchange at the end of this year.
In fact, Volvo Car has discussed the possible listing many times. After giving up the plan to merge with Geely Automobile, Volvo once again embarked on the road of landing in the capital market.
Volvo Car, which is famous for its safety, was founded in Gothenburg, Sweden in 1927. After decades of development, it has gradually become a famous luxury car brand in Sweden. Volvo’s two founders originally worked for SKF, a well-known ball bearing manufacturer at that time. One was an engineer and the other was the manager of international marketing department. They persuaded SKF’s board of directors at that time to start research and development of new cars in 1926, and officially launched the first product a year later.
With excellent sales performance, Volvo grew in size. In 1935, it officially left its parent company SKF and continued to operate independently for Volvo. In 1999, Volvo Group sold its Volvo car business to Ford Motor Company of the United States, and eleven years later, it was acquired by Geely Automobile in China for $1.8 billion.
After Volvo embraced Geely Automobile, it embarked on the highway of development. According to the data released by Volvo Cars, its global car sales in 2019 were 705,400 vehicles, up 9.8% year-on-year, achieving a six-year continuous increase in sales. Among them, China is still Volvo’s largest single market, with a cumulative sales volume of 154,000 vehicles.
At the same time of rapid development, Volvo began to plan the route of landing in the capital market.
In March 2017, some media reported that Volvo planned to raise 500 million US dollars to prepare for listing. In 2018, Volvo officially launched the listing plan. At that time, top investment banks such as Citigroup, Goldman Sachs and Morgan Stanley were hired for listing counseling. However, Volvo finally stopped the IPO plan because the valuation given by the investment banks did not meet expectations.
On February 10 last year, when Geely announced that it would merge with Volvo, some analysts thought it was Geely’s action to help Volvo go public as a whole. Wang Guanqiao, chief analyst of Industrial Securities Transportation Equipment Industry Research, said: "Volvo’s listing is inevitable, but it is only a matter of what form and how much valuation."
However, this merger only lasted for about a year. In February this year, Geely Automobile said that the previous merger plan was shelved, and the two parties would maintain independent operations, but they would cooperate in the fields of autonomous driving, electrification and powertrain.
In mid-May this year, Volvo announced in a statement that it was seeking an initial public offering from the Nasdaq Stockholm Stock Exchange, and also extended the contract of CEO samuelson until the end of 2022, while samuelson had been hoping to promote Volvo’s listing.
Looking at the whole automobile market, new energy vehicles have become the focus of a new round of competition in the global automobile industry after 2020.
According to Canalys’ forecast, it is estimated that in 2021, the global sales of electric vehicles will exceed 5 million, accounting for more than 7% of global sales, up 66% year-on-year. It is estimated that by 2030, the sales of electric vehicles will reach 48% of the global passenger car sales.
On the one hand, with the progress of artificial intelligence, big data, autonomous driving, 5G and other technologies, and the establishment of carbon-neutral targets around the world, a new round of technological revolution will bring earth-shaking changes to the automobile manufacturing field.
On the other hand, the domestic sales of new energy vehicles account for a small part of the global market, and the national policy support originally planned to withdraw from the market this year is still being distributed because of the continuation of the epidemic, which also provides more support and encouragement for the development of the new energy market, which keeps the domestic new energy fever high for a long time.
Shi Jianhua, deputy secretary-general of China Automobile Industry Association, said in an interview with the media recently: "At present, it is not a problem for the domestic annual sales of new energy vehicles to exceed 2 million this year, especially under the advocacy of the two principles and policies of" carbon neutrality "and" peak carbon dioxide emissions ",the internal and external environment of the new energy vehicle market is still constantly optimized and accelerated."
In May, for example, the domestic sales volume of new energy vehicles was 217,000, a year-on-year increase of 159.7%. From January to May this year, the cumulative sales volume of new energy vehicles reached 950,000, a year-on-year increase of 224.2%. However, due to the epidemic last year, this data may not directly reflect the real situation of new energy vehicles in China. Compared with the sales of 1.206 million vehicles in 2019, the sales of new energy vehicles in the first five months of this year have reached 78% of the sales in 2019, with a huge overall increase.
On the other hand, according to the report of Forward-looking Industry Research Institute, as Volvo’s home market in Europe, the proportion of new energy vehicle sales in global sales in 2020 even exceeds that in China, reaching 43.8%, which may be a good situation for Volvo, which focuses on Europe and China, because of its previous sales base.
In the face of the growing global new energy vehicle market, it is inevitable that Volvo chooses to go public to promote the company’s development. For Volvo, if it can be listed on the Stockholm Stock Exchange, it will be able to face global investors and reduce the influence of China investors. Moreover, Volvo’s independent listing, for Geely and Volvo, can be valued separately, which also has certain advantages in the capital market.
In the rapidly growing new energy vehicle market, listing can reserve some funds for Volvo, which can reduce the financial pressure, whether it is used for follow-up research and development or to open up sales channels. However, it needs to be clear that after Volvo’s independent listing, Geely Automobile will remain its major shareholder.
However, in such a big market of new energy vehicles, there are naturally many players who want to take a slice of this big cake.
After the year 2021, many domestic enterprises such as Baidu, Xiaomi, 360, SAIC, Beiqi and Dongfeng have joined in the manufacturing of new energy vehicles, and some enterprises have launched smart car brands to grab market share, such as the HI version of Extreme Fox Alpha S Huawei, which adopts many Huawei technologies, and the first new energy vehicle equipped with HarmonyOS OS smart cockpit.
Not only in China, but also in Europe, which accounts for the largest sales volume of new energy vehicles in 2020, with the introduction of various favorable policies (subsidies and suppression of traditional vehicles) for new energy vehicles by the European Union, many traditional automobile giants such as Mercedes-Benz, BMW and Audi have actively or passively engaged in this field.
"At present, the automobile industry is undergoing changes at an unprecedented speed. Electrification, autonomous driving, intelligent networking and new business models are coming like a wave, and the competition in the industry is becoming increasingly fierce. We must be fully prepared. " Geely wrote in an internal letter published on February 10th.
In fact, the pressure on Volvo is not only from other players entering the market, but also from Geely.
On the one hand, Geely and Baidu cooperated to set up a new energy vehicle enterprise named "Jidu" at the beginning of this year, which gathered Baidu’s autonomous driving technology and Geely’s experience in vehicle manufacturing.
On the other hand, as early as 2016, Volvo and Geely jointly established a high-end brand named Lectra, and a year later, Polar Star was established, which also had a certain impact on Volvo’s new energy vehicle strategy. For example, Polar Star released a pure electric vehicle Polestar 2 in early 2019, while Volvo did not release a model named XC40 Recharge until October, and the parameters of the two models were almost the same.
Fortunately, Volvo is also trying to make changes.
Volvo plans to standard lidar on the next generation of new cars, and in order to achieve software autonomy, Volvo began to switch from relying on suppliers to developing its own software. According to Volvo, it is currently cooperating with NVIDIA, Google and other technology companies, gradually transforming into a full-stack self-research and central computing platform, and plans to equip future models with self-developed in-vehicle systems.
Samuelson plans to achieve full electrification in 2025, reaching the global sales target of 1.2 million vehicles, of which 50% are pure electric vehicles and the rest are hybrid vehicles; In 2030, it became a pure electric luxury car enterprise; Strive to become a climate zero-load benchmark enterprise in 2040; All pure electric vehicles will be sold online.
If this transformation strategy can be carried out smoothly, it will help Volvo to occupy a place in the global competition of new energy vehicles, but the road to change is full of risks and unknowns. Facing the eyeing competitors, listing is a rare opportunity for Volvo to become the leader of luxury pure tram enterprises.
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