Volvo Cars Prepares for US$20 billion IPO Before End of Year

Chinese Geely Holding, Goldman Sachs, BNP Paribas and HSBC are preparing to list Volvo Cars on the Nasdaq Stockholm exchange by the end of 2021, aiming for a US$20 billion valuation in what could be one of the EU’s biggest initial public offerings (IPOs) of the year, reported Reuters.

Volvo Cars executives recently revealed an extensive road map to become a fully electric automaker by 2030, following the official announcement made in March, when Hakan Samuelsson, CEO of Volvo Cars, assured that the combustion engine market is shrinking: “To remain successful, we need profitable growth. So instead of investing in a shrinking business, we choose to invest in the future, electric and online. We are fully focused on becoming a leader in the fast-growing premium electric segment.”

Transforming Volvo Cars into a fully electric automaker will require investment. Since EV market leader Tesla became public in 2010, many startups have gone public both in the US and China, aiming to raise cheap capital to compete with bigger brands, such as Volvo. “We are looking at the possibility of doing an IPO before the end of the year,” said Samuelsson.

Besides the electrification plan for 2030, Volvo will change its retail operations in the EU to allow customers to order directly from the manufacturer, while dealers will only get paid commissions to deliver them. Current laws protecting existing dealers in the US and Mexico would prevent this from happening in those countries.

Henrik Green, CTO of Volvo Cars, insisted in the automaker’s need to focus exclusively on EVs: “There is no long-term future for cars with an internal combustion engine. We are firmly committed to becoming an electric-only car maker and the transition should happen by 2030. It will allow us to meet the expectations of our customers and be a part of the solution when it comes to fighting climate change.”

Electrification in Mexico

Earlier in September, Volvo put its first fully electric vehicle in the Mexican market: the SUV XC40 with a 78-kWh lithium battery and capable of traveling 418 km per charge. This compact SUV, the most sold vehicle by Volvo in Mexico, is now offered in three versions in the country: combustion engine, plug-in hybrid and electric. "All our effort goes toward electrification and this effort begins with XC40. This is our best-selling vehicle in the Mexican market. Much of the success that the brand has had in recent years has been thanks to this model, so we decided that this was going to be the first electric," said Raimundo Cavazos, CEO of Volvo Car México.

However, in emerging markets, such as Mexico’s, “electrification will arrive in a different way,” said to MBN José Román, President of Nissan Mexicana and NIBU. “There are three key players in electrification: the customer, OEMs and the government, which is in charge of developing the necessary infrastructure for electrified vehicles. In emerging markets, we have the technology and there is a clear need for these kinds of vehicles but governments are not ready to massively invest in electrification – not because they don’t want to but because they have other priorities.”