Porsche IPO: Here’s why Volkswagen wants to take the luxury sports-car brand public

Volkswagen AG says it’s in “advanced discussions” to take luxury sports-car maker Porsche public, positioning the move as a way to secure brand-new capital for its ambitious push into electric vehicles.

The proposed IPO—which could reportedly value Europe’s biggest carmaker’s most profitable brand at up to $100 billion—would decentralize the auto group’s corporate structure in a way that leadership believes will help step up VW’s challenge to Tesla. Besides the namesake VW, the auto group also controls Audi, Bentley, Bugatti, Lamborghini, SEAT in Spain, Czechoslovakia’s Škoda, and even the Ducati motorcycle brand. But Porsche is its most profitable. For the first three quarters of 2021, it generated a third of the entire VW automotive division’s profits.

Parties warn media that the agreement isn’t finalized yet. VW’s management still needs to OK it, as does Porsche’s, a group that, in an ironic twist, is technically VW’s largest shareholder. But the idea has been kicked around before. Porsche CEO Oliver Blume told reporters last year that he thought Porsche “could be an interesting part for thinking about an IPO.” As it turns out, VW has also flirted with this spinoff strategy for other divisions: Its truck arm, Traton, went public in 2019, though has never performed phenomenally, even from the start. Likewise, talks to sell off Lamborghini and the Ducati motorcycle brand also went nowhere.

Still, making Porsche a publicly traded company would hand VW cash that could make its EV arm more competitive, infusing capital int0 everything from technology for automating cars to building an electric battery business. The move shows the lengths to which traditional automakers will go to catch up to Tesla. Despite ongoing recalls and regulatory run-ins, Tesla is still worth more than GM and Ford combined, rapidly closing in on an almost $1 trillion valuation. Apparently seeing the writing on the wall, Ford has unveiled plans to spend billions more on EVs—to, in CEO Jim Farley’s words, “deliver breakthrough electric vehicles for the many rather than the few.”

As for other luxury carmakers, Ferrari also went public a handful of years ago, and it’s successfully leveraged that 2015 New York Stock Exchange debut into a valuable public brand, with stock prices more than quadrupling since. Porsche is also a coveted luxury-sports-car brand with proven profit margins, and a roadmap some analysts say plots a viable path toward becoming a mostly electric carmaker. “Porsche is not a Ferrari,” an analyst tells the Wall Street Journal today, “but it is an interesting business.” Its Taycan is among the market’s fastest-charging EVs; last month, it set a new Guinness World Record for the shortest charging time to drive across the United States.