Volkswagen Hits Brakes On Battery Unit Sale And IPO Amid EV Market Slowdown

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Volkswagen AG (OTC:VWAGY) has decided to postpone the sale of a stake in its battery unit and its initial public offering (IPO) due to a slowdown in the electric vehicle (EV) market.

What Happened: The German automaker has put discussions with potential investors on hold and is no longer prioritizing the sale of its PowerCo business, reported Bloomberg on Tuesday. The company’s preference shares experienced a 1% drop following the announcement.

The decision comes amid concerns about VW’s ability to produce batteries at scale. The company is reevaluating its plans for the long-term funding of PowerCo, a unit set up in 2022 to challenge Tesla Inc. (NASDAQ:TSLA) in the EV market.

See Also: Is It Time To Buy Tesla Stock After Thursday’s Bloodbath? Here’s What One Long-term Technical Chart Says.

Despite the current setback, VW is still preparing for “investor readiness from 2024 onwards,” according to a statement to Bloomberg News.

Why It Matters: The EV market has been showing signs of a slowdown. In December, VW-backed JAC began mass production of the Yiwei EV, the first EV in the world to be powered by a sodium-ion battery. The Yiwei EV is expected to start delivering vehicles in January 2024.

In January, VW announced that it would incorporate ChatGPT, developed by OpenAI, into all its car models equipped with the IDA voice assistant. The rollout, set for the second quarter, will begin in Europe.

However, despite these advancements, the EV market has been showing signs of slowing down. In the same month, QuantumScape Corp., a company VW is partnering with to develop solid-state batteries, saw its shares surge after VW’s PowerCo provided positive results from tests using QuantumScape’s solid-state battery. But the stock pulled back steadily from the move’s strength in the following weeks.

Read Next: Tesla’s Fremont Factory, Once Left For Dead By GM And Toyota During Great Recession, Tops North American Production For 3rd Straight Year

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