LONDON, Oct 4 (Reuters Breakingviews) – Zhejiang Geely founder Li Shufu has picked a very good time to take advantage of the mania for battery rides. On Monday Sweden’s Volvo Cars, owned by Zhejiang Geely, announced that it needs to lift 25 billion Swedish crowns ($2.9 billion) by itemizing in Stockholm. It comes after an aborted preliminary public providing in 2018, when traders balked at a mooted $30 billion valuation.
There are sound the reason why Li would possibly get there this time. Firstly, his plans to axe gasoline guzzlers by 2030 are probably the most bold of conventional automakers. Second, Volvo’s all-electric model Polestar introduced that it will reverse right into a blank-cheque car listed in New York at a $20 billion valuation. Take Volvo’s one-half Polestar stake and worth the remaining at 16 instances pre-pandemic earnings – the typical of German rivals BMW (BMWG.DE) and Daimler (DAIGn.DE) – and Volvo may be value $27 billion. However, if it could actually persuade traders that plans to separate the combustion engine enterprise benefit a extra Tesla-like (TSLA.O) valuation, then that might inflate dramatically. Geely’s electrical acceleration could also be simply starting. (By Christopher Thompson)
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