► VW Group tipped to ditch Bugatti
► New owner set to be EV firm Rimac
► Porsche eyes bigger stake in EV start-up
VW Group is on the verge of offloading Bugatti to Croatian electromobility powerhouse Rimac Automobili. Bugatti – the luxury brand best known for today's 16-cylinder hypercars and its pre-WWII automotive masterpieces – will likely be transferred to Rimac via Porsche, in exchange for a bigger share in Europe's answer to Tesla. Sources say VW executives approved the deal last week, but it has yet to be signed off by the supervisory board.
This would have never happened under the late Ferdinand Piech, former boss of both VW's managing board and then its supervisory chairman. After all, Bugatti was his master’s favourite toy in a collection to which the Austrian patriarch had added such prestigious brands as Bentley and Lamborghini during the course of his reign. But Piech fell out with Volkswagen in 2015, and passed away four years later.
Why is Bugatti changing hands?
Volkswagen Group no longer wants to lavish money and manpower on the so-called hobby brands acquired by the former CEO. Instead, all resources must be devoted to fund the massive investment programme in the future of motoring – electrification, digitalisation and autonomous driving.
But how can VW sever ties with Bugatti without losing the support of the surviving Piech family members, which owns 50 per cent of the controlling interest in the group? The answer is simple: by putting their beloved Porsche at the heart of any deal, and acting to the mutual benefit of all parties.
If the future of motoring is electric – not 1500hp petrol-powered hypercars that sell in the hundreds – then getting their hooks further into Rimac, a company with a reputation for stellar EV tech, sounds very beneficial indeed.
Back in 2018, Porsche acquired a ten per cent share in Rimac Automobili. In 2019, they bought another 5.5 per cent. By doing so, Porsche is in good company: other investors include Hyundai, Jaguar, Koenigsegg and Magna. Indeed when CAR visited earlier this year, founder Mate Rimac counted 15 car companies using its tech know-how. Not bad for a company which began life in 2009, but now employs more than 600 people who specialise in electromobility, battery development and performance electronics.
The company details key strengths such as the configuration of highly efficient battery packs, the development of bespoke e-motors, innovations in terms of driver assistance, connectivity and infotainment as well as systems integration and control.
Mate Rimac told us that his focus on performance gives his company the edge. 'Our powertrain systems are the highest power density, and the highest energy density. If you need to have as much power in as little space as possible, you come to us'. HQ is on a non-descript industrial estate near Zagreb.
Rimac may be dubbed Europe's Tesla, but while Elon Musk's firm has churned out more than 600,000 Model 3 and Y cars in the last three years, the Croatians have made but a handful of electric hypercars. The first was the Concept One, introduced in 2011 and of which only eight units were made. The latest is the awesome 1914bhp C-Two coupe which has yet to enter production.
Rimac isn’t yet publicly traded, with the founder holding a 51 per cent majority interest. But there is an enormous buzz around the company – the last funding round pegged its value north of £500m. The biggest secondary shareholders are Porsche, the Camel Group (a Chinese battery producer) and a Chinese investor. While the true value of Rimac is yet to-be-determined by an IPO, Bugatti is probably worth €500m in today's depressed market. But perhaps there is no need for any money to flow at all in the deal.
In an ideal world, Porsche would swap the hypercar-maker lock, stock and barrel for a bigger share of the Rimac action. How big? The target is 49 per cent, which could be a tough nut to crack, but the Germans are keen on accessing as much know-how and brain power as they possibly can.
In exchange, the 32-year-old entrepreneur would obtain the Bugatti brand and the related infrastructure which looks like the perfect stepping stone for that tiny-volume C-Two hypercar. In July, Rimac paid a visit to Bugatti in Molsheim - and reportedly walked away impressed...
What else will happen at Bugatti and VW Group?
If the supervisory board signs off the agreement, the current Bugatti CEO Stephan Winkelmann is unlikely to stay. When asked for comment, neither Winkelmann nor the Porsche boss Oliver Blume replied. We also approached Bugatti's communications department for comment; a spokesperson declined to comment on the rumours, but said that the brand had been 'a positive contribution to the Group for the past two years' and that the brand was 'on track to exceed 2019's sales.'
And, as reported in CAR's August 2020 issue, the Wolfsburg grapevine repeats that Bugatti may not be the only brand set to depart VW for new hunting grounds.
Also under investigation are – in this order – Lamborghini, Seat (to be repositioned by merging with Cupra which is due to become the lead marque), Ital Design, Bentley and Ducati. Unlike Piech, the current top management is quite obviously not that strongly attached to the prestigious crown jewels which are hard to handle and yield precious few synergies. On the credit side, analogue values like history, tradition and brand identity can be priceless assets in a conformist digital market.
Right now, the negotiations with potential investors – banks, private equity firms, hedge funds, the odd Asian OEM – have almost come to a halt due to Covid and the global car industry's increasingly uncertain future. Two years ago, the combined ‘hobby brands’ were allegedly worth over €23bn, but right now we don’t know of a single taker who would even sniff at a €15bn. In view of such widespread fluctuations, the straightforward barter deal under consideration by Bugatti, Porsche and Rimac appears to be a relatively low-risk enterprise.
In contrast, the complex disentanglement of Audi and Lamborghini or Bentley and Porsche would likely entail numerous financial and legal imponderables. While the members of the supervisory board are preparing for their next meeting, Stephan Winkelmann is expected to leave the company with a bang.
According to those in the know, the CEO will in late October give green lights to Vision Le Mans, a brand-new one-off zero-emission track-only hypercar created as a Bugatti by 27-year-old design graduate Max Lask. Vive les voitures bleues!