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Porsche IPO ‘a win-win’ for Volkswagen: Autoblog editor-in-chief

Autoblog Editor-In-Chief Greg Migliore joins Yahoo Finance Live to discuss the Porsche trading debut in Frankfurt, how much capital the IPO has generated for Volkswagen, and automakers racing to develop the electric vehicle market.

Video Transcript

AKIKO FUJITA: We are tracking Porsche's race into markets. The automaker's debut in Frankfurt a bright spot in an otherwise bleak IPO landscape. Parent company Volkswagen listing the company to pay for investments in electric vehicles, valuing the company at roughly $75 billion. For more on this, let's bring in Greg Migliore, "Autoblog" Editor-in-Chief.

This marks the big return, Greg, of Porsche into the public markets-- first time in a decade. What do you make of the pop we saw on its initial day? And what does this tell you about where we are, at least in autos, in this landscape?

GREG MIGLIORE: Yeah, hey, good morning. Thanks for having me. I think right now the star of the show, if you will, is Volkswagen. They made $9 billion today, which is a pretty good day at the office, if you will. And they'll be able to use that to fund their future electrification strategy, shore up their balance sheet, and just in general, it puts them in a better position than they were this time yesterday. Let's put it that way.

The other side of it is they also get to retain control of Porsche, basically. The CEO of Volkswagen, he's still going to be the CEO of Porsche. And they retain about 3/4 of Porsche. So to me, it's really a win-win for Volkswagen.

Down the road, Porsche is going to probably be able to grow a little bit apart from Volkswagen ownership and stewardship. I think as the 2020s roll on here, we're going to probably see them start to really develop some of their own strategies, perhaps try to forge a little bit more of an independent path. And I think it really is a good thing for both companies.

AKIKO FUJITA: Yeah, what do you think that strategy looks like? And more importantly, when we're looking at the auto space as a whole, where do you see luxury vehicles going at a time when there's so many macro headwinds?

GREG MIGLIORE: Absolutely. I think as this decade rolls along, we're going to see more plug-in hybrid and full electric Porsches. Are they going to go full electric, as in every single car and SUV they make is going to be an electric? Probably not. But they've said about 75%, 80% of them will be by the end of the decade.

So if you're still a fan of internal combustion engines, they will still probably have those for you. But they will be much more heavily electrified, which is, of course, where the industry, where the marketplace is heading. So I think they will definitely probably get to a spot where they can achieve a more mature strategy.

Perhaps we'll see some new products. We'll probably see more sophisticated electrification systems. And I think that'll position Porsche to better compete with companies like Tesla and some of the startups, as well as some of the larger electrified vehicle giants like Mercedes, General Motors, and so forth.

AKIKO FUJITA: As you said, Greg, Volkswagen the big winner on the back of this. They really are getting into high gear here-- no pun intended-- on EVs. They've got this goal of selling all EVs or half of their sales be coming from EVs by 2030. But there's a lot of headwinds they've been facing, just like many other car-makers, whether it's the parts shortage, you talk about the minerals that are involved with the batteries. Where's Volkswagen in this timeline, and are they still on track?

GREG MIGLIORE: I think Volkswagen's on track as much as, really, any car company is at this point, given all of the headwinds and challenges they face. The tricky part for them, I think, will be to continue to roll out products like the ID.4, which has been a pretty well-received crossover here in the United States. It's all electric.

It's a lot of fun to drive. It's pretty capable. They need to keep doing things like that-- playing to their strengths. And I think they'll be OK as the decade rolls on. For them, it's all going to be about the products.

AKIKO FUJITA: And finally, Greg, while we're talking about ultra luxury with Porsche today, when you think about the EV race, a lot of that is going to be run-- or won in middle of the road, potentially on the lower end. That's where the adoption is going to happen. Who do you think is in the driver's seat in that race right now?

GREG MIGLIORE: I think you're going to actually see some of the legacy automakers, you know, like, General Motors, like Ford, Toyota, Volkswagen-- they have the dealer network. They have the existing capital to meet the consumers where they are. Tesla, of course, is going to be a part of that conversation.

Their products have gotten a little bit more expensive. That's fine, though. They're sort of carving out maybe even a more premium niche than they've had before. But I think those are the ones who we're going to see really expand in the coming years.

And then for Porsche, Ferrari is an excellent template. They did an IPO about five, six years ago. I think what they will do is continue to try to invest in their product strategy and grow in a similar fashion as Ferrari. There's a lot of similarities there.

AKIKO FUJITA: OK. We'll be watching very closely. Greg, good to have you on a day like today. Greg Migliore, "Autoblog" Editor-in-Chief.