Rimac, the Croatian electric hypercar startup, will take control of Volkswagen’s Bugatti brand in a deal that solidifies its position as an established automotive power.
The new company will be called Bugatti Rimac and will be headed by Mate Rimac, who founded his eponymous group in his garage in 2009 and developed it into one of the most sought-after technology providers in the industry.
The company’s electrical and battery systems have found their way into cars from Aston Martin and Pininfarina to Jaguar and VW’s Seat branded racing arm.
Being controlled by an electrical specialist is also an important step for Bugatti, which markets its hypercars with 16-cylinder engines and guttural tones.
However, the advent of battery technology has resulted in speeds that even the best-tuned internal combustion vehicles cannot achieve: the upcoming Rimac Nevera is expected to be the fastest model ever built, a title previously held by the Bugatti Chiron.
Rimac said Bugatti will have an electric model this decade but will still produce hybrid models until the end of that period. “We can have two parallel, very different product lines,” said Rimac, comparing a Bugatti with a Swiss watch and a Rimac with an Apple Watch.
As part of the deal announced on Monday, Rimac, which will be backed by Porsche and Hyundai, will own 55 percent of the new company, while VW’s Porsche brand will own the rest.
That means Porsche will control 58.2 percent of the final company through its existing stake in Rimac if its stake in Rimac is included, though the companies said the automaker will have no say in running the combined entity. As a result of the deal, no money changed hands, said Porsche boss Oliver Blume on Monday.
It also continues to bring Rimac under the VW umbrella as the German company launches a € 35 billion electric push, although the Croatian company will spin off its business unit that builds technology for other automakers.
Both Bugatti and Rimac will continue to develop their brands and while Bugatti production will remain in France, all research will be relocated to Rimac’s new headquarters in Croatia.
The 32-year-old Mate Rimac himself owns 37 percent of the company, which corresponds to a share of 20.4 percent in the new Bugatti Rimac Group.
“Rimac and Bugatti are a perfect match when it comes to what we all contribute. As a young, agile and fast-moving automotive and technology company, we have established ourselves as an industry pioneer for electrical technologies, ”he said.
He added that the hypercar business “should be self-sustaining and profitable”.
Porsche’s decision to bring Bugatti into a joint venture has raised hopes among VW investors that similar assets within the group that are getting more and more out of hand as the company tries to lead the electrical transformation will be spun off or sold .
Last December, after a clash between VW boss Herbert Diess and powerful German trade unions, the company’s board of directors said there was “an agreement on the board of directors that Lamborghini and Ducati will remain part of the Volkswagen Group”.
In May, Volkswagen turned down a 7.5 billion euro offer for Lamborghini from a Switzerland-based investment vehicle headed by Rea Stark, who is also an electric vehicle start-up with Toni Piech, the son of the former VW CEO founded.
However, pressure from the capital markets to sell these brands has increased. “The message is ‘Forget the toys’,” said someone familiar with the conversations between VW and investors.
Speculations are mounting as to whether VW will outsource part of its lucrative Porsche brand. According to Daniel Schwarz, an analyst at Stifel, the change would give the company the best chance of a substantial re-evaluation.
He estimates that the market value of the premium manufacturer would almost quadruple to 200 billion euros, almost 70 billion euros more than the entire VW group is currently worth.
