Keep an eye on Aston…

While F1 folk are getting excited about Sebastian Vettel paying his first visit to Aston Martin Racing (formerly known as Racing Point), with a short haircut, the main company’s financial situation remains difficult. Lawrence Stroll and his fellow investors own stakes in both companies and the racing team has been rebranded to promote Aston Martin – but they are separate entities. 

For those who are watching these things, the Aston Martin share price is pretty volatile. It is not long ago that the shares were trading at £19, which put the market cap at £4.3 billion. But in the course of 2019 they fell gradually to £10 and then dropped sharply in the autumn, when the company issued a profit warning. Then in 2020 COVID-19 arrived and things got even worse. Today the shares are worth £1.85, although the issuing of new shares has meant that the market cap of the firm is £2.13 billion. The company also has considerable debt (around £1.2 billion) although when it comes to the enterprise value, with debt and cash added to the share value, it is still reckoned to be worth around £4 billion, which is what someone will need to pay to acquire it.

This morning there was an interesting story from China’s East Money, a website that watches the financial markets, which suggested that the China’s BYD Auto Company is preparing to acquire the Aston Martin car company, in a deal that would value the British firm at £4.1 billion. 

BYD (which stands for Build Your Dreams) started out as a company producing rechargeable electric batteries. Today it is the largest supplier of rechargeable batteries in the world. It bought the Tsinchuan Automobile Company in 2002 and while its current range includes electric vehicles, plug-in hybrids and petrol-engined vehicles, it has always been a company that aims to build electric cars. Last May the firm announced plans to expand into Europe with an SUV and a range of commercial vehicles.

It also has a joint venture with Daimler to produce luxury electric cars using the Denza brand. It should be remembered, of course, that Daimler will have a 20 percent of Aston Martin by 2023 in exchange for an engine supply deal.

It should also be remembered that at the start of 2020 Geely and the battery manufacturer CATL both looked at acquiring Aston Martin, but lost out to the Stroll consortium. However since then it has not been an easy ride for the car company, although much depends on the sales of the Aston Martin DBX, the company’s first SUV. 

Things have also been changed somewhat by the British government’s announcement in October that it plans to ban the sale of petrol and diesel cars by 2030, forcing car manufacturers to develop electric models. Some hybrids will be allowed to be sold until 2035, but that’s it. This may kill the British car industry in its current form.

Of course, if Aston Martin is switched over to producing high-end electric cars, its involvement in Formula 1 would make very little sense in the long term, although no doubt the sport will move towards more hybridisation in 2025 and perhaps to full electricity in 2030 or 2035.

What happens to Formula E at that point is not clear…

But, who knows? Maybe East Money isn’t right.

23 thoughts on “Keep an eye on Aston…

  1. Re Aston Martin, the shares are actually £18.46 but of course there has been a 20 to 1 consolidation so compared to the float price at £19.00 today’s equivalent is 92pence. So it has been a rough ride.
    Keep up the good work Joe.

    1. yes, was about to say the same thing (as an individual who owns a number of shares). There was a reverse stock split in December 2020…

  2. Ah, Formula E. Wherein the FIA give away long-term exclusivity to a startup to force the holders of the rights they gave away in the late 90s to come to financial terms or cease having any relevance to the car makers participating in their show.

    Anyway, for now, FIA and Liberty seem to cling to the environmental madness and efficiency nightmare that is “synthetic” fuels to keep F1 going, which one can only hope will be seen for the hapless delay tactic that it is.

    1. Synthetic fuels usually have large percentages of Palm oil, which is responsible for huge amounts of deforestation. Algae are the eco route if anyone is serious. All mixed with ethanol from bio-waste.

      I cannot really remember a time when Aston was not in trouble. I think they were owned by Victor Gauntlet when I knew them.

  3. Everybody will go electric someday so the future of F1 is electric. As for Aston Martin, I happen to know one of the main shareholders and I really hope the SUV brings the results they need.
    However, I have to say that, from what I’ve seen so far, it should be just another SUV competing in the market. The real breakthrough was Porsche a few years ago and everybody followed. I don’t expect the Aston Martin SUV to generate the buzz it needs to save the company.

  4. Oh what a tangled web……… I don’t want to even try to understand what all of that means. Sadly until life gets back to a bit more normality nothing means very much and nothing is predictable.
    I really hope that Aston Martin F1 may be successful and that Vettel re-finds his mojo without the pressure that driving for Ferrari almost always engenders. Over the years how many drivers have left Ferrari with their tales between their legs, happily, to most often flourish elsewhere ?
    I always feared that Aston, the company, was another dream car bubble with extravagant sales projections, from which its principals gained fabulous wealth, for which opinion I was roundly rebuked. Covid has certainly hastened the contraction of many of even the soundest companies but Aston was already in some trouble. Maybe Stroll Snr and others have the funds to turn it all round though the days of conventional ICEs are numbered. The quantity of money required is in a league that is way bigger than Stroll Snr, for all his success, has previously dealt in.
    From a marketing perspective it probably isn’t a bad thing to have the 2 sides working hand in glove, I hope it all comes together.

  5. So much for car manufacturers that don’t move with the times. Here in Australia we have lost most of our car manufacturers, such a shame but there you go. Petrol and diesel will be worthless and I’ll be a fossil by 2030.

  6. I’m shocked what a few years driving for Ferrari can do to your hair line … Carlos beware! But seriously, it seems that all car manufacturers will face the same dilemma – going electric corporately but trying to stay involved in hybrid F1.

  7. The horseless carriage did not kill horse racing. Perhaps the future is a downsized F1 industry running the modern equivalent of Judds and Cosworths with no automobile industry backing (except perhaps in tyres). Rather like the first few decades of the formula, in fact.

    1. No automotive manufacturers, save Alfa Romeo, Maserati, Aston Martin, Porsche, Ferrari and Honda, to name a few. Equally, the most widely adopted engine in Formula 1 at the time – the Ford Cosworth DFV – wouldn’t have existed without the financial backing of the Ford Motor Company…

  8. Aston Martin has been in financial difficulties for 60 years. It has received £millions of world wide, free publicity from hours of coverage on Top Gear, but never appear to benefit from it. The management appear to make one bad decision after another, like spreading the business across the UK and sponsoring Red Bull F1.

    It must be an example of the *Brand* being a magnet for investors, there can’t be another other reason to keep throwing money at a disaster/

    1. You just know that there is bound to be a plethora of assorted tosh to be marketed on the back of the SUVs and competing in F1, add the Vettel signature sub-brand and everyone makes a little cash.

      The notion that the company could be worth 4-billion steel washers seems fanciful.

  9. BYD are already active in Europe in their own name – if you fly via Schipol, most of the buses used from the plane to the terminal are BYD electric buses. They also introduced a range of electric forklift trucks to the European market a few years ago.

  10. Can’t help but feel Aston could go horribly wrong & no one person would feel much of the pain. It’s been downhill for years & only attracted so much attention as it was bought out by Stroll, his consortium & bunch of other like Wolff for pennies on the dollar after a huge crash. So cheap that the risk is almost worth it, if it pays off happy days, if not you’ve lost a tiny part of your net worth or have sold out to the Chinese for break even/tiny profit & just wasted tonnes brain power & time trying to pull off a mega recovery with all sorts off strategies & complex deals with Daimler. Either way I’m sure Stroll would hang onto the F1 team for his son….so let’s hope Lance sticks around. Aston has always been a casino punt on the markets….although it does seem to be going more private, it’s the way forward without the volatility & external scrutiny.

  11. A non-financial comment – Vettel “a short haircut”? The photo I saw has the haircut at the front nearly meeting that at the back, not often we get to see him without a head covering!

  12. As an engineer I’m still not convinced that the full environmental footprint of batteries, storage and electrical generation is understood. From a personal perspective I think high density bio fuels and fuel cells will have a place in the future energy mix.

    1. At < €7.5m, that probably is less than Bernie's daily limit on his Amex card. I wonder if, by any chance, there was contact between Messrs Ecclestone and Briatore in respect of the transaction and whether, by any other chance, Flavio will be an honoured guest some time soon ? 🤭🤣

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