Electric Cars Could Save Aston Martin's Ailing Aston Martin.

Electric Cars Could Save Aston Martin's Ailing Aston Martin.

James Bonds Aston Martin at the World Premiere of "NO TIME TO DIE". (Photo by Tristan Fewings/Getty Images for EON Productions, Metro-Goldwyn-Mayer Studios, and Universal Pictures) GETTY IMAGES FOR EON PRODUCTIONS, METRO-GOLDWYN-MAYER STUDIOS, AND UNIVERSAL PICTURES

Another bailout for the financially troubled British luxury SUV and sports car maker Aston Martin. The company is weakened by its debt and unresolved leadership changes. Analysts are struggling to find positives and wonder if electric vehicle plans could point the company toward safety.

Aston Martin announced last week that it plans to raise PS653million ($744 Million) through investment in PS78million ($93Million) from Saudi Arabia's Public Investment Fund and a rights sale of PS575million ($681M). The rights issue will give the Saudis 16.7%, Chairman Lawrence Stroll's Yew Tree Consortium 18.3%, and Mercedes-Benz just below 10%.

Analysts rejected a counter-offer by Zhejiang Geely Holding Group, a Chinese conglomerate. This would have given more cash but would have reduced current ownership stakes.

Stroll stated, "This is a major event for Aston Martin. It supports the delivery of our strategic plan and accelerates our long-term growth potential."

Aston Martin shares rose close to 10% Friday. However, a graphic showing the company's share prices in 2022 shows a cartoon-like descent with short, sharp rallies. This year, the stock price plunged 70%. When Aston Martin was listed on the stock exchange, it was valued at PS4.3billion ($5.1billion). This has fallen to around PS432million ($513million) now and has slid from PS1.6billion ($1.9billion) at the beginning of 2022.

Aston Martin has been bankrupt seven times since 1913 when it was founded. Financial circumstances worsened again after the float. Stroll, a Canadian billionaire, stepped in to help the finances in 2020. Aston Martin's 3rd CEO was hired in the same period. Tobias Moers was appointed CEO to replace Andy Palmer (76), succeeded by Amedeo Felisa (76), as Ferrari's former leader.

Charles Tennant, a British automotive analyst, said that "I'm not surprised that Aston Martin is entering yet a second round of refinancing to reduce its costly debt burden and invest more in product development, especially in electrification,"

Tennant stated that the debt burden of PS1 billion ($1.2billion) costs PS130 million ($154 million) interest per annum, and it has lower sales than expected - 2,676 in 2022's first half - and that Tennant does not anticipate the company to have positive cash flow in 2024.

Aston Martin Valkyrie (Photo by Gerlach Delissen - Corbis/Corbis via Getty Images) CORBIS VIA GETTY IMAGES

The company expects to sell over 6,660 vehicles by 2022, despite having sold 2,901 units in the first half. The company has stated that sales will reach 10,000 per year by 2025.

Reuters Breaking Views column stated that the latest financing would help the company avoid problems from high-debt servicing. However, problems remain.

"Aston Martin Lagonda may have swerved in order to avoid a collision but could still end in the ditch," stated Breaking Views columnist Dash +4.4%a Afanasieva. He added that the deal would reduce annual interest payments by more than PS30million ($36 million), but prospects for the company are not bright.

Aston Martin's pre-tax loss of PS111.6 million ($143,000,000) in the 2022 1st quarter was more than twice the PS42.2million loss last year. In a few weeks, the 2 nd quarter financial reports will be available.

Aston Martin reiterated Friday that its medium-term EBITDA (earnings after interest, tax, and amortization) ambition to earn PS500m per year was still alive, but analysts are not optimistic.

Aston Martin is far behind its supercar competitors in the race for electric power. Ferrari announced last month that it will launch its first all-electric car in 2025. Ferrari predicts that full-electric cars will account for 5% and 40% of all sales by 2025.

According to the Lex column of The Financial Times, Aston Martin's troubles are not over.

"Shareholders shouldn't complain about paying more for the same business plans they have already signed. This fuel will allow for a necessary overhaul of the front-engine models. A new mid-engine range, due 2024, can be implemented more easily. It is hoped that the new models will double the gross margin per vehicle from 20%. Aston Martin's turnaround effort is reminiscent of a Le Man's race. Lex stated that Lex expects more pit stops.

Aston Martin DBX (Photo by Martyn Lucy/Getty Images) GETTY IMAGES

The next James Bond movie won't be released in cinemas until 2025. So maybe it's still possible for Daniel Craig's replacement to drive silently in an electric car towards his enemies instead of the fire-breathing Aston Martin sportscar.

Analyst Tennant says there's only time.

Aston Martin is also in discussions with Mercedes-Benz. They already supply most of the powertrain technology, Lucid, and Rimac for that crucial first electric car to be released in 2025. Tennant stated that this might be Aston Martin's last saloon.

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