Volkswagen is coming after Tesla. What does that mean for each of the stocks.
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Charging point on a Volkswagen electric car.
Lisa Johanssen-Kubitz / Bloomberg
He wants to be Leader In electric cars around the world. He’s not satisfied with playing Pepsi to Tesla’s
Coca Cola.
The German car giant developed Updated EV ambitions Over the past two days, at an investor event and a shareholder meeting.
Volkswagen
(Tape: VOW.Germany) It has always had big goals for electric cars, but the company is doubling down on the future of all-electric personal transport.
In particular, the company has announced plans to build six gigantic factories by 2030. The mega factory has become an industry term for a battery factory, thanks to
Tesla
(TSLA). Gigafactory is what Tesla has called a massive Nevada battery facility Building With
Panasonic
(6752 Japan).
Volkswagen battery plants should have the capacity to manufacture 240 gigawatt hours of batteries per year. GIGA is short for a billion dollars, but what investors need to know is that this level of manufacturing capacity could supply, very roughly, four to five million electric vehicles a year.
Battery stations became the new motor stations in the automotive industry.
Volkswagen will, of course, continue to buy batteries for the current industry, and it also has significant investment in
Quantum Scape
(QS). Quantum is Leadership Solid lithium anode batteries that promise lower costs, better safety, longer ranges, and faster charging times than current EV lithium-ion battery technology.
For example, Volkswagen delivered about 11 million cars in 2019, the year before the pandemic hit industry sales. In 2020, Volkswagen sold around 230,000 all-electric cars and more than 400,000 electric cars, including plug-in hybrids and hybrid options. Tesla sold around 500,000 electric cars in 2020.
Wall Street Ventures Tesla will supply about 840,000 electric cars in 2021. Volkswagen’s goal is to sell 1 million electric cars this year. Volkswagen has also doubled its target for European electric vehicle sales by 2030. The German automaker wants 70% of European sales by then to be electric cars, double the previous target of 35%.
“In 2030, we expect 50%. [battery-electric vehicle] CEO Herbert Deiss said in his conversation with shareholders on Tuesday. “In Europe we expect around 60 percent.”
Everything is very ambitious. Lower costs will help the company get there. Volkswagen also believes it will reduce the cost of batteries by about 50% between now and 2030, but the absolute level of costs has not been revealed. Batteries account for a large portion of the total cost of an electric vehicle, so a 50% reduction would go a long way in making the EV sticker price equal to a gasoline-powered vehicle.
More competition isn’t the death knell for Tesla. However, that is likely to be a death knell for gasoline cars. Analyst Baird wrote: “VW Power Day confirms that EVs are set to become the standard.” Ben Calo In a research report on Monday. Kallo covers Tesla, not Volkswagen, and sees the Volkswagen event as an indication that the penetration of electric vehicles into the overall auto market will be faster than investors currently expect. However, he expects Tesla to remain in the lead.
Kallo is evaluating Tesla’s stock purchase and has a $ 736 price target for shares. Wedbush Analyst Dan Ives It covers Tesla, not VW either. Rated Tesla Hold shares. However, Ives’ target price is higher than Kallo at $ 950 a share.
His clients ask Ives if new competition was the cause of the recent heavy sale of Tesla shares. Tesla shares are down 21% from their January high. His answer is definitely no.
Ives wrote, “The EV Party is just getting started.” High interest rates have weighed on the high-growth electric vehicle sector, but he is not alarmed. “The … the transformation has just begun because this industry is on the cusp of a $ 5 trillion market opportunity over the next decade.” That’s a huge number, but one that is achievable, given that global auto sales easily exceed $ 2 trillion each year.
That’s enough space for many winners and losers: Volkswagen and Tesla could succeed.
Write to Al Root at [email protected]