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Charging point of a Volkswagen electric car.
Liesa Johannssen-Koppitz / Bloomberg
Volkswagen
wants to be the leader in electric vehicles around the world. He is not satisfied with playing Pepsi at Tesla
Coca Cola.
The German car giant presented updated EV ambitions in the last two days, at an investor event and a shareholders’ meeting.
Volkswagen
(ticker: VOW.Germany) has always had big EV goals, but the company is doubling down on a future of fully electric personal transportation.
In particular, the company announced plans to build six gig factories by 2030. One gig has become the industry jargon for a battery factory, thanks to
adze
(TSLA). Gigafactory is what Tesla called its huge Nevada battery built with
Panasonic
(6752. Japan).
Volkswagen’s battery installations should have the capacity to produce 240 gigawatt-hours of batteries each year. Giga is short for a billion, but what investors need to know is that this level of production capacity can power approximately four to five million electric vehicles annually.
Battery plants are becoming the new engine plants in the automotive industry.
Of course, Volkswagen will continue to buy batteries for the existing industry, and the company also has a considerable investment.
QuantumScape
(QS). Quantum is the pioneer of solid-state, lithium-anode batteries that promise lower costs, better safety, longer intervals and faster charging times than current EV lithium-ion battery technology.
VW, for context, delivered about 11 million vehicles in 2019, the year before the pandemic hit industry sales. By 2020, Volkswagen has sold approximately 230,000 all-electric vehicles and more than 400,000 electrified vehicles, including hybrids and plug-in hybrid options. Tesla sold about 500,000 electric vehicles in 2020.
Projects on Wall Street Tesla will deliver approximately 840,000 electric vehicles by 2021. Volkswagen’s goal is to sell 1 million electrified vehicles this year. Volkswagen has also doubled its target for European electric vehicle sales by 2030. The German carmaker wants 70% of European sales to be electrified by then, doubling the previous target of 35%.
“In 2030, we expect a percentage of 50% [battery-electric vehicle] participate in our global deliveries “, said the CEO Herbert Diess in the discussion with the shareholders on Tuesday. “In Europe we expect about 60%.”
Everything is very ambitious. Lowering costs will help the company get there. Volkswagen also believes it will reduce battery costs by about 50% by 2030, but the absolute cost level has not been revealed. Batteries are a big part of the overall cost of an electric vehicle, so a 50% discount would go a long way to getting a sticker price for the vehicle equivalent to a petrol car.
However, more competition is not death for Tesla. However, it is most likely the death knell for petrol cars. “VW Power Day confirms that electric vehicles will become the standard,” analyst Baird Ben Kallo wrote in a research report Monday. Kallo covers Tesla, not Volkswagen, and sees the VW event as a signal that EV penetration of the global car market will go faster than investors currently expect. However, he expects Tesla to remain the leader.
Kallo values Buy Tesla stock and has a target price of $ 736 per share. Wedbush analyst Dan Ives also covers Tesla, not VW. Evaluate Tesla Hold shares. However, Ives’ price target is higher than Kallo’s at $ 950 per share.
Ives is asked by his customers if a new competition is the reason for the recent sale of Tesla stock. Tesla shares fell 21% from January high. His answer is an emphatic no.
“The EV party is just beginning,” Ives writes. Higher interest rates have affected the high-growth EV sector, but it is not worried. “… the transformation is just beginning, because this industry is on the verge of a market opportunity of 5 trillion dollars in the next decade. “It’s a huge number, but achievable, given that global car sales easily exceed $ 2 trillion each year.
There is enough space for many winners and losers: VW and Tesla can both succeed.
Write to Al Root at [email protected]