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The charging point of a Volkswagen electric car.
Liesa Johannssen-Koppitz / Bloomberg
Volkswagen
wants to be the leader in electric vehicles worldwide. He is not satisfied playing Pepsi at Tesla
Coca Cola.
The German carmaking giant set up updated ambitions for electric vehicles over the past two days, at an investor event and a shareholders ’meeting.
Volkswagen
(Ticker: VOW.Germany) has always had big goals for electric vehicles, but the company is doubling down on a future of all-electric personal transportation.
In particular, the company announced plans to build six giant factories by 2030. A giant factory has become industrial slang for a battery plant, thanks to
Tesla
(TSLA). Gigafactory is what Tesla called its huge Nevada battery facility
Panasonic
(6752. Japan).
Volkswagen battery plants should have the capacity to manufacture 240 gigawatt hours of batteries each year. Giga is short for a billion, but what investors need to know is that this level of manufacturing capacity can power approximately four to five million electric vehicles a year.
Battery plants are becoming the new engine plants of 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 a pioneer in solid-state lithium anode batteries that promise lower costs, better safety, longer range, and faster charging times than current EV lithium-ion battery technology.
VW, by context, delivered about 11 million vehicles in 2019, the year before the pandemic hit industry sales. In 2020, Volkswagen sold about 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.
Wall Street Projects: Tesla will deliver about 840,000 electric vehicles by 2021. Volkswagen’s goal is to sell 1 million electrified vehicles this year. Volkswagen also doubled its target for European electric vehicle sales by 2030. The German carmaker wants 70% of European sales to be electrified vehicles, double the previous target of 35%.
“In 2030 we expect 50% [battery-electric vehicle] we participate in our global deliveries, “CEO Herbert Diess said in his Tuesday talk to shareholders.
All very ambitious. Falling costs will help the company get there. Volkswagen also believes it will reduce the cost of batteries by about 50% by 2030, but the absolute level of costs has not been revealed. Batteries are a significant part of the overall cost of an electric vehicle, so a 50% reduction would help make the price of an EV sticker equivalent to a gasoline-powered car.
But there is no more competition for Tesla. However, it is more likely to be the problem of the death of gasoline-powered cars. “VW Power Day confirms that electric vehicles will become the standard,” Baird analyst Ben Kallo wrote in a report on Monday. Kallo covers Tesla, not Volkswagen, and sees the VW event as a signal that the penetration of electric vehicles into the global car market will go faster than investors currently expect. However, he expects Tesla to remain the leader.
Kallo values buying Tesla shares and has a target price of $ 736 for the shares. Wedbush analyst Dan Ives also covers Tesla, not VW. Values Tesla Hold shares. Ives ’price target, however, is higher than Kallo’s, at $ 950 per share.
His customers ask Ives if the new competition is the reason for the recent sale of Tesla shares. Shares of Tesla have fallen 21% from the January high. His answer is a resounding 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…. the transformation is just beginning, as this industry is at the peak of a $ 5 trillion market opportunity over the next decade. ”This is a huge but achievable number, given that sales of global cars easily exceed $ 2 trillion every year.
That’s enough for many winners and losers: VW and Tesla can succeed.
Write to Al Root at [email protected]