• 14 hours Can Twitter Sway Economic Policy?
  • 17 hours Widespread Power Outages Hit New York City
  • 20 hours Equifax To Pay $700 Million To Settle Data Breach Case
  • 22 hours Netflix Struggles To Rebound After Subscriber Hit
  • 2 days $15,000 For Your Crypto’s Ticket To Visibility
  • 3 days The Next Fashion Frontier
  • 4 days What Is Africa’s Role In The New Silk Road?
  • 5 days Trump Was Right About The Dollar
  • 5 days Is Silver Gearing Up For A Rally?
  • 5 days World’s Largest Hedge Fund Turns Bullish On Gold
  • 5 days It’s Time To Spend More On Clean Energy R&D
  • 6 days Contrarian Investors Are Beating The Stock Market
  • 6 days Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 6 days Amazon Faces European Union Anti-Trust Probe
  • 6 days Commodities Are Having A Stellar Year
  • 7 days Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 7 days 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 7 days Tesla, Apple Claim China Is Stealing Intellectual Property
  • 7 days EV Giants Duke It Out For Battery Dominance
  • 8 days Tech Billionaire Takes Aim At Google
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Oilprice.com

Oilprice.com

Writer, OilPrice.com

Information/Articles and Prices on a wide range of commodities: We have assembled a team of experienced writers to provide you with information on Crude Oil,…

Contact Author

  1. Home
  2. Markets
  3. Other

Volkswagen Looks To Take On Tesla In The EV Race

VW

Volkswagen AG’s new CEO, Herbert Diess, has taken on a corporate mission — to knock Tesla Inc. off its mantle as the global leader in electric vehicle innovation. To get there, the German vehicle manufacturer will double its capital investment in EV batteries.

During the April 3 annual shareholder meeting, Diess said VW is preparing to manufacture as many as 3 million EVs per year by 2025. To get there, the company will be spending 40 billion euros ($48 billion) on the lithium ion batteries needed to hit that sales volume.

That nearly matches Tesla’s market cap value, which closed Tuesday at $49.8 billion. VW closed the day at about $205 billion in market cap.

In early April, prior to Diess leaving his job as head of the VW brand and taking on the CEO position, the company had committed to spend about $21 billion in EV battery packs — a figure which has now more than doubled. Lithium-ion batteries continue to be costly and many times keep automakers in a conservative stance when considering ramping up EV production.

VW shareholders heard about the German automaker’s big plans for vehicle electrification just hours after Tesla CEO Elon Musk had berated analysts sitting in on Tesla’s quarterly earnings call.

Musk has become defensive and defiant in recent weeks as the company’s stock price declines and investors and analysts have begun losing faith in Tesla’s financial future. That stems from Musk’s aggressive Model 3 production targets that are still lagging behind, and the level of capitalization the company needs to add more production lines and build enough batteries. Some investors are concerned that Tesla has taken on too much with its heavy-duty Tesla Semi electric truck scheme. There are several other capital-intensive projects and subsidiaries that include solar power, energy storage, and fully autonomous vehicle technologies. Related: Why Buffett Isn’t Bullish On Gold

During Thursday’s earnings call, Musk insulted analysts by asking them to stop asking “boring” questions. He’d also cut off their questions about the company’s financial performance and plans for the next few quarters.

VW builds more cars in four days than Tesla does in a year, and its executives want to tap into the Tesla-competitive environment. Tesla delivered 101,312 Model S and Model X cars in 2017, and about 1,550 Model 3 deliveries. Volkswagen Group reported that VW and its 11 subsidiary brands sold 10.7 million vehicles in 2017.

Diess would like to see VW become the new global EV brand. The German automaker plans to harness its financial and engineering firepower to refurbish its image and lead the market in EV sales.

“By 2020 we will offer our customers more than 25 new electric models and more than 20 plug-in hybrids,” Diess said. “In just a few years’ time, then, across all brands and regions, we aim to put the world’s largest fleet of electric vehicles on the road.”

VW, which took the top spot in global new vehicle sales last year, is still in a precarious position in restoring its brand image to what it was before the “Dieselgate” scandal broke in September 2015.

Diess traveled to the U.S. last week to testify to federal officials about the carmaker’s emissions scandal, German newspaper Bild reported on Tuesday.

This took place last week soon after former CEO Martin Winterkorn was issued criminal charges and an arrest warrant for his role in the Dieselgate cover up. Matthias Muller, Winkerton’s successor as VW chief, left the top spot in February. 

Related: Five Deals To Watch This Week

VW also has to stabilize its home market of Germany, where government officials are still looking into the scandal. The country may approve class-action lawsuits in its courts, which is expected to draw VW into a wave of suits that will have to be settled at high costs, as has been the case in U.S. courts. Chancellor Angela Merkel has been dragging her feet on allowing class-action suits, but that’s expected to change course and be adopted soon in Germany. Merkel has taken a great deal of criticism for being perceived as attempting to protect VW and other German automakers.

Moving forward in its vehicle electrification strategy is a key element of transforming the company’s image into an ethical, innovative global corporation advocating clean vehicles and development of advanced vehicle technologies. To get there, VW won’t be going down a similar path followed by Tesla and its Gigafactory.

VW is bringing in partnerships with battery makers. So far, agreements have been made with LG Chem, Samsung, and Chinese battery maker Contemporary Amperex Technology Co. to supply batteries and technology. The automaker has no plans to start producing its own batteries, the company said.

By Jon LeSage for Oilprice.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment