Wednesday, January 26

Volkswagen threatens Tesla’s leadership


The Tesla’s dominance as electric vehicle makers begins to be called into question. Not only because of the appearance of rivals as strong as Rivian o Nio, the latter from China, but also from the unstoppable push from traditional vehicle manufacturers that are turning to electric mobility.

Volkswagen will face Tesla with numerous options. Morningstar senior equities analyst Richard Hilbert believes that if Volkswagen achieves its EV sales targets, the company could outsell Tesla in 2025 and lead the group of automakers making the transition.

“By 2030, Volkswagen leads the group with an estimated six million units of electric vehicles and it has the highest share of the group at 18 percent. The automaker is one of the world’s largest producers by volume, ”he noted in a new Morningstar report that looks at EV transition efforts at Daimler, BMW and Nissan, among others.

Forecast for the production of electric vehicles

Internal combustion engines are disappearing as emission standards rise in Europe and China. Electric vehicles are estimated to reach 30 percent of global market demand by 2030, according to Morningstar estimates.

And we cannot forget that among the agreements of the COP26 held in Glasgow it was agreed that all new car and van sales are zero emissions worldwide by 2040, and no later than 2035 in major markets.

This has caused the main manufacturers to turn to the production of electric vehicles. Thus, in the last year, Renault, for example, doubled its electric vehicle units to 122,000 and aims for electric vehicles to account for 90 percent of the total passenger vehicle sales volume of the European brand Renault by 2030.

Volkswagen has set targets for its electric vehicles to reach 20 percent of global sales volume by 2025 and 50 percent by 2030, with 50 models available to consumers. These include the Audi Q4 e-tron, Porsche Taycan, and Volkswagen ID.4.

Additionally, Morningstar forecasts 49 percent annualized growth in the German automaker’s global electric vehicle sales volume from 2019 to 2030 across its Audi, Porsche, Bentley, Volkswagen, Lamborghini and Bugatti brands.

Evolution of electric vehicle sales

The electric vehicle market stands at 2.9 million in Europe and around 150,000 units in Spain, which represents around 0.4 percent of the fleet in our country. The first half of 2021 has shown continued growth, accumulating a total of 16,650 registered vehicles, which is 32.8 percent more than during the same period in 2020 and 41.9 percent compared to the same period in 2019.

However, the objective set by the EU is to reach 250,000 in two years and 5 million in 2030. On a positive side, the acquisition of electrified vehicles is clearly on the rise and, during the first semester of 2021 this trend has been maintained. In fact, the total share of the electrified passenger car market has set records in both Europe and Spain, reaching 34.2 percent and 30 percent of total registered vehicles respectively.

Investment opportunity

Investment in the electric car sector not only is it generated by this interest in electric mobility, but a series of factors converge that makes the sector positively valued.

It’s about the microchip shortage, the lower contribution margin of electric vehicles and the increasing competition from discount valuations of electric vehicle startups.

“Automakers can enjoy a temporary period of greater margin, possibly in the middle of this decade, once the production of electric vehicles reaches a critical volume, due to less complicated manufacturing,” says the expert.

In this way, the actions of Volkswagen trading at a 52 percent discount about Morningstar’s estimated price. Like Nissan, whose discount would be 41 percent for its shares. The Japanese automaker has planned more than a million electric vehicle sales in 2023. By 2030, it would have all of its new vehicle offerings in Japan, China, the United States and Europe.

“The company remains in recovery mode after years of neglecting the development of new models and looking for volume and market share,” says Hilbert about it. For its part, BMW would have a 57 percent upside potential.

TESLA MOTORS (TSLA)TESLA MOTORS (TSLA)

-65,16-6,10 %

1.003,80

VOLKSWAGEN A (VOW3)VOLKSWAGEN A (VOW3)

-1,90-1,03 %

182,44



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