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VW threatens Tesla in race to become top EV producer

VW threatens Tesla in race to become top EV producer
Electric car companies, VW and Tesla are ready for EV war – Photo: Getty Images.

It’s become a heated race: Volkswagen (VOW3) threatens Tesla’s (TSLA) dominance, hoping to take the top spot and become the number one producer of electric vehicles (EVs) in Europe.

Among the world’s electric car companies, TSLA is currently in the lead, but VW is not far behind. Bloomberg Intelligence (BI) research shows that while Tesla will retain the EV crown for at least another 18 months, the automaker will struggle to sell a significant portion of its EVs in 2022 and 2023, and the throne may soon be usurped – by VW.

“It’s an EV arms race. Tesla has hit the bull’s eye — the entire auto industry is chasing it,” Wedbush Securities analyst Dan Ives said in a note.

Tesla (TSLA) stock price

The BI report states: “Profit incentive to overtake Tesla is lacking in the near term for most traditional brands amid rising battery costs and lack of scale, except Volkswagen. The German automaker is on track to catch up with Tesla’s EV volume by 2024.”

But can VW overtake the mighty Tesla? VW’s share price has fallen 28% this year and battery prices remain critical to cost competitiveness within the EV market. So, will VW have enough cargo to win?

Capital.com Chief Market Strategist David Jones said: 2021 was a difficult year for the auto sector, with the global chip shortage forcing many to cut car production drastically. This somewhat explains VW’s poor performance in the second half of 2021.

VW has also acknowledged that competition among electric car companies is strong. This month, VW CEO Speaking at the CAR Symposium conference in Germany, Herbert Diess said Elon Musk is “very fast, very focused and twice as fast as the rest of the industry.”

Volkswagen (VOW3) stock price

Despite the strength of TSLA, VOW3 seems to be heading for first place on the podium and slowly gaining ground on the standings. The group is on track to launch an IPO of its Porsche brand in the fourth quarter.

Keep momentum

That said, analysts also believe that Tesla’s current momentum and dominance among the electric car companies may not be sustainable.

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Giles Coghlan, principal analyst at HYCM, told Capital.com: “First movers in a market are not always the ones who last. Over the years, there’s no denying that Tesla’s brand strength has been very strong, allowing it to stay ahead of its competitors. But as traditional automakers, all of which share similar name recognition, are increasingly entering the EV market, the question arises: will Tesla’s dominance continue?”

Hyundai (HYMTF) stock price

Coghlan stresses that investors would do well to look to Hyundai (HYMTF) and Kia (KIMTF), which are steadily dominating the wider EV race, following the successful launch of the Kia EV6, which has enjoyed widespread acclaim.

While Tesla may be selling a lot more electric cars right now, it has taken the company ten years to bring as many electric cars to market as Hyundai and Kia in just a few months. In the year through May, Hyundai and Kia sold 21,467 of these EV models in the US, meaning it has surpassed even the ever-popular Ford Mustang Mach-E,” said Coghlan.

“Tesla may have moved first, but will that lead last or fade? Behind the success of Hyundai and Kia is an affordable price, and this is ultimately the key to capturing the market and buyers with lower budgets In short, this could bring EVs into the mainstream,” Coghlan added.

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