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Volkswagen is now aiming for approximately 50% of total sales to come from fully electric vehicles by 2030.
Jens Schlueter / Getty Images
The turnaround in what investors think
Volkswagen
is nothing short of great.
Stocks of Volkswagen (ticker: VOW. Germany), coming Thursday, are up 39% for the week and more than 70% last month. These are return shipments that resemble an electric car.
Tesla
(TSLA) stock, for example, gained about 60% leading up to being picked for the
S&P 500
in December.
Electric vehicle investors are ready for such stock movements, but huge short-term gains and losses are not that common in the traditional automotive industry.
What changed at Volkswagen to get its stock moving is its electrification targets. The German automaker is now aiming for around 50% of total sales to come from fully electric vehicles by 2030. The company’s previous target was approximately 25% penetration of existing sales by 2030.
To hit those numbers, Volkswagen also announced plans this week to build six battery factories. The goals are bold and could translate into 5 million or 6 million fully electric vehicles per year by 2030 – roughly half of the 10 million to 11 million the company produces. Tesla delivered approximately 500,000 electric vehicles in 2020.
Investors are clearly excited about Volkswagen’s shift. Apparently it only takes a few days to change from a traditional car manufacturer to an EV player.
For EV bulls, it may be ironic that Volkswagen’s share is up about 40% after the battery factories’ announcement. And in the days following Tesla’s battery technology day in September, which included plans for more internal battery production, inventory fell by about 8%.
But the stock market is all about expectations, as well as valuations. Few expected Volkswagen to double its planned battery power. Tesla, on the other hand, is expected to grow by 50% or more every year for the foreseeable future – and that expectation hasn’t changed for a while.
Tesla is also valued at about 6 times its estimated sales in 2025. Volkswagen is valued at about 0.5 times its estimated sales in 2025. The potential for VW stock is great if the company can even become second fiddle to Tesla.
Tesla shares that came in Thursday were up about 1% this week, a little better than the S&P and
Dow Jones Industrial Average.
Investors don’t seem to believe that more Volkswagen electric vehicles mean bad things for Tesla. It just means more EVs for everyone and fewer petrol cars.
As for Volkswagen, some of the air came out of stock on Thursday. Shares are down more than 14% in foreign trade.
Write to Al Root at [email protected]