Volkswagen can catch up with Tesla in terms of production of electric vehicles next year
The huge rise in Tesla’s share price, analysts explain, was associated with increased investor confidence in its ability to continue expanding its electric vehicle production at an accelerated pace. UBS experts believe that Volkswagen will keep up with the competitor, and by the middle of the decade, both companies will become the largest players in the market.
According to analysts at New Street Research, by the end of next year, Tesla will be able to increase the production of electric vehicles to two million a year, and in 2023 it will overcome this milestone. According to UBS experts, Volkswagen has a quite feasible task to release at least 1.2 million electric vehicles next year, bringing it closer to Tesla in terms of its core business scale.
At the end of last year, Volkswagen managed to occupy up to 25% of the European market, approaching Tesla. According to UBS experts, Volkswagen platforms for creating electric vehicles will be distinguished by good scalability. If in 2020 a manufacturer could earn on average 1% of its cost on each electric vehicle, then by 2025, the profit rate will grow to 7%. By the middle of the decade, as already noted, the cost of producing a budget electric car will equal the cost of producing a car with an internal combustion engine.
As the authors of the policy note explain, Tesla will be able to maintain leadership in certain areas. Thus, the American company will outperform the German competitor in software, including active driver assistance functions. According to UBS experts, Tesla’s developments in the field of creating powertrains will also provide the company with technological leadership compared to Volkswagen. By 2040, UBS predicts that electric vehicles will finally penetrate all segments of the automotive market. Volkswagen’s strategy to switch to electric traction, in this case, should ensure the success of the business transformation.
