German automaker Volkswagen Group vies to topple its main contender, Tesla, in the years to come via increased EV sales. The company's CEO, Herbert Diess, relayed these sentiments amid the 2022 FT Future of the Car conference on Monday, May 9th, highlighting the stringent difficulty in the race to beat out Tesla by 2025, yet the overarching motivation it provides for the German brand outweighs the potential stopgaps.
"It will be a tight race but we won't give up on it. I have to say we didn't expect our main US competitor to be so fast and well-prepared," Diess said, reiterated via Reuters.
VW's Q1 results proved to be positive, showcasing a sales revenue of $66.1 billion (EUR 62.7 billion), with an operating profit of $9 billion (EUR 8.5 billion). As a whole, the German automaker sold a total of 99,064 all-electric vehicles in the last quarter, all of which include EVs from the likes of Audi, Porsche, and more.
Tesla, on the other hand, delivered a whopping 310,000 rides in the same span of time, proving its remarkable reach and persona in the EV market. How exactly VW Group plans on outpacing its rival remains somewhat cloudy, but CEO Diess remains adamant and focused on the target at hand.
The executive was targeted mainly in 2021 for similar remarks, pitting the rival brands (Tesla and Volkswagen) as main contenders in the EV market, as well as consistently measuring the two brands' EVs together in ploys to bridge more investor considerations and outward support.
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The main issue that VW Group has in rivaling its US counterpart is Tesla's already existing production capabilities made on a global scale. From Texas to China, Tesla has a multitude of gigafactories set across the board, one of which only recently just opened not far from Berlin.
Diess himself sees the awkwardness and unfathomability in this ploy, highlighting that Tesla's production ramp-up will be of a major challenge to the German brand and assorted German alternatives like BMW and Mercedes-Benz, most prominently in that location, as well as across the globe.
The CEO's convictions lie in the all-encompassing nature of VW Group, which includes within it an assortment of varied EV brand types, from larger SUV offerings, premium rides, and luxury EVs. It also has an allotment of volume brands, but the main question is if VW alone can dominate the US market, wherein competition will be most fierce against Tesla.
Diess claims the company wants to hit a doubled market share in the US, that's 10% of the location in EV sales, which as the executive relays, will most certainly necessitate the building of a whole new factory and battery production site in the area. Still, while its potential is certainly there, going up against Tesla already seems like a no-win battle, given that the automotive brand has such a massive footprint.
In theory, by 2025, Tesla may well already have a four million EV distribution production capability if all still remains set in stone for the brand. As of yet, VW Group only has the distribution capacity for around 400,000 EVs. Thus, Diess's convictions on building a new plant are certainly necessary - if not dramatically underplayed. If anything, VW would need three more to take on Tesla in that time span.
VW does have an ace up its sleeve in the form of its more affordable ID. Life iteration is a projected $25,000 EV set to debut in 2025. Thus, this having any real effect on the German automaker's current plans seems rather null and void, but the hype moving toward its release could help VW long-term?
It's an uncertain market, and, while Tesla certainly dominates across the board, VW could have the potential to overtake them if they ramp up production capabilities, marketing, and overall EV performance potential. It has an allotment, from Audi to Volkswagen alone. Thus, it could easily steal the show if it can match the rival's production metrics.
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