The turnaround in what investors think about
is nothing short of amazing.
Volkswagen (ticker: VOW. Germany) shares, coming into Thursday, gained 39% for the week and more than 70% over the past month. Those are electric vehicle-like returns.
(TSLA) stock, for instance, gained roughly 60% in its run up to getting picked for the
EV investors are ready for stock moves like that, but huge, short-term gains and losses aren’t as common in the traditional automotive sector.
What changed at Volkswagen, to get its stock moving, is its electrification goals. The German auto maker is now targeting about 50% of total sales by 2030 to come from all-electric vehicles. The company’s prior goal was about 25% penetration of existing sales by 2030.
To make those numbers, Volkswagen also announced plans this week to build six battery factories. The targets are bold and might translate into 5 million or 6 million all-electric vehicle annually by 2030—about half of the 10 million to 11 million that the company produces. Tesla, for context, delivered about 500,000 EVs in 2020.
Investors are clearly excited by Volkswagen’s shift. Apparently, it takes only a couple of days to transform from a traditional auto maker into an EV player.
For EV bulls, it might be ironic that Volkswagen stock shot up about 40% after the battery factories announcement. And in the days following Tesla’s battery technology day in September, which also featured plans for more internal battery production, its stock dropped about 8%.
But the stock market is all about expectations, as well as valuations. Few expected Volkswagen to essentially double its planned battery electric output. Tesla, on the other hand, is expected to grow 50% or more every year for the foreseeable future—and that expectation hasn’t changed in a while.
Tesla is also valued at about 6 times estimated 2025 sales. Volkswagen is valued at about 0.5 times estimated 2025 sales. The potential for VW shares is large if the company can become even a second fiddle to Tesla.
Tesla stock coming into Thursday was up about 1% for the week, a little better than the S&P and
Investors don’t appear to believe more EVs from Volkswagen means bad things for Tesla. It just means more EVs for everyone as well as fewer gasoline-powered cars.
As for Volkswagen, some of the air has come out of the stock Thursday. Shares are down more than 14% in overseas trading.
Write to Al Root at [email protected]