Will Volkswagen electric car deals hurt Tesla?

E-cars: Analysis sees VW quickly catching up with Tesla

Analysts at the major Swiss bank UBS consider Volkswagen to be “fully competitive” with world market leader Tesla in the race for the new market for electric cars. The German carmaker's MEB platform (short for “Modular E-Drive Construction Kit”) is on par with the US manufacturer in terms of costs and has “first-class energy density, efficiency and scalability”.

Volkswagen is still lagging behind Tesla when it comes to batteries and software. On average, Germans lag behind Americans by USD 1,300 per car. Tesla is known for investing a lot of money into developing new, high-performance batteries, but Volkswagen doesn't want to fall behind. Next week there may be news about battery cell production on “Power Day” of the German group.

"Negative contribution margin": Volkswagen still pays extra for electric cars

When it comes to software, too, Volkswagen is said to be years behind Tesla - but there is progress in that, too. It was recently announced that the new ID.3 and ID.4 models will receive “over the air” updates in the future - software updates will be downloaded from the network like with smartphones and no return to a workshop is necessary.

In terms of sales, UBS analysts see Volkswagen catching up with Tesla as early as 2022. Both companies could already sell 1.2 million electric vehicles each next year. For comparison: in 2020 Tesla managed to sell almost 500,000 e-cars, Volkswagen around 134,000. Due to the strongly boosted production, these numbers are expected to multiply.

Europe and China are crucial

In some European markets, Volkswagen has recently been able to secure more market shares than Tesla - they are between 20 and 25 percent. "In the Netherlands and Germany, the Volkswagen brand made it into first place among all-electric vehicles in 2020 as a whole - with a share of 23.8 percent in the BEV market in Germany and 23 percent in the Netherlands," said Wolfsberg most recently .

In addition to Europe, China is of course decisive for the race for market leadership in electric cars - the Middle Kingdom is the largest market for electric cars ahead of Europe. No wonder that Tesla has set up its own factory in Shanghai to serve the huge market from there. But you have to reckon with Vlkswagen in China as well. In the case of the Volkswagen Group's car brands, the share of business in China is now a little more than 40 percent.

Volkswagen sold almost four times fewer electric cars than Tesla in 2020