Volkswagen/electric vehicles: a slow start in a hotly contested race
Carmaker must increase sales, particularly in China, to avoid investors becoming twitchy
Volkswagen’s April Fool’s joke about a “Voltswagen” rebranding for its new ID models prompted a regulatory probe. But the German carmaker indisputably succeeded in publicising its ambition to lead the world in electric car sales. That makes its sluggish start to this year’s electric vehicle sales all the more puzzling.
Volkswagen needs to roughly double its monthly sales figures to meet its goals. It has sold about 126,000 battery electric vehicles in the first five months of 2021. That is more than half last year’s total, but little more than a fifth of this year’s target.
European electric car sales were slow overall in the first quarter, in part because registrations were brought forward to help meet 2020 targets. VW’s sales for these have now accelerated. Lacklustre revenues in China should worry, though, given that market’s importance. Volkswagen expects it to account for more than half its electric vehicle sales by 2030.
Competition is intense there. Volkswagen suffered by launching later than Tesla and local rivals. Critics say the German maker’s models do not have enough of the advanced self-driving and voice-controlled features valued by young, wealthy Chinese consumers.
Volkswagen dismisses such worries. It says Chinese sales of the latest generation of electric cars, with the first two models officially launched in March, are in line with expectations as it ramps up production and expands its new sales network. It insists it is on track to meet this year’s sales targets for electric cars, with several more models still to launch.
So far, investors have given Volkswagen the benefit of the doubt. Though the shares are down 15 per cent since their April high, they are still up by more than 40 per cent this year. They trade on a forward enterprise value-to-ebitda multiple of almost 8, a tenth above its decade average.
But shareholders will become twitchy if sales do not pick up soon. Much rides on VW’s appeal to Chinese electric vehicle buyers. Hopes of knocking Tesla off its top spot in global EV sales depends on it.