Volkswagen's Updated Electrification Plans Push its Market Cap Towards $150 Billion
【Summary】A day after automaker Volkswagen shared its plans to open up to six new electric vehicle battery cell factories in Europe to supply the advanced batteries for its future vehicles the company’s stock is on the upswing. Volkswagen’s shares rose 10% to $32.75 on Tuesday, which pushed the company's market value towards $150 billion, the highest level since 2015.
A day after German automaker Volkswagen shared its plans to open up to six new EV battery cell factories in Europe to supply the advanced batteries for the company's future electric vehicles, its stock is on the upswing.
Volkswagen's shares rose 10% to $32.75 on Tuesday after Monday's announcements, which was the second major update from the company this month. Tuesday's stock surge pushed Volkswagen's market value towards $150 billion, the highest level since 2015.
Volkswagen's preferred shares, which trade on Germany's DAX index, rose as much as 9.3% on Tuesday to their highest level since July 3, 2015, giving the carmaker a market valuation of over 121 billion euros ($144 billion).
Volkswagen's common stock surges as much as 29%, its biggest intraday gain since 2008. The company's shares are up around one third since the start of the new year.
Volkswagen's strong performance throughout the global pandemic last year has helped to sustain the company's bold electrification plans over the next several years."Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation," Chief Executive Herbert Diess said in a statement to Reuters.
Earlier this month, Volkswagen shared its updated "ACCELERATE" strategy, which includes an updated timeline for new electric vehicles. The company originally planned for 35% of its European models to be battery-powered by 2030, but the company has doubled its target to 70% of its model lineup. In the U.S. and China, Volkswagen plans for 50% of its vehicles to be fully-electric by 2030.
Volkswagen's updated ACCELERATE strategy is designed to prepare the automaker for a changing auto industry that's quickly moving towards electrification, connectivity and autonomous driving,as well as the development of software-based vehicles that support over-the-air (OTA) updates.
Volkswagen's aggressive strategy reflects that of electric automaker Tesla, which has pioneered the use of OTA updates and vehicle connectivity in the auto industry. Tesla is also the world's most valuable car company, with a market cap topping $650 billion. As a result, rival automakers like Volkswagen are racing to catch up in the electric vehicle space by following Tesla's lead.
The fully-electric Volkswagen ID.4 SUV is one of many new electric models the automaker will release by 2023.
At the company's annual press conference, Deiss expressed confidence in the automaker's ability to cut costs, which would lead to higher profit margins in the coming years. That optimism helped to push the automaker's shares higher in both the U.S. and Germany.
The Volkswagen Group is aiming for an operating margin of 7%-8% by 2025, adding it would likely end 2021 at the upper end of its 5%-6.5% target. In order to achieve this, the company plans to lower its fixed costs by 2 billion euros by 2023, representing a 5% reduction. VW is also targeting a 7% reduction in materials costs over the same period.
"We aim to put the ambitious transformation of the Volkswagen Group on a solid financial basis," VW's incoming finance chief Arno Antlitz said.
Another part of VW's plans to trim costs is to reduce payroll. On Sunday, VW announced plans to cut roughly 4,000 jobs. The company offered early or partial retirement to older employees at its plants in Germany.
With Volkswagen's nearly $150 billion market cap, the company is positioned for further growth as it works to cut costs and introduce many more electric models over the next several years.
Beginning in 2021, VW will introduce one new electric model every year, starting with the new all-wheel-drive ID.4 GTX in the first half of this year. The automaker will follow that up with the sporty ID.5 in the second half of the year. In Q3 2021, Volkswagen will launch the ID.6 X / CROZZ, a seven-passenger electric SUV for the China market.
Diess told Reuters he believed Volkswagen is actually worth 200 billion euros, as the automaker looks to overtake Tesla as the world's leading producer of electric vehicles.
Volkswagen is also planning to launch a more affordable, mass-market electric car under the ID.3. The EV will arrive two years ahead of its previously scheduled launch in 2027 to 2025.
resource from: Reuters
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