The radical change in what investors think
It is nothing short of amazing.
Volkswagen shares (ticker: VOW. Germany), as of Thursday, were up 39% during the week and more than 70% during the past month. Those are similar returns to electric vehicles.
(TSLA), for example, earned about 60% in her career until she was chosen for the
Investors in electric vehicles are prepared for stock movements like that, but huge short-term gains and losses are not as common in the traditional auto sector.
What changed at Volkswagen, to put its actions in motion, are its electrification goals. The German automaker is now targeting about 50% of total sales by 2030 to come from fully electric vehicles. The company’s previous goal was approximately 25% penetration of existing sales by 2030.
To make those numbers, Volkswagen also announced plans this week to build six battery factories. The goals are bold and could translate to 5-6 million fully electric vehicles a year by 2030, roughly half of the 10-11 million the company produces. Tesla, for context, delivered around 500,000 electric vehicles in 2020.
Investors are clearly excited about the Volkswagen change. It apparently only takes a couple of days to transform from a traditional automaker into an EV player.
For electric vehicle bulls, it might be ironic that Volkswagen shares soared around 40% after the announcement of the battery factories. And in the days after Tesla’s Battery Tech Day in September, which also unveiled plans for increased internal battery production, its stocks fell about 8%.
But the stock market is all about expectations, as well as valuations. Few expected Volkswagen to essentially double its planned battery power production. Tesla, on the other hand, is expected to grow 50% or more each year for the foreseeable future, and that expectation hasn’t changed in a while.
Tesla is also valued at about 6 times estimated sales in 2025. Volkswagen is valued at about 0.5 times estimated sales for 2025. The potential for VW shares is great if the company can even become a second Tesla fiddle. .
Tesla shares that arrived on Thursday were up about 1% for the week, slightly better than the S&P and
Dow Jones Industrial Average.
Investors don’t seem to believe that more Volkswagen EVs will mean bad things for Tesla. It just means more electric vehicles for everyone, as well as fewer gasoline-powered cars.
As for Volkswagen, some of the air came out of stock on Thursday. Shares fell more than 14% in overseas operations.
Write Al Root at [email protected]