Deutsche Bank said Volkswagen should continue to receive more praise for its all-electric vehicle strategy, which could push the company past Tesla in electric car sales as soon as next year, according to foreign media reports.
Analysts led by Tim Rokossa said in a report on March 22 that if VW's all-electric car business could earn a P/E ratio similar to that of Tesla and Azera, its market capitalisation would reach around €195 billion (US$230 billion), more than the company's entire current market capitalisation. Analysts raised their target price for Volkswagen's shares by 46 per cent to €270.
Volkswagen's ordinary shares rose as much as 14 per cent and its preferred shares rose as much as 8.4 per cent on the Frankfurt stock market, while its American Depositary Receipts (ADRs) also rose on the New York stock market. Last week, VW's German-listed shares rose by 22 per cent and 16 per cent respectively. VW also stole the title from software giant SAP, becoming the largest component of Germany's benchmark DAX index and the country's highest market capitalisation for the first time since the diesel cheating scandal damaged its reputation and share price in 2015. The company's plans to compete with Tesla for leadership in the electric car sector sparked a buying frenzy among US retail investors, with trading in its American Depositary Receipts soaring.
Rokossa believes that sales of VW's electric cars are likely to overtake Tesla's in the near future as the VW ID.4 compact SUV is launched globally. Executives of VW's Seat brand said on March 22 that they plan to launch an electric car for urban areas in 2025, priced between 20,000 euros and 25,000 euros.
VW plans to turn the Seat plant outside Barcelona into an electric car hub, aiming to produce more than 500,000 cars a year, equivalent to Tesla's global deliveries by 2020.
Volkswagen truck company Traton SE is also pushing ahead with electrification. By 2025, the division will increase its investment in electrical technology from the previous €1 billion to €1.6 billion and scale back its spending on internal combustion engines.
The future of commercial vehicles will no longer be driven by diesel vehicles, but by electric trucks, says Traton CEO Matthias Gruendler. Due to their lower costs, battery-powered trucks are bound to win out over trucks using hydrogen fuel cells, which will be largely confined to niche markets.
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