Volkswagen AG (ETR:VOW3) is putting some major pressure on Tesla, Inc (NASDAQ:TSLA). Volkswagen electric cars require batteries and that is exactly what the German auto manufacturer has invested into.
Volkswagen Electric Cars
On Tuesday, Volkswagen AG announced that it has obtained $25 billion, or 20 billion euros, in battery supplies. Why? To support its push into electric vehicles in the forthcoming years. This is significant for two reasons, in particular: 1) this move puts a considerable amount of pressure on Tesla, who is currently struggling with Model 3 output issues, and two) this electric-vehicle push will lead to the automaker acquiring 16 factories to produce Volkswagen electric cars by the end of 2022.
To top it off, we have now been informed that Volkswagen AG plans to manufacture up to 3 million electric vehicles a year by the year 2025. These plans are all backstopped by deals with suppliers. The German manufacturer also disclosed that it plans to buy roughly 50 billion euros in batteries in an attempt to move into the electric-vehicle sector.
However, as exciting as this news might be, there is also a downside. According to Volkswagen AG, despite the battery-purchase deals, the company’s power-supply issue is likely to continue, as Volkswagen struggles to obtain cobalt, which is a key element needed for its electric vehicles.
Even though that’s one minor problem, and the rest of Tuesday’s announcement should have caused a considerable amount of optimism in the market, Volkswagen AG was still seen trading down today, currently trading down 2.56%. Meanwhile, as one might have expected, Tesla, Inc. ended today’s trading session seeing red. Tesla has made it known for months that they are dealing with Model 3 production problems, but hearing that Volkswagen is developing a competitive edge may have caused investors to enter a frenzy, hence the stock ending the trading day down 1.06%.
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What do you think? Are you team Volkswagen or team Tesla in terms of electric vehicles?
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