Tesla Is Facing an Unlikely Competitor in the Electric Vehicle Market
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While several companies are joining the electric car euphoria, Swiss bank UBS predicts that by 2025 only two of them will dominate the market. Of course, the first is Elon Musk's Tesla, but there is another rising company that will battle it out for years to come.
It is the automotive giant Volkswagen VWAGY, which has been emerging as Tesla's strongest competitor in the worldwide sale of this type of vehicle.
The Swiss bank recently updated its forecast on how quickly electric vehicles will be adopted. Now they project that they will have 100% of the car market by 2040. That means the battle to be the dominant automaker will intensify more than ever.
Model 3 earns Top Safety + award from IIHS for third year in a row https://t.co/rr0QtV20al- Tesla (@Tesla) February 27, 2021
UBS analysts predict that Tesla and Volkswagen will be the world leaders in electric car sales in the coming years. VW is expected to catch up with Musk's company in terms of total volume of vehicles sold in 2022, when both companies can deliver about 1.2 million cars each.
Volkswagen Group owns brands such as Audi, Porsche, Bentley, Bugatti, and Lamborghini. Last year, the company overtook Tesla to become Europe's most dominant electric vehicle group — the world's largest market behind China for these products. VW now controls between 20% and 25% of the market in this key region.
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UBS rates Volkswagen as the "best EV transition story" in the global automotive manufacturing field.
"We think now is the time to go all-in as an automaker," UBS analyst Patrick Hummel said in a video conference with the media on Tuesday. "It is about gaining level as quickly as possible, because the level will be an engine of profitability," he added.
The institution predicts that, by 2025, the manufacturing cost between electric and non-electric vehicles will be similar, compared to a cost difference of $ 5,000 in 2020 between the most expensive electric cars.
“Volkswagen is well positioned for a value proposition like Samsung, a global brand trusted by its high-quality hardware, produced to scale. This will not bring VW into the Tesla valuation spheres, in our opinion, but it still offers a significant advantage from here, " the specialists added.
Tesla still leads Volkswagen in some critical technical areas, according to UBS. The most relevant long-term advantage is in the software, but Elon Musk's firm also outperforms the German automaker with its integrated electric powertrain, "relentless engineering ," digitization and autonomous driving features, UBS analysts explained.