When Volkswagen mapped out its electric future in 2019, it was the world’s biggest carmaker with every chance of overtaking Tesla as the no. 1 manufacturer of battery-powered vehicles by the middle of this decade.
“Volkswagen will change radically,” then-CEO Herbert Diess told shareholders. “Some of you may rub your eyes in amazement. But make no mistake – the supertanker is picking up speed.”
But the transformation didn’t happen. Almost five years on, the Volkswagen Group, which includes Audi and Porsche, is still miles behind Elon Musk’s Tesla (TSLA), selling less than half of its US rival’s 1.31 million electric vehicles (EVs) last year.
To make matters worse, the champion of German manufacturing is also losing out to new challengers from China, its biggest single market and a country where Volkswagen has been the best-selling car brand overall since at least 2000.
The brand is on the verge of losing that crown to local electric rival BYD.
“Volkswagen has just fallen behind in the battery electric vehicle race,” said Al Bedwell, a director at GlobalData who focuses on e-mobility trends. “The big problem is China, where we actually expect Volkswagen to fall back this year in terms of sales volumes,” he told CNN.
In a market where EV sales are expected to grow by more than a quarter by 2023, Volkswagen’s sales are expected to shrink by 7%, according to data analytics firm GlobalData. The group now ranks eighth in China’s fast-growing EV market, with a share of just 3.3%. BYD, the leader, has 25% and Tesla, in second place, has 15%, according to GlobalData.
Investors’ initial enthusiasm for Volkswagen’s EV ambitions quickly turned to scepticism, as evidenced by the company’s share price, which jumped 60% in 2021 as the carmaker pledged to build six battery manufacturing gigafactories in Europe by 2030 and announced plans to sell more than 2 million electric cars a year by 2025.
Most of these share price gains were lost in 2022, as it became clear that Volkswagen was falling short on execution. The stock has continued to slide, and is down 14% so far this year.
“If what they laid out … had actually been achieved, even partially … I think everyone would be singing VW’s praises right now,” said Daniel Roeska, head of EU automotive research at brokerage Bernstein.
“The Diess plan was phenomenal in terms of what they wanted to achieve, (but) it was never realistic.”
