Race With Tesla Will Be Tight

The electric car market is becoming more and more interesting as other automotive groups intend to challenge Tesla’s dominance.

The Volkswagen Group is one of the main challengers, but as we saw after the first quarter, the company is not yet there. Actually, it’s third, behind BYD in terms of battery-electric car sales.

According to Reuters, Volkswagen Group’s CEO Herbert Diess noted recently that Tesla works at twice the industry pace “in many processes,” but on the other hand, needs to ramp up plants, which includes finding qualified workers. Tesla’s advantage is also a “blank slate start” (without ICE heritage) and a small number of models.

Herbert Diess says that Volkswagen is scaling-up too, and the race between the two will be “tight”.

“There’s a lot coming from our side too… a lot of momentum. It will certainly be tight in coming years,”

Well, only the time will tell which company will be able to sell more electric cars in the future.

A thing that is extremely important to scale-up BEVs is not only the production capacity but also the profitability of such vehicles. In May, Herbert Diess revealed that electric car profit margins are expected to match ICE cars sooner than previously planned.

“We expect the e-mobility business to match the profitability of our combustion engine business earlier than planned. Because we are rolling out our e-mobility toolkits across the board, converting a growing number of production plants and selling our technology to competitors such as Ford.”

Reuters reports that the previous forecast was to achieve profit margin match in 2-3 years. As we understand, it might happen next year, or at least in 2024.

The plan for 2022 is to sell some 800,000 all-electric cars (99,000 were sold in Q1), while in 2023 the number should increase to 1.3 million.

For reference, Tesla sold over 310,000 electric cars during the first quarter and over 1 million within the last four quarters. The company forecasts an average annual growth rate of roughly 50%.