VW chief confident of overtaking Tesla to become biggest EV manufacturer

Volkswagen can overtake Tesla to become the largest electric vehicle manufacturer by 2025, as the challenge of lifting production weakens its fiercest rival, the German group’s chief executive has claimed.

“Elon [Musk] must simultaneously ramp up two highly complex factories in Austin [Texas] and Grünheide [near Berlin] — and expand production in Shanghai. That will cost him strength,” Volkswagen Group chief executive Herbert Diess told workers at VW’s Wolfsburg headquarters on Tuesday.

“We have to seize this opportunity and catch up quickly — by 2025 we can be in the lead,” Mr Diess added.

The confidence from the VW chief stands in contrast to comments he made just last month when he told a Financial Times conference that VW “didn’t expect [its] main US competitor to be so fast and well prepared”, and that it would be a “tight race” to be the dominant electric vehicle producer by the middle of the decade.

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VW, which has invested more than €52 billion in the development of battery-powered vehicles, plans to sell approximately 700,000 electric cars worldwide this year, less than half of the 1.5 million that Tesla chief executive Elon Musk suggested his brand would be able to deliver.

However, Tesla, which coped better than most competitors during the early stages of the semiconductor supply crisis, has more recently been plagued with production problems at its so-called gigafactories in the US, Europe and China.

Mr Musk told a Tesla owners’ club last month that the company’s plants in Texas and Germany were “gigantic money furnaces right now”, losing billions of dollars as they struggle to secure parts and accelerate manufacturing in the face of global supply chain bottlenecks.

Mr Diess, who is friendly with Mr Musk and has credited the entrepreneur with popularising electric cars, seized on these developments in his address to staff, saying that while VW’s strongest competitor “remains Tesla”, the company was “weakening”. His presentation contained a meme that showed actor Jason Momoa, representing VW, creeping up behind fellow actor Henry Cavill, cast as Tesla.

In contrast, VW was running its electric plant in Zwickau at full capacity again after temporary shutdowns, while its factories in China had come back online after pandemic-related closures, Mr Diess told employees.

As a result, VW “will close the gap to Tesla and not let it grow even larger” this year, predicted the chief executive. Mr Musk said last week that he did not agree with industry forecasts predicting that VW would overtake Tesla this decade.

“We don’t really think about other competitors,” he told a Bloomberg event. “The demand for our cars is extremely high and the wait list is long... We are increasing production capacity as fast as humanly possible.”

Separately on Tuesday, Siemens announced it had invested $450 million for a minority stake in VW’s North American charging network, known as Electrify America, in a deal that values the division at $2.45 billion.

VW invested $2 billion into Electrify America as part of a court settlement over the diesel emissions scandal. It plans to have 10,000 charging stations by 2026.

Tesla did not immediately respond to a request for comment on the remarks by Mr Diess.

— Copyright the Financial Times Limited 2022