Beware Tesla, Volkswagen is not joking

-

This week, the SEC announced that Volkswagen is being investigated over its “Voltswagen” April Fools debacle. So what happened?

Voltswagen was the actual new name (for about 24 hours) that automotive giant announced for their US subsidiary on March 31st, in a bid to promote the company's renewed focus on electric vehicles and its new all-electric SUV.

Initially leaked as an upcoming April Fools joke, the name change was later confirmed on official VW corporate channels, before company spokesman Mark Gillies said on Tuesday that the statement was indeed an early April Fool’s Day joke. For a company found guilty of lying in a big way about emissions (Dieselgate), this was a high-risk gag with poor delivery.

Joke or not, VW is very serious about its ambitions for electric vehicles. Last year, between the company's 12+ brands the group delivered around 230,000 all-electric vehicles. That might only be around 2% of Volkswagen Group's total vehicle deliveries, but it is already almost half of Tesla's sales.

VW expects to spend $41B on electric mobility over the next 5 years. With 12 individual brands to manage there's a decent chance they mess something up as they transition to electric, but even accounting for some serious execution risk, that kind of investment could see Volkswagen Group become the biggest EV seller in the world.

Bottom line, Volkswagen's Voltswagen PR stunt may have been a joke, but its EV strategy is not.


Disclaimer: This post is merely my own assessment and is not an investment recommendation. For professional advice, seek input from a licensed investment advisor.

Comments

Post a Comment

Popular posts from this blog

Bitcoin and the 99 other coins

-
So far Bitcoin is having a decent 2021. It hit a record high of more than $41.5K last week, continuing the upward trajectory it has been on since April of last year, when a single Bitcoin cost less than $5K. That rise now means that the sum of all Bitcoins in existence is worth more than $700B.  Because Bitcoin dominates much of the media's attention, it can be easy to forget just how many other cryptocurrencies there are. A quick look through the full list from coinmarketcap reveals over 100 alternative cryptocurrencies with a "market cap" of more than $100M. Each hoping that their unique take on the core blockchain technology will be enough to propel them out of obscurity, to where Bitcoin is today. With some of the names on the list you can't help but think someone is having a joke, or planning something nefarious - there is a "dogecoin", "YEP COIN", "OMG" and even "SushiSwap" (???). This time it's... different? Some of
Read more

Why the stock market is beating expectations

-
Image
  In the early stages of the pandemic, the S&P 500 index dropped a third of its value. Since then it has roared back, soaring more than 50 percent from its low in late March and setting an all-time high last week. This seems very implausible when set against the current state of the economy and the ongoing devastation caused by the pandemic. So why is the stock market rallying in the face of a pandemic and bad economic news? Several explanations are plausible. The stock market is not the economy: The stock market represents publicly traded companies only; it’s not the whole market. Most importantly, it’s always forward looking; i.e. it’s an indicator of the future earnings of those companies and how they would fare in the future. A rising stock market indicates that investors think these companies will do better in the future. On the other hand, a falling stock indicates that investors are pessimistic about the future earnings of companies. Continued income support for the econom
Read more

Netflix: No more burn?

-
In the last article on Netflix , I discussed why Netflix's promise to premiere a movie every week is not an overly ambitious strategy for the streaming giant. It's a brilliant move that isn't risky because Netflix can keep spending at this high rate for a long time. Yesterday's earnings call confirmed this. During the call, Netflix announced that it does not intend to raise any more capital, through debt or equity, as it plans to be cash-neutral this year and cash-flow positive beyond 2021. Looks like all those price increases are flowing through to the bottom line. Of course, saying you don't need any more capital is a really great way of getting people to offer you more capital at even more attractive rates (if you ever did want it).
Read more