The Swiss bank UBS has predicted that as the battle for dominance in the world of EVs heats up over the next few years, Tesla will have another company to join it in the top ranks for global EV sales, and that company is Volkswagen.
MarketWatch noted that UBS increased its forecast recently for how soon EVs will be adopted and it is currently betting that EVs will penetrate all of the automobile markets by 2040. This means that whichever company is the most dominant electric carmaker will be worth hundreds of billions of dollars.
Analysts at UBS spoke in a call with the media this week and predicted that the two companies that will be the two global leaders in EV sales are Tesla and VW. They expect VW to catch up to Tesla in terms of the total volume of cars sold as early as next year — when both could deliver around 1.2 million cars each. That would be 2.4 million EVs delivered and a major milestone for those of us advocating for EVs.
VW is a great role model for legacy automakers that want to start making EVs, UBS noted, while giving VW the title of the “best EV transition story” in the global car-manufacturing space. Analyst Patrick Hummel said, “We think now is the time to be all-in as a carmaker,” adding that, “It is about gaining scale as fast as possible because scale is going to be a driver of profitability.”
UBS also predicts that, by 2025, there will be manufacturing-cost parity between EVs and fossil fuel vehicles. This is compared with a $5,000 cost difference in 2020 with more expensive EVs. The analysts think that the average operating margin for EVs will grow to 7% by that time from 1% in 2020 — which means a margin parity between EVs and ICE vehicles within the next four years.
In the report, Hummel and other analysts wrote about the key area where Volkswagen leads Tesla, and this is the scalability of its EV platform. “We use the analogy from the tech space, calling Tesla the Apple of the future mobility space, because of an admired piece of hardware in combination with a cutting-edge software ecosystem,” Hummel wrote. “Volkswagen is well-positioned for a value proposition like Samsung — a global brand trusted for its high-quality hardware, produced at scale. This won’t get VW to Tesla’s valuation spheres, in our view, but still offers significant upside from here,” the group of analysts added.
UBS noted that Tesla still leads Volkswagen in a few critical technical areas, such as software and also its integrated electric powertrain. UBS analysts called it “ruthless engineering,” and noted that Tesla also leads Volkswagen with its digitization and autonomous-driving features.
Is there anything new in this report, though? It seems this is what many people have been saying for several years. Even Elon Musk has given Herbert Diess a nod and supportive words a few times.