In the Short Term VW will Steal Market Share from Tesla

At the Last Futurist, we don’t understand Cathie Wood’s $3,000 call on Tesla. We don’t expect Tesla to win the EV race or the AV race, and it’s not even close.

In the short-term before 2025, it’s actually VW that has the biggest chance of challenging Tesla for EV first-mover supremacy. This before real technology companies like Apple, Baidu, Amazon (acquiring Rivian) and Huawei and others get into the EV space.

Just like with the future of banking and the future of healthcare, we believe technology companies are best positioned to fuel the smart car innovation era while winning at the intersection of EVs and AVs. If you were Baidu or Apple, this would be the time to put R&D into the future era of the car since legacy automobile players and smaller EV startups are less well positioned to compete in the coming era of software and autonomous driving sensors.

Cathie Wood’s Ark Invest said it expects Tesla Inc’s share price to reach the $3,000 mark by 2025. Cathie made her fortune of $Billions in the bull market of 2020 on Tesla’s back, so of course she needs to stay crazy bullish.

But Cathie Wood doesn’t understand the future of exponential competition or innovation. Her team writes biased reports to pump the sectors and stock picks of her ETFs, which is a bad long-term strategy.

Tesla is a Pioneer but Can it be a Winner against VW?

Tesla has not revolutionized the auto industry, it’s barely profitable and has quality issues all around the world. Yes it has popularized EVs and paved the way for a great era of competition that will drive down car prices and the evolution of the smart car, which are electric vehicles with a wide spectrum of autonomous driving features.

  • The Volkswagen Group (VW) capped off 2020 with 231,600 deliveries of battery-electric vehicles, or more than triple the 73,600 it delivered in 2019. They are expected to be the winners in the important European market ahead of Tesla.
  • Volkswagen is saying more than 70% of the Volkswagen brand’s European sales will be EVs by 2030, up from a previous target of 35%. This means it’s the most likely legacy auto brand along with GM, to be significant competitors of Tesla.
  • Volkswagen said it plans to spend about 16 billion euros ($19 billion) for investment in the future trends such as “e-mobility, hybridization and digitalization” by 2025. That’s more dynamic than GM and likely to rival Tesla’s investments.
  • Market futurists like Michael Burry are betting on VW beating Tesla for good reasons.

The ‘Big Short’ Michael Burry is Short Tesla and Long VW

Michael Burry holds a stake in Volkswagen’s biggest shareholder, he revealed in a now-deleted tweet on of March 3rd, 2021. So why would he do this?

Major analysts agree as well that see Tesla being matched sale for sale by Volkswagen $VLKAF as early as 2022, according to analysts at UBS. 2022 will also show the innovation of Rivian and Lucid Motors and also give us valuable more data on which Chinese EV startups are the most likely winners. At the Last Futurist we think Xpeng will grow faster than Nio and Li Auto.

The deep dive into the ID.3 by UBS Group AG analysts found the platform underpinning VW’s EV models will be fully cost competitive with Tesla and boast best-in-class energy density and efficiency. This according to Patrick Hummel of UBS.

UBS Analysis Points to Bullish Target on VW in EV Industry

  • VW is primarily targeting Europe with the ID.3 hatchback, which will be flanked this year with its crossover sibling, the ID.4. The latter model will be produced in China and the U.S. in addition to Germany.
  • VW plans to at least double the share of its sales that are fully electric this year to between 6 percent and 8 percent, suggesting it might narrow the gap with Tesla by boosting deliveries to roughly 700,000 cars.
  • Government incentives and tightening CO2 emissions targets are driving automakers to release EVs more than customers are demanding them.

The EV market will be a winner-takes all consolidation of just a few names by 2030. Certainly Tesla will be among them, but may not be the huge winner bulls like Cathie Wood have projected. This is because her background is Economics and she does not understand how global competition takes place especially with the rise of Government-backed EV startups in China and the importance of autonomous vehicle software in the big equation.

Tesla will have Too Much Competition

The data currently in 2021 suggests VW, GM, Toyota and Chinese legacy brands will be better at pivoting to EVs than was previously indicated. This is due to a radical shift in how we see the future and battery technology innovation made in 2020. In new sectors first-movers don’t always have a tangible advantage five or ten years later, but simply drive innovation.

We have to admit Tesla’s pockets aren’t as unlimited and deep as some of their competitors. Tesla’s days as the leader of the EV pack might be numbered, at least we have to seriously consider this possibility even at the peak of the hype of Tesla that was in late 2020 and early 2021. The facts will tell a different story.

While Tesla has been a trailblazer in the electric vehicle space, legacy car companies have been laggards to date. We believe VW will be the first to truly move the needle in EVs. While China is the most important market for for EVs, Europe is second ahead of the United States that are green tech laggards.

IHS Markit reports EVs accounted for about 3.3% of the 76.5 million vehicles sold globally in 2020. The research firm expects sales of EVs to rise to 12.2 million in 2025, indicating annual growth of nearly 52%. With Apple expected to have a car by 2026, I think Baidu will do pretty well in the 2020s as well. GM has a good EV-AV hybrid strategy. Lucid Motors has enough backing to do well, in addition to Rivian, maybe the most promising American EV startup.

EVs and AVs will be an incredibly big total addressable market. We believe Tesla is a car manufacture masquerading as a technology company. Is been a fun Elon Musk hustle to watch, but by 2025 we see a lot of Tesla’s shine already failing. The rise of VW is one of the main significant catalysts for this correction to occur.

Patrick Hummel, Head of European and US Auto & Mobility Research at UBS, assesses the MEB electric platform from Volkswagen. For a study on behalf of UBS, “ID.3 teardown: The biggest EV opportunity – Buy“, published on March 2, specialists broke down the fully electric ID.3 into its individual parts.

The result: The ID.3 based on the modular electric drive matrix (MEB), is Volkswagen’s entry ticket to the electric age and the most impressive solution available from an established automotive company.

Volkswagen is Investing Heavily in EVs

So why VW? Volkswagen is achieving peak performance in terms of efficiency, scalability and the energy density of its batteries. In terms of the software platform and ecosystem, Volkswagen is currently still behind Tesla, however Apple, Baidu and Lucid Motors are all in a decent position to succeed here. The partnerships that Lucid Motors will be able to afford as a direct competitor to Tesla will be significant and scale faster than Tesla did before EVs were seen as inevitable.

VW holds an advantage when it comes to scale in Europe. It will take Tesla many years to rival VW at home. In order to meet EU climate targets and beat Tesla, VW plans to launch about 70 purely electric car models by 2030. This will essential dwarf Tesla. Tesla has no idea how to become a car manufacture at scale, and this is why it must create so much “bling” to remain popular.

To become a smart car manufacture that is competitive on a global scale is a nearly impossible feat to accomplish, most will fail. Even if Tesla succeeds, it’s market share in EVs will keep declining every year after 2023. This is because of rising competition in the space and a vast array of new entries.

In all honesty it doesn’t matter what Fisker, Rivian, Nio, Nikola, Canoo, Faraday Future and others do, it matters more what VW, Toyota, GM and bigger companies like Apple, Baidu and Huawei do. Tesla might be allow to be in China simply for the opportunity of Chinese startups and automobile companies to become more innovative faster.

So where will Tesla have EV market share if not in China or Europe? Will Tesla be able to have a significant marketshare in the U.S. where Lucid Motors and Rivian along with GM, Ford and others are maturing rapidly in the EV space? Yes it could lead, but it’s overall global sales total won’t be overwhelming.

Thus for Cathie Wood to claim that Tesla’s stock (already in a bubble) will be $3,000 in the future isn’t just ignorant, it’s deeply misguided and self-serving to her outrageous portfolio stake in Tesla driven by a number of powerful billionaires as the ultimate pump and dump of the year 2020.

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