German auto major, Volkswagen, has an edge over Tesla because of local manufacturing, brand familiarity and cheaper price points. Volkswagen also benefits from its wide array of marque brands like Audi, Bentley and Porsche. Though VW remains the leader in electric vehicles in Europe, it's distantly placed in the global sweepstakes.
Despite Tesla’s dominance in the electric vehicles (EV) segment in the US, it has not been able to topple German auto major Volkswagen from the top spot in the European EV market.
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The Volkswagen group said it held 26 percent share in the EV market in Europe in the first half of 2021.
Although Tesla’s Model 3 is one of the best-selling cars in Europe, Volkswagen still has an edge over the American EV maker because of local manufacturing, brand familiarity and cheaper price points. Volkswagen also benefits from its wide array of marquee brands like Audi, Bentley and Porsche.
EV manufacturing in Europe also received a push from new emission norms in the continent. Auto manufacturers in Europe are driving in new electric and hybrid models to the market to meet the continent’s steep greenhouse-gas emissions targets and avert non-compliance fines which could go up to €33 billion ($37 billion).
“VW has started selling cars more aggressively in Europe than in the China and the US,” Tom Narayan, lead equity analyst of European autos RBC Capital Market, told CNBC.
However, the EV battleground in Europe could soon heat up as Tesla CEO Elon Musk plans to start production at the Berlin Gigafactory by end of the year.
Success in Europe
In 2015, Volkswagen was caught installing emission-cheating devices in its vehicles in the US. The German car giant had admitted to cheating emissions tests and spent more than $33 billion in vehicle refits and regulatory fines.
The scandal propelled VW to find a different way to power their vehicles. After taking over as the CEO, Herbert Diess steered the company towards electrification.
Diess is aiming to spend $68 billion on digital technologies and electric cars by 2024. The company is targeting to build 26 million EVs by 2029 and drive in 50 different models by 2030.
“One thing that Diess does that is positive, he keeps repeating — even when no one in Wolfsburg wants to hear it — that Tesla is the benchmark. He is using Tesla to create pressure within the company for a necessary transformation,” Stefan Bratzel, director of the Centre of Automotive Management in Bergisch Gladbach, Germany, told The New York Times.
Diess has also pointed at the gap in efficiency between the two companies. According to him, Tesla aims to assemble a car in 10 hours at its new plant, while Volkswagen’s factory in Zwickau takes three times as long to produce its ID.3 or ID.4.
However, VW still has to go a long way before catching up with Tesla globally. In the first three quarters of 2021, Tesla sold over 627,350 EVs as compared to VW which sold 293,039.
Volkswagen is planning to double its staff at its charging and energy division, strike new alliances and roll out a new payment technology next year to take on rival Tesla in power infrastructure, Reuters reported.
It is also planning to set up a factory for its fast-charging Trinity electric sedan that is expected to be introduced in 2026.
(Edited by : Thomas Abraham)
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