Sep 24, 2020
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VW Will Be The 1st Mass Market Electric Car Profit Maker: Report

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Volkswagen ID. 3 electric automobile. Photographer: Krisztian Bocsi/Bloomberg © 2019 BLOOMBERG FINANCE LP Volkswagen will become the first global automaker to earn money selling battery-only electric vehicles (BEVs) with profits kicking in from 2022 according to a report from Swiss investment bank UBS. That would raise eyebrows at General Motors which last week at its EV day said its electric vehicles will be profitable but didn t say when


Sales of battery-only cars and SUVs will accelerate to greater than 15% of the worldwide market by 2025 while Tesla s position as the world s most desired electric vehicle will come stressed from German competition UBS said. The prediction for VW may also be welcomed by investors since the corporate plans to spend $36 billion through 2024 on a family of electrical cars right across its mass market brands


However the UBS prediction of 15. 6% to be precise still falls in need of VW s sales expectations. VW has said by 2025 a minimum of 25% of its global sales will be BEVs. And another cautionary note for VW and other electric car wannabes UBS s forecast is way stronger than most


Morgan Stanley expects BEV sales to rise from about 2% globally last year to only 11% by 2025 that’s around where most other forecasters sit. IHS Markit predicts a BEV market share of 14% in Europe for 2025 implying a far lower total for global sales. Tesla Model Y (Photo by Hannes Breustedt/picture alliance via Getty Images) PICTURE ALLIANCE VIA GETTY IMAGES The UBS report is likewise bad news for plug-in hybrid electric vehicles (PHEVs) which will only account for 1


4% globally by 2025. These vehicles which usually have a smaller battery than the BEVs and may offer only about 30 miles of electrical only range before switching to gasoline or diesel power aren’t favored by EU regulators because they permit drivers to ignore the electrical component and mainly drive on the internal combustion engine


And in Europe they’re seen as incapable of meeting stringent fuel efficiency rules which demand a mean 92 miles per U. S. gallon by 2030. PROMOTED Grads of Life BRANDVOICE | Paid Program
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Wild Polio Eliminated In Africa: A Giant Step Closer To Eradication UBS said in a survey published with its forecast Tesla remained the most favored electric car brand with 36% of potential BEV buyers considering one while the approaching Model Y and Cybertruck models push its technology leader status


But that could change soon. In a head-to-head comparison consumers would still prefer an electrical Audi BMW or Mercedes over a Tesla. The main issue is that these brands still lack competitive products that could change in 2021 the UBS report said. BMW unveiled its i4 concept BEV last week for launch in 2021


Mercedes and Audi are gearing up for more premium electric cars and SUVs. UBS said investors are cautious about electric vehicles because upfront investment cost is high demand despite this positive report is uncertain and costs initially will eat into profit margins. VW is in pole position to challenge Tesla with its mass market aimed ID


3 expected to go on sale late this summer. It has also shown its planned electric SUV the ID. 4 on the market next year. Meanwhile there have been reports about production problems with the launch of the ID. 3 according to German investment bank Norddeutsche Landesbank Girozentrale. Automotive News quoting Germany s Manager Magazin said it is right down to massive software glitches


UBS thinks the ID. 3 will deliver profits for VW. A winning EV is a mixture of an acceptable range – 280 to 310 miles – at a price point roughly on par with equivalent conventional cars as proven by Tesla s success. We expect VW is the first global incumbent (manufacturer) to deliver such product and hereby climb the size curve fast


Consequently VW ought to be the first incumbent to earn money with BEVs. Premium (manufacturers) lack scale in BEVs and are unlikely to close the technology/performance gap to Tesla soon which bears the danger of unprofitable EVs and the lack of market share the report said. VW hasn t yet replied to an email seeking comment on the ID


3 report. Later VW said the ID. 3 launch will go ahead as planned this summer however it declined to more precise

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