Why the shares of Volkswagen AG went up sharply
Volkswagen AG has become the most expensive corporation in Germany. The jump in share prices was the result of investor sentiment, which notes the company’s good prospects of overtaking the U.S. Tesla in the electric car segment. Volkswagen has overtaken software developer SAP SE in Germany by market value.
Last week, the carmaker’s common stock gained almost 16 percent and its preferred stock rose 11 percent. This brought its capitalization to 140 billion euros. At the same time, the value of SAP SE dropped to €127 billion.
It should be noted that Volkswagen previously became a leader of the German stock index DAX six years ago. After that the company had hard times because of the scandal with the lowering of the data on emissions.
So far, Volkswagen has failed to surpass Tesla, which is the most expensive car company, with a capitalization of $640 billion. However, this surge of interest in the German concern demonstrates its success in the segment of electric cars. Experts have assessed Volkswagen’s new strategy in conquering the market and note its prospects. In just a few months, the company’s common stock rose in price by 80% and its preferred stock by 50%.
The CEO of the corporation said that Volkswagen’s goal now is to increase the production of electric cars and thereby become a global leader. In addition, the corporation also plans to invest in the construction of battery production facilities for electric cars. They should be fully operational by 2030 and have a total production capacity of 240 GWh. The first step in the implementation of this strategy was to increase the staff of software developers, now it is 10 thousand employees. Thanks to this, Volkswagen has become one of Europe’s largest companies in this area after SAP Corporation.
According to the plans of the management, in the current year the automobile concern should increase deliveries of electric cars in two times and by 2025 should overtake Tesla on the world scene. Thus by 2030 the share of electric transport on the territory of the European Union should reach 60 % from the total amount of deliveries. Besides, it is expected to increase sales volume of Volkswagen products to the level of 1 million electric cars.
The German automaker is not the only one that plans to strengthen its position on the market of electric vehicles. BMW recently said that by 2030, electric cars will account for 50% of the company’s total sales. After this announcement, BMW’s share price rose to record highs, which has not been seen since 2018.