VW sees Tesla as their main competitor

It’s quite a surprise and compliment to Tesla that VW (currently the world largest car company) sees Tesla as their main competitor.

They see their engineering skill, particularly in software, fleet learning, over the air updates, self-driving as being superior to theirs. VW recognize this as the future of transportation and they are lagging behind.

I would also add, VW are short of a Gigafactory or two and need to get on that development soon.


Long TSLA and very happy after this last earnings report!!


https://electrek.co/2017/08/04/vw-brand-ceo-sees-tesla-as-vw… • one of the comments following that article
VW Group thinks they will be competitive with Tesla in EVs in 2025 and also that 75% of their sales will still be ICE cars. At least one assumption MUST be false. The Model 3 is obviously superior to the competition, and equally obvious is the fact that Tesla with a far larger R & D budget over the next seven years than the last seven years is basically guaranteed to at least maintain the same pace of improvements.
So Tesla cars, and any that actually can compete with them, will make every ICE car look like a Model A Ford in comparison. …by 2025, there is no chance in hell that 75% of buyers will want to buy an ICE car.
• VW is interesting because they are panicking publicly. Even so they have not yet fully grasped just how far down they are in this race and just how fast they must go to catch up. These automakers need to put every penny they can grab into EVs over the next decade if they want to survive, they cannot afford to have profits until they really have made the transition to EVs. The problem is that their investors are not Silicon Valley investors with a mindset of playing the long game without profits for long periods. These are not Amazon or Tesla investors. So any CEO that tried to do the right thing would be 99.9% likely to be unemployed later that day.

I never cease to be amazed by those who do not understand the difficulty large corporations have in adjusting to innovative technology. I put in down to a deficit in reading the ample literature on the subject.

They even have problems changing internal focus,. For instance the litmus test at VW was belief in the diesel. When it became obvious that technology could not reach the diesel goal, the lower echelons cheated rather than challenging the validity of the goal. I suspect upper leadership knew but went along with it rather than admit error.

I had not thought of the resistance VW would encounter from bankers and investors if they upped R&D and spent money on expensive battery plants. The P/E of most auto companies is already so low that they have to finance with debt. A far bigger risk in recessions than equity financing.

The comment about the California location and the disproportionate number of Tesla software engineers makes me feel better about my oversized Tesla investment. Because I like software better than hardware as an investment.