Volkswagen Lifts Margin Outlook Again After Record Profit

By Christoph Steitz and Jan Schwartz

The company said it now expected an operating return on sales of 6.0-7.5%, having previously guided for 5.5-7% and nudged up its forecast for net cash flow at its automotive division, now expected to be much stronger in 2021.

The first-half operating profit before special items reached 11.4 billion euros ($13.5 billion), above the previous record of 10 billion euros achieved in 2019, before the coronavirus pandemic wreaked havoc in the global economy.

The strong increase was in part driven by high demand for high-margin luxury Porsches and Audis.

“We’re keeping up our high pace, both operationally and strategically,” Chief Executive Herbert Diess said in a statement, published only hours after the carmaker, along with partners, launched a bid for French-listed Europcar.

“Our electric offensive is picking up momentum and we will keep on increasing its pace in the months to come,” said Diess, who aims for Volkswagen to overtake Tesla as the world’s largest electric vehicle player by 2025.

Porsche SE, Volkswagen’s largest shareholder, also raised it outlook following the carmaker’s result, now forecasting profit after tax of 3.4 billion to 4.9 billion euros in 2021.

Shares in Volkswagen were indicated to open 0.7% higher in pre-market trade.

The global car sector has been hit by a shortage of crucial semiconductors, with numerous rivals, including Daimler, BMW and GM, adjusting or halting production, and Volkswagen accounted for that in its deliveries forecast.

“The risk of bottlenecks and disruption in the supply of semiconductor components has intensified throughout the industry,” the company said, lowering the outlook for deliveries to customers.

It now expects deliveries to be up noticeably in 2021 from the 9.3 million last year, having previously expected them to rise “significantly.”

($1 = 0.8433 euros)

(Reporting by Christoph Steitz and Jan SchwartzEditing by Tomasz Janowski)

Volkswagen Sticks to 2021 Profit Margin Forecast Despite Chip Crunch

Volkswagen still expects to achieve a 2021 operating profit margin of between 5.5% and 7% for the group and a margin of 3% to 4% for its main brand, a spokesperson for the company said.

“Fortunately, been we have able to notably limit the negative impact on our customers and thus on delivery figures so far, for example by selling off inventories and other measures,” the spokesperson said.

Business Insider reported on Tuesday that the Wolfsburg-based firm did not expect to be able to produce more than 800,000 vehicles this year due to semiconductor bottlenecks.

The spokesperson declined to confirm that figure and said it was not possible to reliably forecast the impact of the semiconductor shortage on production and deliveries by the end of the year.

Volkswagen has already said the bottlenecks would lead to a six-figure number of vehicles not being produced, the spokesperson added.

The German firm said this month it expected the chips shortage to ease in the third quarter but saw the bottlenecks continuing in the long-term.

(Reporting by Jan Schwartz; Writing by Riham Alkousaa; Editing by Edmund Blair)

Volkswagen Expects Chips Shortage to Ease in Q3

“At the moment we have reached the lowest point. We are facing the toughest six weeks,” Murat Aksel, the head of procurement on the Volkswagen board, told the newspaper in an interview.

He said he expects around 10% shortage in chips over the long-term as building up production capacities takes up to two years.

Volkswagen will prepare for the bottlenecks by expanding its chips storage and is currently classifying the supply risk of its all models components, he added.

Automakers and electronics producers around the world are being hit hard by manufacturing delays of chips, caused by a global shortfall.

Volkswagen AG has been unable to build 100,000 cars due to the shortage, CEO Herbert Diess said in March, adding the group would not be able to make up for the shortfall in 2021.

(Reporting by Riham Alkousaa, editing by John Revill)

Volkswagen to Get $351 Million in Dieselgate Settlement With Former Execs

By Christoph Steitz, Jan Schwartz and Thomas Escritt

The settlement came on the same day that Berlin prosecutors charged Winterkorn with giving false testimony to the German parliament when he said he was unaware of the carmaker rigging diesel engine tests before it became public.

The settlement marks a major milestone in Volkswagen‘s efforts to turn a page on its biggest ever corporate scandal, which has cost it more than 32 billion euros in vehicle refits, fines and legal costs so far.

The scandal, which Volkswagen initially blamed on a small number of rogue engineers, also spurred it to launch a huge investment in electric cars.

Volkswagen and top shareholder Porsche SE are still subject to 4.1 billion euros worth of shareholder claims in relation to the scandal, but it could take years before any agreement is reached.

Winterkorn stepped down as Volkswagen CEO in September 2015, a week after the scandal – in which the group admitted using illegal software to rig U.S. diesel engine tests – broke.

Wednesday’s deal, which consists mainly of a 270 million euro payment from directors’ and officers’ liability insurances, also includes a settlement with former Audi boss Rupert Stadler.

It still needs to be approved at the group’s annual general meeting on July 22.

A spokesman for Winterkorn, who served as Volkswagen CEO for nearly nine years, declined to comment on the charges brought against him by Berlin prosecutors.

Volkswagen, the world’s second-largest carmaker, said in late March it would claim damages from Winterkorn and Stadler for breaches of duty of care under stock corporation law.

Volkswagen concluded that Winterkorn had breached his duty of care by failing to fully and swiftly clarify circumstances behind the use of unlawful software functions in some diesel engines sold in North America between 2009 and 2015.

As part of the deal, Winterkorn and Stadler will pay 11.2 million and 4.1 million euros, respectively.

Former Audi board member Stefan Knirsch agreed to settle for 1 million euros, and ex-Porsche AG board member Wolfgang Hatz for 1.5 million, Volkswagen said.

In a further sign that legal implications of the scandal will still be felt for some time, Volkswagen said on Wednesday it was under investigation in France following a December ruling by Europe’s top court.

($1 = 0.8205 euros)

(Reporting by Christoph Steitz, Jan Schwartz, Thomas Escritt and Sabine Siebold. Editing by Mark Potter)

Volkswagen Nears Dieselgate Claims Settlement With Former CEO Winterkorn

Via the settlement, Volkswagen is trying to turn the page on its biggest ever corporate crisis in which it admitted using illegal software to rig diesel engine tests in the United States. No details were given on the size of the deal.

“In its meeting yesterday, the supervisory board agreed the essential conditions,” a VW spokesperson said in a statement. “The agreements will be concluded in coming days.”

Since it broke, dieselgate — one of the biggest corporate scandals ever — has cost the carmaker more than 32 billion euros ($38.93 billion) in fines, refits and legal costs.

Volkswagen in late March said it would claim damages from former Winterkorn for breaching his duty of care by failing to fully and swiftly clarify circumstances behind the use of unlawful software functions in some diesel engines.

Winterkorn has denied being responsible for the scandal. He resigned as CEO on Sept. 23, 2015, a week after the scandal was uncovered.

($1 = 0.8220 euros)

(Reporting by Jan Schwartz; Writing by Christoph Steitz; Editing by Jane Merriman)

Ford Follows GM, VW With Two New Dedicated EV Platforms by 2025

By Paul Lienert and Ben Klayman

The all-EV platforms are part of an ambitious multi-year, multi-billion-dollar plan the No. 2 U.S. automaker will outline to investors at its Capital Markets Day in an online event.

The dedicated platforms will give Ford common architectures — including shared chassis components, electric motors and battery packs — on which to base many of its future electric vehicles. That will enable it to simplify and reduce the expense of everything from logistics to manufacturing as it transitions from a global lineup of mostly fossil-fueled products.

Ford said it does not comment on future product speculation.

At Wednesday’s investor event, the company also will provide more details on its long-range battery strategy, including a recently announced battery joint venture with Korea’s SK Innovation, as well as broader goals for electric, commercial and self-driving vehicles, said the sources, who asked not to be named.

Ford previously said it will spend $22 billion through 2025 on electrifying many of its vehicles in the Americas, Europe and China. The sources said Ford is planning to launch at least nine all-electric cars and car-based SUVs and at least three electric trucks, vans and larger SUVs, including second-generation editions of the Ford F-150 Lightning and Mustang Mach-E at mid-decade.

What Ford Chief Executive Jim Farley cannot predict, however, is whether — and how many — customers will embrace the newer battery-powered vehicles, even if they are able to match or beat current combustion-engine counterparts in price, performance and operating costs. That concern is shared by nearly all automakers except Tesla, whose lineup is 100% electric.

Ford’s traditional rivals have sprinted ahead, with both VW and GM committing tens of billions of dollars to electrify their fleets in the same markets as Ford, but on more aggressive timetables. VW and GM each will have at least two dedicated EV platforms, on which many of their future vehicles will be based.

VW launched the first of its all-new electric vehicles, the ID.3, last year in Europe, while GM will begin building its new Hummer EV pickup later this year in the United States. Both companies also are rolling out additional EV models that will share key components with those vehicles.

Ford earlier this year introduced the Mustang Mach-E, an electric crossover built on a new dedicated platform with the internal designation GE, the sources said.

A newer version of that platform, designated GE2, will debut in mid-2023, underpinning new Ford and Lincoln SUVs, according to Sam Fiorani, head of global forecasting at AutoForecast Solutions.

The same GE2 platform eventually will be used as the base for replacements for the Mustang coupe and Mach-E, the sources said.

Ford will use a second passenger car platform — a version of Volkswagen’s MEB architecture — in Europe for at least two new models beginning in 2023, the sources said.

In February, Ford said its European lineup will be all-electric by 2030.

The redesigned F-150 Lightning, due in late 2025, is expected to be the first to employ the new TE1 truck architecture, Fiorani said. The first-generation Lightning, which debuts next spring, uses a platform that is heavily derived from the standard F-150.

Ford could also use the new TE1 platform for electric versions of the Lincoln Navigator and Ford Expedition SUVs, the sources said.

In addition, Ford is expected to get a new electric vehicle, possibly a midsize pickup, that would be based on a platform from EV startup Rivian, in which Ford is an investor.

(Reporting by Paul Lienert and Ben Klayman in Detroit; Editing by Dan Grebler)

Volkswagen Gets 7.5 Billion Euros Offer for Automobili Lamborghini – Autocar

The non-binding offer sets out terms for the purchase of Automobili Lamborghini by Switzerland’s Quantum Group AG, which has formed a consortium with London-based investment firm Centricus Asset Management, according to the Autocar report. (https://bit.ly/3hSmxhW)

Volkswagen said in December that there was agreement in the group that Lamborghini, which has been repeatedly named as a possible divestment, will remain part of Volkswagen.

Asked to comment on the Autocar report, a spokesman for Volkswagen unit Audi, which manages Lamborghini, said: “This is not the subject of any discussion within the group. No, Lamborghini is not for sale.”

Centricus and Quantum Group AG were not immediately available for comment.

($1 = 0.8165 euros)

(Reporting by Ankur Banerjee in Bengaluru, Jan Schwartz, Pamela Barbaglia, John Revill and Christoph Steitz; Editing by Shailesh Kuber and Emma Thomasson)

Volkswagen Lifts Margin Target on Demand for Premium Cars

By Christoph Steitz

The group now expects its operating profit margin to be 5.5-7% this year, versus a previous forecast for 5.0-6.5%, with vehicle deliveries and sales each up by more than a fifth.

The better outlook is mainly driven by improved demand for high-margin premium cars such as Porsche and Audi, a trend that has also been observed by rivals General Motors, Daimler and Ford and Stellantis.

During the first quarter deliveries of cars under the Porsche and Audi brands were both up about a third year on year, Volkswagen has said. Sales of electric vehicles more than doubled to 133,300 vehicles.

“We started the year with great momentum and are on a strong operational course. This is clearly reflected in our positive quarterly figures,” Volkswagen AG CEO Herbert Diess said.

“Our successful e-offensive continues to gain momentum and we have significantly expanded it with attractive new models.”

Shares in the group were indicated to open 1.2% higher in pre-market trade.

The world’s second largest carmaker by vehicle sales this year pleased investors when it provided more detail about its electric vehicle strategy, including higher sales targets and plans to build six battery factories in Europe.

Volkswagen’s operating profit came in at 4.8 billion euros ($5.8 billion) in the first quarter to March, helped by cost cuts and higher sales, versus 0.9 billion in the same period last year that was impacted by the COVID-19 pandemic.

Its improved outlook for the year comes even though the car maker expects the impact of an ongoing shortage of crucial automotive chips to intensify in the second quarter.

($1 = 0.8330 euros)

(Reporting by Christoph Steitz; Editing by Himani Sarkar and Jason Neely)

Volkswagen Expects Chip Supply to Remain Tight in Coming Months

“I think the situation will remain tense,” Ralf Brandstaetter, CEO of the Volkswagen brand and member of the carmaker’s management board, told German news agency dpa.

He said a fire at a factory operated by automotive chip maker Renesas Electronics Corp, as well as snowstorms in Texas that have hurt factory production, had effectively idled output.

“The impact will certainly be felt in the coming months,” Brandstaetter said, adding Volkswagen’s procurement task force was busy around the clock dealing with the issue which remained at the top of the agenda of Volkswagen’s management board.

Volkswagen AG has been unable to build 100,000 cars due to the shortage, CEO Herbert Diess said in March, adding the group would not be able to make up for the shortfall in 2021.

Brandstaetter said the situation was expected to ease somewhat in the second half of the year.

Wayne Griffiths, president of Volkswagen’s Spanish brand SEAT, said last month the challenges caused by the shortage were likely to intensify in the second quarter.

(Reporting by Christoph Steitz; Editing by David Holmes)

Tesla Trading Idea with ETP; Break to $1,111.50

TESLA looks bullish with a potential break to $1,111,50; TSLA ETP to enhance profits

Dear traders, the article below will present my insights on TESLA (NASDAQ: TSLA) and Volkswagen (OTCMKTS: VWAGY) stocks. I will also explain how you can benefit from trading the ETPs.

Tesla Stock Trading Idea Explained

Many traders have been asking me different questions time and time again. Is Tesla a good stock to buy, how to short TSLA stock, what is TSLA? Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. It is listed on NASDAQ under the TSLA symbol. You can also trade TSLA with a factor of 2x or 3x leverage with a listed Tesla ETP instrument.

All other questions can be answered, but before we delve deeper, we need to explain some important things regarding the evaluation of TSLA stock and the forward P/E Ratio.

Price to Earnings Ratio

Price / Earnings ratio (P/E Ratio) is also like saying, how many years of Earnings does it take to pay back the price. A company with a Price/Earnings ratio of 14 says it might take 14 Years of Earnings to repay the price. So, in short, Earnings is the amount a Company Earns for the Year. On March 31, Tesla’s PE Ratio was 1,066.98.

The normal P/E Ratio should be somewhere between 10-25, which means using today’s earnings and valuation, it would take 1066 years of Earnings to pay back the current investment. It means, therefore, the price of the stock is mainly based on Future Earnings.

The conclusion is that investors expect the Future Earnings to rise substantially on TSLA stock.

Tesla belongs to the industry where there will be competition, but the investors think it’s the lead company in this space. Still, in my opinion, it is pretty much wrong to feel this way because there are car manufacturers with over 100 years of trading experience that will also play in the Electric Vehicles space and be competitive against Tesla.

Given the current political mandate on climate change, electric vehicles would be the only ones being sold in the post year 2030, so it has a large market to play in. While Norway is already banning new internal combustion vehicles from 2025, Sweden, Denmark, the U.K., Ireland, and the Netherlands, for example, are planning this step for 2030.

I wouldn’t be surprised if Germany and France follow suit in the next few years.

Significant factors in the electric vehicle industry will be:

  1. Charging stations
  2. The demand for batteries available for the new electric vehicles

The electric car bandwagon is gathering speed. Volkswagen now says 70% of sedan and SUV sales from its namesake VW brand in Europe will be battery-electric by 2030. Investment bank UBS raises its global electric predictions to unprecedented heights. Still, mainstream forecasters don’t share this exuberance.

People think that Tesla will have a monopoly on Electric Vehicles, but in my opinion, they are wrong as major car manufacturers are planning the same thing.

Volkswagen Stock Analysis

Short Term Stock Analysis

Source: MT5

Volkswagen (VOWG.DE) is having a strong uptrend. Shares of Volkswagen, a German car giant, have been in an uptrend ever since a Wall Street analyst raised his bank’s price target for the stock on a bullish view of the company’s electric car plans. Obviously, the EV plans for the German giant boosted the price of stocks. 271-281 is the buying zone, and we can see a lot of confluence.

If the market bounces from the zone, we should expect a re-test of M H3 356.25. Loos for a breakout of the A-B-C pattern and the move to 400.87. VOWG.DE stock, in my opinion, has a good swing potential on the H4 timeframe.

Tesla Stock Analysis

Short term stock analysis H3

Source: MT5

In the chart above, we can see a strong uptrend. The strong uptrend goes in accordance with supporting fundamentals where investors are very bullish. TSLA stock is a “risky” stock meaning that Tesla does have investments in bitcoin. They might be using bitcoin to deal in sales, so that might be inflating their value.

The value is definitely overpriced, and if you invest in Tesla, it’s similar to investing in Bitcoin. It is a herd mentality, and traders think it will take over the giants IBM and Apple. Due to that factor, the short-term TSLA trading idea is bullish.

We can see a strong buying zone around 616.50. See the zoomed chart below.

Source: MT5

We can easily see rising trend lines and an A-B-C bullish pattern exactly at support. Targets are 764, followed by 820 and 887. Short-term rising ABC pattern, camarilla pivot points are supportive for bulls, and buying the dips is a good scenario. At this point, we see that price wants to retest the high of 889 but judging the current momentum and the price action, we could easily see a breakout towards 1111.50. This is the strongest camarilla resistance level Q 5 camarilla. When the price hits the level, short sellers will have the opportunity to sell the stock

Trading Tesla ETPs

In the case of ETP trades on TSLA stock, we can magnify the exposure even without the need for a margin or CFD account.

As you trade it like any other stock, the entry zone 616.50 (308.00 zone in TSL2) is the zone where you might get into a magnified exposure. The advantage of trading TSLA stock with the magnified exposure allows a trader to multiply the returns of any asset, in this case, TSLA.

Let’s see the example of the above trading idea where the 616.50 zone is a buying zone. For example, let’s assume you open a trade, the ETP that trades TESLA stock, and you go with a leverage factor of 2 (TSLA2). When the Tesla share increases by 2% during a trading day, your ETP (TSLA2) will increase by 4% (excluding fees and adjustments).

Conversely, if the value of Tesla drops by 2% on any given day, ETPs offering 2x exposure will lose 4%, respectively.

Swing TSLA Trading Idea

Now, moving back to a daily chart, the situation is similar, but there is a twist. The daily, being a swing trading time frame is susceptible to fewer fluctuations than H4 or H1, we can spot a clear breakout in the trend direction. As stated above, our fundamental analysis highlights the herd mentality, and investors follow the bitcoin pattern. Buying the dips as speculation takes place that TESLA will be the global leader in electric vehicles. Let me ask you a simple thing.

At the end of the day, would you rather have a Tesla EV in your garage or a Porsche EV?

I’d have the Porsche, and the VW Group company is worth only a mere fraction compared to Tesla. VW Group is USD1355Bln market cap, PE ratio of 17.61

Tesla is USD682Bln, PE Ratio of 1112.00; that’s just crazy. The price is over-inflated, and sooner or later, this is going to burst like a bubble. Watch it.

*(Source: Investopedia)

What is an ETP

Now, let’s talk about ETPs and how they could improve your potential gains while reducing trading risks with TSLA. The ETP stands for leveraged exchange-traded products. The standard definition of the ETP* is that Exchange-traded products (ETPs) are types of securities that track underlying securities, an index, or other financial instruments.

ETPs trade on exchanges similar to stocks meaning their prices can fluctuate from day-to-day and intraday. However, the prices of ETPs are derived from the underlying investments that they track.

Main Benefits of the ETPs

There are multiple benefits of trading the ETP compared to standard stock trading. You can choose leveraged (3x, 2x) and Inverse (-1x) exposure to stocks and blue-chip companies such as Tesla, Apple, Amazon. You don’t need a margin account (no margin calls). Additionally, you can trade ETPs just like any other stock/ETF on a regulated exchange (unlike CFDs) via most major brokers.

ETPs are listed on the London Stock Exchange and Euronext in EUR, GBP, and USD, and all of the ETPs are physically backed with the underlying shares, so there is no credit risk.

Volkswagen Considers Succession for Board Member Osterloh

By Jan Schwartz and Christoph Steitz

A move for Osterloh, if confirmed, could ease tensions that came to a head last year when he opposed a push by CEO Herbert Diess for a contract extension to drive his plans for cost cuts and to free up resources to invest more in electric vehicles.

One source said that Osterloh had been offered the position of personnel director at Traton, Volkswagen‘s truck unit that was spun off and separately listed in 2019.

A second source said VW was considering proposing a new labour representative to its board, but did not give a name.

Five sources said that the Wolfsburg-based carmaker would in the near future debate an important change in the composition of its supervisory board.

The company, its main shareholder Porsche SE and the works council all declined to comment.

Osterloh, 64, has since 2005 been a member of Volkswagen’s supervisory board, half of which is composed of labour representatives under Germany’s system of corporate governance.

Should he depart the VW supervisory board, as would be required should he take up an executive role at Traton, the most likely candidate to replace him would be deputy works council head Daniela Cavallo, the sources said.

Procedurally, it would be possible to nominate Cavallo to the supervisory board, subject to a confirmatory vote by shareholders at the annual meeting in July, the sources added.

(Writing by Douglas Busvine; Editing by Caroline Copley and Keith Weir)

Bitcoin Mining Adds to Existing Shortage in Semiconductor Market, Chip Prices Surge

Bitcoin is now a trillion-dollar market thanks to an impressive rally that propelled the oldest cryptocurrency to a fresh all-time high at over $61,000. While market participants enjoy the bullish run, some industries are suffering because of the inflated price of chips.

Everyone is talking about how Bitcoin mining affects the environment due to the huge demand for electricity and the giant carbon footprint. What few people know is that crypto mining impacts the costs of chips, which have been recently booming in price.

Chip Shortages Affecting Entire Industries

Chips are indispensable in so many devices and industries – think about laptops, smartphones, TVs, or cars. The semiconductor industry has already been struggling with supply chain disruptions caused by the COVID-19 pandemic, the winter storm in Texas, and fires at factory sites. But Bitcoin mining is putting even more pressure on the chip market, creating an additional shortage and boosting the price of chips.

The profitability of mining depends on the cryptocurrency’s price, which has rallied for the last few months, surging well above the 2017 peak. The huge competition among miners is prompting an increasing demand for advanced chips. This results in a price boom for chips and thus affects the other industries relying on semiconductors.

CW Chung, head of research at Nomura in Seoul, told Financial Times:

“Added demand from cryptocurrency miners is coming when the chip industry is dealing with simultaneous crises — from supply constraints to a structural shortage of high-end chips. The squeeze should last through the end of the year.”

The problem is so severe that Toyota and Volkswagen – the world’s two biggest carmakers by the number of vehicles manufactured – were forced to cut production due to the shortage of chips. Elsewhere, smartphone makers have no choice but to delay the launches of new devices.

Chung explained that crypto demand might have a great impact on the chip market. For example, during the last Bitcoin rally, demand from miners represented a tenth of the entire sales of TSMC – the third-largest chipmaker in the world.

Nvidia Makes Sure New Chip Is Not Miner-Friendly

The situation is affecting the gaming industry as well, forcing Nvidia to program one of its new chips – GeForce RTX 3060 – to reduce mining efficiency by 50% when it spots mining activity.

Elsewhere, chipmaker Advanced Micro Devices (AMD) told PC Gamer that it had no plans to restrict its graphic cards from being implemented for crypto mining. The truth is that AMD might have no choice at all, as all its drivers are open source.

VW’s SEAT Wants to Build Battery Assembly Plant in Barcelona Area

By Joan Faus

Wayne Griffiths confirmed that SEAT plans to launch an urban electric vehicle in 2025, which it wants to produce at its plant in Martorell, outside Barcelona.

Spain’s industry minister said on March 4 that the country will use European Union funds to create a public-private consortium with SEAT and power company Iberdrola to build the country’s first factory for electric-car batteries, but did not specify where it would be located.

Griffiths said authorities would need to confirm their support to stimulate demand for electric cars, significantly improve charging infrastructure and support the development of car and battery production facilities.

“If we want a car by 2025, we need to make these decisions quickly this year,” Griffiths told a press briefing, adding he was confident of securing an agreement with the Spanish government.

Spain is due to receive some 140 billion euros ($166.98 billion) in EU pandemic recovery funds by 2023, almost half in grants. It plans to channel a large chunk to financing major industrial projects that will help resuscitate and modernise its beleaguered economy.

If SEAT’s electric plan goes ahead, the company plans to produce over 500,000 urban electric cars a year from 2025 at Martorell, including models for other brands in the VW stable, such as Volkswagen, Skoda and possibly Audi, Griffiths said.

Griffiths stressed the importance of building the battery assembly plant near SEAT’s Martorell facility to optimise production logistics.

He said it was less relevant where a battery-cell factory – the prior step before assembling the batteries – would be located and said that had not yet been decided.

SEAT reported in 2020 a financial loss of 194 million euros, compared with a net profit of 346 million euros in 2019, as sales plummeted 26% due to the pandemic.

“This year we must return to profitability,” Griffiths said.

(Reporting by Joan Faus; Editing by Nathan Allen and Susan Fenton)

Power Play: Volkswagen Abruptly Pulls Plug on South Korean Battery Makers

By Heekyong Yang, Yilei Sun and Christoph Steitz

The decision by the world’s second largest automaker to move the bulk of its cars to a different battery cell in two years came as a shock to LG Energy Solution and SK Innovation, three people with knowledge of the situation told Reuters.

“It’s not our everyday business routine to get such one-sided notice from a partner … people seemed to be pretty alarmed,” one of the sources said.

Volkswagen’s shift to a new unified prismatic battery, away from the pouch-style manufactured by LG and SK, is likely to be a massive blow given the pair have invested billions in pouch production sites in the United States, Europe and Asia.

The shift also raised concerns among battery suppliers that the race by automakers to meet growing demand for EVs in a rapidly changing technological environment could leave them behind almost overnight.

“Volkswagen’s announcement is just the beginning of the competition in the EV market, signalling that huge investment will be made competitively in the future,” said Lee Jae-il, an analyst at Eugene Investment & Securities.

Volkswagen is under intense pressure to cut battery costs, strengthen its position in China, and better compete with Tesla Inc. China’s Contemporary Amperex Technology Co Ltd (CATL), which already supplies Volkswagen and Tesla, is making prismatic batteries, the technology favoured for Volkswagen future vehicles.

Thomas Schmall, Volkswagen’s board member in charge of technology, said this week the company would keep its current contracts, adding 80% of its post 2025 generation of EV cars would use prismatic batteries. Schmall did not specify battery technology for the remaining 20%.

Schmall said it would not be a big deal for battery suppliers to switch to production of prismatic cells, although analysts suggested doing so would require significant reinvestment and time to overhaul factories.

SK, which had announced a contract in 2018 to supply Volkswagen with pouch batteries but had not yet started doing so, said it currently has no plans to produce prismatic batteries. It supplies pouch batteries to Hyundai Motor and its sister company Kia.

LG, which makes prismatic batteries but only for smaller goods such as laptops, declined to comment on whether it would expand that production to EV batteries. Volkswagen was one of its biggest clients for pouch batteries, but it retains Tesla, General Motors and Hyundai Motor. It also builds cylindrical batteries for Tesla.

CHANGING ALLEGIANCES

Of particular concern to executives at auto parts suppliers was Volkswagen’s relative lack of consultation with LG and SK about the battery shift, a break with tradition from the industry strategies pioneered by Toyota decades ago.

When LG told Volkswagen it would send an executive to Germany to discuss the potential battery switch, Volkswagen told LG not to, all three people with knowledge of the situation told Reuters. They declined to be identified because they are not authorised to speak to the media.

“This is rare among automakers and suppliers which they have good relationship with,” said Yale Zhang, head of the Shanghai-based consultancy Automotive Foresight. “Traditionally automakers invite core suppliers to discuss future technology before finalising as they need to ensure supply.”

It comes just days after outgoing Panasonic Chief Executive Kazuhiro Tsuga told the Financial Times his company needed “to graduate from our one-legged approach of relying solely on Tesla.” Panasonic lost its coveted decade-long position as Tesla’s exclusive supplier last year when the carmaker unveiled plans to begin developing its own batteries and add LG and CATL as purchasing partners.

Two sources told Reuters SK and LG’s situation was complicated by a U.S. legal battle between the bitter rivals that has threatened to disrupt Volkswagen’s EV production at its Tennessee factory and left the carmaker “very unhappy” with the pair.

“Volkswagen warned South Korean battery makers early last year that Chinese battery makers would be beneficiaries of the legal disputes,” one person told Reuters.

CHINA WINS

China, the world’s biggest car market and a key battleground for EV, is the winner in Volkswagen’s shift from the lighter pouch batteries to the generally safer and easier to source prismatic batteries.

As well as its deal with CATL, Volkswagen told Reuters it planned to source batteries from Wanxiang A123 and Guoxuan High-tech Co Ltd. A source close to Guoxuan told Reuters it anticipates striking a supply deal for lithium iron phosphate batteries in a year or more.

Other China suppliers were likely, Volkswagen said, as it begins the roll-out of five models of its ID series of EVs in the country this year.

“The Chinese have become very strong on a technological level which means the supply side is bigger,” Volkswagen CEO Herbert Diess told Reuters, adding he believed the company remained a relevant customer for LG and Samsung SDI, which supplies prismatic batteries.

“We actually need every cell, every bit of capacity that is available,” Diess said. “But we will have a bigger say in terms of cell design.”

(Reporting by Heekyong Yang in Seoul, Yilei Sun in Beijing and Christoph Steitz in Frankfurt; Editing by Sayantani Ghosh, Joe White and Jane Wardell)

Volkswagen Brand Expects its 2021 Electric Car Deliveries to Double

By Bartosz Dabrowski

The brand will deliver more than 450,000 electric cars this year, the company said on Wednesday. Volkswagen is targeting 1 million electric vehicle deliveries for the wider group.

The core brand is aiming for a significant year-on-year increase in sales revenue and an increase in profits, VW said.

The group’s preferred stock rose as much as 7% to its highest since June 2015, as institutional and retail investors cheered VW’s efforts to overtake Tesla in the electric car market.

Volkswagen earlier this month unveiled its ‘Accelerate’ strategy for its main brand, saying it expected fully electric vehicles to account for more than 70% of total European vehicle sales by 2030, compared with a previous target of 35%.

The Volkswagen brand aims to invest 16 billion euros ($19 billion) in electrification and digitalisation by 2025.

To help finance the investment, it aims to reduce fixed costs by 5% by 2023, freeze headcount at January 2021 levels, boost productivity at its plants by 5% a year and reduce raw material costs by 7%.

The new strategy would generate hundreds of millions of euros in revenue in the coming years, it said.

The group’s stock has doubled in value in just four months, giving Volkswagen a market capitalisation of more than 130 billion euros on Wednesday.

(Reporting by Bartosz Dabrowski in Gdansk; Additional reporting by Christoph Steitz; Editing by Edmund Blair and Elaine Hardcastle)

Volkswagen Looks to Electric Vehicles, Cost Cuts for Profit Recovery

By Christoph Steitz and Jan Schwartz

“Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation,” Chief Executive Herbert Diess said in a statement.

Asked about the closely-watched issue of a potential listing of luxury division Porsche AG, Diess said there was no need for immediate action given Porsche’s importance to the carmaker’s turnaround efforts.

“That’s why you need to think very very hard about every single step,” he said.

Preferred shares in the company rose as much as 6.5% to their highest level since July 13, 2015, giving the carmaker a market valuation of more than 118 billion euros ($141 billion). They are up more than a third year-to-date.

Volkswagen aims to more than double deliveries of electric vehicles to 1 million this year, it said, adding it would also apply a standardised platform model introduced for vehicle production years ago to software, batteries and charging.

Diess’ comments come a day after Volkswagen unveiled plans to build half a dozen battery cell plants in Europe and expand infrastructure for charging electric vehicles globally, accelerating efforts to overtake Tesla.

Volkswagen confirmed it aimed for an operating margin of 7%-8% by 2025, adding it would likely end 2021 at the upper end of a 5%-6.5% target corridor.

Stellantis, the world’s fourth-largest carmaker created through the merger of FCA and Peugeot maker PSA in January, is targeting an adjusted operating profit margin of 5.5%-7.5% this year.

This will be achieved by lowering fixed costs by 2 billion euros by 2023 compared with 2020, a decline of 5%, as well as a decline of 7% in materials costs over the same period, Volkswagen said.

To get a better handle on personnel costs Volkswagen on Sunday offered early or partial retirement to older employees in a move sources said could cut up to 4,000 jobs at its plants in Germany.

The group employs about 670,000 staff globally.

“We aim to put the ambitious transformation of the Volkswagen Group on a solid financial basis,” incoming finance chief Arno Antlitz said.

(Reporting by Christoph Steitz and Jan Schwartz; editing by Riham Alkousaa, Emma Thomasson and David Evans)

Volkswagen Takes Aim at Tesla with Own European Gigafactories

By Christoph Steitz and Jan Schwartz

The world’s No. 2 carmaker, which is in the midst of a major shift towards battery-powered cars, said on Monday it wants to have six battery cell factories operating in Europe by 2030, which it will build alone or with partners.

“Our transformation will be fast, it will be unprecedented,” Chief Executive Herbert Diess told Volkswagen’s Power Day, which also featured the CEOs of BP, Enel and Iberdrola in an effort to replicate Tesla’s Battery Day last September.

“E-mobility has become core business for us,” he added.

Volkswagen did not specifically say how much the plan will cost.

The group had been a laggard on electrification until it admitted in 2015 to cheating on U.S. diesel emissions tests and had to deal with new Chinese quotas for electric vehicles. It now has one of the most ambitious programmes in the industry.

Volkswagen said the European factories will have a joint production capacity of up to 240 gigawatt hours a year, adding the first factory would start operation in 2023 and be set up jointly with Sweden’s Northvolt.

This will be followed by a factory in the German city of Salzgitter in 2025, a factory in Spain, France or Portugal in 2026 and a site in Poland, Slovakia or the Czech Republic by 2027. Two more plants will be set up by 2030.

While the first two factories are already reflected in Volkswagen’s financial planning, the group is currently in “deep discussions” about how the subsequent plants fitted with financial targets, board member Thomas Schmall said.

He added if Volkswagen needed to increase its role in battery cell production then the group would be able to bear that cost.

CHARGED UP

Volkswagen is also working on a major expansion of charging infrastructure, a lack of which is still seen as a major hurdle to the mass adoption of battery-powered cars.

Via existing efforts and partnerships with oil major BP as well as top European utilities Enel and Iberdrola, Volkswagen aims to operate about 18,000 public fast-charging points in Europe by 2025.

This represents a five-fold expansion of the existing fast-charging network, Volkswagen said, adding it would invest 400 million euros in the initiative.

In North America, Volkswagen targets 3,500 fast-charging points by the end of 2021 via its Electrify America unit, while in China, the world’s largest car market, the group aims for 17,000 by 2025.

Shifting to design, Volkswagen unveiled plans to have a new unified prismatic battery cell from 2023, which will support cost cuts generated by the raised level of in-house cell production and could impact its current suppliers.

Electric vehicle makers, including Tesla, are using cylindrical battery cells, which resemble flashlight batteries and are relatively inexpensive and easy to manufacture.

Prismatic cells, which resemble a thin hardcover book, are housed in a rectangular metal case and are more expensive. Pouch cells, another alternative, are thinner and lighter, and resemble a flexible metal mailing envelope.

“On average, we will drive down the cost of battery systems to significantly below 100 euros ($119) per kilowatt hour,” Schmall said. “This will finally make e-mobility affordable and the dominant drive technology.”

The cost of battery cells used for electric vehicles has fallen to an average of $110 per kilowatt hour (kWh), Benchmark Mineral Intelligence (BMI) said https://www.reuters.com/article/electric-batteries-costs-idUSL1N2II222 in December. ($1 = 0.8386 euros)

(Reporting by Christoph Steitz and Jan Schwartz; Additional reporting by Paul Lienert; Editing by Jonathan Oatis and Keith Weir)

Volkswagen Hikes Battery Cell demand in EV Expansion Push: Sources

By Jan Schwartz and Christoph Steitz

The supply chain update is part of the world’s second-largest carmaker’s strategy to raise the share of fully electric vehicles in Europe to more than 70% by 2030 at its core brand, details of which were unveiled last week.

So far, Volkswagen, which sources batteries from LG Chem, Samsung SDI, SK Innovation and CATL, expects annual demand in Europe to be more than 150 GWh from 2025 and to be at a similar level in Asia.

Chief Executive Herbert Diess and Thomas Schmall, Volkswagen’s board member in charge of technology, will unveil details of its battery and charging infrastructure strategy during a Power Day https://www.volkswagen-newsroom.com/de/livestream-5455 scheduled for March 15, the people said.

Volkswagen declined to comment.

The fresh target comes as Volkswagen accelerates its push into electric mobility to close a gap with Tesla, efforts that have led the group’s preferred stock price to hit its highest level in nearly six years this week.

“We think both Tesla and Volkswagen are at the forefront, in different areas though. Tesla is clearly leading on the battery side, including the battery pack integration in the vehicle,” UBS analyst Patrick Hummel told journalists this week.

“But Volkswagen has put what we think is the best scalable EV platform on the road. Very cost efficient and really covering all segments from compact cars to large SUVs.”

(Reporting by Jan Schwartz and Christoph Steitz, Editing by Douglas Busvine and Emelia Sithole-Matarise)