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Volkswagen Set to Drive Electric Mobility via Joint Ventures

Zacks Equity Research

Volkswagen AG VWAGY has decided to set up joint ventures in a bid to finance battery manufacturing, going by a Reuters report. The German automaker has stated that it will purchase 50 billion euros ($56.6 billion) worth of battery cells and has selected some companies from Asia and Europe as partners.

The company expects battery production capacity to reach 150 gigawatt hours each in Asia and Europe by 2025. The figure is projected to double by 2030. The carmaker is reorganising 16 factories to manufacture electric vehicles and aims to start production of 33 distinguished electric cars under the Audi, Skoda, VW and Seat brands by 2023.

However, not every supplier is confident that electric mobility will emerge on such a large scale. In addition to this, customers have been slow to accept electric vehicles due to lack of charging infrastructure, lengthy recharge times and restricted operating range. This has made suppliers sceptical.

That said, the company’s decision to set up joint ventures will likely position it ahead of its peers.

In the past six months, Volkswagen has outperformed the industry it belongs to. During the same time frame, the company’s shares rose 5.6% against the industry’s decline of 1.8%.


Zacks Rank & Stocks to Consider

Volkswagen carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are PACCAR Inc PCAR, CarMax, Inc KMX and AutoZone, Inc. AZO, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PACCAR has an expected long-term growth rate of 8.4%. In the past six months, shares of the company have gained 18.6%.

CarMax has an expected long-term growth rate of 12.57%. In the past six months, the stock has improved 36.3%.

AutoZone has an expected long-term growth rate of 12.2%. In the past six months, shares of the company have rallied 39.3%.

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