VW is the 3rd largest automaker by market cap, trailing Toyota and Tesla. The exponential rise in Tesla’s market capitalization this last 18 months has actually made it bigger than the other top 5 automakers added together but VW has been in the top 5 for many years and will continue to be there for more to come.
As of March 2021, Volkswagen has a market cap of $153.50 B. This makes Volkswagen the world's 76th most valuable company by market cap.
Volkswagen is a group of manufacturers and the model range extends across commercial and industrial automakers like Scania and MAN, through luxury and performance brands including Porsche, Bugatti, Lamborghini, and Bentley. VW has also absorbed, Audi, Seat, and Skoda, and they all now benefit from the technical expertise and manufacturing processes that make a German car have a certain reputation for quality and reliability.
Recently there has been a massive disruption to the automobile industry and one that is more than an evolution of ideas. Long gone are the days of tinkering with exhaust emissions and fuel efficiency. Cars have basically been able to run for longer, be more reliable, go faster and keep their passengers safer for a couple of decades now and for the untrained eye, the styling has pretty much become homogenous. The revolution within the auto space has been pushed by the need for a move away from our reliance on petrochemicals and a move towards zero emissions, in a bid to fight climate change.
We have had hybrid cars now for more than a decade, with their mix of battery power and traditional fuel, or gas, but the space that has been carved out by fully electric vehicles championed by Elon Musk and Tesla along with Top Gear star performances from the likes of Rimac, have shown that the silent battery-powered cars are able to literally go at Ludicrous speeds. These electric cars with hypercar speeds now have battery cells that can get the vehicle not only from A to B but all the way around to Z. The ethos of Musk to encourage petrol heads to want to move into electric has been truly inspirational and the traditional manufacturers are not going to ignore the cultural change, especially as the world governments and policymakers are mandating that petrol and diesel be phased out.
Traditional car customers have been slow to adopt electric vehicles in large numbers because of the limited operating range and long battery recharging times, and because of a lack of charging infrastructure but in England, there are signs on the roadside that more and more people are charging cars from homes or from the on-street charging points, so the infrastructure is on its way.
Volkswagen have perfected the Platform approach, allowing the brands to differentiate themselves through their styling and coach working, with an allowance for tinkering under the hood to get the most out of the engine, etc. This will soon be across their EV range and battery technologies.
It won’t be too long before the likes of Seat and Skoda get a bit of the Porsche 918 hypercar technology or Audi finds itself using some Porsche Taycan in its Audi sports range.
VW is building a Modular Electric Toolkit (MEB) platform which includes everything from the Charging plug, Drivetrain, Battery, and Electronics will be the basis of a platform for the manufacturers to build on top of. With an upgrade to the Premium Platform Electric (PPE). Not only that the likes of Ford will also use VW’s MEB to push their EV vehicle range and allow them to meet their commitments on sustainability.
For investors looking to invest in the whole EV ecosystem, the battery makers are ones in an arms race to be the cell of choice with power delivery, fast charging along longevity key metrics of efficiency. VW is working with LG Energy Solution and Nothvolt but has started plans to build their own ‘Gigafactories’ with 6 battery cell production plants in Europe by 2030.
VW’s share price recently traded towards the highs of 2015, having suffered along with every other global company during the market downturn in 2020. Unfortunately, we didn’t get a new high, but the 3-month momentum and price action are still very bullish. The second test of that high of 262.450 would most likely succumb to the buying pressure.
The 185-186 level is a great place for a retest of old resistance to now act as support, should the bullish move be unwound and the 50 / 200 ema on the weekly chart shows the value area down nearer 150-160 after the share price spent nearly 6 years in a range.
The daily time frame shows clearly the recent consolidation, and we could be carving out a bull flag/pennant and my thesis would be to go with the higher time frame trend on any signs of a breakout with the risk being controlled on the other side of the consolidation range. Those willing to miss out on a potential speculative bullish move could wait for the retest of the weekly support and the little area of balance that formed at the beginning of March 2021 around the 187-199 area, as this would be a truly great place to join in with all of the investors that missed out on the explosive move to the upside.
On the daily chart if we break out of the bullish chart pattern the price target to the upside is around the 290.00 level, which takes us above the 2015 highs, and then it’s blue sky above.
Now that Tesla has proven the concept that the future doesn’t have to be slow, quiet, and boring, the traditional automotive industry is not going to sit back and watch the new companies take market share. The fightback is on and VW is in a very good place both economically and within the political space to create a new electrified future and bring value to investors.