Volkswagen and Toyota will be buying Tesla and making $170 billion in investments to keep them on top.
The epic battle over who will control the future of the automobile industry is about to get even more exciting.
Tesla Inc. has been the pioneer and pacesetter in the early rounds. He captured investors’ imaginations by displaying a vision of what the next-generation vehicles will look like and seizing the emerging market for fully-electric cars.
There are also giants of scale, Volkswagen AG or Toyota Motor Corp. These two largest automakers in the world — each selling roughly 10 to 11 cars for every Elon Musk last Year — are realizing the age of the battery-powered car and are trying to figure out how they can stay at the top.
These masters of mass production devised plans to spend $170 billion in the next five days to maintain their dominance of an industry that they have dominated for decades.
The transition from internal combustion engines will not be smooth for the top executives of these incumbents. It could turn ugly, something similar to when Apple Inc. entered the mobile phone market and overtook Nokia Oyj.
After a year of exceptional growth, during which Tesla was far and away Tesla’s most valuable automaker ever. Now the trillion-dollar issue is whether Musk’s benefits heading into the next generation carmaking are as formidable as his company’s market capitalization.
Andy Palmer, ex-chief of Aston Martin, and ex-Nissan Motor Co. executive, said that “when the two largest car companies in the world decide to go all-in on electric, then it’s not a question of speculation — The mainstream is going electric.” He was also known as “the godfather” of EVs after being instrumental in the development of the Japanese carmaker’s battery-powered Leaf. “I believe the transition to electric will be quicker than anyone expects.
Both Toyota and VW have taken different steps to defend their positions. The one is swinging and putting Tesla in its sights. While the other continues to spread its bets while investing heavily in EVs, the two are waiting for the revolution’s early stages to unfold.
VW is the behemoth that has been waging a furious battle to beat Musk. It has evolved over 84 years into a stable consisting of 12 brands. They manufacture in around 120 locations worldwide and employ more people than Detroit’s population. VW Group produces models that include the Tiguan, Passat and Lamborghini supercars as well as Scania heavy trucks and generates approximately $280 billion annually.
VW has unrivalled electrification budgets every year Herbert Diess, its Chief Executive Officer, has been in charge. He presented his biggest plan yet on Dec. 9 by allocating 89 billion euros ($100billion) to EVs and software development for the next half-decade.
Diess uses Musk constantly as a measurement stick. He’s even been known to be annoying others within VW’s ranks. He welcomed Musk in October as a surprise guest to an executive conference attended by 200 top managers at the automaker.
VW had sold around 322,000 fully-electric vehicles in 2020, which was just under half of its 600,000. Analysts at Sanford C. Bernstein & Co. had predicted that VW would sell 450,000 EVs in the year. This “isn’t the end of the world,” but it is not a cause to celebrate.
Diess will not be deterred. By the end of the year, 27 EVs will be built on the architecture of the ID.3/ID.4 shares. VW will begin production at eight facilities, including two additional facilities in Germany and one in the United States.
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