Volkswagen’s Tesla race is hitting the wrong gear in China. The 130 billion euro German carmaker has been hit by low Chinese sales of its flagship electric car. That bodes ill for boss Herbert Diess’s aim of challenging Elon Musk’s dominance.
Following ebullient sales projections and commentary on Twitter, Diess may soon add missed targets to his list of what he’s copying from Tesla’s overpromiser-in-chief.
In May VW sold just 1,213 ID.4 electric SUV models, two months after its launch, according to Reuters. That was only a slight increase on April. It means the Wolfsburg-based carmaker, which operates in China through separate joint ventures with locals SAIC Motor and FAW, is far behind an implied annual sales target of roughly 100,000 such vehicles.
That’s worrying for Diess – and not just because Tesla sold a comparatively healthy 6,612 of its rival Model Y in China in the first two months after its launch. VW shares have climbed an impressive 44% so far this year, easily outperforming a 27% gain for the benchmark STOXX Europe 600 Automobiles index. It came as the company staked its reputation on beating Musk for electric supremacy, buttressed by Diess’s planned 35 billion euro investment in electrification.
The ID series forms the backbone of a push to sell up to 3 million all-battery rides by 2025, a more than 10-fold increase on last year’s total. China, VW’s largest single geography, is expected to account for roughly half of those sales. And the fact it could boast a peer-beating 19.3% share of the overall Chinese market means it should have an edge over comparative arrivistes like Tesla.
True, the figures represent only two months of sales, and Chinese competition – with a host of domestic zero-carbon contenders in addition to foreign players – is much more cut-throat than Europe, where the ID.4 has proved popular. VW is confident that sales should shoot up later this year as production increases and new electric models are released.
A 1.5% share decline on Wednesday implies VW shareholders are not yet anxious. A longer Chinese slowdown could short-circuit that confidence – as well as Diess’s electric tussle with Tesla.