It’s an exciting time for Volkswagen (OTC:VWAGY). I regularly talk about the German auto giant’s future. The company has announced that it is bidding farewell to the internal combustion engine. “In Europe, we are exiting the business with internal combustion vehicles between 2033 and 2035,” VW Board Member for Sales Klaus Zellmer recently said. After Volkwagen ends combustible engine production, the stock is currently looking for a sustainable floor. German companies have taken the global lead in this process. In the U.S. and China, the phase-out of internal combustion vehicles will take place later. While in South America and Africa, the end of combustible engines it will take a good deal longer. Just a few days ago, VW’s subsidiary Audi announced that the last combustion engines would come off the production line in 2033 at the latest.
But VW will continue to invest in improving its combustion engines, Zellmer stressed. This also applies to diesel vehicles. The planned tightening of the EU emissions standard (Euro 7) for diesel is a particular challenge. However, diesel drives are “still very much in demand, especially among frequent drivers,” the manager said. But what will it mean for the business model?
Supply and Demand in the Auto Space
At the presentation of the financial statements in the spring, Volkswagen CEO Herbert Diess had emphasized that he was relying on supply and demand. “In some regions, internal combustion vehicles will be sold for even longer than in other regions,” he said at the time. In his view, change will come via the market and customers.
Combustion engines are still necessary for the time being and finance the transition to an all-electric world. In addition, modern combustion engines are often more efficient and less harmful to the environment than their predecessors from the times of the diesel crisis. VW is on track for the transformation away from the combustion engine and toward electromobility, autonomous driving, and software.
After Volkswagen Ends Combustible Engines
Group CEO Herbert Diess and his team are investing tens of billions of dollars in these new technologies. However, many investors fail to recall that VW is poised to overtake Tesla as the largest manufacturer of electric vehicles. It will gain market share and customers in the process. Most recently, JPMorgan issued a price target much lower for VW shares. The auto industry now has more insight into semiconductor supply shortages but is not out of the woods yet, analyst Jose Asumendi wrote in an industry report. On VW, he noted that the automaker has solidly updated its global sales strategy.
VW shares urgently need new positive impetus. Most recently, the paper came under some pressure after sales figures for the new ID.4 electric model in the most important single market, China, did not turn out particularly well. As Volkswagen ends combustible engines, American investors can invest in VWAGY by purchasing shares “Over the Counter”. Some pullback looks possible and potentially lower into the $20s. Investors should stay with it. Volkswagen is on the right track in terms of e-mobility, battery production, and software. However, it’s just getting started.