FRANKFURT -- A few hours after Elon Musk berated analysts for what he perceived as unimaginative questions, Volkswagen AG said it was writing a check for batteries that almost match Tesla Inc.’s entire market value.
VW has awarded 40 billion euros ($48 billion) in contracts to battery producers, double from just a few weeks ago. The deals take the German manufacturer within striking distance of its target to lock down 50 billion euros in supplies. By 2025, VW plans to sell as many as 3 million all-electric cars per year, CEO Herbert Diess told investors Thursday at the annual shareholder meeting in Berlin.
While Musk has perfected the role as industry iconoclast, he’s finding himself increasingly on the defensive as investors probe Tesla’s finances and established manufacturers from Daimler AG to VW push aggressively into his niche. VW makes more cars in four days than Tesla does in a year, and is harnessing its immense financial and engineering firepower to make up for ground lost in a self-inflicted diesel-cheating scandal.
“I could not be more bullish on German premium luxury business,” Mike Jackson, CEO of U.S. dealership chain AutoNation Inc., said on a conference call this week. “They have the best pipeline I’ve ever seen.”
The battery investment by VW -- the world’s largest carmaker with Porsche, Audi and Bentley under its umbrella -- was prompted in part by the manufacturer’s own missteps. European diesel sales have fallen off rapidly since VW admitted cheating on emissions tests in 2015, forcing carmakers in the market to accelerate their rollout of electrified vehicles in order to meet coming EU carbon-dioxide limits on engines.
VW’s announcement comes a day after Tesla CEO Musk renewed concerns about the electric carmaker’s ability to hit production targets and conserve cash. During Wednesday’s conference call, he criticized analysts for asking “boring” questions and cut off queries about the company’s capital needs.
“By 2020 we will offer our customers more than 25 new electric models and more than 20 plug-in hybrids,” Diess said. “In just a few years’ time, then, across all brands and regions, we aim to put the world’s largest fleet of electric vehicles on the road.”
VW’s Audi brand, the group’s largest earnings contributor, will start production of its first all-electric SUV at the end of August, followed by the four-door coupe Mission E from sister brand Porsche next year. VW’s namesake brand will start to roll out the new I.D. range of battery-powered vehicles from 2020, which will be priced at comparable levels to similar combustion engine vehicles.
As carmakers roll out their electric lineups, Diess said there were “clear” need to revive talks over joint battery cell production in Europe to satisfy growing demand. Robert Bosch GmbH, the world’s largest auto supplier, decided against starting its own battery cell production earlier this year citing high investment demands.