Volkswagen, until recently the world’s second most valuable car company by market cap (it was overtaken by Tesla in Feb 2020) is really preparing to take on Tesla in the electric vehicle arena.
And why not?
With electric vehicles being projected as being the dominant road transport technology, why would a 80 year old firm (VW was founded in 1937) allow a company over 60 years younger (Tesla was founded in 2003) to overtake it?
But what exactly should VW do to overtake Tesla both in mind share and market cap?
I think one of the challenges for many companies trying to fight Tesla is that the latter is playing by different rules. If one considers how investors consider Tesla, most of them actually consider Tesla to be a technology company that is converting its expertise to make great transportation solutions. That is, for Tesla, technology comes first and cars next. For most other auto companies, their cars come first and the technology is just supporting their transportation plans and designs.
Is this just a terminological difference – what comes first? To some extent it could be, but in certain aspects, considering oneself as a technology company could result in vastly different solutions and products. That could explain why Tesla is straddling three different sectors at the same time – autos, energy storage and renewable energy (solar). Because it considers itself foremost a technology company, it is able to translate its technical and engineering mindset into sectors that are related though different. Doing something similar will be far more difficult for most other auto companies, including VW.