When talking about Tesla's competitors, many people think it is new car-building forces such as Lai Motor and Xiaopeng Motors. However, according to the forecast of UBS Group (UBS), it is traditional car giant Volkswagen that is expected to challenge Tesla.
Analysts at UBS said on a conference call with the media on Tuesday that they expected Tesla and Volkswagen to become two "leaders" in the field of electric vehicles in the next four years. Volkswagen will catch up with Tesla in total car sales as soon as next year, when the two companies will deliver about 1.2 million cars each.
In the past year, Volkswagen has overtaken Tesla to become the highest-selling electric car brand in Europe. Europe is the second largest electric car market in the world, after China. Volkswagen currently controls 20% to 25% of the market in Europe.
UBS predicts that manufacturing costs between electric and fuel vehicles will be flat by 2025, while the average production cost of electric vehicles will be $5000 higher than that of fuel vehicles in 2020. By then, the average profit margin of electric vehicles will increase from 1% in 2020 to 7%, which means that the profit margins of electric vehicles and fuel vehicles will be the same within four years.
UBS has raised its forecast for the popularity of electric cars: they will penetrate 100% of the car market by 2040.
UBS believes that the key area in which Volkswagen leads Tesla is the scalability of its electric vehicle platform. UBS analysts compare Tesla to Apple because of its excellent hardware and state-of-the-art software system. Volkswagen, on the other hand, is similar to Samsung and has the ability to produce high-quality hardware on a large scale.
UBS also admitted that Tesla is still ahead of Volkswagen in some key technology areas. In the long run, Tesla's key lead is software, but Tesla is also better than Volkswagen in integrated electric assemblies, engineering, digitization and self-driving.
UBS recently raised its target price for Volkswagen shares to 300 euros from 200 euros. Volkswagen shares closed at 192.28 euros on Tuesday.
