Volkswagen Sales Drop But Demand For EVs Jumps

Volkswagen delivered around 5.3 million vehicles to customers around the world in 2020, which represents a 15% drop compared to the previous year, largely attributable to the coronavirus pandemic.

December brought some much-needed relief, with sales coming in just 2% lower than the same period last year. Volkswagen (0P6O) was able to maintain its global market share and even expand in several regions, according Klaus Zellmer, the board member responsible for Sales of Volkswagen Passenger Cars.

Volkswagen said that demand for its electric models jumped 158% for the year as the company delivered 212,000 electric vehicles, including around 134,000 battery electric vehicles (BEV). The share of EVs and hybrid vehicles grew to 12.4% of Volkswagen’s total deliveries in Europe, compared to just 2.3% the year before.

“2020 was a turning point for Volkswagen and marked a breakthrough in electric mobility,” said Ralf Brandstätter, CEO of Volkswagen Passenger Cars. He added that Volkswagen stands for “attractive and affordable e-mobility,” more so than any of its competitors. (See Volkswagen stock analysis on TipRanks)

Goldman Sachs analyst George Galliers reiterated his Buy rating on Volkswagen last week and set his price target at €189. This implies upside potential of around 31% from current levels.

Commenting on the structure of the Volkswagen board, Galliers believes that the separation of the board functions of purchasing and components will allow the new head of procurement to focus on reducing material costs by 7% in the next two years.

Consensus among analysts is a Moderate Buy based on 11 Buys, 4 Holds and 1 Sell. The average price target of €177.07 suggests upside potential of around 22% over the next 12 months.

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