Electric ambitions drive Volkswagen's market value towards $150 billion
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FILE PHOTO: The logo of German carmaker Volkswagen is seen on a rim cap in a showroom of a Volkswagen car dealer in Brussels, Belgium July 9, 2020. REUTERS/Francois Lenoir/File Photo
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By Christoph Steitz and Jan Schwartz
FRANKFURT (Reuters) - Volkswagen's shares surged more than 9% on Tuesday, lifting its market value towards $150 billion as the world's second-largest carmaker gave more details about its ambitious expansion in electric driving.
A day after unveiling plans to build half a dozen battery cell plants in Europe, the German company said it aimed to more than double deliveries of electric vehicles this year.
At its annual press conference, it also reiterated its confidence that cost cuts would help to raise profit margins in the coming years.
"Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation," Chief Executive Herbert Diess said in a statement.
Asked about a closely-watched potential listing of luxury division Porsche AG, Diess said there was no need for immediate action given Porsche's importance to group turnaround efforts.
"That's why you need to think very, very hard about every single step," he said.
Volkswagen's preferred shares, traded on Germany's DAX index, rose as much as 9.3% to their highest since July 3, 2015, giving the carmaker a market valuation of over 121 billion euros ($144 billion). They are up more than a third year-to-date.
"Volkswagen is ahead of most of its rivals in terms of electric mobility," said NordLB analyst Frank Schwope.
Volkswagen's common stock, meanwhile, leapt by as much as 29%, its biggest intraday gain since a famous short-squeeze in 2008 during which the carmaker briefly became the world's most valuable company.
Diess told Reuters he believed Volkswagen, whose brands range from budget Seats and Skodas to high-end Audis and Bentleys, was worth 200 billion euros - reflecting his ambition to dethrone Tesla as the world's leading electric carmaker.
Volkswagen, which delivered 422,100 electric vehicles last year, also said it would apply a standardised platform model introduced for vehicle production years ago to software, batteries and charging.
The group confirmed it is aiming for an operating margin of 7%-8% by 2025, adding it would likely end 2021 at the upper end of a 5%-6.5% target corridor.
For comparison, Stellantis, the world's fourth-largest carmaker created through the merger of Fiat Chrysler and Peugeot maker PSA in January, is targeting an adjusted operating profit margin of 5.5%-7.5% this year.
Volkswagen's target will be achieved by lowering fixed costs by 2 billion euros by 2023 compared with 2020, a decline of 5%, as well as a decline of 7% in materials costs over the same period, it said, without giving further details.
To get a better handle on staff costs, Volkswagen on Sunday offered early or partial retirement to older employees in a move sources said could cut up to 4,000 jobs at its plants in Germany.
The group employs about 670,000 staff globally.
"We aim to put the ambitious transformation of the Volkswagen Group on a solid financial basis," incoming finance chief Arno Antlitz said.
($1 = 0.8408 euros)
(Reporting by Christoph Steitz and Jan Schwartz. Additional reporting by Hakan Ersen. Editing by Emma Thomasson, David Evans and Mark Potter)
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