Tesla Inc TSLA may gain a potent rival in the next four years and it won’t be one of the trendy China-based companies like Nio Inc NIO or Xpeng Inc XPEV,as per UBS.
What Happened: The Swiss bank’s analysts predicted that in the coming few years it would be the Elon Musk-led company and Volkswagen AG VWAGY that would be pitted against each other as leaders in EV sales, MarketWatch reported Tuesday.
The analysts at UBS said that German automaker will catch up with Tesla in the number of cars sold as early as next year when both automakers are expected to deliver nearly 1.2 million cars each.
Patrick Hummel of UBS said on Tuesday that it was the best time to be “be all-in as a car maker.”
“It is about gaining scale as fast as possible, because scale is going to be a driver of profitability.”
See also: How to Invest in Tesla Stock
Why It Matters: According to UBS, Volkswagen leads Tesla in terms of the scalability of its EV platform. Hummel compared Tesla to Apple Inc AAPL, which has an “admired piece of hardware in combination with a cutting-edge software ecosystem.”
“Volkswagen is well-positioned for a value proposition like Samsung — a global brand trusted for its high-quality hardware, produced at scale,” said UBS, according to MarketWatch.
The bank said that while this won’t get Volkswagen into Tesla’s valuation spheres, there is still significant upside from present levels.
UBS admitted that Tesla still has lead over Volkswagen in areas such as its electric powertrain, ruthless engineering, digitalization, and autonomous driving.
Last November, Volkswagen CEO Herbert Diess admitted that it was “going to be a race with Tesla.”
Steve Westly, a former Tesla board member said this month that Tesla won’t remain “king of the hill” in electric forever noting increased competition from legacy automakers such as Volkswagen and General Motors Company GM.
Tesla lost out to Volkswagen in Norway EV Sales this year, but still maintains a lead over the company in its home country.
Price Action: Tesla shares closed nearly 19.6% higher at $673.58 on Tuesday and rose 2.32% to $689.21 in the after-hours session. On the same day, Volkswagen OTC shares closed 1.75% higher at $26.62.
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