EV Transformation Kicks Into High Gear

Volkswagen AG VWAGY reported a drop in first-quarter profit owed to weaker sales in China and supply shortages, reaffirming the need for the Europe’s largest carmaker to speed up its EV transition if it wants to catch up to its rivals. Meanwhile, a renown tonneau cover manufacturer Worksport Ltd WKSP announced that it has completed the installation of its manufacturing line at its US facility, meaning it is now a step closer to disrupting the transportation industry with its upcoming patented products, the eagerly anticipated portable COR battery and SOLIS solar powered covers, that promise to be nothing short of revolutionary.

Volkswagen’s Q1 figures

Recovery in sales volumes in Europe and North America fueled a rise in revenue by 22%, leading to total revenue of approximately $84 billion as the decline in China was offset by strong demand in Europe and North America.Throughout these first three months of the year, operating profit fell 31% YoY to approximately $6.3 billion.However, when valuation effects from commodity hedging are excluded, operating profit actually increased by 35% to approximately $7.8 billion.

Deliveries

Volkswagen delivered 141,000 electric vehicles which translates to a 42% increase from 2022’s comparable quarter and accounts for 7% of total deliveries. Sales of plug-in hybrid vehicles increased 9% to 55,756 units with overall deliveries rising 7.5% to more than 2 million units. 

China Delivery Slump Due To Lagging Local Competitors

Deliveries in China slipped 14.5% on an already weaker previous year, but management expects them to recover until the end of the year. CFO Arno Antlitz, added it was important to distinguish between China’s combustion engine market, where Volkswagen has been leading for a long time, and the country’s battery electric vehicle market, where it needs to catch up with rivals including Chinese EV giant Boyd Gaming Corporation BYD who became China’s top selling carmaker. In an effort to turn around the slump in deliveries, the European giant will try to improve its presence in China with new models that will be better tailored to local tastes.

Inflicted Damage From Tesla’s Price War

Volkswagen delivered about 25% fewer EVs compared to 2022’s comparable quarter in China, where its business has suffered from a price war initiated by Tesla Inc TSLA.

Tesla Hikes Prices On Friday

Today, Tesla’s website showed that prices of its more expensive Model S and Model X cars in China were raised.However, this move does not violate Tesla’s price discounting strategy as in China, there are not major competitors to Model S and Model X in the premium price category these two models are in. Despite intensified competition, Volkswagen stated it does not intend to discount prices in an effort to gain market share in China.

Reaffirmed Full Year Guidance

Based on that very solid first quarter and based on an order backlog of 1.8 million cars in Western Europe, including 260,000 EVs, Volkswagen management is confident of the company achieving its financial targets for 2023.  

Speeding Up The EV Transition

Despite an encouraging start of 2023 as both revenues and underlying operating profit significantly improved, CFO Arno Antlitz admitted that Volkswagen needs to speed up its efforts, especially on the BEV front. Volkswagen has begun working on two major European battery factories that are located in Germany and Spain, along with the third facility in Canada.

The Auto Parts Industry Is Also On The Fast Route To Electrification

According to the Investors Observer, Worksport is certainly among the top playes in the Auto Parts industry. Although EVs are more about software than hardware, Worksport has a portfolio of products that promise to greatly contribute to the development of upcoming electric pickups.  Two weeks after announcing its advanced tonneau covers will soon be available to serve Chevrolet, Jeep, Dodge, RAM, Ford Motor F, Nissan Motor Co Ltd NSANY, Honda Motor Co HMC, Hyundai Motor Company HYMTF, and Toyota Motor Corporation TM, Worksport proudly revealed on May 4th that it is now another step closer to its long-term revenue growth goal as it completed the installation of its manufacturing line. With its impressive portfolio of patented and proprietary folding truck covers, Worksport is getting closer to fulfilling its promise of disrupting the transport industry as it can now begin training the staff at its New York facility. The training is expected to last several weeks with Worksport is also expected to provide an update on both its newly redesigned portable COR HD advanced battery system and the solar-powered SOLIS cover for light pickup trucks.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.