Elon Musk Likes That This Tesla Rival Is Making Its Own EV Batteries

Tesla Inc TSLA CEO Elon Musk has reacted to the news that rival Volkswagen AG VWAGY is building its own electric vehicle batteries.

What Happened: Musk tweeted “Great!” in response to a Slashdot article that said Tesla’s German rival was announcing a $20 billion effort to build its own EV batteries.

Great!

— Elon Musk (@elonmusk) July 8, 2022

Volkswagen will create a new company called Power Co to build batteries as it vies to secure enough capacity, according to Slashdot.

Why It Matters: It was recently reported that Warren Buffett-backed BYD Co BYDDY will begin supplying batteries to Tesla. The Musk-led company also gets supplies from China’s CATL, the world’s largest EV battery maker, also a supplier to Volkswagen.

Musk recently dismissed a forecast by Bloomberg Intelligence that Volkswagen could emerge as the top electric vehicle maker by 2024.

Volkswagen expects half of its global sales to be EVs by 2030 and sold 8.6 million vehicles worldwide last year, out of which 452,900 were battery EVs. In contrast, Tesla sold almost a million EVs in 2021.

Price Action: On Thursday, Tesla shares closed 5.5% higher at $733.63 in the regular session and fell 0.4% in the after-hours trading. On the same day, Volkswagen OTC shares jumped 5.5% to $18.24 in regular hours, according to Benzinga Pro data. 

Benzinga’s Take: While Volkswagen has emerged as a potent rival to Tesla, particularly in Europe, it may find battery making to be a challenging proposition. Recently, Rivian Automotive Inc RIVN CEO R.J. Scaringe touched upon the shortages in raw materials needed for battery making. These shortages extend to cobalt, lithium and nickel. According to Scaringe, 90% to 95% of the supply chain simply doesn’t exist.

Read Next: Volkswagen Says US Could Face Many Challenges To Ramp Up EV Battery Output

Photo via BoJack on Shutterstock