Volkswagen Identifies Tesla as its Biggest Competitor

Sparks fly as the battle for electric supremacy takes off.

via Getty Images

Volkswagen Group sells the most cars in the entire world, yet still sees room for improvement in the business. The auto giant has begun to look into where they can be more efficient, reports Reuters, and are targeting the tactics of an unlikely competitor: Tesla.

It might seem odd to think that such a small player can disrupt the world's largest auto brand - after all, the 80-year-old German car company pumps out a lot of vehicles. In 2016 alone, Volkswagen sold nearly 6 million cars worldwide. Tesla sold a mere 1.4% of that, ending the year with slightly under 84,000 sales. So how can VW be scared of Tesla taking the reins and ending up in a powerful position, given their sales numbers?

While Volkswagen has built themselves up as one of the top manufacturers that use gasoline and diesel-powered cars, Tesla was built around technology. Their cars feel very futuristic and modern, partly because Tesla is a software company that builds, as CEO Elon Musk called it, a "sophisticated computer on wheels". This has enabled Tesla to make a very attractive electric car that doesn't feel like the driver is sacrificing the cool factor for gas mileage.

In the old world it is Toyota, Hyundai, and the French carmakers. In the new world it is Tesla.

-Herbert Diess, CEO Volkswagen Passenger Cars

Volkswagen publishes an internal publication called "Inside", seemingly a large public memo for employees. In the most recent edition, Volkswagen brand CEO Herbert Diess mentions that Tesla has abilities that VW does not currently possess. He's absolutely correct in that assertion, as Tesla positioned themselves to build the core of the company and its offerings around electric vehicles. Tesla has already established many areas needed for the electric car to succeed, including the supercharging network, efficient vertical manufacturing process, autonomous driving technology, reliably electric motors, and long-range batteries.

Looking to the future, Volkswagen plans to have five fully electric vehicles released in the market between 2019 and 2022. The company as a whole will need to work quickly and effectively to catch up to Tesla's scaling, something which will allow them to maintain position in the lead through a more efficient manufacturing process. Tesla plans to have the Model 3, Model S, Model X, and Model Y for sale at this time. The Model 3 and Model Y will share a platform, a page out of Volkswagen's book to modular efficiency.

VW's time to strike is coming to a close, as Tesla prepares to build more Gigafactories in the US which will scale production. Considering Volkswagen long-expressed interest in being not only the global leader of vehicle sales (something they already are), but the winner in the race to world-wide electrification - they have a lot of work to do.