Volkswagen Could Dethrone Tesla on Battery Electric Vehicle Sales by 2024

German carmaker Volkswagen (OTC Pink:VLKAF,FWB:VOW) could overtake US-based Tesla (NASDAQ:TSLA) on battery electric vehicle (BEV) sales as early as 2024.

Meanwhile, China’s BYD (SHA:002594) would rank third for BEV sales globally in 2025 followed by a slew of legacy automakers achieving around 1 million annual BEV sales, a recent report from BloombergNEF states.

“Looking ahead, automakers in Europe, China and elsewhere will continue to challenge Tesla via an impending wave of new models, though profit incentives are limited amid rising battery costs and a lack of scale,” said Michael Dean, senior European automotive industry analyst at Bloomberg Intelligence. “That may change in 2025 to 2026 as more brands achieve critical mass on new-generation models with proprietary software.”

Volkswagen, which already leads European sales, has ambitious plans ― achieve a 25 percent BEV sales mix by 2025 to 2026, or about 2.5 million units annually. The German automaker is also investing as much as 30 billion euros in the supply chain, including the opening of six new battery cell plants in Europe by 2030.

In 2021, Volkswagen delivered 263,000 all-electric vehicles, with an overall goal for half of its global output to be all-electric vehicles by 2030. Performing well ahead of its competitors, the German carmaker has committed 159 billion euros over the next five years for investment in electrification.

But in order to dethrone Tesla, which is expected to double its sales in 2023 compared to 2021 on new capacity ramping up in Germany and Texas, Volkswagen would need to expand its European dominance in other regions such as China, the BloombergNEF report shows.

The global BEV sales mix is expected to reach 15 percent in 2025 compared to about 6 percent in 2021, with China remaining the dominant region.

“China’s carrot-and-stick approach to stoking EV sales could push battery-electrics to account for 25 percent of all passenger vehicle purchases by 2025,” said Steve Man, senior China automotive industry analyst at Bloomberg Intelligence. “Sales in China have surged since the launch of the country’s new energy vehicle credit program despite erratic component supply.”

However, for BEVs to remain cost competitive, battery prices are key.

“The middle of this decade will also coincide with a wave of dedicated BEV platforms, new-battery technology and digitalization that will likely make the vehicles more affordable and desirable to consumers,” the report notes.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.