Trying to make sense of the stock market at the moment is, as we’ve said before, a mugs game. Sentiment, for the moment, rules the roost.
One man that seems to recognise this is Volkswagen chief executive Herbert Diess. The German carmaker has long planned to be the dominant force in the budding electric vehicle space, last year promising to spend €35bn on its EV platform, with the aim of releasing 70 pure play battery-powered cars by 2030.
Yet, for some reason, the market didn’t care. While Tesla’s valuation ballooned to over $800bn in January 2021 on the mere promise of EV domination, Volkswagen commanded a measly price tag of just under $100bn. The narrative was clear: the OEMs were already dead, they just didn’t know it.
Well, not quite. Because Diess had been quietly launching his own meta-game versus Tesla. In September 2020, he hosted Tesla’s Technoking for a test drive of its latest vehicle, the ID.3, while Elon was visiting Germany. Three months later, he launched a Twitter account which, absent the Dogecoin pumping, had a Musky whiff in its gratuitous use of technobabble and concept car imagery.
It was a hint at what was to come. On Monday Volkswagen hosted its battery-focused Power Day and, surprise surprise, the old dog seems to have learned a few new tricks. Six, yes six, gigafactories were promised. The presentation deck was laden with neon, electrified imagery. And it even featured the sort of axis-lite charts that FT Alphaville had enjoyed so much from the Californian company in the past:
It was just the opening salvo. Tuesday bought VW’s Analyst and Investor Day, and further big numbers. Diess said that VW would deliver 1m electric and hybrid vehicles in 2021, almost a five-fold increase from 2020. Tesla is only forecasting a 50 per cent growth in deliveries for this one.
The market, having long ignored signals like VW’s growing market share in electric vehicles in Europe, or its bullish capital expenditure forecasts, suddenly woke up. On Friday, VW’s ordinary shares closed at €231.40. At pixel time they’re trading at €297, a gain of 29 per cent in just over two trading days. VW’s preference shares, which are far more liquid, are up 16 per cent. Meanwhile, since the February sell-off, Tesla’s shares are still struggling to catch a bid. At pixel, they’re at $670, off 26 per cent from their all-time-high.
Regime changes are rarely this clean in markets, but given nothing drives prices like sentiment, we could be in for a swift one should these market trends continue.