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Why Cathie Wood's Ark Is Unimpressed With Volkswagen's EV Battery Plans

Why Cathie Wood's Ark Is Unimpressed With Volkswagen's EV Battery Plans

Cathie Wood’s Ark Investment Management remains unimpressed by what it describes as "linear thinking" of Volkswagen AG (OTC: VWAGY) on batteries.

What Happened: Ark analyst Sam Korus touched on Volkswagen’s “Power Day” in the company’s weekly newsletter on Monday.

Korus noted “high-level” takeaways such as the German automaker’s plans to produce 240 GWh of batteries, reduce battery costs by 50%, and add 18,000 fast-charging points by 2030. 

“In ARK’s view, companies with 'old world DNA' are unlikely to transition quickly enough to dominate the new world,” wrote Korus.

See also: How to Buy Volkswagen Stock

“Often the difference between old and new world DNA are plans for linear as opposed to exponential growth trajectories.”

Korus said that rival Tesla Inc’s (NASDAQ: TSLA) goal for 2030 of 3 terawatt-hours of annual production is 12.5 times more than Volkswagen’s number.

Why It Matters: “In an exponential world, companies thinking linearly could be left behind,” as per Korus. 

Last Friday, Wood updated her price target for the Elon Musk-led company to $3,000 in the year 2025. 

Ark is of the view that Tesla can sell between 5 million and 10 million vehicles in 2025. 

Volkswagen stock has been gaining traction after it revealed its technology roadmap for 2030. On Monday, the company's stock closed 12.56% higher at $38.44.

See Also: Who Will Emerge As Tesla's Biggest Rival By 2025?

Volkswagen OTC shares have returned 84.7% on a year-to-date basis, while Tesla shares have declined 5.1% in the same period.

Lansdowne Partners fund manager Per Lekander, who is short on Tesla, noted that Volkswagen and other incumbents could lead to an erosion in the value of the current segment leader in EVs. 

Ark's active ETFs include ARK Innovation ETF (NYSE: ARKK), ARK Autonomous Technology & Robotics ETF (NYSE: ARKQ), ARK Next Generation Internet ETF (NYSE: ARKW), ARK Genomic Revolution ETF (NYSE: ARKG) and ARK FINTECH INNOVATION ETF (NYSE: ARKF).

Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.

Latest Ratings for VWAGY

Apr 2021HSBCDowngradesBuyHold

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