Cathie Wood-led Ark Invest is singing a new tune on Volkswagen AG VWAGY, saying the German automaker is “making strides” in its transition to an autonomous electric future.
What Happened: Ark analyst Tasha Keeney said in a newsletter that “charging vehicle owners per hour is a telling go-to-market strategy for VW’s autonomous taxi platform.”
Keeney pointed to a recent Volkswagen executive Klaus Zellmer interview with Top Gear where he said that if the automaker launches an autonomous service it could charge EUR 7 ($8.56) per hour and achieve profitability.
The analyst noted that if cars on Volkswagen’s platform were to average 30 miles per hour, vehicle owners would end up paying 29 cents per mile for the autonomous service.
Currently driving personally-owned gas cars costs 70 cents per mile, so putting the two costs together adds up to nearly $1 per mile, as per Keeney.
Why It Matters: In March, Ark Invest said it was unimpressed by what it called Volkswagen’s “linear thinking” on batteries.
At the time, Ark analyst Sam Korus had said that “In ARK’s view, companies with 'old world DNA' are unlikely to transition quickly enough to dominate the new world.”
See also: How to Buy Volkswagen Stock
Keeney took a differing view and wrote that, while Volkswagen has had “some false starts,” it is now “making strides in transitioning from a legacy auto manufacturer to a software-enabled, autonomous electric future.”
Tesla Inc TSLA shares constitute 10.1% of the weight in Ark Invest’s flagship fund — ARK Innovation ETF ARKK, as of Monday. The fund holds 3,463,871 shares of Tesla, valued at $2.01 billion.
The autonomous service costs less than the average taxi today, as per the Ark Invest analyst.
“ARK believes that personal car ownership will dwindle, if not collapse, as autonomous taxi networks proliferate and prices drop to only 25 cents per mile,” as per Keeney.
Ark said it intends to continue monitoring Volkswagen’s progress.
Price Action: On Monday, Volkswagen OTC shares closed 0.66% higher at $33.77. On the same day, Tesla shares closed 4.4% higher at $606.44 in the regular session and gained 0.17% in the after-hours trading.
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