CEO VW admitted "Tesla will probably remain the most difficult contender."

From the start of the year, Tesla's market value exceeded the additional valuation of its domestic competitors General Motors and Ford. The California company has also now exceeded the market capitalization of German Volkswagen.

Several news organizations managed to communicate with Volkswagen CEO Herbert Diess as part of the World Economic Forum in Davos. He told Frankfurter Allgemeine Zeitung (FAZ) that he currently focuses on battery-powered models and spoke in detail about Tesla, an American rival.

According to Diess plans, 2020 will be very important for Volkswagen, because the new models of electric vehicles will make a breakthrough and achieve the targets for CO2 emissions, but the company wants to maintain a margin. Central to this is the new VW ID.3, but the compact electric car is struggling with software problems. There are also delays in delivery. But when Diess was asked if VW could start shipping ID.3, as announced, he assured: “Yes, we definitely can.”

Photo: Michael Probst/Bloomberg News

“The gap between VW and Tesla in terms of electrical mobility is still quite large, and above all, the German company must become significantly faster in order to be able to make itself known in the future,” Diess says.

Answering a question about Tesla's current growth on the stock exchange, Diess said he didn't consider the leader in the electric car industry a “direct threat”. He was "almost sure" that Volkswagen would be able to keep up with the planned increase in electric mobility and the development of the necessary software skills. But he admitted that Tesla "will continue to grow rapidly and will probably remain the most difficult contender."

Diess admitted that the software lag behind Volkswagen is "still quite large." While Tesla is paving the way for electric cars, Volkswagen is buying software companies and increasing investments in sustainable vehicles and batteries, Diess said: “We can be fast enough in the future only if we do it ourselves.”

“In the next three or four years, it will become clear who has the advantage in economies of scale for electric vehicles - Tesla or us,” he said.

Diess also commented on the first Porsche electric car recently released by Taycan. As we know, according to the test results from the United States with a single charge, it travels significantly less miles than stated by the manufacturer. But Diess says that, first of all, Taycan had to show that even an electric car can bring high dynamics and sports driving pleasure. “It was a development goal. Range was not a top priority,” explained Volkswagen's CEO.

Diess also reaffirmed his commitment to electronic mobility of batteries, not hydrogen. “Electrification is superior to hydrogen in a car,” he said. “The hydrogen efficiency is significantly lower, so you need three to four times more energy than a battery-powered car.”

Diess expressed his respect for other car manufacturers, but noted that Tesla is the most serious competitor: “We take them [Toyota or the future PSA-Fiat group] very seriously, of course, but Tesla is the biggest contender. The business model of the automotive industry is changing. Tesla was the first to understand this.”

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