Volkswagen AG VWAGY has revealed that it plans to build fully-electric sports utility vehicles for China, the largest car market of the world, per Reuters. This latest move by the German auto giant is in sync with the aggressive growth strategy in China, where electric vehicle manufacturers are treated preferentially. Also, the proposed launch of the fully-electric vehicles by Volkswagen in China from 2021 is aimed at competing with Tesla, Inc.'s TSLA Model X.
Volkswagen's chief executive officer, Herbert Diess claims that ID ROOMZ will be the key electric vehicle to be launched in China. A team of engineers is working on ID ROOMZ and the company intends to produce over 22 million electric vehicles in the next decade.
Also, Volkswagen and its Audi brand will combine R&D operations in China to improve the research and development capabilities.
Thomas Ulbrich, the head of e-mobility of Volkswagen stated that by mid-2023, it will start ramping up the production of 33 electric vehicles. The company will use VW Group's modular electric car ("MEB") platform to build electric cars for VW, Skoda, Seat and Audi brands. In order to increase the mass production of electric vehicles, VW Group is converting 16 factories across the globe.
Shares of Volkswagen have outperformed the industry
it belongs to in the past three months. Over this time frame, it has gained 7.4% against the industry's decline of 2%.
Zacks Rank & Stocks to Consider
While Volkswagen currently carries a Zacks Rank #3 (Hold), Tesla has a Zacks Rank #5 (Strong Sell). The long-term growth rates for Volkswagen and Tesla are projected at 4.8% and 35%, respectively.
A couple of better-ranked stocks in the broader auto sector are Geely Automobile Holdings Ltd. GELYY and Ferrari N.V. RACE , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Geely' long-term growth rate is projected at 7%. Over the past three months, shares of the company have gained 43.2%.
Ferrari has an expected long-term growth rate of 18.5%. Shares of the company have gained 20.5% over the past three months.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tesla, Inc. (TSLA): Free Stock Analysis Report Geely Automobile Holdings Ltd. (GELYY): Free Stock Analysis Report Ferrari N.V. (RACE): Free Stock Analysis Report Volkswagen AG (VWAGY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research