STLA - Volkswagen's Rocky Road: Navigating Market Perception And EV Transition

2024-06-20 18:25:20 ET

Summary

• Volkswagen has faced challenges since the 2009 power struggle and 2015 emissions scandal, with the recent stock price drop due to industry disruption uncertainty.
• The company shares platforms to dilute costs, focusing on electrification through a new steering model and battery production strategy.
• Despite good operating performance and balance sheet, market perception of disruption in the auto industry affects valuation, with potential for re-pricing if the EV transition is executed successfully.

Volkswagen AG ( VWAGY ) has been through a lot of problems since it had its notorious power struggle in 2009, which pushed the stock price to record levels. The company then faced a scandal related to emissions, the diesel gate , in 2015. The company had a stock price resurgence in 2021, in line with the whole market, but it has since dropped back to the 2015 diesel gate levels. In part, this is because the market is seeing the auto industry as exposed to disruption and uncertainty due to the energy transition....

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