Volkswagen Earnings Miss, China EV Deal Could Bolster Its ID4 and Buzz Model Sales
Key takeaways
- Volkswagen’s EV model sales were up 52% compared to last year, with the ID.4 remaining the bestseller
- However, the carmaker has lowered its full-year sales guidance and missed expectations on profit for the quarter
- A $700 million partnership announcement with Chinese EV maker XPeng failed to raise Volkswagen’s share price but sent XPeng’s skyrocketing
Volkswagen is a household name known for its cars, but the company’s latest earnings report left investors cold despite a rise in EV sales, It probably hoped for a share boost when it announced a new $700 million partnership with Chinese EV maker XPeng, but instead, Wall Street was left skeptical at how the deal plays out on the broader market. Here’s the latest.
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What happened with Volkswagen’s Q2 results?
Volkswagen revealed that its global car sales for the second quarter came in at 1.2 million, which is 13% up from the same time last year. For the first half of the year, sales volume was at 2.22 million — a 7.2% lift year over year.
As for its EV sales, Volkswagen sold 59,300 of its most popular EV model, the ID.4 and ID.5 SUV. The Volkswagen ID.3 sold 26,200 units, while other EV models, such as the recently unveiled Volkswagen ID Buzz campervan, sold 9,300 units. That’s a total of 94,800 EV cars, up a big 52% year over year.
However, investors weren’t impressed by the big-ticket financials. Volkswagen has decreased its car sales outlook, and its post-tax profit was down compared to Q2 last year. Nonetheless, the carmaker aims for 10–15% revenue growth for its fiscal year.
What’s the company’s China deal?
In surprising news, Volkswagen announced a $700 million investment into Chinese EV start-up XPeng. The two companies will jointly develop EVs to gain market share in an increasingly competitive landscape.
Volkswagen also already sells EVs in the Chinese market, having delivered 62,000 EV units in the first half of 2023, which is down 2% compared to last year. Its new partnership with a domestic start-up is an apparent bid to boost sales and market share in one of the world’s largest EV markets.
XPeng shares soared by 30% at the news, but Volkswagen closed the trading day down 2.46%. It’s a great deal for the Chinese EV company, but it’s an admission from the European car giant that it needs some help bolstering its EV sales.
The bottom line
Despite strong EV sales, Volkswagen’s downward revision of its sales guidance left investors concerned about whether the automaker is losing vital market share and struggling to keep up with the game.
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