Many people around the world that a new technology or new processes eventually will enable companies and the world to do better. In the auto sector, the belief is very strong, with each new manufacturing plant being able to produce autos better at a lower price for the company. How that translates to the consumer is a different story, but to the company margins are preserved.

In an article by Victoria Waldersee, Jan Scwartz and Nadine Schimroskiz of Reuters the biggest German auto company and the pride of German engineering VW or Volkswagen is building a new plant in German to compete against Tesla. VW is the world’s second largest car maker behind Toyota with a stable of brands including Skoda, Seat, VW, Audi, Porsche and Bentley. In the European market it has a 25% share of the EV market ahead of Tesla of 13%.

Tesla recently opened a Giga factory outside of Berlin and it can produce a model Y every 10 hours, it takes VW 3 times as long to produce the ID.3. VW is building a new plant called Trinity EV which should be up and running in 2026. The plant will use large die casting and cutting the number of components in its cars by several hundred. VW brand production chief Christian Vollmer said the goal is to set the standard in the world and be at 10 hours matching Tesla.

Tesla’s Giga plant can produce 17 components in under 6 minutes. It uses 2 giant casting presses or giga-presses applying 6,000 tonnes of pressure to make the rear of the car. The company will be installing 6 more giga-presses to make the front end of the car.

JPMorgan Chase predicts Telsa’s factory will produce about 54,000 cars in 2022, 280,000 in 2023 and 500,000 in 2025.

VW can produce the Tiguan or Polo in 18 and 14 hours in Germany and Spain respectively but its electric ID.3 made in a factory juggling 6 models from 3 VW brands takes about 30 hours.

VW hopes to build 40 million vehicles worldwide on the new platform called the Scalable Systems Platform with half of the vehicles electric by 2030.

Tesla which produced 936,000 vehicles hopes to produce 20 million vehicles by 2030.

Linking to dividend paying stocks, when you examine the expectations of the above those are large numbers of production and sales and many things have to go right if they are to succeed. The capital costs will be large, but if the auto companies do it, the margins can be very good. We consumers often point to things companies can do, but for companies when they commit to change there are many costs. As investors, we expect the companies to bring the best technology to the making of the vehicle and be rewarded with good margins.

There are more questions than answers, till the next time – to raising questions.