When it comes to the opportunities in electric vehicles, investors often gravitate toward new and exciting EV start-ups. However, in this Fool Live video clip, recorded on Nov. 22, Motley Fool.com contributors Matt Frankel, Jason Hall, and John Rosevear discuss why investors might not want to overlook Volkswagen (VWAGY 1.26%).
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Matt Frankel: Volkswagen has a little over $100 billion market cap. They are a dividend stock which has been a rarity so far on this list. I think Toyota (TM 0.60%) is the only other dividend stock we've talked about so far. They have a 2.8% dividend yield.
Just to put some of these numbers into perspective, Volkswagen, they sold 231,600 EVs last year. They plan to end this year with about double that many. They want about 20 percent of their volume to be EVs in 2025. This is the reason I ranked it as highly as I did as compared to Toyota. As John just mentioned, which was late to the EV party, Volkswagen is pursuing EVs pretty aggressively.
They plan to launch 70 different EV models in addition to 60 hybrid models by 2030. They plan to build some 60 battery factories in Europe by 2030, a network of charging stations in Europe and China. In the 3rd quarter, they sold 1.8 million vehicles. That was actually down 30% year-over-year, mostly due to supply constraints. But through the first three quarters of the year, they sold 7% more vehicles than they did in the first three quarters of 2020 because we all know what was going on in the first three quarters of 2020. It's really an interesting dynamic between these supply constraints in 2021 and the effects of COVID in 2020. It's really tough comparisons all around.
John Rosevear: For what it's worth, I've been looking at 2019 numbers for a lot of the established companies. It gives you a baseline.
Frankel: Then you have to realize the price inflation. The prices have gone up significantly on new cars just in the past few years. That makes 2019 not a great comparison in a lot of ways. It's a really weird time to be trying to evaluate car companies. I feel for you, John, in your daily routine here.
But 1.8 million vehicles sold in the 3rd quarter, annualize that, about 7 million vehicles in annual sales volume from Volkswagen. That puts some of these other companies in perspective that Lucid (LCID 0.41%) hopes to scale to 90,000 vehicles a year. Just to put these valuations into perspective, Volkswagen is valued on par with both Rivian (RIVN 6.10%) and Lucid. They did about $57 billion of revenue last quarter. They are profitable.
That's a word you haven't heard too much so far in our conversation except maybe with Toyota. They did about three billion dollars in after-tax profit in the third quarter, a little bit more excess in euros, so really profitable company doing a great job in pivoting to EVs. I would put them right up there with Ford and GM in terms of how they're going all in on EVs. Anyone have any thoughts on Volkswagen beyond that?
Jason Hall: How Ford (F -1.92%) went through their financial troubles before the financial crisis and they kept the company from having to go bankrupt, they had their fraud problems before now. They had real fraud with their diesels. That forced their hand to make this pivot, I think, and I think it's going to pay out really well, John.
Rosevear: Absolutely. This is how they are moving on from Dieselgate, committing huge sums to electric vehicles and so forth. Again, with the big automakers we have to suss out, how much of this is just going to be replacement volume versus additive to the bottom line?
VW has got some good plans. When you talk about 70 new models, you're talking about across a dozen different brands at all kinds of price points. Traditionally at VW, Audi and Porsche pay the bills. They have the highest margins, whereas the volume comes from the VW brand itself. The EVs they've done for Audi and Porsche have been very strong. They're looking at subscription services and so forth, the kinds of things that all the automakers are talking about to try and boost margins over time. They're well-positioned. They're doing well, they're doing what they need to do to get to their goal of, I think, it's three million EVs a year by 2025.
