Volkswagen AG shares surged the most since a historic short squeeze a dozen years ago after back-to-back days of briefings on how it plans to supplant Tesla Inc. as the global electric vehicle leader. VW’s common stock soared as much as 29% on Tuesday after the company announced plans to standardize key technologies across its sprawling industrial empire and generate scale effects that both Tesla and established automakers are unlikely to match. On Monday, VW said it would build six battery factories in Europe alone.
The stock move is reminiscent of a short squeeze that briefly made VW the world’s most valuable company in 2008. VW’s three dominant holders – the Porsche and Piech family, the German state of Lower Saxony and Qatar — hold 90% of common stock. VW’s preference shares, which have a much larger free float and are more widely traded, rose as much as 9.3% in Frankfurt trading.
Diess, 62, has been overhauling VW’s vast operations to free up funds for spending on the battery and software capabilities that made Tesla the world’s most valuable automaker last year. He was concerned until recently, telling Bloomberg News in January that the capital markets’ dim view on the company put it at a disadvantage.
The outsize gain in VW’s common stock relative to preference shares is partly driven by U.S. retail investor buying and high short interest, according to Ken Menager, a special situations strategist at Avalon Capital. VW’s American Depositary Receipts are based on the common-share listing in Germany.
Volkswagen’s ID.4 electric SUV
Photographer: Krisztian Bocsi/Bloomberg
“Volkswagen is turning electric, poised to overtake Tesla’s battery-electric vehicle crown in 2023 and catch up on software by 2025, a view the market is only now developing,” Michael Dean, a Bloomberg Intelligence analyst, wrote in a report. “Educating investors about its battery tech — it aims to cut cell costs by 50% via the rollout of solid-state batteries — and software should also reap rewards.”
Porsche Squeeze
The last time VW witnessed a similar stock surge was when Porsche’s attempt to take over the company led to a short squeeze resulting in a series of investor lawsuits.
Porsche’s plan to acquire its much bigger rival faltered when the global financial crisis hit. To save Porsche from bankruptcy, VW ended up buying the sports-car maker over the course of several years, leaving only a publicly traded holding company whose main asset is VW shares.