Volkswagen Stock Surges 20%, Dragging Down Korean Battery Stocks

Stock Prices Soar Due to Electric Vehicle Expansion Strategy
Tesla Also Shows Weakness

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The stock price of German automaker Volkswagen, which caused a plunge in Korean battery companies' stocks the day before, surged sharply.

On the 16th (local time), Volkswagen's American Depositary Receipt (ADR) stock listed on the New York Stock Exchange opened trading at $33.66, up 8.37% from the previous day. Volkswagen's stock price quickly soared into the $30 range and even reached $35 during the session. This is the highest level since 2009.

Volkswagen also showed a strong performance on the German stock market, rising as much as 20% intraday.

Investment media Barron's evaluated that Volkswagen's bold electric vehicle strategy unveiled at the 'Power Day' event the day before led to the stock price increase.

At this event, Volkswagen announced plans to build six new battery factories in Europe by 2030 and to achieve 70% of its sales in Europe from electric vehicles by 2030. Volkswagen revised its original electric vehicle sales target from 50% to 70% by 2030.

Barron's noted that Volkswagen's current price-to-earnings ratio (PER) based on expected 2021 earnings is only about 11 times, which is significantly lower compared to the PER of electric vehicle companies. Tesla's PER is 174 times.

Meanwhile, as Volkswagen declared it would use prismatic batteries instead of pouch-type batteries, Korean battery companies such as LG Chem and SK Innovation saw their stocks fall by 7.76% and 5.69%, respectively, on the Korean stock market the day before.

The stock price of Tesla, a leading electric vehicle company, also fell 3.66% to $682. Tesla started trading around the previous close but the decline widened as the market close approached.

This content was produced with the assistance of AI translation services.