Volkswagen To Invest $27M Over 5 Years In EV Production

Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) will pump in €22.8 billion ($26.9 billion) for the development of its main car brand over a period of five years. This announcement follows the recently reported investment of €2.4 billion ($2.8 billion) by its commercial-vehicle division, MAN, in its revamp production facilities (Read more: Volkswagen's MAN to Invest $2.8B in Plant Upgrade).

Of the total, €14 billion will be utilized on the automaker’s German plants. Also, the company will be developing its Zwickau plant into an e-mobility facility, which includes an investment of €1 billion. At this plant, the company has plans to focus on the production of electric vehicles (EVs) based on the new modular electric drive kit (“MEB”).

The MEB technology will enable the company to offer electric vehicles with rapid charging capabilities, operating capability from 400 to 600 kilometers and package assistance at a price of a similar diesel car.

Volkswagen AG Price and Consensus

In 2020, the first next-generation electric vehicle, Volkswagen I.D., will be unveiled in the market.

This recent investment by Volkswagen is to boost its Transform 2025+ strategy, via which, it aims to develop its modular production and incline more toward e-mobility.

Per management, the company’s goal is to hold a leading position in volume segments and obtain a major place in e-mobility.

Price Performance

Last month, shares of the company have outperformed the industry it belongs to. The stock has gained 9% compared with the industry’s 2.3% rise.

Zacks Rank & Key Picks

Volkswagen carries a Zacks Rank #3 (Hold). A few better-ranked companies in the auto space include American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) , Yamaha Motor Co. Ltd. YAMHF and Navistar International Corporation (NYSE:NAV) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Axle has an expected long-term growth rate of 8.1%. Its shares have been up 30.1% in the last three months.

Yamaha has an expected long-term growth rate of 10.6%. Shares of the company have been up 24.5% in the last six months.

Navistar has an expected long-term growth rate of 5%. Its shares have been up 25.3% in the last three months.

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