"Our aim is to become the benchmark not just for luxury cars or sustainable credentials but the entire scope of our operations," Bentley Chief Executive Officer Adrian Hallmark said in a statement.
The announcement sent Volkswagen's share price soaring on 26 January, after what has been a bit of a stuttering start to 2022 for the stock.
With the EV market continuing to grow, and with its competition, what does this development mean for the Volkswagen's share price?
Volkswagen's share price is down 2% since the start of the year, closing Tuesday 1 February at EUR260.4, although considering that General Motors [GM] and Tesla [TSLA] have experienced heavier losses, that might not be a bad thing.
Helping the stock are Bentley's plans to shift its entire offering to electric-models by 2026. While on the face of it that's a tough task considering that powerful combustion engines are a major part of the car manufacturers' offering. Lamborghini, another Volkswagen-brand, could face a similar identity crisis as it spends EUR1.5bn to build hybrid cars.
However it seems that demand is there. In 2021 Bentley's sales increased by 31% compared to the previous year, with record deliveries of 14,659 cars globally in 2021. The company said that 1 in 5 sales of its Bentayga SUV were of the new hybrid model and that it was committed to having the 'first fully electrified and zero carbon luxury car company in the world.'
'This significant achievement was driven by new model introductions, a fresh product portfolio and increasing demand for Bentley's new hybridised models, introduced under Bentley's Beyond100 strategic path to full electrification by 2030,' said Bentley in a statement.
Volkswagen is going all in on the shift to electric vehicles (EV) following an explosion in demand last year.
In the UK, 1 in 6 new car registrations were for plug-ins or electrified vehicles last year, according to data from the Society of Motor Manufacturers and Traders. In 2021, 305,000 plug-in vehicles were sold giving them a market share of 18.6%, up from 17% the previous year. Globally, 2021 electric vehicle (EV) sales were on track to hit 6.3m last year, according to data from BloombergNEF.
In the third quarter of 2021, North American EV sales were up 63% to 179,000, while Europe hit a record high of 571,000, up 43% year-on-year. In China sales almost tripled to 882,000, with BloombergNEF predicting that the fourth quarter will see over a million EV sales in the region.
One of the largest automobile manufacturers on the planet, the firm is spending EUR52bn on its transition to electric vehicles. In the long-term, this should pay off for the company, even if in the short- to mid-term there have been some speed bumps.
In the third quarter, Volkswagen's operating profits fell to EUR2.8bn for the period between July and September. The company blamed the semiconductor shortage that had caused a bottleneck. Should Volkswagen be able to get production up and running, then the damage could be limited. That of course depends on how prolonged the shortage is.
GlobalData's Daniel Clarke told ZDNet that automotive and tech industries could expect continued disruption in 2022.
"For the automotive sector, it means that new car sales will not be as high as automakers would like, simply due to production issues," Clarke said.
So while the announcement at Bentley is a good thing for Volkswagen's share price, wider efforts to increase production across the automobile giant are likely to have a more substantial effect.
Over the 12 month timeframe, Volkswagen's share price has gained 50% as investors back the German carmaker's electric dreams. Yet analysts seem to think the stock can go further with a consensus price target of EUR257, according to Yahoo Finance - a 38% downside on Tuesday's close.
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