This ‘EV’ stock gained 70% in one month. It’s not Tesla.

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The turnaround in what investors think about

Volkswagen

it is nothing short of incredible.

Volkswagen shares (ticker: VOW. Germany), arriving on Thursday, gained 39% last week and more than 70% last month. These returns are similar to those of electric vehicles.

Tesla

(TSLA), for example, won about 60% in his run until he was chosen for the

S&P 500

in December.

EV investors are ready for stock moves like this, but huge short-term gains and losses are not so common in the traditional automotive sector.

What changed at Volkswagen, to put its stock in motion, were its electrification goals. The German automaker now targets around 50% of total sales by 2030 for all-electric vehicles. The company’s previous target was about 25% penetration of existing sales by 2030.

To make these figures, Volkswagen also announced plans this week to build six battery factories. The targets are bold and can translate into 5 million or 6 million fully electric vehicles per year until 2030 – about half of the 10 million to 11 million that the company produces. Tesla, for contextual purposes, delivered around 500,000 EVs in 2020.

Investors are clearly excited about Volkswagen’s move. Apparently, it only takes a few days to transform from a traditional car manufacturer to an EV player.

For EV bulls, it may be ironic that Volkswagen’s stock soared about 40% after the announcement of the battery factories. And in the days following Tesla’s battery technology day in September, which also presented plans for more in-house battery production, its stock dropped about 8%.

But the stock market revolves around expectations, as well as valuations. Few expected Volkswagen to basically double its planned battery electric power. Tesla, on the other hand, is expected to grow 50% or more each year in the near future – and that expectation has not changed for some time.

Tesla is also valued at about 6 times the estimated sales in 2025. Volkswagen is valued at about 0.5 times the estimated sales in 2025. The potential for VW’s shares is great if the company can become a second violin for Tesla.

Tesla shares arriving on Thursday were up about 1% in the week, slightly better than S&P and

Dow Jones Industrial Average.

Investors don’t seem to believe that more Volkswagen electric vehicles will mean bad things for Tesla. It just means more EVs for everyone, as well as fewer gas-powered cars.

As for Volkswagen, part of the air went out of stock Thursday. Shares fell more than 14% in overseas trading.

Write to Al Root at [email protected]