Volkswagen appears to be optimistic about the near-term progress, noting that easing semiconductor shortages start to offset supply chain bottlenecks and rising costs.

According to Reuters, Volkswagen Group's CEO Herbert Diess said that the company is "earning more than ever" and ramping up electric car production in its biggest markets - Germany and China.

All of that is expected to enable the German manufacturer to narrow the EV gap between Volkswagen and Tesla, on track to become #1 globally by 2025. At least that's Diess' vision, who also points out that Tesla's position will weaken.

Herbert Diess said that Tesla's issues at Giga Berlin-Brandenburg and Giga Austin plants, plus expansion of Giga Shanghai, will drain strength out of Tesla:

"Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time - as well as expand production in Shanghai. That's going to take strength out of him,"

Volkswagen's boss likes to say things like that from time to time. Earlier this month, he said also that "the race" with Tesla will be tight, but we noted that as far as Q1 is considered, the Volkswagen Group is not even #2 in terms of BEV volume.

On the other hand, Tesla really has some issues (as basically everyone - including Volkswagen) to solve. In the case of Texas, it might be mostly the availability of the all-new 4680-type cylindrical battery cells. The ramp-up in Germany was slower than initially anticipated (including the recent reports about delayed deliveries), but there is also news about the addition of the third shift early next month. The Chinese plant is recovering from lockdowns and preparing for an upgrade.

We are not in a position to evaluate Herbert Diess' thesis, but remain cautiously optimistic, as Tesla has a proven track record of navigating through challenges pretty well. In a matter of a few days, we will see Tesla's Q2 production and sales numbers, which will give us a hint about the situation.

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