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Volkswagen (VWAGY) to Build Electric Vehicle Plants in China

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Volkswagen AG (VWAGY - Free Report) is building two manufacturing plants, per Bloomberg. The aim of the company is to produce 600,000 electric vehicles (EVs) on its dedicated battery-car platform, Modular Electrification Toolkit (“MEB”). The new factories in Anting and Foshan will open next year. With this, the German auto giant will be able to catch up with Tesla, Inc.’s (TSLA - Free Report) capacity to manufacture electric vehicles.

Herbert Diess, the chief executive officer of Volkswagen, says that the company leads the competition on e-mobility with the right products, better groundwork and economies of scale. It intends to produce about 70 battery-powered models across its 12 auto brands by 2028 and make 22 million EVs over the next decade.

Notably, in April, the company revealed that it plans to build fully-electric sports utility vehicles for China, the largest car market of the world. This move is in sync with the company’s aggressive growth strategy in China, where electric vehicle manufacturers are treated preferentially. Also, the proposed launch of the fully-electric vehicles by Volkswagen in China from 2021 is aimed at competing with Tesla’s Model X. In fact, Tesla’s sole assembly plant operating in Fremont, CA, can manufacture about 500,000 vehicles.


In the past three months, shares of Volkswagen have outperformed the industry it belongs to. Over this time frame, the stock has gained 1.4% against the industry’s decline of 4.3%.

While Volkswagen currently carries a Zacks Rank #3 (Hold), Tesla has a Zacks Rank #5 (Strong Sell).

A couple of better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Over the past year, shares of the company have gained 2.6%.

Fox Factory has an expected long-term growth rate of 16.4%. Over the past three months, shares of the company have gained 17.1%.

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