Volkswagen (OTCMKTS:VWAGY) is looking to drive off into a successful, eco-friendly future. The legendary automaker is taking the first steps Thursday, unveiling its all-electric SUV. What does this mean for Volkswagen stock?
The big news is that Volkswagen unveiled the ID.4 — its first fully electric SUV — on Wednesday. It is also the first vehicle to be built on its modular electric vehicle platform (MEB) that will make its way to drivers in the United States. Other stats on the SUV include its $40,000 starting price tag and its estimated driving range of 250 miles.
German-listed Volkswagen stock is rallying slightly on the news, although the over-the-counter versions are in the red Thursday.
Why? This announcement from Volkswagen comes at a pivotal moment for automakers.
As companies like Tesla (NASDAQ:TSLA) and Fisker (NYSE:SPAQ) continue to gain traction and market share, traditional automakers like Ford (NYSE:F), General Motors (NYSE:GM) and Volkswagen must pivot to stay relevant.
But why should investors care about this one specific vehicle release? Importantly, the ID.4 is a truly global launch. American drivers will get to experience its all-electric SUV and its new MEB for the first time. Many car companies have chosen to first focus on China or Europe with their electric cars, but Volkswagen is showing that it is serious about its ID.4.
Volkswagen is also telling investors that it is getting serious about the environment — and its earlier promises to make a difference.
Volkswagen Stock and All-Electric Vehicles
You may remember that just a few years ago, Volkswagen was in hot water over a pretty serious emissions scandal. After paying $35 billion in settlements and fines, the company also promised a whole new lineup of all-electric vehicles. Simply put, the company needed to repair its damaged reputation.
At the time, the company promised to sell 150,000 electric and plug-in vehicles by the end of 2020. Volkswagen also said that by 2025, it would sell over 1 million battery-powered electric cars. With those lofty goals in mind, the unveiling of the ID.4 puts it in the right direction.
Plus, there are a few other catalysts working in its favor. Thanks to the novel coronavirus, consumers say they care about trust and sustainability more than ever. The pandemic has shown individuals just what sort of impact they can have on public health and the environment, and therefore, many experts believe adoption of electric vehicles is about to spike. That bodes well for Volkswagen, and it also helps that the company is taking steps to repair its reputation and deliver on its promises.
The last big trend working in its favor is that we know consumers prefer to drive SUVs and pick-up trucks, which historically have not been well-represented in the electric vehicle market. That should help Volkswagen as it lends it popular brand to the ID.4.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.