$VOLKSWAGEN AG(VLKAF.US)$ considers China-based electric vehicle makers $NIO Inc(NIO.US)$ and $XPeng(XPEV.US)$ as "very serious competitors", the German automaker's CEO Herbert Diess said on Tuesday.
What Happened: Nio and Xpeng have had a strong start in the European market, both foraying into Norway last year.
"We see the Chinese competitors, mostly the technology-oriented like Nio or Xpeng ... as very serious competitors in the future," Diess said, in response to an analyst's question about the Chinese EV brands in Europe. Diess added that the German automaker keeps a track of their "primary activity."
The 63-year old Volkswagen CEO said it is a game of scale and that it takes lots of effort to become relevant in the automotive industry. He said automakers need to have at least 2% to 4% market share to stay relevant and competitive, even if they are a niche player.
$Tesla(TSLA.US)$ success came after "15 years and spending some 20 billion (dollars)," said Diess.
Why It Matters: China continues to be a key market for Volkswagen outside Europe.
It has now set a target of doubling ID electric vehicle sales to at least 140,000 units in China this year, after having missed 2021 targets significantly due to semiconductor shortages.
Volkswagen delivered 70,625 ID EVs last year in China, below its target to sell between 80,000-100,000 units.
Price Action: Volkswagen stock closed 0.8% higher at $23.1 a share on Tuesday.