Volkswagen Wants to Compete with Tesla. Here's What's Stopping It

Taking on Tesla is a monumental and extraordinarily task, and if there's one company that may be able to pull it off, it is German automaker Volkswagen. But it's going to take more than a couple of years.

Volkswagen learned their lesson the hard way last year, as it rolled out its flagship EV called the ID.3. The ID.3 was futuristic, had all the German characteristics of beautiful design, spaciousness, and comfort. But its software didn't function properly.

For all of the focus that Volkswagen placed on hardware, they admittedly under-emphasized the role of software in making an EV that can be better than Tesla. VW's ID.3 reportedly had hundreds of software bugs, and early customers must now bring-in their cars for service to have newer, less sophisticated software installed. The learning curve for updating software remotely is higher than Volkswagen anticipated, and now any notion of overtaking Tesla has been pushed out for years. 

German automakers are resilient, however, and they have quickly identified problems in workflow, management, and depth of human capital needed to make the ID.3 competitive. The next couple of years will present major challenges for Volkswagen's entry into the EV market, but investors shouldn't rule them out.