Volkswagen's Tariff Turnaround: A Catalyst-Driven Buy Below €220

As the clock ticks toward Volkswagen's June 2025 tariff resolution deadline, investors are poised to capitalize on what could be one of the most compelling catalyst-driven opportunities in European equities. With a 25% U.S. import tariff hanging over its American operations, Volkswagen (VOWG_p.DE) stands at a pivotal crossroads—one that could unlock a 5-7% revenue boost, accelerate its EV dominance, and revalue its stock by 25% in 12 months. Here's why the market is underestimating this German automaker's upside.

The June Deadline: A Make-or-Break Moment for Margins

The U.S. tariffs on European automakers, imposed in 2024, have cost Volkswagen an estimated €1 billion annually. A resolution by June 2025 would eliminate this drag, immediately improving margins and freeing cash for growth. CEO Oliver Blume has framed negotiations with U.S. officials as “constructive,” leveraging Volkswagen's $5.8 billion stake in Rivian and plans for “massive” new U.S. investments in battery production and EV manufacturing as bargaining chips.

Why this matters: A deal by July 2025 would:
- Remove tariffs on ~$3 billion of annual U.S. exports.
- Boost EBIT margins by 1-2 percentage points.
- Signal geopolitical stability, easing risks for broader EU-U.S. trade.

Undervalued, Yet Underappreciated: The EV Scale Play

Volkswagen's EV strategy is often overshadowed by Tesla's (TSLA) narrative, but its scale is unmatched. With 62% global BEV contract growth in 2025 (vs. Tesla's 34%), models like the ID.7 Tourer and Audi Q6 e-tron are capturing premium market share. Crucially, its $5.8 billion Rivian stake isn't just a financial bet—it's a strategic lever. Rivian's U.S. EV expertise and manufacturing footprint align perfectly with Volkswagen's localization goals, enabling it to pivot from tariff-vulnerable imports to domestic production by 2027.

Asymmetric Upside: Technicals and Valuation Signal a Buying Floor

At €205, Volkswagen trades at 8x forward EV/EBITDA, a steep discount to Tesla's 45x and even Stellantis' (STLA) 15x. This compression ignores its €50 billion+ EV pipeline and the untapped potential of its software division, CARIAD. Technicals further support a rebound:
- Key support: €180 (2023 lows) holds, with resistance at €220.
- Bullish divergence: Rising RSI (60) vs. flat price action suggests momentum.

Analysts project a €275 target by Q4 2025 if tariffs are resolved, implying a 34% upside. Even a partial deal could lift shares to €250, with a 5% stop-loss below €190 capping downside risk.

Risks: Navigating the Tariff Tightrope

• Deal failure: A no-deal outcome by June 2025 could extend margin pressure, with shares dipping to €160.
• Rivian underperformance: If Rivian's losses grow, Volkswagen's investment could become a drag.
• U.S. regulatory shifts: Trump's threats to hike tariffs to 50% by July 2025 add volatility.

Conclusion: Buy the Dip Before the Deal

Volkswagen's June deadline is a binary event with outsized upside for investors who act now. With its EV scale, Rivian-backed leverage, and undervalued stock, the path to €275 is clear—if negotiations succeed.

Recommendation:
- Buy below €220, targeting €275 by Q4 2025.
- Stop-loss: €190 (5% below entry).

The clock is ticking. For investors willing to bet on Volkswagen's turnaround, the reward-to-risk ratio is compelling—and the catalyst is just around the corner.

Disclaimer: This analysis assumes resolution of U.S.-EU trade disputes by Q3 2025. Risks include geopolitical delays and EV demand shortfalls.