What's going on?

Sparks could be about to fly: Volkswagen � the world�s second-biggest carmaker � announced on Tuesday that it�s aiming to sell one million electric vehicles (EVs) this year.

What does this mean?

Volkswagen�s new target represents a big step up from the 231,000 EVs it delivered last year, and could see the German carmaker get one over on Tesla: its biggest EV rival produced 500,000 vehicles last year, and plans to increase that by 50% or more this year. And even if Volkswagen can�t catch up in 2021, it has the longer term in mind: the company�s aiming to become the world�s biggest EV manufacturer by 2025 at the latest (tweet this). Investors, for their part, seem pretty optimistic about its chances: they sent the company’s shares up 7%.

Why should I care?

Zooming in: It�s all down to the batteries.

Batteries are the most expensive part of an EV: get �em cheap and companies will slash the cost of their cars, making them a more appealing buy for customers and � fingers crossed � pushing up sales. That might be why Volkswagen also unveiled plans to build six battery factories in Europe by 2030 � a move that should cut its battery costs by as much as 50%.

For markets: These valuations are looking a bit skewiff.�

Volkswagen�s odds of overtaking Tesla�s sales are looking pretty good, but its odds of overtaking its rival�s market value � $670 billion to Volkswagen�s $145 billion � are far slimmer. Some investors reckon this valuation gap can partly be explained by Tesla�s superior software � specifically its autonomous driving technology. Then again, it�s not like Volkswagen hasn�t got the edge in other ways: it already has the infrastructure to churn out millions of vehicles every year.