WOLFSBURG, Germany: Tesla's expansion took Volkswagen by surprise, said an official, and the German carmaker may struggle to overtake Tesla, its U.S. rival.

Speaking via video link from Germany at a Financial Times auto conference, Herbert Diess, Volkswagen's chief executive, said, "We did not expect our main U.S. competitor to be so fast. It will be tight, but we will not give up on it. I would still see a chance that by 2025 we are first. At least second."

Tesla, under Elon Musk, has become the world's largest carmaker by stock market value, at nearly $900 billion, compared with VW's €89 billion in 2021. Of the 8.9 million vehicles VW sold last year, 452,900 were EVs.

For the last two years, Toyota has sold the largest number of autos worldwide, but has decided to opt for a slower transition towards electric vehicles.

The chief executives of Volkswagen and Tesla seem to share a close relationship. In 2020, Musk test-drove one of VW's ID.3 electric cars, accompanied by Diess in Germany.

In October, Musk joined a conference call of VW executives at the invitation of Diess to discuss how to speed the transition to electric technologies.

"The first quarter of 2022 was for sure dominated by the shortage of semiconductors, but added that there were signs of improving conditions in an issue that has dogged the industry's recovery from the pandemic," he said.

"Even under these really difficult circumstances, 2022 could still be a good year for us and for the car industry," he added.

Despite its plans to be the world's largest electric car manufacturer, Volkswagen only aims for 50 to 60 percent of its sales to be EVs by 2030, while traditional manufacturing rivals, such as Volvo and General Motors, are planning to only sell gasoline-powered vehicles through 2030 and 2035, respectively.