Volkswagen Group CEO Herbert Diess appeared on CNBC's “Squawk Box Europe” this week at the World Economic Forum in Switzerland. He noted that VW still plans to catch up and potentially overtake Tesla on EV sales by 2025.

Tesla is the global leader when it comes to electric cars, and it's growing rapidly, even amid factory shutdowns and supply chain constraints. Diess shared that once the supply chain issues are resolved, it should help Volkswagen to start ramping up momentum once again.

CNBC asked Diess why Tesla is so highly valued. More specifically, why are investors so willing to pay a massive premium for Tesla over other automakers. Diess explained that markets are "always about the future.” He added:

“Tesla currently is in the lead when it comes to EVs, probably also it is the most digital car company already and they have some advantages. We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales.”

Diess, once again, praised Tesla for its success. He continues to emphasise the US electric automaker's strong business model, though he thinks VW will be in a position later this year to begin chipping away at Tesla's market share. This is due in part to his belief that Tesla will likely face challenges as the year moves on, especially since it's trying to get two new factories up to speed.

Meanwhile, Diess says Volkswagen is simply "trying to keep up speed." Not too long ago, Musk himself took to Twitter to advise Rivian CEO RJ Scaringe that opening factories isn't easy, and "It’s insanely difficult to reach volume production at affordable unit cost." Sure, Tesla was already well-established prior to opening any new factories, though two at a time in the midst of global chaos stands to be a monumental challenge.

Musk and Diess seem to have mutual respect for one another. In fact, the Tesla CEO recently called Volkswagen second only to Tesla when it comes to EVs.

With all of that said, it's difficult right now for CEOs, analysts, and investors to forecast what lies ahead. Ever since the COVID-19 pandemic struck across the globe, there have been obstacles making it difficult for almost all automakers to guarantee the success they had just a few years back.

Diess remains confident, however. He believes there are signs that the chip shortage could begin to be less of a problem as soon as the middle of this year, which isn't far off. He didn't say that it will go away, but he did say supply chains appear to be "getting in order again." The VW Group CEO explained:

“I would say that we would see an alleviation of this situation towards mid-year and second half we should be in better shape — if the situation is not getting any worse, which I don’t think so."