Volkswagen rallies as much as 8.8% as investors buy into its plans to rival Tesla for electric vehicle dominance

• The car manufacturer climbed as much as 8.8% on Wednesday, reaching its highest level since 2008.

• Volkswagen announced plans to build battery factories across Europe and invest in software development.

• The company aims to overtake Tesla as the leading electric car manufacturer.

German car manufacturer Volkswagen rose by as much as 8.8% on Wednesday, extending the gains made the day before when it unveiled its plans for expansion in the electric vehicle market that could make it the world's leading producer.

Shares were up as much as 8.8% at one point, at 291 euros ($346), their highest since November 2008 and set for a 25% gain so far this week. Volkswagen's US-listed shares closed 10% higher on Tuesday.

At its "Power Day" on Monday, Volkswagen said it would build six electric vehicle battery factories across Europe and produce predominantly electric cars by 2030. This has triggered a surge in the value of its shares.

Volkswagen also stated it could significantly reduce battery production costs, which in turn would drive down electric vehicle retail prices, and invest into building an electric vehicle software infrastructure to be used across all of its brands.

Disruption in supply chains through factory closures, manufacturing interruptions and delivery delays have put pressure on the car manufacturing industry throughout the pandemic.

By shifting its focus towards electric vehicles over the past year and effectively emulating Tesla's strategy, Europe's largest carmaker has gained back a significant amount of ground. Volkswagen shares have risen by 180% since the market crash in March last year.

The company is aiming to dethrone Tesla as the global leading manufacturer of electric vehicles: "Our goal is to secure a pole position," said Herbert Diess, CEO of Volkswagen, on "Power Day".