Times are changing in the automotive industry when traditional automakers begin to view disruptors—such as Tesla—as true competitors. The latest such comments come from the world's largest automaker by sales: Volkswagen Group.

Volkswagen brand CEO Herbert Diess told Reuters it officially views Tesla not as an underdog, but a legitimate competitor. Not only that, but he alluded to the electric-car maker as a true threat. Asked about Volkswagen's direct competitors, he replied, "In the old world it is Toyota, Hyundai, and the French carmakers. In the new world, it is Tesla." This is despite Volkswagen selling close to 6 million cars last year. How many cars did Tesla sell? About 76,000.

The chief executive went on to say Volkswagen lacks abilities that Tesla currently possesses. Specifically, Tesla operates an expansive network of electric-car charging stations, produces good electric motors, and has begun to dabble in self-driving technologies with Autopilot. Clearly, Volkswagen is a tad envious, based on these comments. The brand continues to reinvent itself following VW Group's disastrous diesel scandal, still unfolding after two years. From now on, diesel is dying and electric powertrains will rule the future at VW Group.

Part of the reinvention will be an onslaught of new electric cars coming by the end of this decade, with a major focus on Europe and China. The U.S. market will be treated to electric cars as well, but a leaked product roadmap pegs the U.S. as more of a late adopter. At least three electric VWs should eventually arrive in the U.S., however.

Diess closed by saying the brand "deliberately" continues to measure itself against Tesla and that it must "significant improve" on multiple facets to take on the ever-shifting auto industry. Tesla is no laughing matter these days.