German legacy automaker Volkswagen reportedly plans to develop a low-cost model under $35,000 in the US or Mexican market, Reuters reports.
The announcement came from Volkswagen Group America’s Head of Strategy during the Reuters Events Mobile Automotive USA 2023 conference.
Plan details
Head of Strategy Reinhard Fischer recently disclosed Volkswagen Group America’s plans to launch a new model with an attractive price of only below $35,000 as it seeks to compete with industry leader Tesla.
“We are not scaling back plans for EVs in the US market.”
Reinhard Fischer, Volkswagen Group America’s Head of Strategy
The German automaker expects the planned electric vehicle to arrive in 3 to 4 years. According to Automotive News, its options apparently include existing Volkswagen factories in Chattanooga, Tennessee, Puebla, Mexico, and the new South Carolina assembly plant.
Apart from this, it also announced plans to source the model’s battery packs in the US to access the IRA’s up to $7,500 tax credits.
In hindsight, the automaker already declared that it will have a battery cell production in Canada to secure sufficient supply for its current and next-gen EV offerings produced in North America.
VW’s US portfolio
According to Electrek, Volkswagen is already selling the all-electric ID.4 to the US market. It currently offers eight various trims for the e-SUV with a base price of $38,995.
The 209-mile Standard trim is the sole offering that sells for under $40,000. Meanwhile, the 275-mile Pro trim starts at $43,995.
VW aims to launch the all-electric minibus ID.Buzz in 2024. The company has not yet revealed the pricing, but the industry anticipates the model to have a base price of approximately $60,000.
The company’s flagship model, VW ID.7, is also expected to be available at US dealerships as early as next year. In Europe, the model starts at $62,000.
In comparison, the Tesla Model 3 now starts at $38,990 with a maximum 272-mile driving range. Meanwhile, the 260-mile Model Y has a base price of $43,990.
Considering these prices, VW really needs to have an affordable model in its US lineup to compete with Tesla.
If the upcoming sub-$35,000 succeeds in qualifying for the $7,500 tax credits under the IRA, customers can purchase it for about $27,500. It still excludes other state incentives that it can potentially access.
BEV sales results
EV-a2z previously reported that VW’s global all-electric vehicle sales surged 45% YoY to 531,500 units in the January to September period. This notable sales growth boosted the BEVs’ share to 7.9% of the company’s total vehicle deliveries in the same period, up from just 6.1% in the same period last year.
Launching a competitively priced model is crucial for Volkswagen to achieve its target of having BEVs account for 50% of its overall car sales in the US by 2030. It will also aid the company in catching up with its rivals in the US, particularly Tesla.
