Volkswagen’s Electric SUV Ignites New Challenge for Tesla

On Wednesday, Volkswagen AG’s subsidiary disclosed its ID.4 electric sport utility vehicle along with a pricing strategy focused on starting a new front in competition with Tesla Inc. and other automakers.

Fighting Performance with Price!

The ID.4’s driving range is less than as compared to Tesla’s Model Y electric compact SUV, which provides more than 300 miles (483 km) with one charge.

However, Volkswagen is hoping to fight that by offering the ID.4 at a lower price than Tesla’s Model Y. Customers can further leverage from federal and state electric vehicle subsidies for which Tesla no longer qualifies.

The ID.4 will initially be launched at a price of $39,995 and will be about $5,000 less expensive once the company starts building it in the United States, according to Volkswagen.

By comparing the two contenders, Tesla’s Model Y is priced at $49,990, the Model X SUV is priced at $79,990 and its lowest-priced Model 3 sedan comes at $37,990. Elon Musk, Tesla’s CEO, on Tuesday, said he is focusing on building a $25,000 electric car; however, that is expected to happen three years from now.

The ID family is a vital part of the Volkswagen brand’s ambitious plan to manufacture 1.5 million electric vehicles a year by 2025. In the U.S. market, the ID.4 also is focused on getting Volkswagen back on the shopping lists of consumers turned off because of the brand’s diesel emissions cheating scandal.

First at this Price Point!

The ID.4 is going to be the first electric compact SUV that can come for around $35,000. Focusing on an increased-volume segment and the average price level of vehicles sold in the U.S. market, Volkswagen of America chief Scott Keogh told Reuters.

“We want volume,” Keogh said.

Integrated with three years of free charging on its Electrify America network, Volkswagen dealers are going to be able to provide the ID.4 for thousands of dollars less than a typical Tesla Model Y.

“We wanted to make sure not only do we have sufficient range, but do we have the price point?” Keogh said.

The ID.4 release will also test Volkswagen’s U.S. dealers. The automaker is asking them to invest in charging stations and other infrastructure and aiming at building online selling capability for electric vehicles.

Assembly will Begin from 2022

The ID.4, which is expected to be assembled in the United States beginning from 2022, is part of a family of electric vehicles anticipated to consist of a reincarnation of VW’s popular Microbus van.

“I want a volunteer army, not a draft army,” Keogh said, explaining his message to dealers at a meeting in Chattanooga, Tennessee, last November. Nearly every U.S. dealer of VW has agreed to make the required investments, he claimed.

John Luciano, head of Volkswagen’s U.S. dealer council, stated that dealers who leverage on the automaker’s subsidies for advertising costs can offset investments in charging infrastructure and other equipment.

“If you really pay attention, you can do it at almost no cost,” said Luciano, who owns Volkswagen and Toyota stores in Amarillo, Texas.

“How many will I sell? I don’t know,” Luciano said of the ID.4. “We have been getting calls for years about the van.”