In a July 13 interview with German automotive publication Automobil Produktion, VW’s chief of corporate strategy Thomas Sedran said the German automaker is preparing to launch within the next few years an all-electric Volkswagen ID model that could be as cheap as $27,000 before incentives.
That’s $8,000 less than the expected starting price of the $35,000 Model 3, which had its first delivery to CEO Elon Musk earlier this month.
VW is playing into being one of the largest automakers in the world, with all the economic benefits of mass-market production and the global sales network that Tesla lacks. In May, VW brand chief Herbert Diess played off that advantage and challenged to beat the Model 3 in sales.
Sedran’s assertions of the $8,000 lower price comes from VW’s long history of selling cheap cars for years at high-production volumes.
Another piece of the pricing puzzle will come from the cost of li-ion batteries, which VW has little control over.
Tesla is counting on reducing costs at its Nevada Gigafactory battery plant – from between the current market average of around about $172 to $229 per kilowatt-hour to less than $115.
VW is still years away from rolling out its ID all-electric vehicles such as the sedan, microbus, and crossover SUV versions revealed over the past year. Earlier this year, the automaker indicated it may have to covert over existing plants to manufacture lithium-ion batteries to be cost competitive.
Tesla is preparing to get its Nevada battery plant and Fremont-Calif. vehicle manufacturing plant up to scale by the end of the year. The company wants to produce 500,000 new vehicles starting next year, and is considering acquiring more property overseas for battery and vehicle production.