Volkswagen aims for sub-$35,000 EV in the U.S.

Key Points

  • 🚗 Volkswagen plans to launch an electric vehicle in the U.S. costing less than $35,000 within the next 3-4 years.
  • 💰 In Q3 2023, EVs constituted 7.9% of the U.S. market, setting a record; however, price remains a barrier for some potential buyers.
  • 🌐 Volkswagen aims to address this by offering an affordable EV to boost sales and demand in the U.S. market.
  • 🔋 The company plans to localize battery pack assembly to qualify for the Inflation Reduction Act incentives, making the EV eligible for the full $7,500 tax credit.
  • 🔄 VW remains committed to expanding its EV efforts in the U.S. market and has no plans to scale back, unlike some other legacy automakers.
  • 🛠️ Despite past struggles, Volkswagen has introduced competitive EVs like the ID.3 and ID.4, targeting segments similar to Tesla’s Model 3 and Model Y.
  • 🌍 The move aligns with the broader trend among automakers to offer widely affordable EVs to a larger consumer base.

Volkswagen is aiming to bring an electric vehicle to the U.S. market that will cost less than $35,000, and it plans to launch it within the next 3-4 years.

In the U.S., EV adoption has grown significantly over the last few years. In Q3 2023, EVs made up 7.9 percent of the total market share, marking a new all-time record for the U.S.

However, there are still plenty of car buyers who have no intentions of buying an EV, and price is still a big issue for people moving forward, although they have come down substantially.

Many automakers are attempting to offer EVs that are widely affordable and will not break the bank for those who are interested. General Motors has its Chevy Bolt EV that hit a sub-$30,000 price tag, and Tesla is moving toward $30,000, but only after federal and state incentives.

Volkswagen has struggled with its EV efforts in terms of software, but since then, it has offered some competitive EVs, including the ID.3 and ID.4, which share segments with the Model 3 and Model Y, respectively.

However, the German automaker has not tasted the success it expected, and sales have been relatively underwhelming. It feels that in the U.S., a more affordable EV option for consumers will perhaps help to surge sales and demand.

At the Reuters Events Automotive USA 2023 conference in Detroit, Senior VP and Head of Strategy at Volkswagen Group of America Reinhard Fischer said that Volkswagen will do exactly that.

The company will not only build an EV that costs less than $35,000, but it also plans to localize the assembly of battery packs to qualify for Inflation Reduction Act incentives, helping the car qualify for the full $7,500 tax credit.

Some EVs have only qualified for half of that amount because they are not completely assembled in North America. For 2023, only 50 percent of the vehicle’s battery must be assembled or manufactured within North America.

This requirement increases by 10 percent annually until 2029, when the entire battery pack must be assembled and manufactured in North America to receive half of the $7,500 credit.

There was some speculation on whether VW would start to slow down its EV efforts as many legacy automakers have struggled with scaling their production, resulting in huge financial losses.

Fischer said that VW had no plans to scale back EVs in the U.S. market.

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