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Harley Lover

Tesla and Volkswagen to compete with new affordable electric cars at ~$25,000 to $30,000

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In Europe, that is. First came Tesla:

Quote

In September, Tesla announced that it will make a new smaller long-range electric car with its new battery technology starting at $25,000.

CEO Elon Musk commented in the announcement:

Tesla will make a compelling $25,000 electric vehicle that is also fully autonomous.

Musk also added that the new $25,000 electric car is going to come to market in about three years, when Tesla has ramped up production of its new battery cell.

It appears that VW is responding to this move by Tesla, for which I commend VW - it appears they feel duty bound to protect their market beachhead in Europe, and view Tesla's move into the 'affordable' car area as an existential threat:

 
Volkswagen is accelerating plans to launch a full-electric small car that will be positioned below its ID3 compact hatchback. The entry-level EV will replace the Up minicar and potentially the Polo, company sources told Automotive News Europe. The car will be based on VW's MEB platform like the ID3. It will start at around 20,000 euros ($23,840). It could be called the ID2 with a smaller version called the ID1, German press reports said. VW has set up a Small BEV (Battery Electric Vehicle) project team to work on the Polo-sized model, which would go on sale in 2023 at the earliest. To save costs the EV could use more affordable, less energy dense lithium iron phosphate cells.

 

Edited by Harley Lover

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How are they going to make a profit on a $25K vehicle when they can’t make a profit on $50k vehicles?  Also - 3 years is a long time.  

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Just now, akirby said:

How are they going to make a profit on a $25K vehicle when they can’t make a profit on $50k vehicles?  Also - 3 years is a long time.  

 

I can only go by VW's reaction - they see this as something they can't play wait and see on in their home market, so they are accelerating their time table to bring the product to market. I'm not passing judgement on the soundness of the decision - just showing folks what is going on. 

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If EV advocates really want the electric market to take off, this is exactly what they need, an affordable BEV vehicle.  But, as pointed out, three years is a long way off.  

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4 hours ago, akirby said:

How are they going to make a profit on a $25K vehicle when they can’t make a profit on $50k vehicles?

 

Don't know about VW's profitability on its current BEV, but Tesla Model 3 is solidly profitable. Sandy Munro said in 2019 that even the base $35k model (no longer available) "can hit an 18 percent gross margin from the Fremont factory". With the advancements that Tesla has made since then in battery technology and manufacturing efficiency, Tesla should easily be able to mass produce a $25k BEV profitably in the next 3 years.

 

Sandy Munro's Tesla Deep Dive - Autoline After Hours 447 - YouTube

 

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3yrs....about mall cruiser bronc time frame...tesla has magic beans which ford wishes it had

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6 hours ago, Harley Lover said:

 

I can only go by VW's reaction - they see this as something they can't play wait and see on in their home market, so they are accelerating their time table to bring the product to market. I'm not passing judgement on the soundness of the decision - just showing folks what is going on. 


They can’t afford to ignore Musk regardless of the veracity of his claims.  It’s a good goal and any full line automaker has an advantage by subsidizing BEVs with continued ICE profits if necessary.

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1 hour ago, rperez817 said:

 

Don't know about VW's profitability on its current BEV, but Tesla Model 3 is solidly profitable. Sandy Munro said in 2019 that even the base $35k model (no longer available) "can hit an 18 percent gross margin from the Fremont factory". 


Gross profits are meaningless if you can’t turn a net profit.  Engineering, design and testing aren’t free.

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Didn't Tesla silently kill off the $35K Model 3 because they couldn't make $$$ on it?

 

They planning on coming out with a street legal golf cart?!

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22 minutes ago, silvrsvt said:

Didn't Tesla silently kill off the $35K Model 3 because they couldn't make $$$ on it?

 

They planning on coming out with a street legal golf cart?!

 

The implication seems to be continued reduction in battery costs, including the adoption of improvements from its acquisition of Maxwell last year. Again, the story isn't just what Tesla says its going to do, the story is VW's response to Tesla's plan - to accelerate its own vehicle in this price range for intro "as early as 2023".

Edited by Harley Lover

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Is the VW taking the tax credit into account? If not that could be huge. 

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4 hours ago, sullynd said:

Is the VW taking the tax credit into account? If not that could be huge. 

 

This is in Europe.

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On 11/28/2020 at 7:37 AM, silvrsvt said:

Didn't Tesla silently kill off the $35K Model 3 because they couldn't make $$$ on it?

 

They planning on coming out with a street legal golf cart?!

 

They killed it because no one wanted it. Very few Model 3 owners ordered the basic model.

 

The small Tesla model is a competitor for VW's upcoming ID.2 - a Ford Fiesta/VW Polo/Honda Fit size car (B-segment).

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2 hours ago, bzcat said:

They killed it because no one wanted it. Very few Model 3 owners ordered the basic model.

 

Yes sir bzcat. Model 3 Standard Range Plus is a much better value than the now discontinued $35k Model 3 Standard Range. For $2,990 extra (base price of $37,990) the Plus model adds 43 miles of range (263 mi. vs 220), fog lamps, 12-way power heated front seats, 14 speaker premium audio system, and some other amenities.

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