At the end of the 2023 quarter, a new version of the ID.3 electric compact car will be sold for less than 40,000 euros, which is 3,000 euros less than its current price, according to the group’s announcement this week.
German consumers will be able to buy an ID.3 for the same amount as the Y model – the cheapest – of Elon Musk’s brand, which has shaken up the entire automotive sector by cutting its prices in recent months, sometimes by up to 20%. Tesla has multiplied its sales by 10 in Germany in January.
During the year 2022, the Volkswagen group was the leader in electric sales in Europe, with 352,000 vehicles sold, but Tesla has delivered 1.31 million cars worldwide against 572,100 for the German rival.
“Volkswagen has taken the measure of the threat,” comments Ferdinand Dudenhöffer, an expert in the automotive sector, according to which the group had “no choice but to respond” to the dumping of the American manufacturer.
Ferdinand Dudenhöffer says that the other brands of the group and the rest of the German manufacturers will also have to enter this “price war” to defend their place in the battery-powered car market, even if it means cutting back on their margins for a while.
Volkswagen’s CEO Oliver Blume has so far ruled out any generalized price cuts for electric cars, and the issue is bound to come up again at the group’s detailed earnings presentation on Tuesday, March 14.
On the other hand, Tesla is not alone in competing with the leading European carmaker in its race to electrify. Convincing Chinese drivers to drive ID.3s, Audi e-trons and battery-powered Porsche Taycans is Volkswagen’s other priority.
For several years, the Chinese giant has been moving at high speed towards all-electricity, and Volkswagen is running the risk of being overtaken in its main market. China currently accounts for some 40% of the group’s sales, and most of its sales are of traditional engines, which last year gave it a 16% share of the country’s automobile market.
Clearly, Volkswagen does not have good figures: in 2022, the VW brand of the group obtained only 2.4% of the market share, far behind Tesla (7.8%), the Chinese BYD (16%) and a host of other Chinese manufacturers, according to official Chinese data cited by the German business daily Handelsblatt. Mercedes and BMW did not reach the 1% threshold.
“In the world’s largest car market, German manufacturers have so far lagged behind local brands,” says expert Stefan Bratzel in his annual report on electromobility. Of the more than 5 million electric vehicles sold in China last year, Volkswagen’s sales did not exceed 155,700 units.
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