Volkswagen shuns EV price war

VOLKSWAGEN Australia says it is not going to enter a price war against Tesla when it launches its first EV models in a few months.

The VW ID.4 is the first electric model to arrive, with pre-orders opening in July and pricing expected in the next few weeks, but the company has already said it will not entertain the idea of cutting its entry price just to compete with the recently reduced Tesla Model Y.

The Chinese-made, US-branded EV SUV now starts from just $55,900 plus on-road costs for the entry-level RWD model, undercutting all other players with midsize SUVs despite offering a pretty extensive range of equipment for the money.

“We’re not going to get into a price war,” said VW Australia passenger vehicles general manager of marketing and product Ralph Beckmann.

“The brand never has, it never has competed on price, it’s a competition on value.

“We need to get this price right, and this is very much a high focus from the brand. The timing - as it stands - we will have cars with customers in quarter four, and the car will go on pre-sale in the middle of this year.

“The key point here is to land these cars at a sustainable, strong price point that we can keep in market. The last thing we want to do is launch at a price point and then, two months down the track, have to react and discount it significantly, like we’ve seen in the industry in some cases.

“And it’s really paramount for us to protect our customers who are buying this product and their residual value for the future to make sure this is not destroyed in price point variations and so forth.

“What we’re bringing with ID – and you will see when we announce the pre-sale in a bit more detail, is (we’re launching) with a far more comprehensive package than just the product.”

In part, Mr Beckmann was referring to a collaboration with Ampol Australia, in which VW Australia will offer discounted fast-charging as well as tailored home-charging solutions for single- and three-phase households.

“There’ll be some other kinds of solutions that we will be offering, so it’s a value proposition rather than entering a price war,” he added.

It is worth pointing out that VW hasn’t yet confirmed its final specs or details on the ID.4, so pricing will no doubt be commensurate with the gear on offer in the EV model range.

But it must be noted that Tesla has an advantage in that the Model Y is built in China, which means lower costs of production, and lower shipping costs than VW’s German-built ID.4. There is also the fact that the Model Y is physically bigger, so for those after as much electric SUV as they can get for the money for their family, it has a very, very strong case to argue.

VW Australia product and PR communications manager, Daniel DeGasperi, said there is another cost when it comes to cutting the price of EVs as Tesla and other brands are right now, and it comes out of the wallet of consumers. 

“When manufacturers discount, you often hurt your most loyal buyers, and you really slash resale values significantly,” he said.

“So, you’ve got to - as far as possible - future proof your business by putting in really good price points.

“And that’s why we’re not here today telling you ID.4 pricing, because there is always an opportunity to do better with the pricing, and that’s what we want to do before we announce it.

“July is when people can buy it”, he said, noting that it is expected that the brand will continue to hold its cards close to its chest until then.

On the flipside of VW, Kia Australia has stated its intent to target Tesla’s Model Y in the EV SUV segment with its new EV5 family SUV, which has been tipped to slot in under $60,000 when it launches in the next month or so.