I don’t know what substance the executives over at Wolfsburg have been vaping, but Volkswagen’s senior executives have this fantasy of delivering a £17,000 EV by 2027. At a world premiere just gone, Volkswagen revealed the ID 2All, a pure electric concept hatch with a design language clearly referencing the VW Golf. The vaping senior executives believe the ID 2All will retail for less than £25,000 when it launches in 2025. A pure fantasy. Secondly, VW revealed its master stroke, a relatively pocket-sized entry-level EV, the ID 1All, which will retail for £17K. Another vaping-induced fantasy price tag. The ID 1All will launch in 2027. Even VW brand executive Thomas Schafer says a sub £17K Polo-sized EV will be difficult to achieve.
VW has a modular EV platform at its disposal and is switching to lithium-iron-phosphate batteries to lower costs. They threw in the economies of scale to distract the uninformed, but it’s all marketing and vape induced fantasy economics at best. If I know a £17K EV will never come to pass, then VW knows it too, they even admitted as much to the press. To achieve the economies of scale holy grail VW will simply have to lower costs, increase production, and sell more.
Volkswagen isn’t selling enough of its current EV stock to pass on price reductions because the ID EV range was rushed into production based on outdated legacy car manufacturing blinkered logic. The price of an entry level VW ID 3 is £40K, the ID3 is inferior next to a similarly priced Tesla Model 3. However the biggest barrier to VW’s £17K EV fantasy is not the economies of scale, but the German economy.
Inflation caused by the USA led proxy war in Ukraine has cut off Germany’s access to cheap imported natural gas. Russian gas fueled Germany’s manufacturing industry and economy leading it to become the dominant power broker in the EU. As a result of the USA proxy war in Ukraine, Germany’s economic outlook is perilously on the precipice of contracting with whispers of a possible recession looming.
The proxy war in Ukraine, which Germany is part of, is a self-inflicted gunshot wound that will lead to a period of de-industrialization. While German industry weathered the storm of being deprived of cheap imported Russian gas, it faces another threat, the rise of China’s industrial base. China recently overtook Germany as the world’s second-largest car exporter.
China’s share of the global battery and electric-vehicle market increased to 28% in 2022 whereas the share of German companies such as Volkswagen fell from 7% to 4%. These are the facts Volkswagen must surmount if it is to ween itself off the vape induced fantasy of delivering a fantasy EV that will retail for £17K.