VW to Elon: Mass producing electric cars is easy. We’re making 50 million.
News | 12.11.2018
Volkswagen wants the world to know it’s going all-electric. The German company’s chief executive Herbert Diess told the automotive press the VW’s new electric-car platform is designed to produce 50 million vehicles over the next several years (though the company hasn’t given a specific timeline), according to AutoBlog. To put that in perspective, VW sold 10.7 million vehicles last year.
The company has already broken ground on an electric-car factory in China and secured a battery source for 50 million cars, Diess told Automotive News in an interview published Nov. 12. “I think we have the best setup strategy for the electric vehicles to come,” Diess said.
Tesla continues to decimate the competition in its category, and even outside it. The Model 3 was the best-selling electric car in the US during the third quarter of 2018, and the fifth-best selling sedan overall. With the Model S and Model X, Tesla holds three of the top four spots among best selling electric cars.
Major automaker can no longer employee a wait-and-see strategy on electric cars. While Tesla remains small, it is eating into sales of conventional vehicles. Earlier this year, Tesla reportedly outsold Mercedes-Benz in the US for the first time, according to Atherton Research. Now, Tesla is racing to compete with VW, Toyota, GM, Ford, and others outside its luxury niche.
But automakers are starting to flex their mass-production muscle, and the economics in the lower price range are unforgiving. Profit margins on premium sedans and SUVs priced around $100,00 give Tesla room to maneuver if its production processes aren’t hyperefficient. But there’s far less wiggle room at the $35,000 base price Tesla has promised for its mid-range sedan, the Model 3. At the moment, the base purchase price for a Model 3 is still $45,000.
VW understands that, and aims to take the wind out of Tesla’s sails (and sales) by offering its entry-level EV for less than €20,000 ($23,000). VW is voting this week (paywall) whether to accelerate its EV production timeline, while moving some labor-intensive assembly of internal combustion engines out of Germany into the Czech Republic, where labor is cheaper. Meanwhile, electric cars will continue to be assembled in Germany. If VW moves forward with those plans, it will signal a true philosophical shift for the company away from internal combustion engines—the first commercial versions were invented in Germany—to electric vehicles.
The first model in VW’s new “ID” electric series will debut by early 2020.