Volkswagen is making it clear it will not partake in the EV price war spurred by Tesla’s recent price cuts.
Is an EV price war on the horizon?
After Tesla slashed prices in China, the US, and the EU, across its lineup of electric vehicles, including a 20% discount on the Model Y, analysts predicted it would have a spillover effect on other BEV manufacturers.
We first saw it happen in China when EV maker Xpeng reduced prices by up to $5,300 on some of its most popular models shortly following the Tesla price cuts.
Although Tesla saw “unprecedented demand” as many stores hit new records following the cuts, it put essentially every other automaker (startups and legacy) in a spot to compete.
For example, Vinfast, a Vietnamese EV maker looking to establish a presence in the US, is offering a new special pricing promotion on its first model to make it to the states, the VF 8 City Edition, which will now start at $49,000 with an addition $3,000 direct discount off the MSRP.
Amid growing indications of an EV price war brewing, Ford also slashed prices on its ever-popular Mach-E electric SUV earlier this week. Marin Gjaja, chief customer officer for Ford’s EV unit, told Automotive News:
We have to compete. It’s a competitive marketplace, and it just got a lot more competitive because of what Tesla did. We’re not going to cede ground to anyone.
Volkswagen’s leader says the company will take a different route, sticking to its pricing strategy despite demand concerns.
VW not matching Tesla’s price cuts
According to VW CEO Oliver Blume’s recent statements, the automaker already has a pricing strategy in place and will stand by it.
Blume told German newspapers it would not partake in a price war with Tesla, stating:
We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands.
VW joins General Motors, which also announced it would not offer EV price cuts during its latest earnings release.
Instead of price cuts, VW will aim to achieve profitable growth to become a global EV leader. The automaker delivered around 330,000 ID.4 models in 2022, up 23%, and over 580,000 ID models since launching in 2020.
Top comment by Mike
GM and VW so far have always been priced well compared to Tesla. You could buy two new bolts for less than a Model 3. Comparable VW had always been cheaper than a Y so I dont see why they would cut prices, especially with lower margins. Tesla was the one that needed to drop prices with high margins and slowing demand for their products.
Volkswagen Group recently brought back former Bentley and Audi designer Andreas Mindt to help lead the company’s EV efforts and bring the company into the modern age.
Tesla’s price cuts are clearly having a profound effect on the EV market. As the EV leader continues to shatter expectations while continuously breaking electric vehicle delivery records, it’s making it difficult for other automakers to compete, especially with lower prices.
Tesla is lightyears ahead in terms of production capabilities because of its focus on zero-emissions EVs from the beginning; other auto manufacturers are now looking to catch up.
While Ford is cutting prices to compete, GM and VW are standing by their pricing strategies. We’ll see how the pricing battle plays out over the next few months.
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