Volkswagen ID.3 achieves major cost reductions

Battery costs roadmap by Volkswagen

According to Herbert Diess, the chairman of the board of management of Volkswagen, the ID.3 is 40 % cheaper to build than the e-Golf.

The Volkswagen ID.3 uses the new MEB platform, exclusively made for electric cars, while the Volkswagen e-Golf uses the hybrid MQB platform made to allow multiple powertrains.

“If you focus on an electric platform, all in all it accounts for a 40% reduction against the predecessor electric Golf. Most of it from cells and the battery system. Around 5-10% comes from dedicating an entire plant to electric vehicles”.

 

This means that if the Volkswagen e-Golf is now profitable when sold for 31.900 euros in Germany, the Volkswagen ID.3 would also be if sold for 19.140 euros…

Now, before you start jumping around in joy thinking that the Volkswagen ID.3 will be at least 40 % cheaper to buy than the e-Golf wait a minute. With electric cars costs and prices are only remotely related. For example the same Volkswagen e-Golf that in Germany is priced for 31.900 euros, in Portugal costs 42.904 euros

The truth is that automakers first decide how many electric cars they want to sell (globally or in a specific market) and then calculate for how much they can sell them to maximize their profits. With limited production/supply, prices are inevitably high, regardless whether costs are high or not.

Unfortunately, regarding electric cars legacy automakers still operate as cartels and cooperate to reduce market competition. Just like the OPEC (Organization of the Petroleum Exporting Countries) cartel operates. The price is calculated after they decide how many oil barrels they want to produce and export, it has nothing to do with costs.

On the bright side, more demanding emissions regulations starting already next year in the EU (European Union) force a production increase of electric cars, this alone will inevitably make them more affordable.

 

 

More info:

https://www.reuters.com/article/us-volkswagen-electric/vw-ceo-says-new-id-3-car-40-cheaper-to-build-than-electric-golf-idUSKBN1XS1BN

This Post Has 8 Comments

  1. Let’s hope they get many orders 😅

    1. I am not sure that that is in our best interest, if they sell less than expected they will have to lower the price. We can at least see that it is possible to lower the price.
      Pedro: What is the expected price of the ID.3 in Portugal?

  2. This is great news that automakers are openly saying this now, and great that VW has managed to get their costs down so quickly. They will, like you said, sell every one they make. Even if VW isn’t lowering their prices as much as they could, they are still going lower than their competition, aren’t they? Which means they’ll be pushing the market to also lower their prices, otherwise the ID.3 will quickly eat up market share. It’s like they’re getting ready to break with the peloton. The first manufacturer that really undercuts their competitors will be the one making the actual break.

    If MG can really manufacturer as many ZS EVs as they say, they are also going to push prices down for their competition.

    Nissan, Kia, Hyundai, PSA, etc. are really going to have to get on it to catch up. and BMW is just hoping they can ride this out with PHEVs.

    1. When the base model expected to cost under 30.000 euros arrives in 2021 and the annual production reaches the planned 330.000 vehicles, it’ll make a difference.
      Moreover, the Tesla Gigafactory 4 in Europe is expected to start Model 3 and Model Y production in 2021. In 2022 electric cars will start to become mainstream.

      1. double thumbs up!

  3. Knowing this the EU should tighten the screws really quickly. Car makers went ballistic in the past claiming they were losing money on every EV, something I have always strongly rejected because the numbers told differently, Now we know for sure that VW can churn out ID3s at mainstream prices, so the EU should just up the ante and force car makers to put EV’s on the market with max price for a baseline model of X for each segment, or just tighten the emissions regulations to force more EV sales.

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