Frankfurt – German giant volkswagen is poised to follow Tesla’s lead with a high-profile price drop as the battle for global dominance a la electric car The segment is intensifying and local challengers are making headway in the key market of China.
A new version of Volkswagen’s ID.3 electric car model will go on sale at the end of March for just under 40,000 euros ($42,000), the VW brand announced this week.
This is a reduction of 3,000 euros compared to the current ID.3 price, placing it on par with the popular Model Y from North American rival Tesla.
Industry insiders see the move as a direct response to several rounds of price cuts by the Elon Musk-owned company in recent months, including discounts of up to 20 percent in Europe and the United States.
In Germany, Tesla sales soared more than 900% year-on-year in January as a result, making it the country’s best-selling electric car that month.
While the 10-brand VW Group was Europe’s top e-car maker in 2022 with 352,000 vehicles sold, Tesla’s bold cuts have forced the German firm’s hand, said industry analyst Ferdinand Dudenhoeffer.
“Volkswagen sees how big the threat from Tesla is,” he told AFP.
The automaker “will have no choice” but to enter a “price war” to defend its place in the hotly contested market for battery-powered vehicles, even if it means profit margins will be hit for a while .
CEO of the VW Group Oliver Blume He has so far ruled out a general drop in prices across all e-cars, but the issue will come up strongly when the group presents its 2022 financial results on Tuesday.
But Musk isn’t VW’s only headache. In China, the world’s largest car market, the electrification of the industry has kicked into high gear and VW is fast falling behind domestic competitors.
China’s challenge: The Asian giant currently accounts for around 40% of VW Group sales, mainly vehicles with traditional internal combustion engines, giving it a 16% market share in China.
But in the electric car segment, the Volkswagen brand has managed a market share of just 2.4 percent, behind Tesla with 7.8 percent and China’s BYD with 16 percent.
A slew of other Chinese automakers including Wuling, GAC and Chery are also outperforming VW, according to data compiled by financial newspaper Handelsblatt.
Fellow German automakers Mercedes-Benz and BMW fare no better in China, their electronic models each having a market share of less than one percent.
“In the world’s largest car market, German manufacturers have lagged behind local brands,” industry expert Stefan Bratzel said in his annual report on electromobility.
Of the more than five million electric vehicles sold in China by 2022, VW accounted for just 155,700.
– Jam-packed entertainment: “The days when traditional German carmakers could take their market shares (in China) for granted are gone,” he said. Gregor Sebastiananalyst at the Mercator Institute for China Studies.
“In Germany, driving performance remains a key factor” when customers choose a new car, he said.
“But in China, where many people spend much of their driving time stuck in traffic jams and value new technology very much, car interaction with the smartphone and overall connectivity is more important,” he added. .
VW’s China boss Ralf Brandstaetter said the group needed to make cars “in China, for China” if it wanted to increase electronic sales there and do so faster.
“The Chinese develop a new car in two and a half years. It takes VW just under four years to do it,” he recently told German newspaper Sueddeutsche.
A new version of Volkswagen’s ID.3 electric car model will go on sale at the end of March for just under 40,000 euros ($42,000), the VW brand announced this week.
This is a reduction of 3,000 euros compared to the current ID.3 price, placing it on par with the popular Model Y from North American rival Tesla.
Industry insiders see the move as a direct response to several rounds of price cuts by the Elon Musk-owned company in recent months, including discounts of up to 20 percent in Europe and the United States.
In Germany, Tesla sales soared more than 900% year-on-year in January as a result, making it the country’s best-selling electric car that month.
While the 10-brand VW Group was Europe’s top e-car maker in 2022 with 352,000 vehicles sold, Tesla’s bold cuts have forced the German firm’s hand, said industry analyst Ferdinand Dudenhoeffer.
“Volkswagen sees how big the threat from Tesla is,” he told AFP.
The automaker “will have no choice” but to enter a “price war” to defend its place in the hotly contested market for battery-powered vehicles, even if it means profit margins will be hit for a while .
CEO of the VW Group Oliver Blume He has so far ruled out a general drop in prices across all e-cars, but the issue will come up strongly when the group presents its 2022 financial results on Tuesday.
But Musk isn’t VW’s only headache. In China, the world’s largest car market, the electrification of the industry has kicked into high gear and VW is fast falling behind domestic competitors.
China’s challenge: The Asian giant currently accounts for around 40% of VW Group sales, mainly vehicles with traditional internal combustion engines, giving it a 16% market share in China.
But in the electric car segment, the Volkswagen brand has managed a market share of just 2.4 percent, behind Tesla with 7.8 percent and China’s BYD with 16 percent.
A slew of other Chinese automakers including Wuling, GAC and Chery are also outperforming VW, according to data compiled by financial newspaper Handelsblatt.
Fellow German automakers Mercedes-Benz and BMW fare no better in China, their electronic models each having a market share of less than one percent.
“In the world’s largest car market, German manufacturers have lagged behind local brands,” industry expert Stefan Bratzel said in his annual report on electromobility.
Of the more than five million electric vehicles sold in China by 2022, VW accounted for just 155,700.
– Jam-packed entertainment: “The days when traditional German carmakers could take their market shares (in China) for granted are gone,” he said. Gregor Sebastiananalyst at the Mercator Institute for China Studies.
“In Germany, driving performance remains a key factor” when customers choose a new car, he said.
“But in China, where many people spend much of their driving time stuck in traffic jams and value new technology very much, car interaction with the smartphone and overall connectivity is more important,” he added. .
VW’s China boss Ralf Brandstaetter said the group needed to make cars “in China, for China” if it wanted to increase electronic sales there and do so faster.
“The Chinese develop a new car in two and a half years. It takes VW just under four years to do it,” he recently told German newspaper Sueddeutsche.
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With VW expecting China to make major advances in self-driving in the near future, the German group said last year it was partnering with Chinese AI chip specialist Horizon Robotics to accelerate the development of technologies of intelligent driving.
And even with all the changes sweeping the industry, German automakers’ reputation remains a trump card in China, Sebastian said.
“The competition is tough,” he said. “But German carmakers like Volkswagen have more than 80 years of experience building cars for different markets and customers, that will give them an advantage.”
