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17th of November 2018

Technology



VW CEO says electric car costs higher than expected, sees competition making progress

Volkswagen likely has more electric vehicles lined up in the next few years than any other automaker, but now the German automaker expects those cars to cost more than expected as it sees the competition making progress.

Chief Executive Officer Herbert Diess made the comment in an interview for the company internal newsletter (via Bloomberg):

“The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected. This is particularly so since some of our competitors have been making more progress.”

The CEO didn’t specify which automaker is making progress, but many of them are currently in a race to reduce electric vehicle prices.

The Renault-Nissan-Mitsubishi alliance CEO claims it is the ‘only carmaker making money selling electric cars’ and Tesla is aiming to be profitable by the end of the year.

VW wants to stay profitable even with the important increase of electric vehicles in its sales mix.

Diess said:

“We need higher profits to finance our future. Four percent is a minimum, 5 percent to 6 percent allow for some future investments and with 7 percent to 8 percent we’re crisis-ready.”

Limited battery supply is seen as one of the biggest cost risks, which is why VW already awarded $48 billion worth of electric vehicle battery contracts to support its plan to produce over 1 million electric vehicles per year by 2025 between all its brands.

Audi is going to be first with a next-generation EV and then a series of new vehicles are scheduled to come to market from Porsche, VW and other brands.

One of the most critical vehicles in terms of pricing is going to be the one based on VW’s I.D. Concept, which they plan to be mass-produced and “competitive with the Tesla Model 3′.

Electrek’s Take

This has been one of the main excuses of legacy automakers for not making electric cars: “they are too expensive to make and people don’t buy them.”

While this narrative is still alive, VW is at least acknowledging that it is not the case for everyone and therefore, they should be able to do it too.

There’s no secret to it. They need to mass produce EVs. That’s how you get the cost down. Legacy automakers have feared doing this because they didn’t see a demand for it, but that cannot be an excuse anymore after the demand that we are now seeing for a vehicle like the Model 3.

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