One of the biggest obstacles to the widespread adoption of electric vehicles (“EVs”) is price. Even though most developed governments have introduced federal tax relief to make EVs more affordable, they are still too high priced for a large chunk of the population. While automakers like Tesla and BMW seem to be catering to customers from a higher tax bracket, Volkswagen AG (OTC: VWAGY) is committed to making electric vehicles that can be afforded by the average consumer.
Volkswagen’s generation of affordable EVs, denoted by names starting with “ID”, allows customers who traditionally wouldn’t have been able to afford an electric vehicle to become EV drivers. The first of these models, the Volkswagen ID.4, is due to arrive in the U.S. by the end of this year and according to the automaker, is not meant to compete with Tesla Inc.’s (NASDAQ: TSLA) Tesla Model Y. Volkswagen is looking to corner the crossover SUV segment by offering alternatives to models like the Honda CR-V, the Toyota RAV4, or the Chevrolet Equinox.
“While we certainly looked to Tesla for the inspiration or the customer experience, we’re certainly not looking to their customer base as our playing field,” says Volkswagen of America Executive Vice President of Sales and Marketing Duncan Movassaghi. He says that the ID.4 will offer a lot of what Tesla offers but at a much lower price point, with the automaker looking to position the model as the EV of choice for the 4 million Americans who buy a vehicle from the crossover SUV segment.
It is one of the fastest-growing and best-selling segments of the American auto market. “We’ve got a car which is not a compromise, which really, in terms of its styling, its driving, its packaging, and importantly its price really works for the average American. If you’re driving a RAV4, if you’re driving a CR-V, this car is a great alternative,” Movassaghi says.
Volkswagen of America formed a sub-council with dealers, which helped subsidize market costs, and planned out how each store will allocate the cars, as well as staffing each with an EV expert. Customers will be able to initiate the purchase process online before heading off to the dealership to complete the final details and/or for delivery. You will first pay a $100 deposit to reserve the ID.4 followed by an additional $400 deposit when you build and spec the vehicle. Both of the deposits will be refundable.
It would be interesting to learn how other EV makers will respond to the move played by Volkswagen.
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