Volkswagen announced the world premiere of the ID.2ALL concept, an electric vehicle that is expected to cost less than 25,000 euros. This has caused a stir in the industry as a vehicle priced so low seems too good to be true. Everyone has INSTANTLY gone into their ‘IT’S A TESLA KILLER MODE’ like chickens with their heads cut off
But NO ONE besides US is posing the KEY questions. HOW can Volkswagen make money on such a low-priced vehicle? And IF it’s successful, does it bastardize sales of their higher priced EVs?
The first thing to note is that the ID.2ALL is still a concept car and not a production model. It may take some time before it is available for purchase, and the final price may vary from what has been announced. However, assuming the car is produced and sold at the announced price, there are several ways VW COUL make money on it.
The first and most obvious way is through economies of scale. Volkswagen is one of the largest automakers in the world, and it has the capability to produce vehicles at a large scale. If VW can produce a significant number of ID.2ALLs, it can take advantage of economies of scale to reduce the cost of production. This would enable VW to keep the cost of the car low while still making a profit.
Another way VW could make money on the ID.2ALL is through the sale of optional extras. Even if the car is priced low, VW could still offer a range of optional extras that customers can purchase at an additional cost. These could include things like a larger battery, a better infotainment system, or more advanced safety features. By offering these extras, VW could increase the overall profit margin on the car.
Volkswagen could also make money on the ID.2ALL through government incentives. Many governments around the world offer incentives for the purchase of electric vehicles, such as tax credits or rebates. By pricing the car low, VW could make it more attractive for customers to purchase, which would enable them to take advantage of these incentives. This would ultimately benefit VW as it would increase the overall demand for the car.
Lastly, Volkswagen could make money on the ID.2ALL through the sale of carbon credits. As a manufacturer of electric vehicles, VW would be able to earn carbon credits, which could then be sold to other companies that are not meeting their carbon reduction targets. This would enable VW to earn additional revenue, which could offset any potential losses from selling the car at a low price.
While it may seem difficult to understand how Volkswagen could make money on a low-priced electric vehicle, there are several ways.
But we think there is a HUGE danger here and it is one the industry doesn’t want to admit. VERY few want a HIGH priced LUXURY EV. The only reason some have sold well up to this point is that people are LIMITED by choice.
We said it before and we’ll say it again. EVs at most are an APPLIANCE. There is no SEX or SOUL to them. The lions share of people yearning for them want something CHEAP that has long range. End of story. This is one of the key reasons Elon has DELAYED the low cost Tesla. HE KNOWS it will bastardize sales. So DELAY it as much as possible.
Message to VW. BE CAREFUL what you wish for….