VW hopes an aggressive pricing strategy will help it kick Tesla’s butt

Volkswagen I.D. concept
Ronan Glon/Digital Trends

Volkswagen is about to parachute into the market segment dominated by Tesla. The company has announced bold plans to embark on a huge electric car offensive in the coming years. Beating Tesla at its own game is easier said than done, though, and so the German giant plans to get the upper hand by undercutting its rival on price.

The first car detailed in the company’s product plan is a hatchback previewed by the I.D. concept (pictured) that made its debut last year at the Paris Auto Show. At the time, Volkswagen executives told us the model — which might not retain the I.D. nameplate — will replace the e-Golf when it makes its debut in about 2019. Thomas Sedran, the group’s chief strategist, told German trade journal Automobil Produktion the I.D. will cost anywhere between $7,000 and $8,000 less than Tesla’s hotly anticipated Model 3.

While Model 3 production began in early July, Tesla still hasn’t announced pricing information. We know, however, that it will start at approximately $35,000, meaning the I.D. will carry a base price of approximately $27,500. That’s before incentives are factored in, too. Depending on where you live and which incentives you’re eligible for, the price of an I.D. could drop to roughly $20,000. In comparison, the e-Golf currently starts at $28,995 before incentives.

Without incentives, the I.D. will be about $10,000 more expensive than a regular, gasoline-burning Golf. The incentives will run out sooner or later, but Sedran is hopeful the price of electric vehicles will drop as the technology experiences more productivity gains. At current prices, building a lithium-ion battery pack costs about 175 euros (about $200) per kilowatt-hour. Moving forward, that figure is expected to dip to below 100 euros (about $115). Sedran didn’t comment on when we will reach that point, however.

Volkswagen has revealed the I.D. family will include a sedan, and enthusiast website VWVortex has learned a second model will join the lineup a few short years later. Whether they’ll go head to head against the Model 3 is up in the air at this point; it seems like a segment Audi, not Volkswagen, should be marching into. However, it looks like the production version of the I.D. Crozz concept will go head to head against the Tesla Model Y, and being aggressive on price could help Volkswagen come out on top.