By William Boston
BERLIN -- Volkswagen AG on Wednesday took the wraps off its ID.4
all-electric sport-utility vehicle in a bid by the world's largest
car maker to challenge Tesla Inc. and re-energize a problem-ridden
electric vehicle strategy.
Volkswagen remains years behind its U.S. rival in developing and
selling a mass market electric car. Even as it slowly catches up,
Tesla has stayed one step ahead, launching better-performing
vehicles and even building a new factory near the German capital,
in Volkswagen's backyard.
The ID.4's predecessor, the ID.3, has been plagued by software
glitches, forcing Volkswagen to sell tens of thousands of the first
models in a stripped down version pending a full software update
later this year or early next year.
The problems were so alarming to the company's owners that
directors stripped CEO Herbert Diess of his job managing the
Volkswagen brand earlier this year. Volkswagen has since undergone
a sweeping restructuring of management in charge of the electric
Ralf Brandstätter, CEO of the Volkswagen brand, said last week
that the ID.4 would have the full software package when it is
available next year.
Tesla, meanwhile, has long left its own production problems
behind. The company has now gone from Silicon Valley startup to a
global manufacturer with one factory in China already operating and
its European plant near Berlin set to start production next
Some 80% of the 245,000 electric vehicles sold in the U.S. last
year were Teslas. Worldwide, the company sold 367,500 cars in 2019,
a 50% increase from the previous year, giving the Silicon Valley
manufacturer 17.5% of all electric car sales last year.
Technologically, Volkswagen's ID.4 is full of gadgets and
electronics -- advanced driver assistance, over-the-air software
updates, a digital assistant that responds to the command "Hello
ID" -- but the battery gets just 250 miles of range on a single
charge, compared with Tesla's Model Y's 316 miles. And Tesla has
long had remote software update capabilities and near autonomous
"Do we have the exact range of Tesla? No, but we have a better
price point," said Scott Keogh, CEO of Volkswagen Group of
At a starting price of $39,995 before subsidies and federal tax
credits, the ID.4 is nearly $7,000 cheaper than the Model Y, Mr.
Keogh said. And the price of the ID.4 is expected to fall to around
$35,000 when the vehicle is produced in the U.S. after 2022. Until
then, it will be imported from Europe.
Volkswagen is well-known to American consumers, but despite a
brief period of popular success in the 1960s and 1970s the company
has fallen behind its Asian rivals Toyota Motor Co., Nissan Motor
Co. and Hyundai Motor Co. Ltd.
Last year, Volkswagen sold 363,322 vehicles in the U.S. -- a 2%
market share and a steep drop from the 1970s, when the company was
selling more than 500,000 cars a year in a smaller market.
Volkswagen is a more dominant player outside the U.S. It is the
biggest foreign auto maker in China, where it builds and sells more
than four million vehicles a year. In Europe, Volkswagen and its
stable of brands that include Audi, Porsche, Skoda, and Seat have
26% market share.
Volkswagen has made several attempts at a U.S. comeback before,
including its ill-fated "clean diesel" campaign which the company
admitted in 2015 was built on illegal software that allowed its
diesel-powered cars to cheat emissions tests. The company's
reputation tanked as the details of dieselgate, as the scandal was
But in 2016, the company launched the Atlas 7-seater SUV, built
in the Chattanooga, Tenn., plant for the U.S. market. It has since
become one of the most popular medium-size SUVs in the U.S. Last
year, the company sold 81,508 Atlas models, nearly a quarter of its
U.S. sales overall.
The Atlas was the result of years of trial and mostly error for
Volkswagen in responding to American tastes. It also informed
Volkswagen's decision to make its first electric vehicle built for
the U.S. an SUV.
"The way you catch on in culture is you launch a great product
and it catches fire," said Mr. Keogh.
He said the "sweet spot" in the U.S. market is compact SUVs,
which is now dominated by conventional brands such as Toyota's
RAV4, and is the largest part of the U.S. passenger car market.
The closest Tesla comes to that segment is its Model Y, which
went on sale this year. But the Model Y is built on the same
framework as the Model 3 four-door fastback sedan and is more a
crossover between a sedan and an SUV.
Industry analysts expect the share of electric vehicles to
outpace traditional cars in the coming years and account for up to
70% of the market by 2040.
Volkswagen is targeting annual sales of 1.5 million electric
vehicles a year by 2025, about a third of which it says will be
Write to William Boston at firstname.lastname@example.org
(END) Dow Jones Newswires
September 23, 2020 12:28 ET (16:28 GMT)
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