Tesla ended 2022 with notable incentives in many markets, including the US, China, and Europe. Surprisingly, it opened 2023 with even bigger promotions, reducing the prices across its entire lineup in the US, with some cuts as large as 20%. We just recently learned that Ford is following suit, but Volkswagen Group reportedly has no plans to jump on the bandwagon.
The Tesla Model Y – one of the best-selling EVs in the world and a top-selling vehicle among all cars – can now be had for over $20,000 less if you can get the revamped US federal EV tax credit. The Model Y started at $65,990 ahead of the price cuts, and Tesla lowered it to a shocking $52,990, later raising it to $53,490. It's now eligible for a $7,500 tax credit in the US, making it precisely $20,000 cheaper than it was just weeks ago.
Volkswagen sells the ID.4 electric SUV on our shores, which is a direct rival to the Model Y. The ID.4 has a starting price of around $40,000, which already undercut the Model Y by ~$26,000 before Tesla's updated prices, and it's still ~$13,500 less expensive even after the cuts, but the VW EV isn't selling nearly as well as the Model Y.
Volkswagen Group sells a host of EVs across the globe under a long list of different brand names. In fact, thanks to its huge umbrella, large manufacturing footprint, and forward momentum with electric cars, the group is one of a handful of manufacturers that aims to top Tesla as the global EV leader in the near future.
With all of that said, VW Group CEO Oliver Blume told a German newspaper that the company has no plans to reduce its prices to follow suit with Tesla. According to Automotive News, Blume said:
"We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands."
In order to push forward and become a global leader in EVs that can truly challenge Tesla, the Volkswagen Group will have to grow while remaining profitable, Blume added. If the group's brands heavily discount their electric cars, they will likely lose money as part of the price battle. Moreover, it has already been proven in many markets that even if a VW EV is less expensive, Tesla's EV sales are more successful.
Regardless of Tesla's quick and significant reductions, some brands may simply not be able to enter into a price war. Renault reportedly has no plans to reduce prices either, though it mentions residual value and stability as its reasons for standing firm. Brand Chief Fabrice Cambolive shared with Automobilwoche:
"If you cut sales prices by 10 percent or more within a week's time it weighs on residual values and hurts existing customers. What counts for us is stability. But it's foreseeable that prices for EVs will come under scrutiny."
Porsche, which is part of VW Group, may actually increase its prices by as much as 6 percent. However, a company spokesperson noted that pricing changes typically occur at the beginning of a new model year, which is an unwritten rule Tesla clearly doesn't follow.
