By the end of this year in the United States, Volkswagen's lone all-electric offering will be joined by a sleek, long-range sedan and a retro-throwback van with three rows of seats. But those EVs won't be bringing a 2023-style price war with them.
That's according to Pablo Di Si, the CEO of the Volkswagen Group of America. “What we said last year was value over volume,” Di Si said. “That doesn't mean that we don't care about market share. That means that we're going to take a balanced approach."
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The Volkswagen Group goes all-electric, but not without headaches
After its mid-2010s diesel cheating scandal, the Volkswagen Group—which includes VW, Audi, Bentley, Porsche and more—vowed to go all-electric in the coming years. But software headaches, production issues and profitability challenges have all rendered that goal easier said than done, for now.
Di Si sat down to discuss a wide range of topics with InsideEVs this week in Berlin during the conglomerate's annual press conference and investor report. Those included plans for the upcoming ID.7 sedan and ID. Buzz van, both due on sale later this year.
In the U.S., Volkswagen has joined the price-cut party as well, but it mostly hung out in the back and left after just one drink. "We have adjusted the pricing on the ID.4 recently, but we have not been as aggressive as other competitors,” Di Si said.
"Aggressive" is an accurate way to put it. Starting with a series of rapid-fire cuts from Tesla early last year, several automakers selling EVs—including Ford, Lucid, Rivian and others—also dropped prices to stay competitive. Others have done so more covertly by offering super-cheap lease deals and discounts at dealerships.
Those moves have helped drive electric adoption in America to a record-breaking 8% of the overall market, but they made already-elusive profits from EVs even harder to attain. And worse, those moves tanked the resale values of many electric models.
But Di Si, a straight-talking Argentinian native who previously ran the VW Group's operations in South America, said he's happy with how last year went for the ID.4. He has good reason to be, too. Despite a somewhat rocky initial launch, the ID.4 has been an objective hit. The crossover netted 37,789 U.S. sales in 2023, up roughly 40% year-over-year making up an impressive 11.5% of Volkswagen's total volume.
And that’s all before the ID.4 got serious new upgrades to power, range and software, including over-the-air updates—something Di Si called “a pain in the neck” to implement. The ID.4’s quality is also now “significantly better” than when it launched, he added.
“The first two months went down a little bit to 7.5% EV penetration for the industry [in January and February], but we remain higher," he said. "Now we need to build volume.”
"Value over volume" has been a mantra at the VW Group since last year, when the world's second-largest carmaker committed to rejuvenating profits for mainstream brands like Volkswagen, Seat and Skoda, while still eventually going all-electric. Some EVs from its luxury brands, like those in the Audi lineup, are already profitable; others, like the newly all-electric Porsche Macan, are going up in price in exchange for vastly increased performance.
Globally, the Volkswagen brand is struggling a bit with slowing sales in China and weaker-than-expected demand for the compact ID.3. But the automaker has said it expects to correct this over time, including with the launch of the upcoming compact ID.2, which aims to be profitable with a starting price of about 25,000 Euros ($27,209 at today's exchange rate). The company also expects that the revived Scout Motors truck brand will help turn things around, with EVs that will be designed and built in America for the American market.
Di Si said volume is coming in the next few years for VW in the U.S. with a larger electric SUV, “which is in our plans." Presumably, he referred to the three-row ID.8. Until that arrives, the next move is what Di Si calls “halo cars”: the ID. Buzz and ID.7 sedan.
Pricing hasn’t been announced on either one yet, but the ID.7 is expected to start in the $50,000 range, while the ID. Buzz remains anyone’s guess. (The van America gets is a larger, more upscale cousin of the European one, and it has a bigger battery with more range and more power.) Sedan sales in America haven’t been great for years, and as fun and capable as the ID. Buzz seems to be, electric vans are unlikely to unseat crossovers anytime soon.
Instead, they’re meant to “elevate” a brand that has often struggled to find its identity in the U.S. market despite dominance elsewhere, Di Si said.
“It’s a premium car, with premium touch and feel and great range and great infotainment,” Di Si said of the ID.7, which is already shaping up to be one of the longest-range electric cars on the market. “Is it going to sell a lot of vehicles from a value point of view? Probably not. Obviously, I’d like to sell as many ID.7s as I can, right? But from a marketing point of view, I need to be realistic.”
The ID. Buzz is a slightly different story. Though it’s been in the works since 2017, the hype around it remains palpable.
“I think we're going to have a really good problem because the demand is going to be far, far ahead of supply,” Di Si said. And it will likely get people into Volkswagen dealerships, where they may end up driving away in one or something else.
The strategy around these cars also speaks to how much EV tax credits drive decisions these days. Both EVs are imports from Germany, which means they will only qualify for tax credits if they’re leased. Volkswagen actually lucked out by building the ID.4 at its Chattanooga, Tennessee plant; it remains the only “foreign” brand in America to offer full tax credits when purchased or financed.
But even if demand for the ID. Buzz ends up booming, it’s unlikely Volkswagen will find a way to build it in Tennessee, a factory Di Si said is already “at capacity” with what it can do.
“We’ve been discussing this a lot internally and with our dealer council,” he said. “The key here is to keep the product alive after a year, after two years, you need to bring innovation—new concepts, new variants. I think the setup is correct in Hannover, that's where they have the expertise.”
The upgraded ID.4 will have to hold down the fort for a while. The ID.7 is expected to go on sale in the late third quarter of this year, while VW is targeting November for the ID. Buzz.
Contact the author: patrick.george@insideevs.com
Correction: An earlier version of this story stated an incorrect figure for VW's U.S. ID.4 sales. We regret the error.
