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VW CFO: Electric Small Cars Not Profitable

Volkswagen will not bring an ID.1 to the market in the near future. Arno Antlitz, CFO of the Wolfsburg automotive group, considers the small car unfeasible for VW at today's costs.

This is what the ID.1 could look like - if it ever arrives.| Photo: Rendering by Andrei Avarvarii
This is what the ID.1 could look like - if it ever arrives.| Photo: Rendering by Andrei Avarvarii
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Thomas Kanzler

If you are looking for an affordable small car with an electric drive, you will be disappointed when looking at German manufacturers. Except for the new e.Go, the two-seater E-Smart, the Opel Corsa, and the larger Opel Mokka, the brands have withdrawn from this segment. VW or Ford have nothing (anymore) on offer.

“We have to work profitably. Therefore, below an ID.2, given today's battery and raw material costs, an even cheaper model is not feasible at the current time,” Antlitz explained in an interview with the Süddeutsche Zeitung.

Antlitz criticizes the lack of support from the state. There are various subsidies in EU countries, but a unified line is not recognizable. Thus, the current restructuring toward electromobility is a major challenge for the corporation.

"This is different in the USA, think of the Inflation Reduction Act, which currently strongly promotes the production of new climate-friendly technologies,", criticized Antlitz of the current situation in the EU.

ID.2 for under 25,000 Euros

So, the ID.1 will not come in the foreseeable future. The Wolfsburg-based company is already working on the ID.2, a class above. The all-electric ID.2 is set to hit the market in 2025 at a price below 25,000 euros. According to Antlitz, when ramping up electromobility, VW is fully focusing on “the most attractive profit pools, meaning the particularly lucrative and simultaneously in-demand vehicle segments as well as the fastest-growing regions.” Thus, the initial focus will be on SUVs for the attractive markets in China and the USA.

Electric city cars are not profitable

The main reason for the reluctance to produce small, affordable cars lies primarily in the exorbitant costs of the power storage. The battery for a small car like the VW e-up currently costs around 7,000 euros. Depending on the model and size, battery manufacturers may also demand up to 30,000 euros for the battery package. Since customers in the small car segment in particular are very price-conscious, large profit margins are not possible.

What does that mean?

Even with internal combustion engines, many German manufacturers are exiting the small car segment. The increasingly stringent emission standards and legal requirements for safety systems are driving manufacturing costs up as well. And with electric vehicles, the expensive battery is added on top. An electric small car for 30,000 euros is hard to justify to most buyers.

Translated automatically from German.
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