Volkswagen is announcing an affordable electric vehicle (EV) to appeal to the masses as it struggles to keep up with other EV manufacturers.
Key Details
- Volkswagen is teasing the release of an affordable EV priced around $26,600.
- The German brand took to Instagram to tease the new car with the hashtag #VWForThePeople.
- The new EV is expected to look similar to the VW Golf, which has sold more than 35 million units, and will be the most affordable EV in the U.S. when it hits the market.
Why it’s important
Luxury EVs have been the leader in sales among all other EVs, with Tesla being the leader with an estimated 491,000 sales in the U.S. during 2022, followed by BMW with 332,388 and Mercedes-Benz with 286,764, according to Automotive News.
EV sales accounted for 5.3% of U.S. new car sales in 2022, up from 3% in 2021, according to the automotive research firm Wards Intelligence. Most new EVs are luxury brand models with an average price of over $61,000, which is about $12,000 more than the industry average.
Volkswagen is looking to break into the growing EV market by adding a new EV that appeals to everyone by offering it for a low price, making it available for those who cant afford the high-dollar luxury EVs.
Volkswagen has stayed busy this week, announcing a new battery plant in the U.S. and its plans for a new $200 billion investment in EVs now, the German automaker is announcing a new affordable EV.
VW has been teasing a new EV that will be the cheapest electric option available for an estimated $26,600. The next most comparable option is the Chevrolet Bolt for $27,495, which sold around 38,000 units in 2022.
The vehicle being at a low price point could help sell more models as many Americans have reported the main reason for not switching to electric is due to the high vehicle price points.
China is the company’s largest market, but sales fell 41% in January and only accounted for 33% of the company’s worldwide sales. Volkswagen has lost sales to Tesla and Chinese manufacturers such as BYD Co. and hopes this new addition could increase sales.
Tesla is the leading EV manufacturer in the U.S. and recently dropped its prices by as much as 20% to boost sales and make vehicles eligible for tax credits.
The Model 3 Sedan is now $4,930 less than the average new vehicle sold in the U.S., and the more expensive Model Y sport utility vehicle had a $13,000 price drop earlier in the year.
Other retailers are following the EV giant’s lead, including Ford, which dropped the price of its electric Mustang Mach-E by an average of $4,500, and Lucid Group Inc. began offering $7,500 discounts on its EVs.
Although the companies are dropping their prices, the vehicles remain on the higher end of electric costs, and with VW releasing a cheap, trusted car, it could be just what the company needs to see vehicle sales grow and dominate the electric sector.
