VW can hold EV pricing after credits

LOS ANGELES — Volkswagen of America CEO Scott Keogh laid out a broader unifying theory of the German automaker's pricing plans for its coming lineup of electric vehicles, saying that the company believes its huge global scale will be able to absorb the loss of federal tax credits for EV buyers to keep net consumer prices stable.

Speaking on the sidelines of the Los Angeles Auto Show, Keogh reiterated that the net pricing after tax credits for what will be the brand's first MEB-based EV in the U.S. — a compact crossover coming next year that is to be called the ID4 — would be in the "sweet spot" for the segment, likely in the low- to mid-$30,000 range.

But where Volkswagen's global EV strategy will really pay off is when the $7,500 to $10,000 in current federal and state EV tax credits expire.

"We're going to be putting upwards of 20 million products on this platform, and I think that's going to be the holy grail power of the group because it really starts to lead to some supplier conversations," when Volkswagen can buy components in increments up to 20 million units, Keogh said. "This can really lead to some dramatic scaling effects."

Keogh estimated that Volkswagen brand dealers would enjoy the benefit of the $7,500 tax credit for "about two years" before Volkswagen Group — including Audi and Porsche sales — would exhaust the 200,000 federal tax credits available. Those early tax credits, Keogh argued, give the automaker "a little bit of breathing room" on pricing early in the life cycle of the new ID family of EVs.

"We'll use a little bit of that, but at the same time, we're getting battery costs down, and we're getting range up all the time," Keogh said. "So we will use this at the beginning to make sure we hit an effective price point. And then, when [the tax credits go] away, we still want to be there" at that price point.

"We don't want to all of a sudden have a $10,000 [price jump], so this is the magic of the cells and batteries and everything else" that is done at scale globally using the MEB platform strategy to drive down costs, Keogh explained. "But this is where we know we gotta get."

Volkswagen globally has sweeping plans to introduce an onslaught of new EVs across its many brands. This month, it boosted its five-year budget for hybridization, electric mobility and digitalization to €60 billion ($66 billion), a 36 percent increase over its previous spending plan on electrification.

Volkswagen plans to introduce as many as 75 all-electric models, up from a previous forecast of about 70, by 2030 and now expects to produce some 26 million EVs globally over the next 10 years, up from earlier projections of 22 million.

In the U.S., Volkswagen will open with the ID4 and will follow that with a retro-styled electric take on the Microbus in 2021.

A third EV, to be based on a modified version of the ID Space Vizzion concept it showed at the auto show here last week, is to be in dealerships by 2022.

Keogh said he sees direct evidence that the tide is beginning to flow toward broader acceptance of EVs. He said electric cars are no longer oddities on the road, increasing their acceptance among the buying public. In addition, broader evidence of the impacts of climate change are beginning to motivate consumers that their habits must change, Keogh said, adding that Volkswagen could see EVs make up 10 to 20 percent of its annual sales in the U.S. by 2025.