VW readies Tenn. plant to make a more affordable ID4

CHATTANOOGA — The Volkswagen ID4's entry price will drop next year when the automaker introduces a version with a smaller battery pack built in an $850 million addition to its massive assembly complex here.

The Chattanooga plant will build the compact crossover with the original 82-kilowatt-hour battery pack as well as a new version for North America with a 64-kWh battery pack. The smaller pack, along with projected savings from using local suppliers, is expected to push the ID4's starting price below $35,000 before any tax credits, said Scott Keogh, CEO of Volkswagen Group of America.

All of the ID4s now being sold in North America are coming from Zwickau, Germany, but those imports will end when the Chattanooga plant gets up to speed next year, Keogh said, allowing the German plant to feed greater demand in Europe for the ID4 and its predecessor, the Golf-size ID3.

Keogh was speaking here as VW introduced all-wheel-drive versions of the ID4, which will go on sale this year. The 295-hp, two-motor awd versions have a 2,700-pound towing capacity and a $3,680 premium over the standard rear-wheel-drive models. Leases will start at $439 per month, with $3,644 due at signing, VW said.

Keogh said VW believes the mix of rwd and awd models could be around 50-50. The AWD Pro version results in a loss of 11 miles of range, with the current 82-kWh battery, leaving it at 249 miles vs. the Pro trim's 260.

Consumers also have the option to purchase the vehicle outright. The ID4 AWD Pro starts at a pre-tax credit price of $44,870, including shipping. But VW is adopting an aggressive leasing and re-leasing strategy that will allow it to retain control over the valuable battery pack as the vehicle grows older so that the batteries can be reused or recycled.

Buyers and lessees get two years of free maintenance and three years of free DC fast charging through the Electrify America network. VW says the price point places the ID4 AWD Pro edition below that of the Ford Mustang Mach-E AWD and the Tesla Model Y Long Range.

VW began taking reservations for the ID4 a year ago and started deliveries in the U.S. in late March. The reservation strategy allowed the German automaker to begin selling the ID4 nationwide through its dealership network, unlike some other automakers that have concentrated their EV sales in states promoting zero-emission vehicles.

The first versions of the ID4 have already sold out, Keogh said, and have brought new customers into VW showrooms. Keogh said 68 percent of ID4 buyers are new to the brand, and 89 percent are purchasing their first electric vehicle.

The Chattanooga plant has capability to build as many as eight different EVs, plant managers said, but the brand has no other announced products slated to fill in production there. Keogh revealed this month that VW planned to bring an aerodynamic electric sedan to the U.S. to accompany the coming ID Buzz, but the sedan, to be called the ID Aero, will be imported from Germany.