VW gets into a price war with Tesla in Europe

Volkswagen said it wouldn’t get involved in a price war with Tesla. But now it too is dramatically slashing prices on its ID line of electric vehicles in Europe, following Tesla’s price cuts for the top-selling Model 3 and Model Y.

As the new year brought tighter restrictions on government EV incentives, VW is slashing prices on the ID line in France, Belgium, Germany, and Norway, among other countries, reports Automotive News Europe. The company is also revamping its trim offerings and unrolling “market-specific offers” geared to the “country-specific requirements and needs of customers,” the report said.  

Last January, CEO Oliver Blume said that the automaker wouldn’t get into a price war in Europe with Tesla. “We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands,” he told Frankfurt Allgemeine Sonnetagszeitung (source: Automotive News Europe). Last October, the company reported a slowdown in EV orders, but said it would stay the course with its pricing model, regardless of what rivals were doing.

That now has changed as VW, among other automakers, is looking for new strategies to keep momentum going as Tesla quickly outpaces the competition. In France, VW has overhauled its line so that now nearly all versions of the ID3 compact hatchback and ID4 and ID5 SUVs on offer are eligible for the government’s EV bonus of €5K to €7K. The ID5 is now available in France for just over €50K in a new “ID” trim, which is more than €8 less than when it launched.

VW trailed Tesla by a long shot in EV sales in France. In 2023, VW sold 4,791 ID3s, making it only the 84^th most popular model overall and 13^th best-selling EV, Automotive News Europe reports. In France, the Tesla Model Y, the best-selling EV, sold 37,124 units.

In Norway, VW has made more critical cuts to the ID3’s price tag, to stay competitive in a market that has achieved 82% percent of sales being EVs – 20% of those sales being a Telsa in 2023. Belgium and Sweden will also see revised vehicles and lower prices. In Belgium, the ID3 is now priced at €39,990 and the ID4 for €39,649, both now eligible for an EV bonus of €5,000.

Electrek also reported that VW has pushed back plans to launch its $27,000 (€25,000) ID 2all EV, moving from the target of 2025 to May 2026, according to German media outlet auto motor und sport. But delaying the production of an affordable EV could be a risky move that could VW back even further as Tesla and BYD gain momentum.

European sales in 2023 brought in just over 2 million BEVs, compared to 1.6 million in 2022. But those numbers need to quickly improve if Europe is to meet its emissions goals. EV sales are expected to accelerate to 4.8 million in 2025. By 2030, 9.3 million EVs are expected on European roadways, according to investment researcher Jefferies (source: Forbes).

This year, Europe is targeting 22% of the market share to be comprised of BEVs, up from 18% in 2023. By 2030, that should bump up to 80%, and then to 100% by 2035.