There is little doubt in our mind about the fact that electric cars will dominate the automobile industry by the end of this decade. At present, however, ICE vehicles dominate the market. What accounts for that slow uptake is the fact that electric vehicles are made of expensive parts and technologies, resulting in a product that most people can barely afford.
VW Does an Encore with another People’s Car!
Enter, Volkswagen, the same automaker that built the Beetle (aka Type 1, volkswagen or people's car) back in 1938. In that same tradition, VW steps in to match the huge EV market potential and the need to make e-cars more affordable to the masses.
Initial plans had indicated that the Volkswagen Group would launch via its Spanish carmaker SEAT in the Chinese market. The company had partnered with JAC Automotive, known for its low-cost manufacturing capabilities, and planned to penetrate China with budget-friendly zero-emission EVs that would help the country tackle its longstanding pollution crises.
Volkswagen Badge Instead of SEAT
Unfortunately, due to the devastating impact of the coronavirus on global markets, these plans have reportedly been scrapped, as SEAT does not seem to be moving forward with them. Now its parent company Volkswagen has taken up the project to the delight of VW followers. With VW in the helm, a low-cost EV that could very well dominate global markets is not far ahead.
On hindsight, an EV carrying the badge of SEAT would be an unlikely win in the Australian automobile market. A possible problem would be the difficulty of repairing it or finding the right car parts, as limited demand would have a proportionally limited repair and maintenance facilities.
With this budget-friendly EV car range bearing the VW insignia, Australians would be more than willing to invest in support services, although VW would still conduct manufacturing and development through its state-owned Chinese partner manufacturer. It's uncertain whether some car parts would be manufactured in other countries as well.
Cheaper than MG, Currently the Cheapest EV in the Market
The initial rumoured price for this new budget EV was set at under $35,000, but if the vehicle or its car parts would be manufactured in other parts of the world, then this price tag might be tough to achieve. Still, it's highly likely that the price of this low-cost EV range would be lower compared to the cheapest EV currently available in Australia: the MG ZS, priced for the base model at $46,990.
Naturally, the company has to cut corners to keep the price of the vehicle on the low end. The most obvious savings will come from a smaller battery compared to similar EVs in the market.
It would not sit in the same stage as big EV players like Tesla, which are pushing for a 1000-km per charge milestone at a price tag of $100k+. The good thing is that for urban consumers, a small battery is not a big concern as long as it does not disrupt daily commute, so this might work.
The size of EV batteries is also shrinking with each passing day. Batteries are becoming more energy-dense with newer technology. It means EV manufacturers could soon fit powerful batteries into smaller cars that usually have a more mass appeal. And this is precisely the potential that VW wishes to tap: a small, affordable EV that can deliver great mileage of between 150 km and 300 km.
Some regions of the global automobile market might be resistant to welcoming an EV that has most car parts manufactured in China, even if it carries the German car company’s badge. VW might do a better job pushing this new range into more quality-conscious markets if more car parts were manufactured outside of China.
No Name Yet for VW EV Entrant
A confirmed name for the new range is yet to be disclosed by Volkswagen. The company manages numerous car brands around the world, but most would not have been able to sell a budget persona due to their polished brand image. The only fair contenders for this new line were SEAT, Skoda, and Volkswagen itself.
Development of this range is part of Volkswagen’s grand plan to expand into the EV sector by 2025, increasing its pure electric car models from 6 to over 50. It is also working on making it easier for customers to access charging options, and a dedicated company, called Elli Group, has been set up to work on making green power more accessible for EVs.
Volkswagen launched its EV expansion plan in late 2019 and committed to investing around $800 million on its site located in Chattanooga, USA. According to plans, this plant would come out with its first EV by 2022. However, due to the recent COVID-19 disruptions, this launch might also be delayed.
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By Muhammad A. Lashari