VW defends launch of high-priced 'mass-market' EV

BERLIN -- Volkswagen defended its decision to launch a higher-priced ID3 aimed at early adopters before bringing to market the entry version of its first mass-market full-electric car.

VW has started taking orders for a launch-edition ID3 that will be priced at below 40,000 euros ($45,000) in Germany, excluding government incentives.

One of the biggest hurdles to a higher uptake in electric vehicles has been the high cost due to their expensive traction batteries.

Volkswagen has said the ID3 would be a car "for the millions and not the millionaires," repeatedly emphasizing the affordability of the car for the everyday buyer.

But the ID3 will not be immediately become a car for the masses because VW chose to launch first a small-series launch edition of the Golf-sized car with a price tag higher than the cost of the entry version of its Passat midsize sedan. This was due in part to VW executives deciding that the company had to spark interest in the ID3's technology first, before the mass-market customers would feel comfortable purchasing a car with a different powertrain than a gasoline or diesel unit.

At the Automotive News Europe Congress last month, VW brand marketing chief Jochen Sengpiehl said the automaker is focusing initial marketing for the ID3 on "early adopters" of EV technology.

At a press briefing in Berlin, Silke Bagschik, head of sales and marketing for VW brand's electric vehicle line, said there had been internal discussions over which versions to launch first because "we said it would start with 30,000 euros and we went first with one for just under 40,000."

Bagschik said it would have been "wrong to go with a version with a shorter range and the lower equipment level."

VW said at the ID3 concept's debut at the 2016 Paris auto show that the 125 kilowatt (168 hp) electric car would cost roughly as much as a comparably equipped Golf with the same performance.

Early adopters want features such as augmented reality heads-up display, Bagschik said.

VW brand aims to topple Tesla as the world's top-selling EV maker by 2025 selling 1 million EVs a year with more than 20 battery-powered cars in its lineup.

Tesla generated 400,000 orders for its Model 3 in part because they claimed in the first quarter of 2016 that it would sell for $35,000. The first deliveries were made in July the following year, but it was not until February that Tesla announced the Model 3 would be available at this price.

To do so, however, CEO Elon Musk said he would be closing stores to focus more on online sales. Only weeks later, he reversed course to keep a number open but at the same time ceased advertising the entry price. Excluding federal tax credits and other government subsidies, U.S. customers shopping Tesla's website can order the Model 3 Standard Plus for no less than $39,900.

Bagschik said VW customers would not have to wait anywhere near that long for the ID3 entry version to arrive.

After the ID3 debuts at the Frankfurt auto show in September, orders will begin in earnest for the 58-kilowatt-hour version that like the launch edition will be able to travel 480 km (298 miles) on one charge under WLTP. Then comes the base 47 kWh version Pure with 330 km.

"Customers can order [the base version] next year -- by the middle of next year at the latest," Bagschik said. The 77 kWh Range S with a 550-km range will go on sale last at a date yet to be announced.

Since pre-booking began on May 8, prospective customers making a non-binding deposit of 1,000 euros have reserved over two-thirds of the 30,000 units of the ID3 launch edition. Volkswagen expects to have the series sold out before the public even has a chance to see it in September.

Bagschik said dealer feedback indicated that those reserving a production slot had done their research on the car and were likely to follow through with a purchase once orders are taken after its unveiling.

Volkswagen disclosed charging and battery details for the ID3 on Monday.

The automaker said it will guarantee that the batteries will retain at least 70 percent of their usable capacity after eight years or 160,000 km (100,000 miles) of use.