Automotive News points to the battery pack price as a reason, but it is actually the price tag.
UBS said the MEB platform and its vehicles would be profitable after the teardown of an ID.3. Automotive News said this is not the case for the ID.4 in the US, and it points to battery pack prices for that. However, a simple look at the prices for the electric crossover shows that the reason is something else: the ID.4 costs much less in the US than in Europe.
The ID.4 is sold in Germany in two options: the Pure, with a 52 kWh battery pack for €36,950 ($44,929 at the current exchange rate), and the Pro, with a 77 kWh battery pack. This one costs €44,450 ($54,049). There’s also the promise for the ID.4 GTX, but the price has not yet been disclosed. Prices informed by Volkswagen already include a 19 percent tax called MwSt, or Mehrwertsteuer, which translates to Value Added Tax (VAT).
In the US, the car was sold in two options: First Edition, for $43,995, and Pro, for $39,995. The only one left is the Pro because the First Edition is already sold out. It has the same battery pack presented in Europe, with 77 kWh.
The ID.4 costs $14,054 less in the US than it costs in Germany, where it is produced. If we did not consider the German VAT, the ID.4 would still cost €37,353. That's equivalent to $45,419, or $5,424 more than American customers pay for the electric crossover. Although there are more factors than taxes determining prices in each country, such as dealership network profit margins and transportation costs, explaining why the ID.4 is cheaper in the US than in Germany is something only Volkswagen can do.
We have asked Volkswagen about the price difference but expect no answer from the German automaker. All questions related to prices are treated as competitive information and normally ignored. If we hear back from it, we’ll update this article.
Considering the entry-level Tesla Model Y (Long Range) costs $51,490 in the US, charging $45,419 for the ID.4 would still make it look like a bargain – remember that Volkswagen is yet to spend its federal tax credit quota, which is another advantage to its EV.
What is clear is that Volkswagen deliberately decided to price the ID.4 very aggressively in the US, possibly below its manufacturing costs – something the automotive market classifies as "buying market share." That would make it lose money in each unit it sells in the country for an even more compelling apology note due to Dieselgate.
Automotive News discussed how demand for the minerals required to make batteries will affect prices in a way scale might not be able to properly tackle. It also said Thomas Ulbrich, Volkswagen’s new head of development for passenger cars, said the ID.4 would be profitable at some point in its "first life cycle." In the US, that may only happen with lower production costs coming from Chattanooga or a higher price tag, similar to that it presents in Europe. Let’s see how Volkswagen decides to pursue profitability with the ID.4.