Published on August 9th, 2019 | by Steve Hanley0
EV Price Parity Coming Soon, Claims VW Executive
August 9th, 2019 by Steve Hanley
Michigan is ground zero for the US auto industry, which is why the Center For Automotive Research, an independent organization that conducts research, forecasts trends, develops new methodologies, and advises the auto industry on public policy, is located there. Each year, the Ann Arbor-based group hosts a conference for industry leaders. One of the attendees this year was Reinhard Fischer, senior vice president for Volkswagen Group and head of strategy for VW in North America.
Fischer had some interesting things to say about the EV market while at the CAR conference. In particular, he claimed the time when electric vehicles become price competitive with conventional cars is getting nearer, thanks in large measure to the $50 billion his company is investing in EV manufacturing worldwide. Volkswagen says it is planning to offer 70 battery electric models in the next few years and projects total sales of 22 million EVs over the next decade.
“We strongly believe that the tipping point is near, and that tipping point will be price equity,” Fischer told Automotive News. When that happens, more mainstream buyers will become interested in owning an electric car, not just early adopters. “Once you overcome the fear of something new, the EV is the better choice for you,” he added.
When price parity is achieved, “I don’t think it’s going to take a lot of convincing,” Fischer added. “There is a fundamental curiosity. Everybody sees the end state. When you put pencil to paper, owning a full-electric vehicle costs about half of what a gas car costs me to operate.” Fischer certainly has a different point of view that Klaus Froehlich, head of R&D at BMW who told the press recently that nobody wants to buy electric cars.
In its recent focus groups, Volkswagen has discovered there are concerns about electric cars that go beyond price. “There is still a fear about driving electric cars through water,” Fischer said. “For 50 years, we’ve educated people that electricity and water don’t mix.”
Then there’s this: “Range anxiety has now been replaced by charging anxiety,” Fischer added, but he is not particularly worried. “A hundred years ago, gasoline was sold at pharmacies. Today, we have 122,000 gas stations in the United States. It’s transformed from a bottleneck to a commodity. Electric charging is going to be exactly the same.”
Despite Fischer’s optimism, Volkswagen has a way to go yet before its electric cars reach price parity with conventional automobiles. Its first EV based on its new MEB electric car chassis, the ID3, will sell initially in Germany for about €40,000. A less expensive entry level version of the car will list for around €30,000. That’s quite a bit more than your base model Corolla, Civic, or Elantra.
The take away is that electric cars are going to cost less in 3 to 5 years. That’s good news. even if EV advocates might wish the tipping point would arrive sooner. Patience, grasshopper.