July 30, 2021

Gp Delivers1

The excellent automotive artisans1

Standing between VW’s ID4 and profits: The battery

It’s a challenge faced by automakers as they transition into battery-electric vehicles: Current lithium ion batteries require large amounts of mined minerals, such as cobalt. And as global demand for those minerals increases with each newly introduced battery-electric or plug-in hybrid vehicle, so do the cost pressures.
While big-ticket luxury EVs should be able to absorb those costs, it will be more difficult for models closer to mainstream pricing such as the ID4, which starts at $41,190, including shipping, minus any tax incentives.

VW reports its U.S. sales quarterly, so the ID4’s 474 sales reported in the country so far happened in the last 20 days of March. However, the company took thousands of reservations from U.S. consumers last fall after production began in Germany, and it has been delivering cars nationwide.

“As early as you are launching it in the U.S., for sure the car is not profitable. But it becomes profitable over the first life cycle,” Ulbrich told Automotive News via video last month. “This is our target, and we will reach for it.”

Ulbrich identified a number of factors that keep the Tiguan-sized ID4 from making money right away, including teething issues at its single assembly plant in Zwickau, Germany, which also builds the Golf-sized ID3.

Beginning next year, VW’s Chattanooga plant is expected to begin production of localized versions of the ID4.

“It is not just only a question of development of the car, it is also a portion of the ramp-up in the plant. Everything is new, you have not [reached peak] efficiency, and so on. And this is one point of the situation that you really have to optimize, and then it becomes a step-by-step after this ramp-up, including the optimization inside of the product,” Ulbrich explained.