'Half-Price Electric Car' Era... Volkswagen Ignites Price War

Affordable 30 Million KRW Range Without Subsidies
Mass Popularization of Low-Cost Models Begins
Volkswagen Compact EV ID.2all
World Premiere at 35 Million KRW Range
Tesla, GM, Kia Also Announce Launch Plans

The battle for affordable electric vehicles in the 30 million KRW range has begun. The launch of budget electric cars is the final challenge for the popularization of electric vehicles. Volkswagen is introducing the compact electric SUV ‘ID.2all’ priced under 25,000 euros (approximately 35 million KRW). Tesla, as well as GM and Kia, have also announced plans to launch affordable electric cars.

Going forward, consumers will be able to purchase electric vehicles in the 30 million KRW range without government subsidies from various countries. The spread of affordable electric cars has accelerated, mainly driven by Chinese local EV makers releasing inexpensive models one after another, and other global automakers have also started to introduce budget models targeting the worldwide market.

On the 15th (local time), Volkswagen unveiled the compact electric SUV concept car ID.2all (hereafter ID.2) for the first time in the world. The ID.2 is Volkswagen’s first front-wheel-drive vehicle built on the dedicated electric vehicle platform MEB. The wheelbase is about 2600 mm, slightly smaller than Hyundai Kona EV, Kia Niro EV, and Chevrolet Bolt EV. It is equipped with a 166 kW (226 hp) electric motor. It can travel 450 km on a single charge (WLTP standard). Mass production will begin in 2025.

Volkswagen unveiled the ID.2all concept car, a compact electric SUV priced under 25,000 euros, on the 15th (local time).
[Photo by Woo Su-yeon]

The design of the ID.2 is friendly yet dynamic. The C-pillar (the pillar between the rear door and rear window) design is borrowed from Volkswagen’s iconic Golf model. It offers a spacious cargo capacity of up to 1330 liters. Innovative technologies such as the state-of-the-art driver assistance system Travel Assist and intelligent lighting system IQ.Light are also applied.

The biggest competitive advantage of the ID.2 is its price. The concept of the ID.2 unveiled that day is ‘for the people,’ meaning a car for the masses. This aligns with the brand name’s meaning (people’s car) and reflects the intention to accelerate the electric vehicle era. Volkswagen has set the price of the ID.2 below 25,000 euros (approximately 35 million KRW). Compared to the current European small SUV market price of about 40,000 euros (approximately 55 million KRW), it is nearly 20 million KRW cheaper. Although the ID.2 is a model aimed at the European market, there is potential for sales expansion to other markets in the future.

Additionally, Volkswagen announced on the same day that it plans to launch a micro electric SUV in 2026 and is preparing a model priced below 20,000 euros. Half-price electric cars are a challenge not only for Volkswagen but for all automakers aiming to be mass-market brands. At the same time, it is a long-standing wish of consumers. On the 1st, Tesla’s stock price wavered when it delayed revealing detailed specifications of the half-price electric car ‘Model 2’ at its Investor Day.

"Ultimately, the key is price"… Elon Musk, Tesla CEO
Plans to halve assembly costs by simplifying processes at Mexico factory

Earlier this month, Elon Musk, CEO of Tesla, announced plans to reduce assembly costs by half through process simplification at the Mexico Gigafactory. However, he postponed revealing detailed specifications or pricing of the ‘Model 2.’ The market was disappointed. It is said that affordable electric cars are seen as the key to Tesla’s stock price recovery.

Last year, General Motors (GM) announced it would launch the Chevrolet Equinox EV within this year at $30,000 (approximately 39 million KRW). Kia will begin mass production of the compact electric SUV EV3 in the 30 million KRW range starting next year.

These moves reflect the judgment that as electric vehicle adoption progresses faster than expected, price competitiveness will ultimately be a crucial factor determining success or failure. China clearly illustrates this. While Tesla’s high-priced electric cars sell well in China, inexpensive electric cars priced under 10 million KRW also sell in large numbers. The Hongguang Mini from Shanghai GM Wuling, which has consistently ranked high in local sales for years, starts at a low trim price of around 5 million KRW.

Elon Musk Tesla CEO

Chinese EV makers have been able to lower prices thanks to batteries. They widely use relatively inexpensive materials such as lithium iron phosphate and have a well-established value chain from raw materials to finished products, ensuring smooth supply. Although battery prices have dropped significantly over the past few years, they are still estimated to account for 30-40% of the total cost. China, the world’s largest EV market, has declared its goal to raise the electric vehicle penetration rate (the proportion of EVs among all new car sales) to 20% by 2025.

Price policy has also become important in the fiercely competitive U.S. market. This is because the Inflation Reduction Act (IRA) has tightened subsidy conditions. European governments are competitively reducing subsidies. This is also why automakers are rushing to launch affordable electric cars that do not rely on subsidies.

GM Chevrolet Equinox EV to launch at $30,000 this year
Kia to start mass production of 30 million KRW EV3 next year
Electric vehicle adoption faster than expected, price competitiveness seen as key to success

In South Korea, competition in technology and R&D to lower electric vehicle prices is also in full swing. Hyundai’s BlueOn, which was previously only supplied to government agencies, was priced in the 50 million KRW range before subsidies, which was 4 to 5 times higher than similar internal combustion engine models at the time. Kia’s electric car based on the compact car Ray was also priced in the 40 million KRW range, more than three times higher than the internal combustion engine model.

Ioniq 5 manufactured at Hyundai Motor's Ulsan plant

Recently, Hyundai’s Ioniq 5, the best-selling domestic electric vehicle, starts at the 40 million KRW range. The price gap with similar internal combustion engine models has narrowed significantly. An industry insider said, "As battery raw material prices decrease and technology improves, electric vehicle prices can also be lowered," adding, "Considering the mid- to long-term reduction in the price gap with internal combustion engine models, government subsidies will also be structured to decrease."

On the 15th (local time), Volkswagen revealed the budget electric car ID.2, openly sharing its design, detailed specifications, price, and mass production timeline. Compared to Tesla and other automakers delaying information disclosure about ‘half-price electric cars,’ Volkswagen’s approach is proactive. Volkswagen aims to lead the era of electric vehicle popularization through aggressive pricing policies and establishing a full lineup of electric vehicle models. Thomas Sch?fer, CEO of the Volkswagen brand, said, "The ID.2 is a model that shows the direction of the Volkswagen brand," and added, "We are changing to provide electrified mobility to the masses."

Volkswagen unveiled the ID.2all concept car, a compact electric SUV priced under 25,000 euros, on the 15th (local time).
[Photo by Woo Su-yeon]

This content was produced with the assistance of AI translation services.