The Breakthrough of Mass-Market E-Cars as the IAA Powers Up

Dear Friends & Shareholders,

The unquestioned star at this year’s International Motor Show (Internationale Automobil-Ausstellung or “IAA”) in Frankfurt, Germany, is not a horsepower sports car or a massive SUV but the ID.3 from Volkswagen. The compact car, the size of a Golf, is intended to follow exactly on from the Golf’s success story. The ID.3 should become a real Volkswagen: a car for the masses. The ID.3 is VW’s first model to be designed as an electric vehicle right from the start. It is based on the MEB, the modular electric drive matrix on which all electrically powered VW’s will be based in the future. Ford and the start-up e.Go Mobile also want to use the MEB which VW is aiming to establish as the industry standard. This would save a considerable amount of money.

The ID.3 is already available in the cheapest version at a price of just under 30,000€, around US$33,000. In Germany, it is not more expensive than a Golf diesel after deduction of the subsidy for electric cars amounting to 4,000€ ($4,400). Although the ID.3 has only been seen in camouflage so far, 30,000 customers have already reserved the car. At the IAA, VW’s newcomer will be shown in unmasked colors for the first time with production slated to begin at the end of the year and deliveries beginning in mid-2020.

While no other volume manufacturer is so consistently focusing on electromobility, the ID.3 is not only of great importance for VW; the success of the car will probably also determine how quickly and to what extent electric cars, more broadly, will succeed. So far, the market for electric vehicles in Europe and America have been dominated by expensive SUVs and sedans from Tesla, Audi or Jaguar or by more exotic niche vehicles such as the Renault Twizy; however, this will probably soon be a thing of the past.

Electric mid-range cars on the advance

Now, an increasing number of manufacturers are including small and compact cars with electric motors in their product range. For example, the VW subsidiary, Skoda, will present the Citigo-e iV at what is still the world’s largest motor show. Seat, which also belongs to the VW Group, will present the Mii iV. Both electric cars are expected to cost less than 20,000€ ($22,000).

The electric cars from the VW group are of course not without competition. The Mercedes subsidiary, Smart, is showing its revised city car, which soon will only be delivered with an electric motor at an entry-level price around 21,500€ euros ($23,700). In the future, the Smart will be built by a joint venture between Daimler and Geely in China.

BMW wants to attack VW’s ID.3 with the electrically powered Mini. At 32,500€ euros ($36,000), it will compete in the same price range. The traditional German brand Opel and Japanese manufacturers will also be presenting their new mid-range electric cars.

The #1 Tesla hunter

While most electrical innovations are in the small and compact car segment, they are not the only ones. At the IAA, Porsche will debut the electric sports car Taycan as a series model. The Germans want to use it, above all, to drive Tesla into the parade. There are already around 30,000 advance orders for the Taycan.

If the car manufacturers’ plans work out, electric cars will soon be in the fast lane – not only in China, but now also on the other major car markets. The VW group alone with its twelve brands intends to sell almost as many electrically powered cars as Tesla in the coming year. Then it will become clear how stable the supply chains are – from the battery raw materials to the cells. We can be excited.