Those who confidently market their certified annual and used cars under the “Weltauto” label are making a clear statement. World car, at Volkswagen, the second largest car manufacturer in the world after Toyota, always also meant: A car that is built and sold all over the world. A car like the VW Beetle, which has been assembled in many countries around the world for decades and sold in even more. From this point of view, a world car is not just about certificates and quality. Rather, it is also about sales and mass, about meeting the tastes of people in as many regions of the world as possible.
But the real question now is: will Volkswagen be able to offer such world cars without petrol or diesel? Making the leap into the era of electric cars?
The electric model ID.4 could become such a world car. A spacious SUV and one of the youngest hopes from the Wolfsburg car group, built in Germany, in China and also in the US plant in Chattanooga (Tennessee). Base price in the US: around 39,000 dollars. But since cars can’t just be sold on the basis of quality, brand awareness and such things, but also on the price, it was not entirely unimportant what was happening in the USA these days.
Bad news: Only US manufacturers were on the first list
It started on Monday with the US Treasury Department presenting a list of those vehicles that will continue to enjoy full tax breaks in the future. Bonuses paid by the US government in the wake of the $430 billion Inflation Reduction Act (IRA) to strengthen the USA as an industrial location. The list included big names like Cadillac, Chevrolet, Chrysler, Ford and Tesla. What stood out here: The manufacturers benefiting from the federally funded per-car perk of $7,500 were all American.
European or Asian models? none. Even the ID.4 from VW was not on the list. For a car company that has been making a living from globalization for decades and that believes in the world car, that was not good news. Without robust tax premiums, you’re at a disadvantage anywhere in the world. But especially in the USA with its many strong domestic car brands. Two days later, the turnaround: VW let it be known that the ID.4 now meets the requirements for tax breaks in the USA. The group is now the only foreign carmaker to have placed an electric car on the US market that will receive full relief.
The US government wants to make itself less dependent on Chinese battery technology
To even qualify for the full $7,500 rebate, automakers must prove they assemble their vehicles in the United States. But the real problem for foreign suppliers is different: at least 50 percent of the value of the battery components must come from US production. A rule that is primarily intended to make the industry less dependent on Chinese battery technology. For Europe’s automotive industry, which traditionally maintains very close supply relationships with battery suppliers from Asia, this is not always an easy requirement to meet. In fact, VW is said to have failed to provide central proof of the origin of battery components in time for the start of the new subsidy rules on Tuesday.
VW has now announced that the electric car will now “not only be extremely affordable, but also competitive with conventional compact SUVs”. The electric vehicle was sold around 10,000 times in the first quarter of the year in the USA and is currently one of the best-selling electric vehicles on the US market. In the end, tax breaks of $7,500 can decide whether this remains the case or whether domestic manufacturers are left behind. Such a tax discount is an important purchase and sales argument – especially in times when the group has to fight hard on another continent.
In China, VW is no longer the market leader for the first time in decades
Because while VW was struggling for tax premiums in the USA these days, bad news came from another market for world cars: Shortly before the start of the auto show in Shanghai it became known that Volkswagen was losing its decades-long market leadership in China. For years, Chinese carmakers have been concentrating on technologies for electric cars, fast charging systems and their networking. Unlike the Germans, who spent years tweaking their internal combustion engines to make them even more economical and efficient.
The fact that the Chinese rival BYD is now overtaking the Wolfsburg-based company because of its electric cars also shows that the days of German petrol and diesel engines are gradually over in China. Sales of cars with internal combustion engines in China are currently in free fall and with them the old business model of VW, Mercedes, BMW and many others. At the same time, sales of purely electric cars and vehicles with plug-in hybrid drives are increasing – of all places, where the Chinese suppliers have long since left the Germans behind. For a company that thinks in global car dimensions, this could become a problem.