While competitors such as Tesla and Ford have initiated price cuts on their most popular all-electric vehicles, General Motors and Volkswagen Group have both said they intend to keep their EVs’ prices at their current level.
In January, Tesla initiated a round of aggressive price cuts to its entire vehicle lineup. Its two most popular cars, the Model Y crossover and the Model 3 sedan, received substantial adjustments, with some variants receiving as much as 20% off their previous price.
Ford announced in late January it was also cutting the prices of its popular Mustang Mach-E all-electric crossover lineup, ranging from $600 to $5,900, and said it was significantly increasing production.
During a call with analysts, GM CEO Mary Barra was asked about the price cuts of its two main competitors in the U.S. EV sector. Barra said for now, there doesn’t seem to be a need to adjust the prices of GM’s lineup of electric cars.
“When we look at our strong product portfolio and the interest that we have at the prices that we’ve already announced, we feel that we’re well positioned. We think right now we’re priced where we need to be,” Barra said.
Barra said GM would be monitoring the price situation to ensure the automaker remains competitive, noting GM was the leader in U.S. sales and it saw the largest year-over-year increase in market share among car manufacturers.
VW Group CEO Oliver Blume told a German newspaper the company has no plans to reduce its prices either. According to Automotive News, Blume said, "We have a clear pricing strategy and are focusing on reliability. We trust in the strength of our products and brands."
Volkswagen Group sells a host of EVs across the globe under a long list of different brand names. In fact, thanks to its huge umbrella, large manufacturing footprint and forward momentum with electric cars, the group is one of a handful of manufacturers that aims to top Tesla as the global EV leader in the near future.
In order to push forward and become a global leader in EVs that can truly challenge Tesla, the Volkswagen Group will have to grow while remaining profitable, Blume added. If the group's brands heavily discount their electric cars, they will likely lose money as part of the price battle.
Moreover, it has already been proven in many markets that even if a VW EV is less expensive, Tesla's EV sales are more successful. Volkswagen sells the ID.4 electric SUV in the U.S., a direct rival to the Model Y. The ID.4 has a starting price of around $40,000, which undercut the Model Y by about $26,000 before Tesla's updated prices. It's still about $13,500 less expensive even after the cuts, but the VW EV isn't selling nearly as well as the Model Y.
Porsche, which is part of VW Group, may actually increase its prices by as much as 6%. However, a company spokesperson noted pricing changes typically occur at the beginning of a new model year, an unwritten rule Tesla clearly doesn't follow.
Abby Andrews