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Volkswagen ID.2 Will Be Profitable at 25,000 Euros, Claims CEO Thomas Schaefer

Volkswagen unveiled the ID. 2all concept in March, previewing an affordable compact EV for the masses. Brand CEO Thomas Schaefer claims the upcoming model, which should sell for around €25,000/$27,500, will provide a healthy margin of at least 6 percent.
Volkswagen ID.2 will be profitable at 25,000 euros, 17 photos
Photo: Volkswagen | Edited
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Electric vehicles are a money pit for traditional carmakers, all selling EVs at a loss. Ford, the only carmaker that breaks down the financials for its EV division Model E, lost more than $2 billion in 2022 and expects a $2 billion loss this year. It's hard to know how much money Volkswagen is losing on its EV business. It's likely to be less, considering the scale of Volkswagen Group operations compared to Ford.

In a recent interview with Automotive News, Volkswagen brand's CEO Thomas Schaefer claimed that its upcoming affordable EV, the ID.2, should be profitable at the €25,000/$27,500 price. Not only that, but he expects at least a 6% profit margin on the model, a very bold statement. "We cannot have margins below 6 percent," Schaefer told Automotive News.

To achieve this, Volkswagen Group will sell four vehicles, two from the Volkswagen brand, one from Cupra, and one from Skoda. Volkswagen's second model based on the ID.2 will be a crossover, followed by a Skoda SUV and the Cupra Urban Rebel subcompact. The ID.2 would be the cheapest, while the rest will sell for more money.

Volkswagen will build all four EVs in Spain, with the ID.2 and the Cupra Urban Rebel coming from the plant in Martorell. The Volkswagen crossover and Skoda SUV will be assembled in Pamplona starting in the second half of 2025. Both factories would need to be converted to produce electric vehicles by then. Volkswagen will source the batteries from its new battery plant in Sagunto, near Valencia, although this factory will only come online in 2026.

Asked about the volumes, Schaefer boasted that Volkswagen doesn't make cars below 100,000 units per year, although this wasn't always true. The planned production is around 150,000 units for either factory, which can go as high as 300,000 per year. Volkswagen CEO said that battery production would be the limiting factor, although batteries can also come from other factories in Salzgitter and its supplier Northvolt.

Volkswagen's battery-cell subsidiary PowerCo will produce the Unified cells, scaled across all models. The Unified cells are prismatic, and Volkswagen CEO thinks they will become the industry's standard. That is hard to believe, considering that Tesla, the dominant EV maker, favors round cells. Other carmakers are following Tesla, so Volkswagen would need to beat Tesla before its batteries would become the industry standard. Schaefer says that the Unified cells give his company a real cost advantage. However, he also believes that "getting a car below 25,000 euros that has no compromises with safety and range is literally impossible at the moment."

Volkswagen is working on an even cheaper EV in the sub-20,000-euro ($22,000) segment. The smaller model will arrive around 2026-2027 and not use the MEB Entry platform. Volkswagen will develop an even cheaper in-house architecture and rely on extreme scale and a downsized battery to reach that price point. Volkswagen and Skoda jointly develop the new model.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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