...solo che una id3/4 al momento non e redditizio per VW secondo le dichiarazionie di Ulbrich (CTO VW Group)
The profitability equation is a challenge facing not only VW, but other automakers as they transition to volume EVs
The new Volkswagen ID4 may be the 2021 World Car of the Year, but there is one thing it is not yet: profitable.
The battery-electric compact crossover that began arriving at dealerships nationwide in March is not making money, at least at its current U.S. price, says a high-ranking member of the automaker's board of management.
Thomas Ulbrich, the new head of development for VW passenger cars, promises the ID4 will start making money for its parent company at some point in its "first life cycle."
It's a challenge faced by automakers as they transition into full-electric vehicles: Current lithium ion batteries require large amounts of mined minerals, such as cobalt. And as global demand for those minerals increases with each newly introduced battery-electric or plug-in hybrid vehicle, so do the cost pressures.
While big-ticket luxury EVs should be able to absorb those costs, it will be more difficult for models closer to mainstream pricing such as the ID4, which starts at 36,950 euros in Germany and $41,190 in the U.S.
VW reports its U.S. sales quarterly, so the ID4's 474 sales reported in the country so far happened in the last 20 days of March. However, the company took thousands of reservations from U.S. consumers last fall after production began in Germany, and it has been delivering cars nationwide.
"As early as you are launching it in the U.S., for sure the car is not profitable. But it becomes profitable over the first life cycle," Ulbrich told Automotive News via video last month. "This is our target, and we will reach for it."
Ulbrich identified a number of factors that keep the Tiguan-sized ID4 from making money right away, including teething issues at its single assembly plant in Zwickau, Germany, which also builds the Golf-sized ID3.
Beginning next year, VW's Chattanooga plant is expected to begin production of localized versions of the ID4.
"It is not just only a question of development of the car, it is also a portion of the ramp-up in the plant. Everything is new, you have not [reached peak] efficiency, and so on. And this is one point of the situation that you really have to optimize, and then it becomes a step-by-step after this ramp-up, including the optimization inside of the product," Ulbrich explained.
Cost cannot be ignored
But VW may have a more difficult, longer-term economic issue to overcome with the profitability of the ID4 and the rest of its massive, companywide $55 billion global EV plan.
Because the minerals used to make batteries are mined, the supplies are likely to become constrained as demand grows, driving up costs, argues Eric Noble, president of CarLab, a consulting firm in Orange, California.
"VW surely has the best intentions, but they are playing catch-up," Noble said. "What they will discover with experience is that, as they lower the cost of the packaging and cooling around the cells themselves, the percentage of the battery's cost that is raw materials rises. Those raw materials are earth minerals, and the price of those rise with demand — the same as iron ore, gold, diamonds and crude oil."
VW's top management has repeatedly said that its global scale would help make EVs affordable by driving down purchasing costs and democratizing technologies across its brands and global markets.
But Noble said that scale does not work when demand is high and wide and supplies are constrained — just as automakers are discovering right now with microchips.
"When demand rises, prices rise, too," Noble said. "This is a tough lesson for carmakers used to lowering their costs with volume. These are not assembly costs; they are mineral costs, and mineral prices do not work that way."
Before becoming head of passenger-car development Feb. 1, Ulbrich oversaw VW's mobility efforts.
"He saw the ID3 and ID4 from sketch to street in record time and made significant contributions to making electric mobility suitable for widespread use," brand CEO Ralf Brandstätter said in a written statement announcing the promotion.
Room for improvement
Ulbrich said that "the battery is the most important area to optimize for cost; there is no doubt about that." He said the company is focusing its efforts on improving battery efficiency and reducing its costs for raw materials, separators and thermal management systems. Companywide, it is targeting a 350- (563 km) to 400-mile (644 km) range for most of its EVs over the next few years.
"I'm sure that we will come down on the cost with the chemistry, but I hope we can accept that we are not talking about the final figures today," Ulbrich said.
But, he added, if EV ranges are ever to go higher, "then we are talking about solid-state batteries."
VW has invested $200 million so far in QuantumScape, a California company developing solid-state batteries that it claims will dramatically improve energy storage capabilities and reduce charging times.
"We are really paying attention [to] this technology and the evolution of this technology. I think this will be really driving range higher than what I've mentioned. This will be the technology which is needed," Ulbrich explained. "Otherwise, the batteries become too big, too heavy and too inefficient for weight that you have to cover on the drive."
Noble said that the steadily falling battery costs of the past few years are likely to level out at around $100 per kilowatt-hour using current chemistry and then fluctuate with mineral prices.
"If and when the solid-state battery is ready for prime time, things could change," Noble argued. "But VW shareholders, or German taxpayers, had better be prepared to massively subsidize every full VW BEV until then."