From the end of March, a new version of the compact electric ID.3 will be sold for less than 40,000 euros, or 3,000 euros less than its current price, according to the group's announcement this week.

German drivers will be able to get an ID.3 for the same amount as the Y model - the cheapest - from Elon Musk's brand, which has shaken up the entire automotive sector by slashing its prices in recent months, sometimes up to 20%.

Tesla thus multiplied its sales by 10 in Germany in January.

Over the whole of 2022, Volkswagen was the leader in electric sales in Europe, with 352,000 vehicles sold, but Tesla delivered 1.31 million cars worldwide compared to 572,100 for the German rival.

“Volkswagen has taken the measure of the threat”, comments Ferdinand Dudenhöffer, expert in the automotive sector, according to which the group had “no other choice but to respond” to the dumping of the American manufacturer.

"Price war"

According to him, the other brands of the group and the rest of the German manufacturers will also have to enter this "price war" to defend their place in the market for battery-powered cars, even if it means cutting back on their margins for a while.

The boss of Volkswagen, Oliver Blume, having so far ruled out any generalized price reduction movement on electric ranges, the question will not fail to come back during the detailed presentation of the group's results scheduled for Tuesday.

But the firm of Elon Musk is not the only one to compete with the first European manufacturer in its race for electrification.

Convincing Chinese drivers to drive an ID.3, Audi e-tron or battery-powered Porsche Taycan is Volkswagen's other priority project.

Faced with the Asian giant's high-speed shift towards all-electric, Volkswagen runs the risk of being overtaken in its main market.

China currently accounts for some 40% of the group's sales, which sells the vast majority of traditional engines there, having ensured 16% of the automotive market share in the country last year.

But in the electric segment, the picture is less bright: in 2022, the group's VW brand only obtained 2.4% of the market share, far behind Tesla (7.8%), the Chinese BYD (16%) and a host of other Chinese manufacturers, according to official Chinese data cited by the German business daily Handelsblatt.

Mercedes and BMW did not reach the 1% threshold.

"In the world's largest automotive market, German manufacturers have so far lagged behind local brands," said expert Stefan Bratzel in his annual report on electromobility.

Of more than 5 million electric vehicles sold last year in China, Volkswagen's sales did not exceed 155,700 units.

Having fun in traffic jams

"The time when the Chinese market was acquired (from German manufacturers, editor's note) is over," comments Gregor Sebastian, analyst at the Merics Institute.

“In Germany, driving performance remains a key factor in vehicle purchase,” he continues.

"But in China, where many city dwellers spend much of their time driving stuck in traffic, new technologies and the car's interaction with the smartphone are more important."

"The Chinese develop a new car in two and a half years, VW needs just under four years for that", recently confided to the daily Süddeutsche Zeitung Ralf Brandstätter, former boss of the VW brand who took over the management this summer. of the group's activities in China, with the mission of boosting electricity sales there.

China will be a pioneer in the implementation of autonomous driving, estimates VW, which announced in October an important partnership with Horizon Robotics, a Chinese specialist in artificial intelligence, to strengthen itself in this field.

"Competition is fierce", says Gregor Sebastian, "but German manufacturers like Volkswagen have more than 80 years of experience in producing cars for different markets and customers, this gives them an advantage", believes however the expert.

© 2023 AFP