Electric Vehicle industry competition heats up

Now that electric vehicles are here to stay and making money, competition in the industry is heating up. Volkswagen has declared its intention to take on Tesla in a big way — and those most likely to benefit are consumers.

The Financial Times reported that Herbert Diess, the Brand Chief for Volkswagen, made the company’s plans public at a press conference Sunday: “Anything Tesla can do, we can surpass,” Diess remarked.

“[Tesla] is a competitor we take seriously. Tesla comes from a high-priced segment, however they are moving [to less expensive cars],” Diess continued. “It’s our ambition, with our new architecture, to stop them there, to rein them in.”

Volkswagen has already unveiled three concept vehicles: a smaller hatchback model, a minivan, and a crossover. They are all based on its flexible EV platform, which it calls MEB. Volkswagen aims for a production rate of one million vehicles by 2025.

Clearly the German automaker has the capacity to mass produce vehicles; the question is whether it can take Tesla to the mat based on volume. The weak point for Tesla vehicles has always been cost. The company hasn’t always been profitable, and average consumers are priced out of buying from Tesla. This is where companies like Volkswagen will hit them — but how much it will hurt remains to be seen.

Tesla vs. Volkswagen

Tesla is also ramping up production: based on its latest projections — which seem totally achievable — it should reach production of 500,000 cars per year seven years earlier than Volkswagen. However, they can only accomplish this feat if people are able to buy those cars. Thus far, people are willing — but the prices remain out of reach for many consumers. That’s Volkswagen’s real edge, assuming it can keep its own costs lower.

However, Tesla has plenty of edges of its own – not least its track record of innovation. Tesla as a company has many loyal consumer-fans precisely because it does things differently than ‘the big boys’ — and companies like Volkswagen may find this loyalty harder to get around than they imagine. In the meantime, consumers can enjoy the benefits of competition as more and more electric vehicles come to market, and companies look to capture more mainstream, middle income demographics.