EV sales growth momentum is showing signs of slowing
ID. EVERY1
Since launching the ID.3 in 2019, Volkswagen (VW) has steadily expanded its lineup of BEV-only models. Currently, the global lineup includes the ID.3, ID.4, ID.4X (China-exclusive model), ID.5, ID.6 (China-exclusive model), ID.7 (sedan/station wagon), and the ID.BUZZ produced by the commercial vehicle division. Unfortunately, only the ID.4 has been introduced in the Japanese market, but the ID.BUZZ should arrive soon. Incidentally, only the ID.4 and ID.BUZZ are sold in the North American market, with Europe and China being the main markets.
In fact, of the VW Group’s global BEV sales in 2024 (744,800 units), Europe will account for 447,900 units and China for 207,400 units, accounting for approximately 88% of the total. However, global BEV sales, which had been steadily growing until now, are expected to decline for the first time in 2024, down 3.4% from the previous year (771,100 units). This is largely due to a 5.2% decline in Europe, the VW Group’s largest market, as well as a sharp slowdown in China, with sales increasing by 8.1% from 23.2% the previous year. Looking at the VW brand alone, global sales in 2024 are expected to be 383,100 units, down 2.7% from the previous year. The momentum of BEV sales expansion is showing signs of slowing.
The serious reasons why EV sales in China are stagnating
ID. EVERY1
The biggest reason is that European countries have decided to end or reduce subsidies for the purchase of BEVs after December 2023. In October 2022, the EU agreed to ban the sale of CO2-emitting passenger cars and light commercial vehicles within Europe by 2035. Although the EU changed its policy to allow ICE vehicles that use e-Fuel in March 2023, at present the only vehicles that emit zero CO2 are BEVs or FCEVs. As there is still little infrastructure for FCEVs, realistically BEVs are the only option, but BEVs are still more expensive than gasoline or diesel vehicles, and their widespread adoption will be difficult without subsidies.
Furthermore, although the issues of charging time and driving range have been improved year by year, in a society where urbanization is progressing day by day, the number of homes with charging facilities in their parking lots is not increasing. As a result, sales have plateaued. This is the current situation in Europe.
The situation is different in China. Despite the economic slowdown, the BEV market in China continued to grow through 2024, thanks in part to subsidies for trade-ins of NEVs. However, the rise of new local BEV manufacturers, led by BYD, is putting pressure on foreign manufacturers. The VW Group’s BEVs are also rapidly losing their competitiveness.
To overcome this situation, the VW Group has shifted its focus to offering more compact and affordable models in the European market. This includes the ID.2all, which was unveiled in March 2023, and the ID. EVERY1, whose concept car had its world premiere this time.
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ID.2all
ID.2all
The ID.2all, a B-segment hatchback with a total length of 4050mm, roughly the same size as the current Polo, is scheduled to be released in 2026 for 25,000 euros (approximately 4 million yen), and is also scheduled to be introduced to the Japanese market. There will also be a GTI version and an SUV version, which will highlight the fun of driving, so many people are looking forward to them.
The ID. EVERY1 is a sub-B segment hatchback with an overall length of 3,880 mm, which is even more compact than the ID.2all, and is scheduled to be released in March 2027 at an even more affordable price of 20,000 euros (approximately 3.2 million yen). Its looks are also familiar and reminiscent of VW’s tradition, and it seems likely to be popular with a wide range of users.
Both of these vehicles are front-wheel drive models that use an improved version of the MEB, a modular platform exclusively for BEVs, and are likely to be rolled out to other brands under the group, such as Skoda and Seat. If they can establish themselves as “people’s cars” that are fully accepted in Europe, like the Golf, Seat Leon, and Skoda Octavia, the VW Group’s BEV expansion strategy may be able to get back on track, at least in Europe.
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ID.CODE
ID. UNYX
Meanwhile, in China, the company has launched a new electric vehicle sub-brand, ID.UX, targeting young people. At the Beijing Motor Show held in April 2024, it unveiled its flagship model, the 4.8m-long SUV concept, ID.Code. It has been announced that it will be an extremely advanced model, different from the existing ID. family, featuring a very futuristic design, an infotainment system incorporating AI, and Level 4 autonomous driving. While the release date for this model has not yet been decided, five models will be released under the ID.UX brand between 2027 and 2030.
Based on the ID.UX, a compact SUV called the ID.UNYX will be released in the summer of 2024. This model will use the newly developed China-exclusive BEV platform “CMP (China Main Platform)” developed at VCTC (Volkswagen China Technology Company), a development center in Hefei, eastern China. By using a platform that is more optimized for the Chinese market, the company aims to improve the product appeal of models sold locally.
The success of the ID.UX will be key to VW’s recovery in the Chinese market. A fierce battle will unfold with local manufacturers in terms of both advanced technology and price, but it will be an uphill battle that VW cannot afford to lose.
