What Volkswagen Plans for China

By Chris Lange Updated Jan 12, 12:11PM EST · Published May 9, 1:50PM EDT

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What Volkswagen Plans for China — © courtesy of Volkswagen of America Inc.

[cnxvideo id=”655237″ placement=”ros”]Volkswagen currently dominates the passenger car volume market, and now the company is turning its sights on China as part of its plan to grow sales in electric vehicles (EVs). Overall, management is confident that it can become a global leader in electric car sales, but it will still have to deal with Tesla Inc. (NASDAQ: TSLA) in the meantime.

Management plans to achieve sales of roughly 1 million battery driven vehicles annually by the year 2025. Also Volkswagen thinks its new I.D. family of vehicles can pass up Tesla in the EV market on a price-point basis.

China is currently the largest market for electric cars, and it may just give Volkswagen the push that it needs to pass Tesla, by offering mass-market battery-powered vehicles at a lower price than Tesla’s upcoming Model 3.

Tesla currently sells the Model S sedan and Model X crossover. The Model 3 will be unveiled in July, and Elon Musk expects to move into the mainstream with this model. In fact, Musk is targeting sales for the Model 3 to be 1 million by 2020.

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However, Volkswagen has a plan to undercut Tesla sales. VW plans to enter China with models that are priced below $30,000 — the expected price of the Model 3 is $35,000. Also Tesla has no Chinese manufacturer, which could cause more upward pricing pressure.

VW has signed off on three battery models based on its new modular electric-vehicle architecture. The cars will come to market in 2020 and will be a Golf-sized hatchback and two sport utility vehicles (SUVs), one the size of a Tiguan and the other the size of the Tiguan Allspace. These models will be the first of I.D. family.

Shares of Tesla were trading up 4% at $319.59 on Tuesday, with a consensus analyst price target of $268.71 and a 52-week trading range of $178.19 to $327.66.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.