What do you think of Volkswagen’s new ID4, which is priced no higher than RMB 250,000 after subsidies?

Last night, the domestically produced Volkswagen ID.4 was officially unveiled. This MEB model will be produced by FAW-Volkswagen and SAIC Volkswagen respectively. It is currently in the process of preparing for volume production. It is expected to be launched in 2021 and delivered in the first quarter. The important point is that the price is in a relatively reasonable range from previous expectations, with a price of less than 250,000 yuan.

Figure 1 Price of ID.4 CROZZ

01. Different versions and Volkswagen’s core selling points

Based on the overseas version of MEB, ID4, the two domestic localization companies only differentiated in details. FAW-Volkswagen is ID.4 CROZZ, and SAIC Volkswagen is ID.4 X. Based on the MEB platform, the maximum range of both cars exceeds 550km (the price range of the long-range version after subsidies does not exceed 250,000 yuan). Objectively speaking, the positioning of MEB is to run volume at the beginning, and the positioning is to bring down the price. This price is a relatively normal reaction after the further price drop of Tesla Model 3. ID4 has 4 power versions, from the entry-level ID.4 Pure (109kW, peak torque 220N·m) to the most powerful ID.4 ProPerformance version (maximum power 150kW, maximum torque 310Nm). The battery Pure is equipped with 55kWh; the ID.4 Pro is equipped with an 83kWh battery, with a maximum range of 550km.

Figure 2 Current market positioning

From Figure 1, we can see that the squeeze pricing of Model 3 has an impact on many car companies. Weilai, which is relatively stable above 300,000, also relies on the separation of car and electricity to lower the price and expand production capacity through financial means. If we follow the existing normal price positioning, we can understand the market demand in this way. At present, 250,000 yuan is a relatively sensitive price for new energy vehicles. After the personal demand for electric vehicles in restricted cities gradually becomes rigid demand, this part of the car-buying population is mainly the superposition of original model replacement and new purchase demand. The variable at this time point lies in the subsequent localization of Model Y, which forms a two-category layout with Model 3. There will be more means to reduce the cost effect brought by the superposition of production. The subsequent 21-23 is the downward range of Model 3, and 250,000-260,000 may be the main range of Model 3.

Table 1 Segmentation of different markets

The main selling point of Volkswagen ID.4 is still the accumulated brand appeal (accumulated trust) in history, relatively high-quality interior, mature dealers and services in first-tier cities. These are all mid-sized pure electric SUV models made by Volkswagen. As the next step of urban use, they have sufficient power and endurance. ID4 represents the differentiation of Volkswagen and the previous MQB oil-to-electric conversion. It is a thorough transformation from design to digitalization. This model, which may not be very complete (mature), has now reached a state where it must be practiced. The price of 250,000 is, in a sense, a sign that Volkswagen wants to increase its volume.

Figure 3  ID4  's subsequent software problems may accompany this car for a long time

02. China’s new energy vehicle sales in 2021

I estimate that Tesla may increase the volume to about 250,000 in 2021. Among foreign companies, Tesla is the main one with fighting potential, followed by Volkswagen. These two companies are estimated to account for 60%. As for the independent sector, it seems that except for SGMW, which has taken a new path, the overall volume may maintain the scale of 2020. The increase of new forces is probably in a smaller dimension. This is my main judgment for 2021. Of course, there is a relationship of increase and decrease here. Maybe this dimension is a goal for some companies, and the completion rate will be discounted, and the overall scale may not reach 1.4 million.

Table 2 Possible volume forecast for 2021

Summary: From the overall perspective of the new energy passenger vehicle market in 2021, there will be a relatively large change.