VW’s new Tiguan shows the steep climb ahead for EVs like the ID.4

Posted by Talbot Payne on May 14, 2021

Farmington Hills — General Motors and Volkswagen say their future is electric. The two manufacturing behemoths have set ambitious goals to produce only battery-powered vehicles by 2035.

But the latest model of VW’s best-selling vehicle introduced here — the 2022, gas-powered Tiguan compact SUV — shows how steep the road is ahead.

The new Tiguan, with an estimated base price of $26,000, will go on sale this fall alongside VW’s first global EV, the similarly-sized $41,000 ID.4. Even with the temporary federal $7,500 tax break for buying an electric vehicle, that’s a yawning $7,500 price difference in America’s most competitive SUV segment. With 398 miles of EPA-estimated range, the Tiguan dwarfs ID.4’s 250 miles of battery range.

“We do know it’s going to take awhile for most U.S. customers to say, OK, cool,” they will buy an electric vehicle, VW North American product marketing chief Hein Schafer said in an interview at the Tiguan’s media reveal.

“Price point is a challenge. (The) cellphone industry was no different. As they started up, battery efficiency was not where it should be, it was very expensive. Batteries got more efficient, they got more affordable. And so you got more range and the price point of cellphones came down. I think EVs are going to be no different.”

VW’s challenge to convince customers to go electric is compounded by governments that, for the first time, are forcing automakers to produce a specific powertrain. Both Washington state and Great Britain, for example, say they will forbid gas-engine car sales by the end of this decade.

The 2022 VW ID.4 is the German brand's first EV in the USA. It starts at $41k and benefits from a $7500 federal tax credit.

It will be the second time in two decades that VW has had to reinvent itself. Just over 10 years ago, VW was a sedan brand, with the majority of its sales in Jetta, Golf and Passat cars. But as the American consumer flocked to SUVs, VW had to switch gears to adapt.

The Tiguan was introduced in 2008 and struggled to gain traction against popular badges like the Toyota RAV4, Honda CR-V, and Nissan Rogue. It wasn’t until the Tiguan’s second generation, 2017 long-wheelbase model that VW posted sales above 100,000 units in a segment where its Japanese competitors move over 400,000 vehicles annually.

“The Generation One Tiguan was very much Euro-centric — didn’t have second-row comfort, didn’t have the trunk. But we were working feverishly to find a Tiguan that met all the U.S. customers’ needs and wants,” said Schafer. “When we launched Tiguan in 2017, we saw immediate success. We more than doubled our volumes, Clear lesson: if you listen to U.S. customers, you . . . can have success in the U.S. market.”

The ID.4 enters a U.S. market where customers have shown little interest in EVs not named Tesla.

After Tesla’s big three EVs — Model 3 (89,976 units sold), Model Y (79,072) and Model X (22,255) — the best-selling electric chariot in 2020 was the Chevy Bolt at 20,754 units. In its fourth year of sales, the $36,000 Bolt hatchback — hyped as a Model 3 killer in 2017 — sold about 1/5th as many vehicles as the comparably-sized, gas-powered Chevy Trax crossover. The $33,000 Nissan Leaf EV — now in its tenth year on the market — sold just 9,564 units.

“Consumer consideration to buy an EV for the last 10 years has been stuck at about 3-4%,” said Ed Kim, vice president for Industry Analysis at Auto Pacific, while noting that actual EV sales are under 2% of the market. “With new vehicles in the market like the Model Y and Ford Mustang Mach-E, our recent data shows that doubling to about 6%.”

Plug and play. The 2022 VW ID.4 recharging at Novi Electrify America charger.

While the German-built ID.4 shows off a new, minimalist interior design, the Mexican-made Tiguan is hardly standing still as it gains new technologies like a digital instrument display, digital climate controls and wireless Apple CarPlay/Android Auto to match its own bold styling update.

Load an all-wheel-drive ID.4 with all the features and it tops out at $49,675 before tax incentives — a price more in line with Tesla’s luxury Model Y. A similarly-equipped Tiguan will run about $37,000 (pricing will be announced closer to fall release).

“There is a fair amount of apprehension (with EVs) when it comes to charging, range. Is it going to inconvenience me?” said Schafer. “So I think the (ID.4 and Tiguan) complement each other. We have the Tiguan that is extremely spacious, has all the creature comforts. Then ID.4 teases this prospect that EVs are not what you think they are. (It’s) fun to drive . . . and also doesn’t have servicing costs that a gasoline engine vehicle has.”

Auto Pacific’s Kim points out that — unlike the cellphone revolution that freed Americans from wall-tethered phones — EVs actually limit mobility by tethering consumers to a charge cord.

“With the internal combustion engine, you have the freedom to drive anywhere,” said Kim. “EVs don’t have as much infrastructure and they take longer to charge. We’re still at a point in time when it doesn’t make sense for everybody.”

The ID.4/Tiguan siblings are in the middle of a full lineup of utes (including the bigger Atlas and Atlas Cross Sport) that will soon be joined by the 2022 Taos, VW’s first subcompact SUV.

Tellingly, Taos is not an EV. The costs of batteries are simply too steep.

“(The Taos) is going to come out with a very peppy, 1.5-liter turbo engine, which is going to have phenomenal fuel economy because we know customers buying in that segment are extremely cost-conscious,” said Schafer.

Key to VW’s EV plans — as well as other manufacturers — is government partnerships for massive subsidies.

In addition to the $7,500 federal tax credit, VW touts state incentives for EV buyers like California’s $1,500 rebate and access to carpool lanes. VW also anticipates federal manufacturing subsidies for the ID.4 when it begins production at the company’s Tennessee plant in 2022.

The interior of the 2022 VW ID.4 is simple and modern. All digital displays and good storage space.

“If USA is serious about reducing CO2 emissions, I feel like it makes sense to extend (the $7,500 tax credit) until you get to a point where these cars are affordable,” said Schafer, citing the Biden Administration’s push to reduce carbon dioxide emissions. “That’s a critical point — because if you look at the average transaction price of a car in the U.S., almost 70% of volume is below 40 grand. So if you really want to transform the market . . .  you’ve got to stimulate that for a period of time.”

Other manufacturers face similar challenges as they bring EVs to market. Ford’s first electric SUV — the $44,000 Mustang Mach-E — enters the same compact SUV segment as Tiguan. Ford’s segment mainstay, the gas-powered Escape (2020 sales: 178,496 units) now sports a hybrid-electric version that stickers for under $30,000.

This year, Ford introduced a new gas-powered, $28,000 Bronco Sport to the segment that hit dealers about the same time as Mach-E. The electric Mustang came out of the blocks quickly with 3,739 sales in February, then trailed off to 1,951 sales in April. Bronco Sport, meanwhile, posted 5,525 February sales and accelerated to 13,856 units in April.

For now, VW touts the daily usability of the ID.4 — which can charge overnight at home for routine metro commutes. The build-out of national electric infrastructure is a longer-term play — also dependent on government’s help.

“We’ve made it clear that, post-2035, we’re not going to be developing any more gasoline-powered engines,” said Schafer. “How fast can we pull that off? We need to earn money, too. We make money with gasoline-powered cars, so it’s very clear we need to time that transition with the market.”

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