Volkswagen looks to U.S. EV tax incentives to capture buyers

Volkswagen AG believes that electric-vehicle incentives put in place by President Joe Biden’s Inflation Reduction Act will help the company more than double its share of the U.S. market.

The German carmaker plans to sell 25 EV models in the US by 2030, all of which should qualify for the maximum $7,500 in tax credits provided by the Biden policy, said Pablo Di Si, chief executive officer of Volkswagen Group of America. That broad availability will help the automaker attract more customers as the company aims to account for 10% of U.S. auto market by 2030 compared to about 4% today, he said. 

“We have a great opportunity in the U.S.,” Di Si said in a Bloomberg Television interview. “I believe this is the right time and the right place.”

Long an also-ran automaker in America, VW wants its group of brands such as Audi and Porsche to achieve a 10% share in the U.S. by 2030. It’s targeting a 5% share in the same period for its namesake brand, which has just 1.8% today.

The company plans to spend $7 billion in the country to add production for its electric vehicles. It began assembling the ID.4 electric SUV in the U.S. last year while output of the ID.Buzz electric van is slated to begin in 2024. The company is also planning U.S. production of a midsized and a large electric SUV in the next several years.

Di Si said Volkswagen will be able to capitalize on the growth in electric vehicle sales faster than some other established automakers and gain ground on Tesla Inc., the industry’s leader. VW’s historic rivals also have big EV plans, but the company has a head start on some of them with its ID.4 already expanding production in the US.

Volkswagen of America has said 80% of the 25 new electric models it plans to introduce in the United States by the end of the decade will be produced in the U.S. or Mexico, tipping its hat toward the incentives laid out in the Inflation Reduction Act.

Getting that much share will be tough, said Sam Fiorani, vice president of global forecasting for AutoForecast Solutions. Even if Volkswagen gets an outsized portion of electric vehicle sales, reaching to 10% of the total market will hinge upon EV sales rising faster than currently expected, he said.

“VW has gone through a number of periods where they wanted to gain share in U.S.,” Fiorani said in a phone interview. “The only time it worked was when the Jetta came out. VW just doesn’t have that big of a following anymore. It will be tough without a huge shift to EVs.”

To have a chance of realizing its goal, VW is also hiring designers and engineers to tailor its future models more closely to American tastes. The company has unsuccessfully tried to make a push in the U.S. in the past, but its models were either too expensive to gain big sales volume or didn’t have enough appeal to dislodge consumers from American and Japanese brands.

Di Si said in a separate interview Thursday with Bloomberg that while VW is confident in its plan, achieving its U.S. market share goals will be a stretch.