Volkswagen Group (OTC:VWAGY) is offering ID. electric vehicle buyers in China an option to rent out the battery to bring down ownership cost as the German automaker looks to compete with Tesla Inc (NASDAQ:TSLA) and homegrown rivals including Nio Inc (NYSE:NIO) in the world’s largest auto market.
What Happened: The program will lower the purchase threshold for customers by RMB 60,000 ($9,600) to up to RMB 120,000 ($19,200) depending upon the electric vehicle that they choose to buy, a company spokesperson told Benzinga.
Volkswagen is essentially offering the battery-leasing option as a flat amount, interest free loan for five years, a program that is currently valid until the end of this year.
The offer is valid on different variants of the recently-launched electric compact ID.3 as well as the recently launched compact electric sports utility vehicle ID.4 and the mid-size crossover SUV ID.6.
The starting price for the ID.3 after subsidy is around RMB 159,888 ($25,582). The starting price for the ID.4 is RMB 199,888 ($31,982) and RMB 239,888 ($38,382) for the ID.6 after subsidy.
Why It Matters: Buyers will still have to pay back the loan for the battery, unlike in the case of Nio, which offers a similar program. Nio offers a battery-swap option for its buyers wherein they don't have to purchase a battery when they buy a car.
The locally made compact electric vehicle ID.3 is the third such model from Volkswagen’s ID. series in China. The compact was launched last month and is made at a SAIC-Volkswagen jointly operated plant in Shanghai.
The German automaker began delivering its all-electric ID.4 Crozz in March this year, a model that it makes in partnership with China’s FAW Group.
Volkswagen has set an ambitious target to sell up to 100,000 ID. series electric vehicles this year in China and still has much catching up to do to meet that milestone.
Price Action: VWAGY shares closed 3.38% lower at $30.32 a share.
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