VW betting IRA incentives for EVs to swell US market share, boost brands

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 United States by 2030, all of which should qualify for the maximum $7,500 in tax credits provided by the Biden policy, said Pablo Di Si, CEO of Volkswagen Group of America. That broad availability will help the automaker attract more customers as the company aims to account for 10% of the U.S. auto market by 2030 compared with about 4% today, he said.

Volkswagen AG officials think the German automaker will be able to double EV sales in the United States thanks to incentives set by the Inflation Reduction Act.

“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 United States 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 midsize 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, 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 United States.

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 outsize portion of electric vehicle sales, reaching to 10% of the total market will hinge upon EV sales rising faster than currently expected, he said.