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German automaker, Volkswagen AG (OTC:VWAGY), has significantly reduced the prices of its ID.4 electric SUV in China, now starting at $20,000, according to a recent report by Electrek.
The price cut was announced by FAW-VW, Volkswagen’s joint venture in China. The ID.4, initially launched in China in January 2021 at a price of 193,900 yuan ($26,700), is now being offered at a slashed price of 145,900 yuan ($20,060).
Volkswagen operates in China through two joint ventures, namely FAW-VW and SAIC-VW, selling two versions of the ID.4 and ID.6 electric models. The price reduction in ID.4 comes as the electric vehicle market in China intensifies with new competitors and pricing pressure.
This move follows a similar price cut on the ID.3 electric car by VW-SAIC in July, with the vehicle’s price starting at 125,900 yuan (around $17,500), down by 16% from its original price.
The pricing strategy seems to be paying off for Volkswagen as ID.3 sales shot up from 1,819 units in June to 7,378 in July, following the promotion, with over 10,000 orders gathered.
The automaker has indicated that the ID.4 offer is limited to only 3,000 vehicles, but considering the success of the ID.3 promotion that ran until over 17,000 units were sold, the offer might be extended.
Despite the success in stimulating demand, the sustainability of these promotions in the long run remains in question, especially with increasing competition from other automakers in the region, including Berkshire Hathaway Inc-backed BYD Auto (OTC:BYDDF) and Tesla Inc. (NASDAQ:TSLA).
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