Volkswagen revealed this morning that they expected a 50% price fall in battery costs by 2027 across its core brand models, over a 2023 baseline, and a further 20% saving heading towards 2029.
The Core Group brands include Volkswagen Passenger Cars, SEAT/Cupra, ŠKODA and Volkswagen Commercial Vehicles.
Volkswagen will start producing its first European models featuring in-house Powerco. LFP battery cells this year, in line with the start of production of four core models coming from Volkswagen, ŠKODA and Cupra later this year, manufactured at SEAT's Matorrel facility just outside Barcelona.
The price of the model, led by the Cupra Raval and followed by two VW derivatives – ID.2 and one crossover – and a ŠKODA, all based on an adapted version of the MEB all-electric modular platform, will begin at around €25,000 before local subsidies.
Battery price cuts and scaling benefits, commonality and synergies will also allow Volkswagen to then launch a Portugese-made €20,000 ID.1 model from 2027, with the concept model being unveiled in Düsseldorf earlier this month.
The IEA (International Energy Agency) has previously said that lithium prices, a key component in electric car batteries, have dropped by more than 85% from their high peak in 2022.
The IEA also stated that after years of investments, global battery manufacturing capacity reached 3 TWh in 2024 and is also driving those price falls, with the Paris-based agency forecasting that capacity could see another tripling if all announced projects are built, although that was prior to the declared bankruptcy of Northvolt, announced yesterday.
Meanwhile, the Volkswagen brand readjusted its timetable to meet its operating margin target of 6.5% by three years to 2029 from the original 2026 target. The margin during 2024 was 2.9%, hit by non-recuring restructuring costs booked during the last 12-month period.
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*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK
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