VW: EVs to bring 'significant price increases' in compact segment

The comments seem to contradict CEO Herbert Diess' promise that VW will sell EVs for half the price of the Tesla Model 3 by 2020.

Volkswagen chairman Hans-Dieter Poetsch has apparently backpedaled on claims that the company's cheapest electric vehicles will significantly undercut the Tesla Model 3's base price.

CEO Herbert Diess late last year claimed VW was preparing to launch EVs "that can do anything like Tesla and are cheaper by half" by 2020. Now, Poetsch has argued that electric powertrains are so expensive the transition to battery power will raise the price floor for an entire segment.

"The current price level cannot stay the same if these cars are equipped with electric motors," Poetsch told Welt am Sonntag, as translated by Reuters. "Therefore, it will inevitably lead to significant price increases in the small car segment."

Tesla's growth strategy has centered around building ever-cheaper vehicles as the price of batteries dropped over more than a decade. The company is still struggling to reduce production and component costs for the Model 3 before offering the cheapest $35,000 configuration to customers.

Diess' previous comments outlined VW's intention to 'stop' Tesla's growth and "rein them in" as the California-based automaker moves downmarket.