Volkswagen seeks to leave ‘dieselgate’ behind with all-electric compact SUV, the ID.4

Volkswagen unveiled its new battery-electric ID.4 compact SUV on Wednesday, the linchpin in its effort to move past the “dieselgate” emissions cheating scandal and into a zero-emissions future.

Significantly, the car will not be marketed as any kind of Tesla-killer.

“We don’t go all out to compete head to head with the other EVs out there,” said Jeffrey Lear, electric vehicle product manager at the German company’s U.S. marketing arm. “We’re out to win the hearts of compact SUV buyers.”

In other words, to woo buyers away from two highly desirable suitors: the Toyota RAV4 and the Honda CR-V.

The idea is to mainstream the ID.4 as a “no comprises” alternative to gasoline-powered competitors.

“By targeting compact crossover buyers, they’re making a calculated decision to pull from a broader, more open-minded consumer base that’s less likely to be swept up in the Elon Musk frenzy,” said Jessica Caldwell, Los Angeles-based market analyst at Edmunds.

A large and growing pool it is: In 2019, 2.89 million compact sport utility vehicles were sold in the U.S., 700,000 more than in 2014, according to Kelley Blue Book.

But at $39,995 before incentives, the ID.4’s premium pricing presents a challenge, Caldwwell said: “Consumers say they’re open to buying an EV, but few pull the trigger” and most revert to gasoline power.

In the U.S., the trend is not good. Battery-electric and plug-in hybrid vehicle sales declined 7% last year to 325,000 and accounted for only 2% of the U.S. market out of 17 million sold. Most of those electric cars were Teslas. Which means it’s high-pressure time for Volkswagen’s sales and marketing department and its 650 U.S. dealers.

Dealers, especially outside California, have been accused of shrugging off the electric car market in favor of more-profitable vehicles. Volkswagen is making a big effort to counteract that. It plans to reimburse dealers for as much as half the costs needed to prepare their properties for electric car sales and to reimburse them as much as 75% of marketing costs.

Most companies have focused on dealers in California and northeastern states for electric car sales. But Volkswagen needs to go coast to coast.

That’s because, post “dieselgate,” Volkswagen is going all in on EVs.

For those who don’t know, Volkswagen in 2015 was accused of, and later admitted to, rigging software to make it appear as if several of its diesel engines passed clean-air tests when they actually spewed illegal levels of pollution.

Volkswagen wasn’t the only company that did this, but what turned out to be criminal behavior was more widespread at the company. One U.S. Volkswagen executive is serving a prison term and others will stand trial on fraud charges in Germany, including former Chief Executive Martin Winterkorn. Fines, settlements and restitution have cost the company an estimated $33 billion.

The company embarked on what it hopes will be a cultural transformation. Mea culpas remain a central theme in public appearances. It hopes a serious push into EVs will sometime soon make “dieselgate” history.

The company’s risky and expensive pivot toward EVs adds up to $35 billion in investments and the introduction of more than 30 EV models worldwide through 2025. The bet is safer in Europe, where stiff fines await any automakers that fail to meet increasingly strict greenhouse-gas emissions rules.

The U.S. is a different story. Not only are EVs a tougher sell here, but the Trump administration is also trying to block state regulations that encourage or require less-polluting cars and trucks.

Volkswagen has long had trouble succeeding with any kind of vehicle in the U.S. market, even though it is the world’s biggest or second-biggest car company in sales, depending on the month. (It goes back and forth with Toyota.) It’s huge in Europe and in China. But in the U.S., market share is only about 2%.

U.S. sales for Volkswagen peaked way back in 1970, when the company sold 569,000 Beetles and Microbuses at a time when U.S. pop culture had hit its hippie heights. Sales last year totaled only 363,000 vehicles, according to Automotive News — up from the dark days of “dieselgate,” but still anemic.

Product mix, pricing and quality have all been problems over the decades. The company kept naming Germans to head U.S. operations. The company’s culture shift included the admission that it failed to grasp the workings of the U.S. market. Finally, late in 2018, it named an American, Scott Keogh, as U.S. CEO after his successful stint running Audi, Volkswagen’s premium brand.

“This is the most important launch for Volkswagen since the Beetle,” Keogh said Wednesday.

Can he persuade Americans to switch from gasoline to an electric EV? The Los Angeles Times was given an early look at the car in its first iteration, called the 1st Edition. Clearly, the company has worked hard to come up with something special. The car is at least as good-looking as any of its competitors. The interior is clean and modern. It’s roomy, as an electric car should be. The range is competitive, estimated at 250 miles.

It’s spiced with interesting touches, like a small light bar that runs along the bottom of the windshield that flashes right or left to indicate when a turn is coming up on the navigation system. There’s a wireless charger for a smartphone, and the light bar can indicate state of charge. The center screen can be controlled with hand gestures.

Its zero-to-60-mph time is 8 seconds at 201 horsepower with rear-wheel drive. It’s no speed racer, but it doesn’t need to be to win over middle Americans. With electric motor torque rated at 201 pound-feet, it’ll pop into traffic plenty fast.

Volkswagen knows price will be an issue. It’s training its dealer sales force to highlight the $7,500 federal tax credit on an EV purchase, and the possibility of qualifying for a similar $2,000 credit in California. The company calculates fuel savings at $2,500 over five years. Buyers will receive three years of free charging at Electrify America public fast-charging stations. (Billions in “dieselgate” fines were sunk into the Electrify America build-out.)

Put that all together, and the price comes in about even with comparably equipped RAV4s and CR-Vs, according to Volkswagen.

“If everyone just looks at the sales price they’ll be walking away,” Lear said. “We have some education to do.”

The ID.4 is manufactured in Zwickau, Germany, but production will move to Volkswagen’s Chattanooga, Tenn., plant to serve the U.S. market in 2022. The move will shave $5,000 from the price of the car, the company said.

Deliveries will trickle out late this year and across Volkswagen’s dealer network over the first half of next year. An all-wheel-drive version, boosting horsepower to 302, will be released in spring 2022.

Also due for 2022: an all-electric van inspired by the classic Microbus, called the ID.Buzz.