VW plans to sell electric Tesla rival for less than $23,000: source says

Volkswagen (VW) intends to sell electric cars for less than 20,000 euros ($22,836) and protect German jobs by converting three factories to make Tesla rivals, a source familiar with the plans said.

VW and other carmakers are struggling to adapt quickly enough to stringent rules introduced after the carmaker was found to have cheated diesel emissions tests, with its chief executive Herbert Diess warning last month that Germany’s auto industry faces extinction.

Plans for VW’s electric car, known as “MEB entry” with an annual production volume of 200,000 vehicles, are due to be discussed at a supervisory board meeting on November 16, the source said, adding that another vehicle, the I.D. Aero, will be built in a plant currently making the VW Passat, a mid-sized sedan.

The carmaker, which declined to comment on the plans, is also expected to discuss far-reaching alliances with battery cell manufacturer SK Innovation and rival Ford.

The November 16 strategy meeting will discuss VW’s transformation plan to shift from being Europe’s largest maker of combustion engine vehicles into a mass producer of electric cars, said another source familiar with the deliberations.

VW’s strategy shift comes as cities start to ban diesel engine vehicles, forcing carmakers to think of new ways to safeguard 600,000 German industrial jobs, of which 436,000 are at car companies and their suppliers.

An electric van, the ID Buzz, is due to be built at VW’s plant in Hannover, where its T6 Van is made, the source said.

To free up production capacity for electric cars in Hannover, VW’s transporter vans could be produced at a Ford plant in Turkey, if German labor unions, which hold half the seats on VW’s board of directors, agree, the source added.

VW and Ford are in “exploratory talks” about an alliance to develop self-driving and electric vehicles and to complement each other’s global production and sales footprints, Reuters reported last month.

Ford has strong sales and profits in the US thanks to its exposure to the lucrative pickup truck segment, while VW dominates the market for passenger cars in Europe.

The companies are considering cooperation deals in the areas of commercial, electric and autonomous vehicles, although a final agreement is unlikely to be announced at the strategy meeting, the second source said.

The details of a cooperation deal with Ford may take until the end of the year to be finalized, the second source said.

The German carmaker will mainly focus on debating the merits of converting its VW factories in Emden, Zwickau and Hanover, which all build combustion-engine cars, to electric ones under the plans being discussed by the board of directors, according to the second source.