Volkswagen is looking to take on the Tesla Model 3

Nobody thought that they could do it, but Tesla (TSLA) found a way to make electric vehicles safe, fun and beautiful.

The S, X and 3 models are the three safest cars ever tested by the National Highway Traffic Safety Administration. Performance is also not an issue, with impressive battery degradation and speed that can reach most high-end production vehicles whose price tags are significantly higher and sometimes, in multiples, too high. a Tesla.

Tesla vehicles also look great, unlike many other 100% electric vehicles that we have seen on the roads over the past ten years. So while many people inside and outside the industry want to take risks against Tesla, it's hard to deny that the automaker has completely upset that electric vehicle space .

Other automakers have ignored Tesla, they have now observed Tesla, they have now sued Tesla. The question is, can they catch them?

Volkswagen against Tesla

The last manufacturer to stand out is Volkswagen (VLKAY). The company recently made headlines as it continues to negotiate a partnership with Ford Motor (F) to leverage various synergies. We do not know for sure what this partnership might look like, but we know where Volkswagen is headed.

The company would seek to sell an electric vehicle at a price of "less than" 20,000 euros (about $ 22,800), according to Reuters.

Known as the "MEB Entry", Volkswagen would intend to convert three German production plans for the production of electric vehicles and produce 200,000 models. Can he do it?

If you think Volkswagen is a small producer, think again. If the name is not as popular in the US as Ford or the General Motors (GM) Chevrolet, Volkswagen produced just under 11 million units in 2017. To put that into perspective, the sales rate annual in the United States continues to fluctuate 17 million units.

It should also be noted that Volkswagen has a number of brands. Bentley is a leader in the electrification movement among ultra-premium luxury cars, while Audi and Porsche are also launching into space.

200,000 electric vehicles at less than $ 23,000 is not an easy task. Although Tesla is not necessarily the mainstay of automotive production efficiency, it may be difficult to ensure an adequate battery supply for Volkswagen. Especially for 200,000 entry-level vehicles, with the needs of Audi for its e-tron and the Porsche Taycan (Porsche to produce about 20,000 units the first year).

Admittedly, it took Tesla so long to get closer to the annual production rate of 200,000 because of several other problems. Nevertheless, going from zero to 200,000 units (or more) is not an easy task. Doing it at this price is also a headache.

The Tesla Model 3 starts at $ 46,000 for the mid-range, and a short-range model is planned for 2019. However, without significantly reducing performance, how will a manufacturer do the job for 23,000 USD? ?

The battery costs are down, of course, but even the goal of Tesla is simply to go down to the $ 35,000 level. How can Volkswagen get there and make money?

This is not clear. We do not even know if Volkswagen can produce as many electric vehicles or how many people will want to buy them. That may be why the price is so low initially, as Volkswagen does not have the reputation of environmentally conscious drivers. His fraud scandal has cost him not only billions of dollars, but also many customers who will never buy his brand. Believe it or not, many electric vehicle drivers buy these cars for their impact on the environment, not just because they do not pay at the pump.

Whatever the case may be, we will probably know more later this month as Volkswagen is scheduled to hold a strategy meeting on November 16th.

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