A Cool, Affordable EV Is Coming. Just Not to America.
Why the Volkswagen ID.2all and other small EVs don't make it to the U.S. market
It has an estimated 280 miles of range. It’s got a ton of space for groceries, strollers, and outdoor gear. It boasts an interior that looks simple yet modern and high-tech. It should be remarkably easy to park on city streets. Best of all, when it goes into production in 2025, it should start at under 25,000 euros, or about $26,500.
There’s just one problem: It’s not coming to America.
The U.S. is missing out on arguably the most exciting electric vehicle debut so far this year. It isn’t a supercar or a high-end luxury SUV, but the Volkswagen ID.2all Concept, unveiled Wednesday at an event in Hamburg, Germany. While the ID.2all is just a concept car for now — a kind of exciting preview of where a car company wants to go, sometimes realistically and sometimes fantastically — VW is making clear that it will produce such an EV and this one looks very ready for public consumption.
It also represents something frustratingly elusive in America's nascent EV market: an affordable, modern, small car. A Volkswagen U.S. spokesperson has confirmed that there are no plans to bring the production version of the ID.2all stateside. That’s disappointing, but sadly understandable given Americans’ car-buying habits and the economics of EVs.
But there may be light at the end of the tunnel from other sources.
EVs are still expensive, especially in America.
To date, the “affordable” EV remains a massive white space in America’s EV market.
In the 2010s, a number of so-called “compliance cars” fit that bill, mostly smaller hatchbacks and sedans fitted with batteries offering limited range to meet California’s emissions rules. As a concept, very few of those exist anymore, and few of them were that great to begin with.
In modern times, the average American new car costs around $46,000. If you want to break up with gasoline and go electric, expect to pay much more — the average American EV cost about $65,000 last year. Supply chain disruptions were one of the main culprits, but car prices and loan terms had also been rising for years.
Those average prices have gone down thanks to the Inflation Reduction Act’s tax rules, which offer credits of up to $7,500 if the EV is built in North America. Right now, only a few are.
Today, the best solution to this problem is probably the Chevrolet Bolt, which is a stunningly good deal thanks to discounts and tax incentives. It’s also technologically outdated and probably due to be discontinued; it doesn’t fast-charge at the rate of many rivals.
There’s also the Nissan Leaf, an early pioneer in this space that can be had in the mid-$20,000 range after tax breaks. But it, too, has a charging system that’s basically obsolete and is thus slated to die soon.
Finally, there’s the venerable Tesla Model 3. The latter is finally rather affordable thanks to Tesla’s price cuts and tax incentives, starting at $31,290 only if you include those deals and cuts. (You may recall that Elon Musk promised the Model 3 would cost $35,000 for years, but it really didn’t until recently.)
The point is, America is a long way from having a market of truly affordable new EVs, especially small ones. If you want the electric equivalent of, say, a Honda Civic or a Toyota Corolla, you’re largely out of luck. Instead, our recent EV market is largely made up of high-end luxury sedans or crossovers, replete with wildly high-tech features and capable of stunning zero to 60 mph times.
But widespread EV adoption will be key to reducing vehicle emissions and achieving climate change mitigation goals. So far, especially in the U.S., the cost of these cars has been a gigantic barrier to making that happen.
Any new technology is expensive, and supply chain disruptions have made things worse. Automakers are working to scale electric car production, ramp up the homegrown battery industry with help from the IRA’s tax incentives, and to spread more EVs across their lineups at different price points.
But smaller, more affordable, and even city-focused EVs aren’t especially on their radar screens yet.
America’s small car track record is poor.
There’s another problem here: In recent years, we as a nation have bought a lot of trucks, crossovers, and SUVs.
As larger vehicles got better fuel economy than their gas-sucking predecessors from the 1990s, Americans started moving away from smaller cars. Automakers responded in kind. Ford killed off most of its sedans and small cars (except the Mustang) in 2018. General Motors offers almost no small cars anymore and only one sedan, the aging Malibu. Mostly, it’s the Japanese and Korean automakers who bother to make these anymore.
Instead, we’ve shifted to buying bigger vehicles, which are still less efficient and worse for the environment than small cars. Take the new GMC Hummer EV, for example. It’s huge, with an enormous battery that takes a ton of resources to make and uses a lot of electricity to charge, even if it generates no tailpipe emissions. It also starts at $108,700.
It’s a little crazy we can buy an electric Hummer, but not an electric Volkswagen Golf, isn’t it?
Speaking of, there’s reportedly a good chance the production ID.2all could simply be called the next Golf. But the Golf isn’t even sold in America anymore thanks to its dwindling sales; only its more expensive enthusiast-friendly versions the GTI and Golf R are available here.
It also helps to remember that automakers can charge more for bigger cars, even when they don’t cost that much more to make than smaller ones. The car business runs on profit margins. Right now, these are even worse for EVs as the “legacy” automakers fight to match Tesla’s low building costs and high margins. They have to charge a lot for EVs, and produce bigger ones, if they want to make any money from them. (Ironically, it also means the EV revolution is largely being financed through combustion-engine Suburban and Expedition sales.)
Plus, if Volkswagen wanted to sell this car here, it’d have to be built at one of its North American factories in Tennessee or Mexico, or else it can’t take advantage of the new tax credits. That won’t make sense if it can’t be sold at high volumes, and our poor track record buying Golfs basically rules that out.
So if you’re wondering why the Volkswagen ID.2all won’t be your next EV, remember it’s a perfect storm of American preferences for big cars, the high cost of batteries, the need to make EVs profitable, and now, new rules around tax breaks impacting production decisions.
Where to go for cheap EVs?
But not all hope is lost — maybe.
Remember that “affordable” and “small” aren’t necessarily the same thing, although Americans often think they are. The new Chevrolet Equinox EV crossover looks extremely promising; it should start around $30,000 before any tax breaks. But it’s bigger than a Bolt.
There’s also the upcoming Fiat 500e, which is coming back to America and should get about 150 miles of range — not bad at all for a city car. No word yet on if this Italian compact will be produced on this continent, which would dictate its tax break eligibility.
Tesla is also apparently working on an even cheaper EV to slot in below the Model 3, possibly to cost around $25,000. If anyone can pull that off, it’s Tesla, which remains ahead of the competition on its ability to build EVs at scale. But Elon Musk indicated in January that this cheaper EV is not a priority, so we’ll see.
Another EV startup, Fisker Automotive, has admitted that affordable EVs are a huge market opening. It aiming for a $29,900 starting price, again before incentives. But Fisker is still in the long, challenging process of rolling out its first EV crossover, so that’s years away if it happens at all.
Finally, China has a new crop of affordable EVs that's taking Europe by storm, but given Washington's tensions with Beijing, we’re quite unlikely to see them stateside anytime soon.
So if Americans want an affordable, practical, city-friendly EV instead of an expensive truck or SUV, what are we to do?
I don’t want to get everyone’s hopes up, but I’ve seen the power of demand work before — especially in the enthusiast world. Cars like the Nissan GT-R, the original Subaru WRX, the Toyota GR Corolla, and Audi RS6 Avant came to the U.S. after enough consumers demanded them. This can, and does, happen from time to time.
The question is whether it could happen for, say, the Volkswagen ID.2all. Maybe if enough Americans demand it, Volkswagen will answer with supply. But then we’d have to do our part and actually buy it.
If Americans really want cheaper, smaller EVs, eventually we’ll have to put our money where our mouths are.