VW’s next-generation MEB electric platform is apparently delivering some significant cost reductions. VW CEO Herbert Diess says the first vehicle on the platform, the ID.3 electric car is 40% cheaper to build than the e-Golf.

Earlier this month, VW started production of their ID.3 electric car at its Zwickau factory, which they are completely converting from gasoline-powered car production to EV production.

At an investor event, Volkswagen Chief Executive Herbert Diess claimed that the new electric vehicle cost about 40% less to produce than the e-Golf electric car (via Reuters):

“If you focus on an electric platform, all in all it accounts for a 40% reduction against the predecessor electric Golf. Most of it from cells and the battery system. Around 5-10% comes from dedicating an entire plant to electric vehicles.”

The electric Golf was a conversion of the internal combustion engine version of the Golf and therefore, it wasn’t optimized for an electric powertrain.

And while the Golf is a high volume vehicle, the e-Golf program was fairly low volume, which means that VW didn’t produce many electric powertrains.

Now the German automaker has an entire factory dedicated to electric vehicle production from the ground up.

Interestingly, Diess was saying last year that the cost to bring their EVs to market was higher than expected:

“The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected. This is particularly so since some of our competitors have been making more progress.”

They seem to have made some progress since.

VW already awarded $48 billion worth of electric vehicle battery contracts to support its plan to produce over 1 million electric vehicles per year by 2025 between all its brands.

They now claim to be buying batteries for $100 per kWh for their electric vehicles.

The automaker said that electric cars will soon reach price parity with gas-powered vehicles.

As costs come down, Volkswagen is planning to make a sub-$22,500 all-electric vehicle. It is expected around 2023.

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