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FRANKFURT (Reuters) - Volkswagen's VOWG_p.DE new ID.3 electric vehicle will be 40% cheaper to build than the electric version of its Golf model, Chief Executive Herbert Diess told investors on Monday.

The battery in the new ID.3 can be used to add structural rigidity to the body and the modular layout of the battery allows for advantages in packaging and economies of scale.

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

This cost reduction is one of the reasons that Volkswagen is confident it can shift from making combustion-engined to electric cars without eroding the company’s profit margin, VW said.