Inside Volkswagen's big ID.Buzz bet

Volkswagen is betting big on the upcoming ID.Buzz electric van. With availability of the vehicle still a year out, the automaker is counting on years of pent-up anticipation to not only sell the bus shrouded in nostalgia, but to have it act as a halo product to bring customers to the brand's entire EV lineup.

With the vehicle already out in Europe, it's now -- almost -- time for the United States to flock to showrooms and fawn over an electric minivan that transcends the label. The Volkswagen ID.Buzz is meant to pull you in, to appeal to the part of your brain that daydreams about beach adventures. Volkswagen will most certainly sell out of the Buzz for the first few years, but that's fine for the automaker. The electric bus is the bait to get you excited about the rest of the ID lineup. Customers might come for the ID.Buzz, but they're likely going to leave with an ID.4.

A hero's welcome

Image Credits: Volkswagen/James Lipman

Image Credits: Volkswagen/James Lipman

With the capacity to only build about 100,000 ID.Buzzs a year for the entire globe, getting your hands on one of these coveted vans is going to be tough. But it's not a volume car; it's an EV gateway drug for Volkswagen. The automaker is betting that customers will come to drool over the ID.Buzz whether in showrooms or online and leave with another VW EV.

The question is whether this strategy will pay off. VW executives say early signs suggest it will.

After the world premiere last year in Europe, Volkswagen saw interest in the following months increase in its other EV vehicles by more than 200%, according to the automaker.

"They came to the dealers and they came on our website. So the idea was really to branch out. So it's not a question of volume." VW's head of global passenger car R&D Kai Grunitz said during a roundtable discussion with media.

The automaker is hoping to recreate that in the United States, Volkswagen North America CEO Pablo Di Si told a group of journalists ahead of the unveiling.

"I consider myself to be very, very lucky to be right here, right now," Di Si said. "This is a very exciting moment for our brand. Bringing the ID.Buzz to the U.S. next year brings the halo effect to our brand."

The CEO continued, "The love relationship with this vehicle with U.S. consumers, it's incredible."

"As the Volkswagen brand is transitioning to full electrification, it needs electric vehicles that captivate and engage American consumers. The ID.4 is a worthy electric vehicle, but ultimately it's a pragmatic vehicle that doesn't try to appeal on an emotional level," Ed Kim, president and chief analyst of AutoPacific, told TechCrunch in an email.

"The ID. Buzz aims to be exactly that. Like the New Beetle of 1998, the ID. Buzz is an unabashedly retro-futurist take on a brand icon, in this case, the original Volkswagen Bus." Kim continued. "Not only will it draw attention to Volkswagen as an EV maker, but it will also mark the return of fun and whimsical styling to a brand whose design has become quite conservative as of late. In this sense, the ID. Buzz will serve as a halo not just for Volkswagen's EV efforts, but for the brand as a whole."

Minivans are cool now? Minivans are cool now.

Image Credits: Roberto Baldwin

Image Credits: Roberto Baldwin

Minivan sales have been in decline for decades. Even a slight bump in popularity can't bring the masses to a van. But while other automakers have to struggle to convince consumers about the joys of a vehicle with sliding doors and tons of cargo space for humans and stuff, VW seems to have shrugged off the lame factor by pivoting hard toward the past.

"The ID Buzz comes to America at an interesting time with the minivan segment down significantly from its highs and other OEMs restyling their minivans to make them look more SUV-like such as the Kia Carnival." Sam Abuelsamid, principal research analyst at Guidehouse Insights' told TechCrunch.

"The challenge that VW has is will the retro style of the ID.Buzz remain appealing to customers and fans of the old Bus longer than other retro models like the New Beetle? I think it might be less of a problem for the Buzz. Coming as a three-row, it also has an opportunity to attract people that wanted a three-row SUV but prefer something a bit different," Abuelsamid noted.

Di Si sees potential ID.Buzz owners as free-spirited and young at heart. Again, not really a group known to be drawn to the utility of a minivan.

Combating price gouging

Image Credits: Volkswagen/James Lipman

Image Credits: Volkswagen/James Lipman

All that cool means demand, and Volkswagen only plans to build the entire world's supply of ID.Buzz vans at a single factory in Hanover, Germany. The facility has a manufacturing capacity of 100,000 vehicles a year. "I think we're going to be overwhelmed next year with orders," Di Si told TechCrunch.

That's typically bad news for customers trying to purchase a high-profile vehicle. When demand for the Ford Bronco quickly outstripped supply, dealerships started tacking on outrageous markups. Di Si and Volkswagen want to combat that.

Di Si said that he was talking to dealers about this issue. He's not sure what the solution is just yet, but he told journalists, "We need to respect the consumers." He later said the one thing that should strike fear into the hearts of dealerships: "We can not have markups on this vehicle."

One of the solutions the CEO floated was an online order system that had a set price that couldn't have a markup added and was delivered by a dealer. Some Bronco owners dealt with surprise markups above what they thought they were paying when they ordered their SUVs online. The customer would receive a noye that their new SUV was at the dealership but now with a higher price tag. Volkswagen doesn't want that to happen.

Di Si did say that the ID.Buzz is going be a huge vehicle for after-market accessories and that could appease the dealer networks. They might not get the big pile of markup cash up front, but they'll be able to upsell items to new owners hoping to trick out their new van as they drive whimsically into a bygone era of VW microbuses in a fancy new EV.

That said, don't expect to be able to pick one up in the showroom. With demand as high as they predict, the only real way to get one is via an online order -- and even then, it's going to be tough.

Which puts VW in a weird position. It doesn't want to take a customer's money and then deliver the van two years later. It would rather end sales once the allotted vehicles are all spoken for. But that means money left on the table if demand is more than double what the company can build. Di Si did say that they might consider building the Buzz at an additional facility if it made sense financially.

There will be other variants of the Buzz coming in the near future. This likely includes the coveted camper van. VW wants to keep the interest going. The automaker knows it has a hype machine on its hands and it's trying to keep the Buzz in the minds of potential customers for as long as possible. Sure, they might not all want to wait for an electric minivan, but while they're poking around Volkswagen's site, they might find themselves building an ID.4 or ID.7 -- and to VW, the weird nostalgia van has done its job.