Volkswagen has announced plans to develop low-cost electric vehicles to compete with aggressive Chinese rivals, following the collapse of a potential partnership with Renault earlier this month. Targeting the European market, Volkswagen aims to produce electric vehicles priced around €20,000 ($21,746), with a world premiere set for 2027.

“This initiative is about providing entry-level electric mobility from Europe for Europe,” stated Volkswagen CEO Oliver Blume. “We’re committed to Europe as an industrial hub, promoting European industrial policy and serving European customers.”

The project, named ID.1, responds to Chinese manufacturers, who enjoy a 30% cost advantage and are gaining market share in Europe. Volkswagen plans high localisation in Europe for the ID.1, reducing component transport routes and emissions.

Volkswagen recently highlighted that the European auto industry has 2-3 years to brace for this competitive challenge, warning that the sector’s survival is at risk. To bolster its position, Volkswagen is implementing €10 billion in savings and cost-cutting measures by 2026.

Despite the low price point, Volkswagen brand boss Thomas Schaefer assured that the ID.1 would set standards in technology, design, and quality. However, he noted that achieving this amidst rising energy, raw material, and labour costs remains a challenge. Schaefer emphasized that successful European electromobility requires political support and competitive framework conditions.

This article is part of our ‘New Mobility’ special feature, examining the revolutionary changes sweeping through the automotive industry: