Volkswagen Group plans to launch an electric car costing 20,000 euros, announced brand director Thomas Schäfer during the group’s annual digital press conference.

“The tentative title is ID.1 and the vehicle is scheduled for 2027,” Schäfer stated.

The executive also assured that the compact car would “aim” to fill the lower end of the company’s electric portfolio and provide “affordable electric mobility for all.”

Therefore, the launch date was set for a year after the ID.2all, expected in 2026, and projected to cost less than 25,000 euros.

According to Schäfer, work on the ID.1 is already well advanced.

“We’re already on it; we know how the car should be,” he noted.

The decision on where it will be manufactured is still pending as “from an economic point of view, it’s an enormous challenge.”

Currently, four scenarios are under consideration to achieve this goal. “We will make a decision shortly,” the executive added.

Reports suggest Volkswagen is also in talks with Renault to collaborate on the small electric car to achieve higher volumes.

The ID.1 is one of the eleven new electric models Volkswagen plans to launch by 2027, following the release of the ID.7 last year.

The current combustion models Golf, Tiguan, and T-Roc will also be “transitioned to the electric future.”

Volkswagen thus maintains its electric course despite the current weak demand.

“The future of Volkswagen is electric,” Schäfer affirmed.

Volkswagen urges the EU to ease emission targets

During the event, Volkswagen’s director called on European regulators to reduce emission targets set to take effect next year, exposing the company to hefty fines.

The German manufacturer needs to reduce emissions by approximately 15 per cent next year, according to an analysis by information provider Jato, cited by Bloomberg, just as demand for electric vehicles in Europe is being affected.

Starting in 2025, EU automakers will have to reduce the amount of CO2 emitted in their new vehicle fleets, a task made even more challenging due to a new measurement standard more closely aligned with real driving conditions.

“It doesn’t make sense for the industry to pay penalties when the framework conditions for increasing electric vehicles aren’t in place,” said Oliver Blume, Volkswagen’s CEO, during the annual results presentation.

“Depending on the framework we have in different markets, it’s important to adjust the CO2 targets and think about what’s realistic,” he added.

According to the US agency, automakers are feeling the pressure of cooling electric vehicle sales, making it increasingly difficult to attract new buyers as incentives disappear and vehicle prices remain high.

Carlos Tavares, CEO of Stellantis NV, warned in January that the rush to offer affordable electric vehicles would end in a “bloodbath” due to high production costs.

Volkswagen revealed last Wednesday its plans to launch 30 new models across the group this year to boost sales momentum, many of which will be electric like the ID.1.

However, transitioning to electric vehicles is more difficult as consumers are holding back in the face of high interest rates and a slow economy.

In Germany, the largest market in Europe, battery car sales have plummeted after the government completely cut subsidies.

The discontinuation of state subsidies for electric car purchases in that country at the end of 2023 led to a collapse in demand, and Volkswagen had to cut production and cancel shifts at its electric car plants in Zwickau and Emden.