Volkswagen to compete with Chinese companies by making a low-cost electric car

Volkswagen plans to develop low-cost electric vehicles (EVs) to compete more effectively with Chinese automakers, the company announced on Tuesday. This decision follows the collapse of talks with Renault regarding a potential partnership for the project earlier this month.

The goal is to produce EVs for the European market priced around 20,000 euros ($21,746), with a world premiere scheduled for 2027. Volkswagen Chief Executive Oliver Blume emphasized the importance of producing affordable electric mobility solutions within Europe, highlighting a commitment to European industry, policy, and consumers.

Dubbed the ID.1 project, this initiative is Volkswagen’s response to Chinese competitors who hold a significant cost advantage of about 30% over Western manufacturers. Chinese automakers have been increasingly capturing market share in Europe, challenging established brands on their home ground.

Volkswagen intends to achieve a high level of localization in Europe for the ID.1 project, which will help minimize transport distances for components and reduce emissions. This strategy aligns with the broader goal of sustainable production.

Recently, Volkswagen warned that the European auto industry has only two to three years to prepare for the intensifying competition from Chinese firms. Failure to adapt could jeopardize the sector's survival.

In response to these challenges, Volkswagen is executing savings and cost-cutting measures worth 10 billion euros at its core brand by 2026. Despite the ambitious price target for the entry-level EV, Volkswagen brand boss Thomas Schaefer assured that the model would excel in technology, design, and quality. He acknowledged that achieving this balance is more difficult now due to increased costs for energy, raw materials, and labor.

Schaefer also stressed the need for political support and favorable competitive conditions to ensure the success of European electromobility initiatives. This collaborative effort between industry and government is crucial for achieving the desired outcomes in the EV market.