Volkswagen, the German automotive giant, has announced exciting plans to launch an electric car priced around 20,000 euros in Europe by 2027. The move positions Volkswagen to compete in the fast-growing market for affordable electric vehicles for the masses.
With this upcoming model, Volkswagen aims to fulfill its “social responsibility” by spearheading an “entry-level electric mobility project from Europe for Europe,” according to CEO Oliver Blume. The decision to develop the car in-house rules out a previously considered partnership with French rival Renault.
While Volkswagen lags behind some European and Chinese competitors in the low-cost electric segment, it is determined to catch up. Renault is working on its sub-20,000 euro Twingo for 2026, while Citroën is planning a similarly priced small car for 2025.
As part of its broader electric strategy, Volkswagen also provided details of a portfolio of sub-25,000 euro EVs, including the ID.2 planned for 2025. Two compact cars (from VW and CUPRA) and two small SUVs (from VW and Skoda) will be produced in Spain.
Electric cars have quickly captured a 14.6% market share in Europe by 2023. However, their still-high starting prices, often 35,000-40,000 euros for models like the VW ID.3 or Tesla Model 3, have limited their appeal to higher-end buyers. Pressure is mounting on automakers to offer entry-level options, especially as the EU bans the sale of internal combustion engine cars by 2035.
Volkswagen faces the challenge of making its electric models profitable, as their development is still heavily subsidized by traditional car sales. To achieve economies of scale, VW will use a new common component platform called MEB+ for upcoming models.
The automaker has also announced plans for a ~20,000 euro electric car for the crucial Chinese market, and aims to cut costs by 40% by 2026 to remain competitive against local rivals.