Dive Brief:
- Volkswagen Group is launching new electric vehicles in Europe that it says will set standards in the entry-level segment in terms of technology, design, quality, and customer experience, the automaker announced Tuesday.
- The first model of its “Electric Urban Car Family” is already in development and is planned to launch by the end of 2025 with a price of around 20,000 euros (~$21,668), which will make it one of the most affordable EVs on the market. VW plans to launch other entry-level EVs by 2027.
- VW’s entry-level EVs are intended to help the automaker fend off growing competition as more low-cost electric vehicles are exported to Europe by China-based manufacturers targeting global expansion.
Dive Insight:
Price is among the barriers to more widespread EV adoption, as most readily available battery-powered vehicles cost significantly more than gas-powered or hybrid options.
VW’s ID.4 electric SUV for example, has a starting MSRP of $39,735 in the U.S., while the higher trim all-wheel-drive ID.4 Pro S costs $53,875. But by launching new entry-level EVs, VW aims to boost its market share in the highly competitive segment.
The automaker says that its decision to launch more affordable EVs is becoming more urgent due to rising energy, material and raw material costs.
“The future is electric,” said Thomas Schäfer, CEO of the Volkswagen Group, in the press release. “In order for electromobility to become widespread, attractive vehicles are needed, especially in the entry-level segment.”
The four entry-level EVs will include two compact cars and two small SUVs. The compact vehicles include one VW brand model and one under its Cupra nameplate. While the two SUVs will include one VW model and one Škoda model. All four vehicles will be built in Spain for the European market.
Production of the entry-level EVs will also include a high degree of localization in Europe, which will reduce transport routes of parts and other components along with a reduction in carbon emission generated from logistics.
Automakers in Europe are facing competition from new electric automakers in China, which are entering the market with more affordable EVs. The companies include Xpeng Motors and BYD, which overtook Tesla as the top EV seller worldwide in the fourth quarter 2023.
In July of last year, Volkswagen Group announced it was acquiring a 5% stake in Xpeng worth approximately $700 million to help boost its competitiveness in China. VW then announced plans to co-develop an EV platform and software with Xpeng in March.
The two automakers will jointly source common parts to lower costs for two China-specific midsize EVs, with the agreement giving Xpeng access to the Volkswagen Group’s global supply chain and may lead to further collaboration in the future.
Despite its collaboration with Xpeng and its more affordable EVs for Europe, Volkswagen’s CEO believes that policies must be in place to help it better compete in the local EV market.
“One thing is clear, electromobility from Europe for Europe can only succeed with political support and competitive framework conditions,” Schäfer said in the press release.
