Volkswagen is developing a ‘small, affordable’ entry-level electric car

Summary:

• Volkswagen is developing an entry-level electric car smaller than the ID.2, aiming for affordability. Despite the historical cost challenges of electric vehicles, VW is confident in reducing prices with a unified cell in 2026.

Volkswagen is exploring the potential of developing an entry-level electric car, aiming for a model even smaller than the Polo-sized ID.2, as revealed by Kai Grunitz, the company’s technical development chief. Grunitz emphasized the significance of creating a compact and affordable electric vehicle, stating, “We’re actively working on an ID.1 or a small ID model, or whatever name it may take. Having a small, affordable vehicle is crucial.”

Historically, electric cars have tended to be more expensive than their petrol counterparts, largely due to the high cost of batteries. The challenge is particularly pronounced with small cars, given their narrow profit margins, causing many automakers, including new Chinese brands, to steer clear of them. Grunitz expressed confidence that VW is close to overcoming this obstacle, noting, “With our unified cell set to debut in 2026, we anticipate a significant reduction in battery costs.”

Despite the technological capability to develop the car independently, Grunitz highlighted the importance of scalability and openness to collaboration. He stated, “The question is not whether we can do it on our own or not. From a technology standpoint, we are capable. The challenge lies in scalability. Developing a genuinely affordable fully electric vehicle is intricate.”

In addressing potential partnerships, Grunitz acknowledged the exploration of collaboration beyond the VW Group. While he neither confirmed nor denied rumors of a tie-up with Stellantis, he emphasized the necessity of profitability, stating, “It has to make financial sense. However, for VW, this car’s significance goes beyond profit because it serves as the entry point to our brand. Affordability is key for a first-time car buyer. By introducing an ID.1, we hope that customers may later consider upgrading to an ID.2, 3, or 4. Hence, having a small, affordable vehicle is pivotal.”