Volkswagen unveils $20,000 entry-level EV to take on Chinese competitors

The big picture: Volkswagen has teased a new entry-level EV that it plans to launch in a few years as an all-electric successor to the now-discontinued Up hatchback. Rumored to be named ID.1, it will be positioned below the Volkswagen ID.2all, which debuted as a concept in 2023 and is expected to be launched in 2026.

Volkswagen said that the entry-level EV will have a €20,000 (around $20,500) base price to make it attractive to "a wide variety of user groups." The company also expressed hope that the "high-quality" electric hatchback will add to the company's profitability. The automaker will unveil the vehicle in March, with the commercial launch provisionally set for 2027.

Unfortunately for buyers in North America and other global markets, Volkswagen seems to have no plans to release this model outside of Europe. The company described the vehicle as being "from Europe for Europe," which suggests it will be sold only in the old continent, at least initially. However, China is one of the biggest markets for VW, so it won't be a major surprise if this car makes it to the Asian nation at some stage.

The new model is expected to rival Chinese electric cars that are flooding the global markets with cutting-edge features at attractive prices. The leading China-based EV maker, BYD, recently surpassed Tesla's market share in some European countries. In the UK, the company sold 1,614 passenger cars last month, while Tesla sold just 1,458, according to data published by the Society of Motor Manufacturers and Traders (SMMT).

Low-cost electric cars are an integral part of Volkswagen's future plans, which include the ID.2all and the newly announced model, both based on a tweaked version of the modular electric drive (MEB) platform. VW's existing ID models have shown strong momentum in recent years, selling 1.35 million units globally since 2019. Last year alone, the company sold 383,100 EVs, making it the sixth-largest EV-maker in the world.

Volkswagen is planning major changes to its premier European factory to support the production of its next-gen affordable EVs. According to reports, the company's historic plant at Wolfsburg, Germany, will undergo substantial renovation and retooling to enable EV manufacturing. The automaker will reportedly relocate the production of its Golf hatchback to Mexico, making room for next-gen EVs like the electric Golf and T-Roc models.