Volkswagen, the German vehicle manufacturer, is set to unveil an affordable electric vehicle for the masses. Unlike Tesla, which did not reveal a similar vehicle during its recent investor day, Volkswagen is expected to preview a compact hatchback with a starting price below $26,600. The model is slated to hit the market in a few years, with EV blogs and enthusiast publications eagerly anticipating the reveal. With the need for a people’s car for the electric age, Volkswagen has been struggling to keep pace with Tesla’s EVs and is facing sales declines in China, where domestic manufacturers have increased their game. An electric model that comes close to the success of the Golf, of which Volkswagen has produced more than 35 million units, would be a major boost for the brand.
This event marks a busy week for Europe’s biggest carmaker. Volkswagen recently unveiled plans for its first battery plant away from home, in St Thomas, Ontario, with the largest single automotive investment in the country’s history. The company also increased its rolling five-year spending plan by 13% to €180 billion, with more than two-thirds going to software and EVs. CEO Oliver Blume stated that this year would be decisive in executing strategic goals and accelerating progress across the group.
Although Tesla has dominated the early days of EVs, the company’s last new passenger vehicle, the Model Y, was launched in 2020. It has made only minor cosmetic changes to the Model 3 since its production almost six years ago. Although the sedan briefly sold at the $35,000 price point its CEO promised, he has suggested Tesla has been working on and off towards a $25,000 model first teased in 2020.
However, building an electric car for the masses has been the industry’s white whale, with batteries stubbornly expensive and EV production numbers still relatively small. Manufacturers have yet to find a way to field affordable electric models aside from short-range mini models in China unlikely to catch on in other markets. With the ID family of EVs struggling to catch on, Volkswagen needs to field an affordable electric model quickly to keep pace with Tesla and to retain its customers when they switch to plug-in cars.
Volkswagen became a global behemoth through the Beetle, which sold more than 23 million units and epitomised Germany’s post-war economic renaissance. The company’s diesel emissions scandal left it with no choice but to aggressively switch to batteries, but its ID family of EVs has not caught on as quickly as hoped. Despite buggy software and a price tag well above the €31,000 Golf, the ID.3 compact EV remains the most comparable model, starting at €43,995. Shipments for Volkswagen’s most popular EV in Europe, the €46,335 ID.4 compact SUV, were less than half of the Model Y and even further behind the Golf.
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