Volkswagen to Launch Affordable EVs to Challenge Its Chinese Rivals

German auto giant Volkswagen has announced plans to develop a low-cost electric vehicle (EV) model to compete in the growing EV market, which is riddled with Chinese EV makers with inexpensive models.

According to Reuters, Volkswagen aims to manufacture electric cars for the European market that cost about 20,000 euros ($21,746). The company also said that a 2027 global debut was scheduled.

The project, known as ID.1, is being launched when Chinese competitors, some of whom have a 30% cost advantage over their Western counterparts, are pushing their way into Europe to take market share and challenge top automakers there.

Volkswagen noted that the project would rely heavily on localization in Europe, which would lower component transportation routes and emissions.

Volkswagen warned last week that the industry's viability in Europe was in jeopardy unless the European market was given two to three years to prepare for the competitive challenge.

Volkswagen is presently implementing 10 billion euros worth of savings and cost-cutting initiatives at its namesake brand by 2026 as part of these efforts.

According to Thomas Schaefer, head of Volkswagen's brand, the projected entry-level model would set benchmarks in terms of technology, design, and quality despite its low price point. He said this had become more difficult because of rising labor, raw materials, and energy expenses.

China's BYD in Europe

The plans' announcement came a few days after recent reports said that a new inexpensive EV from China's BYD Co. will be introduced in Europe next year, worrying local automakers.

The Chinese automaker disclosed last month that the Seagull hatchback will debut in the European market next year. Wireless phone charging and a spinning touch screen are just two of the luxurious features included in this $10,000 car.

Martin Sander, the leader of Ford Motor Co.'s European EV division, is one individual who is uneasy about the new rival. He said the company is looking closely at this model and others made by Chinese EV makers.

BYD officials expect the Seagull to sell in Europe for less than €20,000 ($21,500) even after tariffs and adjustments to comply with European standards. The design, technology, and high build quality that BYD put in the Seagull at a reasonable price has earned praise.

BYD Against Europe Tariffs

Michael Shu, managing director of BYD Europe, revealed earlier this month at a London industry conference that the company plans to introduce a more costly €25,000 EV even before the city car. Since BYD intends to construct two regional factories, it will survive any EU levies intended to impede its growth.

After meeting with automakers' CEOs, French Finance Minister Bruno Le Maire said he was amenable to BYD opening a store in France. As a result, the two planned facilities were announced.

Le Maire reaffirmed France's commitment to industrial initiatives and greeted BYD and the larger Chinese car sector in the nation with great warmth. Le Maire made his remarks during Chinese President Xi Jinping's recent state visit to Paris, where he said that the Chinese auto sector, including BYD, "are very welcome in France."