Volkswagen's €20,000 EV to target Europe's budget market by 2027

Volkswagen AG is gearing up to revolutionise Europe’s electric vehicle (EV) market with its new budget-friendly electric car, the ID.EVERY1, priced at around €20,000 ($21,580). The compact EV, unveiled in Düsseldorf on Wednesday, is set to hit the roads by 2027, positioning itself as one of the most affordable options in the market.

The ID.EVERY1 will be the first Volkswagen model to feature software from its joint venture with U.S.-based EV maker Rivian Automotive Inc. (RIVN.O). This software is designed to reduce the number of electronic control units and simplify the wiring system, effectively lowering the vehicle’s weight and manufacturing costs. According to Volkswagen’s brand chief, this approach is critical for achieving the €20,000 price point.

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“We need the next two years to bring down battery costs and streamline production to make this price a reality,” the brand chief stated, emphasizing the urgency of cost-cutting measures. The carmaker is also planning to launch eight new affordable EV models by 2027, including the €25,000 ID.2, which is expected to debut this year.

Market competition heats up

Volkswagen’s move comes amid fierce competition in Europe’s budget EV market. Only a few models, such as the Dacia Spring and Leapmotor’s T03, currently fall under the €20,000 price range. However, the landscape is set to change with 11 new models under €25,000 slated for release this year, including the Renault R5, the Fiat Grand Panda, and the Hyundai Inster.

Negotiations between Renault SA (RNO.PA) and Volkswagen to jointly produce an affordable electric version of the Renault Twingo broke down last year. As a result, Renault plans to launch the model independently in 2026.

Cutting Costs to Compete with China

To finance its budget EV ambitions, Volkswagen is slashing production capacity and operational costs. The carmaker’s move is seen as a direct response to growing competition from Chinese EV manufacturers, who have rapidly expanded their market share in Europe with low-cost models.

Volkswagen’s strategy focuses on achieving economies of scale through its partnership with Rivian and leveraging in-house software to streamline production. By reducing the complexity of its vehicles, the company aims to cut down on materials and manufacturing costs, making its affordable EVs financially viable.

Chinese manufacturers have set the bar high with competitively priced EVs,” said the brand chief. “We’re committed to defending our market share in Europe with a robust lineup of affordable electric models.”