Volkswagen rolls out cheaper EVs in battle with Chinese carmakers
ID.Polo is one of four planned affordable electric vehicles across the VW, Škoda and Cupra brands
Volkswagen has unveiled one of its cheapest electric vehicles to date, as it bets on a series of new launches to boost profits from affordable battery-powered models and compete with Chinese rivals.
The ID.Polo, launched on Wednesday, will retail from about €25,000 and is the standard bearer in a new “family” of four entry-level EVs to be released this year across three Volkswagen Group brands — VW, Škoda and Cupra.
The cars were developed jointly, generating savings of about €650mn by avoiding duplicating work across the brands, said Volkswagen, which is seeking to boost the profitability of its EVs and reduce the cost of producing mass-volume models.
“This is how we are making electromobility economically viable in the volume segment and accessible to the masses,” VW brand chief executive Thomas Schäfer said at an event in March.
The vehicles share a common platform, have almost 80 per cent of the same components and will be produced at a single factory in Spain, where labour costs are lower than in Germany.
Volkswagen is in the midst of a major restructuring programme that will see it cut tens of thousands of jobs and capacity in Germany. Earlier this year, it said it was hoping to save €1bn by 2030 by coordinating production across its mass-market brands regionally.
The launch of the brands comes as Volkswagen — which accounted for one in four battery vehicles in Europe last year — faces intensifying competition from BYD and other Chinese manufacturers who are seeking to grow sales in the region.
The ID.Polo’s starting price compares with just under €23,000 for the entry-level version of BYD’s Dolphin Surf, which is in the same segment.
Bringing production for three different brands to one factory outside Germany was “no small thing” for Volkswagen and would give it a cost advantage, said Daniel Schwarz, an auto analyst at Metzler Bank.
The company would normally have had a debate with unions about “whether such an important car should be produced in a certain factory in Germany”, he added.
Analysts have said lower production costs in Spain and the latest iteration of Volkswagen’s battery technology would bring the new model range closer to its petrol offering in terms of profitability.
The new ID.Polo will be followed next year by the release of the smaller and even cheaper ID.Every1 with prices starting at €20,000. While the more compact car would set a price floor for Volkswagen’s battery electric range, executives expect to achieve healthier returns from the larger model.
The ID.Polo would “make Volkswagen fully competitive again in the important small car segment”, which was its traditional strength, Alexander Sauer-Wagner, head of the German Volkswagen and Audi dealership association, told the FT.
The new models would also win over consumers that EVs have so far failed to reach, said independent auto analyst Matthias Schmidt.
The launch of the four models could help “Volkswagen to enter higher-volume segments and markets,” such as southern Europe, where battery sales had lagged behind, he said.