Volkswagen shows €25,000 EV to compete where Tesla has left an opening

Volkswagen shows €25,000 EV to compete where Tesla has left an opening
epa10522184 Chairman of the Board of Management of Volkswagen (VW) and Porsche Oliver Blume (L) and Volkswagen (VW) member of board of management for Finance and Operations Arno Antlitz pose for photographers in front of an ID.Buzz Volkswagen car after the annual press conference of the automotive group Volkswagen at the Volkswagen Group Forum showroom in Berlin, Germany, 14 March 2023. Volkswagen hosted the company's 2023's annual press conference in Berlin. EPA-EFE/CLEMENS BILAN

(Bloomberg) -- Volkswagen AG unveiled an affordable electric vehicle that’s a couple years away from production, putting Europe’s largest carmaker on a collision course with Tesla Inc.

The compact ID. 2all concept previews a car costing less than €25,000 ($26,400) that VW is readying for the European market in 2025. The maker of the Golf hatchback — which was knocked off its perch atop sales charts last year — said Wednesday the EV will be as spacious as that model and as inexpensive as the Polo.

“We are implementing the transformation at pace to bring electric mobility to the masses,” VW brand chief Thomas Schäfer said in a statement.

Volkswagen urgently needs a people’s car for the electric age. It’s struggled to keep pace with Tesla’s EVs and needs to halt sales declines in China, where domestic manufacturers led by BYD Co. have stepped up their game. An electric model that comes even remotely close to the success of the Golf — VW has produced more than 35 million units — would do wonders for the brand.

The ID. 2all’s debut in Hamburg adds to a busy week for VW. On Monday, the German company announced plans to build a battery factory in Canada — its first outside Europe and the country’s biggest-ever auto investment. On Tuesday, the manufacturer increased its rolling five-year spending plan some 13% to €180 billion, with more than two-thirds going to software and EVs.

While Tesla has dominated the first phase of the EV shift, Chief Executive Officer Elon Musk has left an opening for incumbents by taking time to pad out the company’s lineup.

Tesla last launched a new passenger vehicle — the Model Y — in 2020, and it’s only made minor cosmetic changes to the Model 3 since the sedan went into production almost six years ago. It’s unclear when the $25,000 model Musk first teased in 2020 will be ready.

The ID. 2all boasts 450 kilometers (280 miles) of range, driver-assistance features and an overhauled in-car infotainment system. VW said the front-wheel drive vehicle takes design cues from the Polo, Golf and Beetle.

Building an EV affordable enough for the mass market has been the auto industry’s white whale. With batteries remaining expensive and EV production still scaling up, cheap electric cars have mostly been limited to short-range mini models in China that are unlikely to catch on in most of the rest of the world.

VW’s existing lineup of EVs includes the ID.3 sedan, ID.4 and ID.5 sport utility vehicles and the ID. Buzz minibus. It’s going to introduce an updated version of the ID.3, a long-wheelbase ID. Buzz and an ID.7 saloon this year and is also working on an electric model priced below €20,000.

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