Building small, affordable electric cars has been a tough nut for carmakers to crack. Many companies have openly worried that creating budget-friendly electric models just isn’t sustainable, especially when each brand tries to go it alone. This very challenge led big players like Renault and Volkswagen to talk about working together. They aimed to find a business model that made sense and cars that people could actually afford. Now, Volkswagen has revealed a surprising truth: their first small electric cars actually lost them money.
Volkswagen isn’t new to this game. Years ago, they sold models like the Skoda CITIGOe iV, the SEAT Mii electric, and their own Volkswagen e-up. These were early attempts at urban electric vehicles. However, they came with a hefty price tag for the company. Thomas Schäfer, who leads the Brand Group Core (which includes CUPRA, SEAT, Skoda, Volkswagen, and Volkswagen Commercial Vehicles), shared some eye-opening figures recently. In an interview, cited by Spain’s Foro Coches Electricos from faz.net, Schäfer admitted the group lost around 8,000 euros on each unit sold back then.
Electric Models Finally Turning a Profit?
Fast forward to next year, and Volkswagen is ready for a fresh start. They plan to roll out a new lineup called the "Electric Urban Car Family." This new collection will kick off with four B-segment models: the CUPRA Raval, which will be the first to hit the market, the Skoda Epiq, and the Volkswagen ID. Polo and ID. Cross. Looking further ahead, 2027 will see an A-segment addition, the Volkswagen ID.1, possibly named ID. Lupo or ID. Up. The big difference this time? These new models are designed to be profitable, just like their gasoline-powered cousins.
So, how will they make money this time? The company learned from its past. Volkswagen has decided to develop these vehicles collaboratively. Spanish teams at SEAT/CUPRA are leading the charge, building these cars for all Brand Group Core brands on Volkswagen’s platform. This shared development is a huge money-saver. The company expects to cut at least 600 million euros in costs. That’s a saving similar to what they achieved years ago when developing the Skoda Superb and Volkswagen Passat together.
Other smart moves are also in play. They will use new, unified battery cells. These are Lithium-Iron Phosphate (LFP) batteries, which are cheaper than the Nickel, Cobalt, Manganese (NCM) type found in many electric cars. They’re also opting for the front-wheel-drive version of the MEB+ platform. This setup is simpler and cheaper to build than the rear-wheel-drive alternative. Spanish government subsidies are also helping to make the project more feasible.
Production will be spread across a few locations. The Raval and ID. Polo will be built in Martorell, near Barcelona, Spain. The Epiq and ID. Cross will come out of Landaben, in Navarra, Spain. And the ID.1 will be made in Palmela, Setúbal, Portugal.
Oliver Blume, the CEO of the Volkswagen Group, summed up the ambition clearly. He said the "urban electric vehicle family marks a new beginning." He highlighted that these cars stand for affordability and progress. It’s a key promise from the Volkswagen Group: to provide mobility for everyone. "From Europe, for Europe. Volkswagen delivers," he stated, reinforcing their commitment to this new, smarter path.