Cheaper electric cars are coming at last. To Europe, anyway. 

The Volkswagen Group on Tuesday said that "for some time" it's been working on compact electric vehicles that will cost around 20,000 euros, the equivalent of $21,700. Europe's largest carmaker said the new vehicles will premier in 2027. 

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Cheap EVs are a problem right now

Cheaper EVs will be hugely important for propelling the transition away from fossil fuels. Thanks to huge economies of scale, Chinese automakers have cracked the code to cheap, mass-market electric vehicles. The rest of the world is still largely struggling to pull that off. 

So, these much-needed cheap EVs won't be available tomorrow. But they're important in the long-run nonetheless.

Electric cars are still largely more expensive than their combustion counterparts, particularly in Western markets. That'll need to change for more mainstream buyers to get on board with the EV transition. In China, where electric and plug-in hybrid vehicles already make up some 50% of car sales, buyers can get EVs as cheap as $5,000. It's no coincidence that the market where EVs are cheapest is also where they're the most successful. 

Companies like Volkswagen will need to crank out mainstream electric options over the next several years to meet customer demand. Or else Chinese automakers, which have become increasingly aggressive global exporters, will do it for them. 

"In order for electromobility to become widespread, attractive vehicles are needed,
especially in the entry-level segment," said Volkswagen brand CEO Thomas Schäfer in a statement. "Despite the attractive price, our vehicles will set standards in the entry-level segment in terms of technology, design, quality and customer experience," he added. 

Volkswagen ID.3 GTX (2024)

The 2024 Volkswagen ID.3 GTX.

The Volkswagen Group sells cars under a number of brands, including VW, Audi, Porsche and Škoda. At the top-end of the spectrum, it's developed a new electric platform for Audi and Porsche. At the lower end of its offerings, it's planning a series of EVs costing around 25,000 euros. Those include two compact cars from VW and Cupra, along with small SUVs from VW and Škoda. They'll break cover as soon as the end of 2025. The 20,000-euro models are a natural next step, Volkswagen said. 

Today, the Volkswagen brand's entry-level electric offering is the ID.3 hatchback, which starts at roughly 40,000 euros. 

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We don't know much about the 2027 models. Volkswagen shared a shadowy image depicting a small hatchback, but that's all we have to go off of for now.

So what does this mean for the U.S. market, which has suffered from a shortage of cool, cheap electric offerings? It's not clear yet. Volkswagen specifically billed the 20,000-euro models as "from Europe, for Europe."

But companies like Kia, Chevrolet, Volvo, Ford and Tesla are all preparing entry-level EVs for the U.S. market. As electric cars eat up an increasing share of vehicle sales, any brand looking to compete for mainstream American buyers will need a moderately priced EV in its stable. So we'd bet that Volkswagen will bring a compact SUV stateside sooner rather than later to slot below the currently available ID.4.

Contact the author: tim.levin@insideevs.com

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