For Volkswagen, manufacturing electric cars was for a long time more of a strategic bet than a profitable business. In the early stages of electrification in Europe, the German brand incurred significant losses on each unit sold, especially with urban models like the e-Up!, conceived more as rolling laboratories than profitable products.

That period served to gain experience, but it also made it clear that the electric future would only be viable if a profound reduction in production costs was achieved.

Today, the landscape is very different. Volkswagen claims to have made a decisive move by becoming one of the manufacturers that has made the most progress in reducing industrial costs associated with electric cars. The goal is no longer simply to comply with regulations or buy time against the competition, but to sell popular electric vehicles without sacrificing profitability.

30% lower costs: the key to change

The turning point comes with a concrete figure: 30%. As confirmed by the brand's CEO, Thomas Schafer, Volkswagen has managed to reduce average production costs by that percentage at several of its European plants. He explained this in an interview with Auto Motor und Sport, where he made it clear that this progress is essential for the company's future.

“We still have a way to go, but together we want to demonstrate that it is possible to develop and build competitive cars in Germany,” the CEO stated, emphasizing that efficiency is not the result of a single measure, but of a profound transformation of processes, structures, and labor decisions.

The Wolfsburg, Emden, and Zwickau plants have been key in this process. There, production lines have been optimized, internal agreements have been renegotiated, and more flexible working methods have been introduced, specifically geared towards the manufacture of electric vehicles.

The goal: truly popular electric vehicles

The impact of this cost reduction will be directly reflected in the brand's upcoming launches. Volkswagen is preparing an offensive of small, urban electric models that aim to compete on price with traditional combustion engine vehicles. Among them are the future ID. Polo and the ID.1, expected to arrive in 2027.

According to the company's plans, the ID. Polo should be priced below $27,000, while the ID.1 will target an entry price below $22,000. These figures place them in a price range that has been very difficult to reach for electric cars produced in Europe until now, especially while maintaining high quality and safety standards.

This pricing strategy is not accidental. Volkswagen has closely observed the moves of its rivals and knows that price is the decisive factor in achieving widespread electrification.

Brands like Renault have already announced similar strategies with compact electric models designed for the general public, which has accelerated the need to react. Difficult decisions to reduce costs. The 30% reduction in costs has not come solely from the use of cheaper materials or technological improvements. A significant part of the adjustment has been in labor. In recent months, around 25,000 workers have signed partial retirement agreements or severance packages as part of a broader restructuring plan. This process is part of an economic crisis the brand faced at the end of 2024, when it announced the need to cut up to 35,000 jobs by 2030. The aim of these measures is to drastically reduce the company's structural costs and ensure its long-term viability in an increasingly competitive market. Although these decisions have generated debate and internal tensions, Volkswagen management insists they were unavoidable to guarantee the company's industrial future in Europe. Electrification with no turning back. All of this is happening against a changing political backdrop. The European Union has recently softened its stance on a total ban on combustion engines by 2035, which some interpreted as an opportunity to slow down the electric transition. However, Volkswagen doesn't seem willing to slow down. Thomas Schafer has been emphatic about this and has ruled out slowing the pace of development for zero-emission vehicles. He also denied that the brand will offer gasoline engines in its new family of small electric models, such as the ID. Polo, the ID. Cross, or the ID.1. "This wouldn't make sense due to emissions regulations and would be too expensive for consumers," he said.the executive explained.