Volkswagen (VW) is entering 2025 facing significant challenges in its electric vehicle (EV) strategy, following over four years since the debut of its ID.3 and ID.4 models.
Initially, these vehicles were expected to offer a strong competition to Tesla, but the reality has been more difficult for the German automaker, with few new releases in the pipeline for the near future.
See also: Volkswagen Explores Deepening Partnership with Rivian in EV Expansion
VW’s electric lineup has seen limited updates in recent years. The latest addition, the ID.7 sedan, was introduced in the third quarter of 2023. However, the company’s next major release, the ID.2, is not expected to launch before 2026 in select markets, with North America unlikely to see the model.
Priced under €25,000 (~$26,000), the ID.2 is set to offer compact affordability, comparable in size to the smaller Polo, while providing interior space similar to the Golf. “For the next year or so, VW is forced to sell old technology to new customers,” said Matthias Schmidt, a German automotive analyst. “That’s going to be difficult.”
See also: Chinese Companies Eye VW Plants as Volkswagen Seeks Buyers for Osnabrück and Dresden Sites
The company is facing headwinds in several key markets, including the USA, Europe, and China. In Europe, reduced subsidies in critical markets such as Germany have hindered demand. Meanwhile, in China—vital for VW’s long-term EV strategy—the company is losing ground to local competitors who offer more affordable, mass-market EVs. Even luxury models like the Audi Q8 e-tron and Porsche Taycan are struggling to gain traction in the increasingly competitive Chinese market.
To strengthen its position in China, VW has formed a partnership with Xpeng, focusing on a joint electrical and electronic (E&E) architecture for its future EVs in the region. The first models from this collaboration are expected to launch in 2026, including two mid-range vehicles, one of which will be an SUV. VW aims to boost its Chinese sales from 2.93 million units last year to 4 million by 2030. “The introduction of new models is one solution, but it is just as important to maintain our broad portfolio,” said VW spokesperson Stefan Voswinkel. “We have worked hard over the past few years and have really good models with high-performance software and high quality.”
See also: Tesla to Open Supercharger Network to Volkswagen EVs, Access Expected by Mid-Year
In the US, VW is preparing for the launch of the Scout Terra and Traveler, electric models set to debut in 2027. However, these vehicles will be sold exclusively through a direct-sales model, bypassing traditional dealerships, which has already sparked controversy, especially in California. Despite the resistance, the electric pickup and SUV have strong potential to resonate with American buyers, though production is still several years away.
Source: Bloomberg