Volkswagen is feeling the heat as it struggles to keep pace in the global electric vehicle (EV) market. The German automaker, once seen as a serious contender to Tesla, is falling behind while competitors forge ahead. Since the launch of the ID.3 and ID.4 more than four years ago, VW’s EV lineup has grown at a snail’s pace. Analysts warn that the next few years will be especially challenging.
The latest addition to the company’s electric range was the ID.7 sedan, unveiled in the third quarter of 2023. However, no new EVs will make their debut from VW in 2024 or 2025. The highly anticipated ID.2, an affordable compact EV with a starting price under €25,000 (~$26,000), is scheduled for release in 2026. According to VW, the ID.2 will combine the interior space of a Golf with the compact dimensions of a Polo. The catch? It likely won’t be available in North America.
Volkswagen ID.2 concept showcasing compact size and modern design
“For the next year or so, VW is forced to sell old technology to new customers,” says automotive analyst Matthias Schmidt. This is a daunting task as buyers increasingly turn to newer and more innovative EV offerings.
Struggles Across Global Markets
Volkswagen’s challenges are not limited to Europe. In key markets like the United States, China, and regions across Europe, the company is seeing weak EV sales. In Europe, the removal of subsidies in countries such as Germany has hurt demand. Meanwhile, local Chinese manufacturers are outperforming VW with competitively priced, technologically advanced EVs.
High-end models like the Audi Q8 e-tron and Porsche Taycan have also struggled in China, where affordable EVs now dominate. The harsh reality for VW is clear: it needs to catch up in a country critical to its long-term plans.
Volkswagen ID.4, one of the brand’s key EVs, on a scenic road
To regain its foothold, VW has partnered with Chinese automaker Xpeng to co-develop a cutting-edge electrical and electronic (E&E) architecture. This will serve as the foundation for all future VW EVs in China. The first two jointly developed models, including one mid-range SUV, are expected to launch in 2026. With this venture, VW aspires to boost its annual Chinese sales from 2.93 million in 2023 to 4 million by 2030.
The company emphasizes not only the introduction of new models but also maintaining a diverse lineup. “We have worked hard over the past few years and have really good models with high-performance software and high quality,” says VW spokesperson Stefan Voswinkel. However, these models, tailored for China, will not be offered in other regions.
In the United States, VW is pivoting to embrace more American-centric offerings. The upcoming Scout Terra and Traveler, an electric pickup truck and SUV, aim to capture consumer interest. These vehicles will be sold through a direct-sales model, bypassing traditional dealerships. This bold strategy has already sparked backlash from VW dealers in California but could resonate with buyers seeking unique EVs. Unfortunately, production of these models isn’t expected to start until 2027.
With no major EV launches until 2026, Volkswagen is relying heavily on its current lineup to sustain itself. For now, the road ahead looks steep.