Volkswagen (VWAGY) is pulling forward the development of a small electric car for the masses ahead of tougher climate regulations, Reuters said. Volkswagen stock fell.
Under the "Small BEV (Battery Electric Vehicle)" project, engineers are racing to develop a smaller all-electric car which priced between 20,000 and 25,000 euros ($24,000-30,000).
This would make it cheaper than Volkswagen's already small ID.3 electric hatchback, which went on sale in September.
Volkswagen did not provide details on what the new vehicle might look like, when it might be launched or where it might be built, Reuters said. The Financial Times said the smaller EV won't come out for at least three years.
The European Union's more stringent emissions targets are forcing Volkswagen to increase the hybrid and electric share of European sales to 60% by 2030, up from 40% prior.
In October, the ID.3 electric hatchback, key to Volkswagen's plans to dominate global EV sales, leapfrogged Tesla (TSLA) in Europe.
Volkswagen sold 10,475 ID.3s for the month as production of its ID family of electric cars hits full swing at its Zwickau facility. Renault's Zoe sold 9,614 units in October. Tesla sold just 834 Model 3s after a strong September.
The German automaker began ID.3 deliveries in September but is not bringing the vehicle to the U.S., where smaller cars are out of favor.
It plans the larger ID.4 crossover instead.
Last year, Volkswagen vowed to invest $71 billion in electric and autonomous vehicles as well as battery production, laying the groundwork for the new ID family. Earlier this month, it boosted that spending to $86 billion.
Also in November, General Motors boosted EV and AV spending as automakers play catch-up with Tesla. GM is now spending $27 billion by 2025, up more than a third (35%) from a prior target. Volkswagen partner Ford (F) is spending $11 billion by 2022 on electric cars.
Tesla is starting to boost capital spending after a long slide, as the EV maker continues work on the Berlin and Austin factories. CEO Elon Musk has made comments over the years about a $25,000 car. This week, Musk again mused about a Tesla hatchback, which presumably would be a more-direct rival vs. the ID.3. But it's not clear that Tesla is actively pursuing either project at this time.
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