European automakers Volkswagen and Renault have ended negotiations for the joint development of an affordable electric vehicle to compete with low-cost Chinese models, Reuters reported, citing four sources familiar with the situation.
Volkswagen, Renault ditch joint development plans for cheap EV
Volkswagen reportedly ditched talks with French automaker Renault about co-developing an affordable electric vehicle version of the Twingo car.
Despite the setback, Renault’s Ampere will continue developing the electric Twingo without Volkswagen. It plans to officially launch the electric version of the iconic car in 2026.
Meanwhile, the ending of the negotiations could mean that Volkswagen may have to go solo in delivering a low-cost EV to challenge Chinese players’ dominance.
Factors affecting the failed negotiations
According to one of the sources, VW’s works council had a major role in the failed negotiation with Renault. The unnamed source even emphasized that a co-developed Twingo EV could have arrived by 2026.
While the two companies have yet to confirm the report, a VW spokesperson asserted that the company was still exploring potential options for affordable electric cars.
In addition, the second source disclosed that VW walked away from the negotiations primarily because Renault planned to build the car in one of its factories. Meanwhile, the German automaker aims to fully use its European production network.
Wasted opportunity
Volkswagen and Renault expected that a partnership would yield cost reduction, a huge benefit that may combat a key hindrance for European players amid the surge of cheap China-made EVs.
A partnership would have united the household brands of the region’s top two economies, potentially establishing a counterforce against Chinese rivals entering the European market.
In addition, the fourth source said that the partnership could have established the “basis” of an Airbus for autos.
However, they failed to find an agreement after several months of discussions, prompting VW to decide to develop its own affordable electric car.
VW sources revealed that the German automaker may make a decision on the electric vehicle plan within weeks. In hindsight, VW CEO Thomas Schaefer previously said that he aims to rollout a low-cost EV by 2027.
Chinese electric automakers continue to flood the European market, heavily pressuring homegrown players like Renault and Volkswagen to cut costs and accelerate new affordable model development. European brands aim to launch smaller models with a price of sub-€20,000 to challenge Chinese EVs.
