Currently reading: Volkswagen Polo faces axe as Euro 7 rules drive price up

VW boss Thomas Schäfer says newly confirmed emission rules could add €5000 to the cost of a small car

Volkswagen is prepared to pull its small cars off sale rather than engineer them to meet costly new Euro 7 emission regulations, which could add as much as €5000 to the cost of a car.

CEO Thomas Schäfer said engineers at the company were currently assessing the regulations, and a decision was expected within the next couple of weeks as to whether or not they would proceed. 

“We had a very good plan, where we thought EU7 was an insurmountable hurdle [and therefore would be scrapped] that will accelerate electrification,” Schäfer said at the Los Angeles motor show.

“We planned small electric cars that would come in 2025 between Volkswagen, Skoda and Cupra that would be built in Spain. And that basically replaces the combustion engine in small vehicles like the Polo, as cars become so expensive [with EU7], there is no point carrying on.

“Then two [or] three weeks ago, word got out that EU7 was coming through and it would be on a reasonable level. And we thought, okay, let's go, that might help us transition a little bit [by keeping models like the Polo on sale], it doesn't change the plans, but it helps financially because you can transition a little easier and reinvest at the same time everywhere.

“But last week, another message came through [confirming stricter EU7 guidelines will be implemented] and we're back to square one. It’s even worse...

"It makes no sense to go with very small cars beyond EU7. It will push the price up of the small cars by 3000, 4000 or 5000 pounds or more, then all of a sudden a small vehicle becomes unaffordable.

“We need another two weeks. At the moment, we have engineers evaluating what that means. But if that is true [the expected impact of EU7 on the price of cars], we definitely won't invest anymore and we'll just keep the plan to electrify as quickly as possible.”

Thomas schafer

When it was put to Schäfer that the European Commission said EU7 would add just €304 to the cost of a car, he said it was a number he didn't recognise, being way out, as cars wouldn't only need to be made into at least mild hybrids to meet stricter emissions regulations but also meet stricter safety legislation that requires technology far in excess of €300.

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Schäfer said that Volkswagen had committed to making the electric ID 2 supermini cost less than €25,000, but plans were still developing to try to make a battery-electric car that would cost less than €20,000.

“The reality is that we need to get something below the €20,000 mark,” he said. “But that's not confirmed yet. We've confirmed [the] ID 2, but the team is now working on ideas. How we get now into the area below 20, to be honest, we haven't found the solution to battery costs. There's a reason why both manufacturers do cars from big to small and not inch their way down [with EVs].

“I personally think it can be done, but you probably have to talk about range. Obviously, you’ve got to know what's really necessary in such a vehicle, you have to have to talk about how many variants of it we need or you can bring, but battery cost at the moment is the deciding factor. Of course, if that develops further and we get some better cost per kWh, then there's a realistic chance to get there.”

When asked if Schäfer was open to working with other partners outside of the Volkswagen Group to try to build better economies of scale to bring the cost of small electric cars down, he said it might be something that was needed. “I would say you probably have to also look into collaborations,” he said. 

Mark Tisshaw

mark-tisshaw-autocar
Title: Editor

Mark is a journalist with more than a decade of top-level experience in the automotive industry. He first joined Autocar in 2009, having previously worked in local newspapers. He has held several roles at Autocar, including news editor, deputy editor, digital editor and his current position of editor, one he has held since 2017.

From this position he oversees all of Autocar’s content across the print magazine, autocar.co.uk website, social media, video, and podcast channels, as well as our recent launch, Autocar Business. Mark regularly interviews the very top global executives in the automotive industry, telling their stories and holding them to account, meeting them at shows and events around the world.

Mark is a Car of the Year juror, a prestigious annual award that Autocar is one of the main sponsors of. He has made media appearances on the likes of the BBC, and contributed to titles including What Car?Move Electric and Pistonheads, and has written a column for The Sun.

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Gubiee 20 November 2022
So everything is moving towards Electric Vehicles EV's, all based on some beurocratic legislation at costs to the environment. I agree that we are running low on crude oil and a replacement needs to be found. But for me, forcing everyone to electricity is wrong. We have other ways to produce EV's rather than just batteries. What about hydrogen tech or diesel hybrid. Why only petrol hybrid and batteries. These car batteries are not recyclable and have only have a finite charge ratio. I work as an engineer where I can cover in excess of 300 miles a day with a full set of tools. This is not a work supplied vehicle either, as I am self employed. I have just purchased a polo for my son to drive. Again choosing againt an EV. I would only buy an EV for myself or my family when the battery's are 100% recyclable and when the ranges are 500 miles plus on a charge. The UK does not have the infrastructure to charge EV currently. Now to say that the new Vehicles are 5k more due to euro7 legislation is madness. If this is on small cars, how much more will they put on medium cars? Who has the money to pay £25k for a small car that will realistically do 150 miles and last 5 years before a 10k battery swap which will end up in landfill. Come on VW where is your blue-sky thinking.
gagaga 18 November 2022

So another £5k on *all* cars then,

That £8k Dacia of 2020 will be £25k by 2025.

Well, they'll certainly achieve their aim of pricing the plebs off the road.

Deputy 18 November 2022

Idiots all round.  Crazy regulations but also manufacturers who assume I want a CHEAP small car.  I like a small car as our second car for local use.  But I don't want a cheap one.  I'd like a luxury small car.  But they'd rather sell 2 tonne SUVs to school run mums whereas they could easily alter the zeitgeist and make small luxury the thing to have.  Hopefully electric small cars will have luxury options.

lukeski 18 November 2022
I don't think they are saying that you won't be able to buy a luxury small car, Audi A1 etc will remain, they are though saying that they won't be able to make cheap, or at least mass market small cars, such as the Polo under these regulations. Not to besmirch the marketing power of car companies but I am also not sure that it is easy to change the zeitgeist :)
catnip 18 November 2022
But haven't Audi already said some time ago that there would be no replacement for the A1, and that the entry point into Audi ownership would be a larger vehicle? MG, on the other hand, have said that the MG3 replacement will still be petrol powered, so there's a lot of mixed messages at the moment.
The cynic in me says that what the VW group is really saying is that they only really want to sell expensive cars to, make big profits, and they can more easily get away with that with larger vehicles.
catnip 18 November 2022

But haven't Audi already said some time ago that they wouldn't be replacing the A1, and that the entry  point into Audi ownership would be with a larger model?  On the other hand MG have just said that the replacement for the MG3 will still be petrol powered, so there are mixed messages coming across right now.

The cynic in me thinks that VW are really saying that they only want to make bigger, higher profit models, something not as easy to do with smaller vehicles.