Volkswagen Secures Funding for Affordable ID.1 EV Production in Portugal






Volkswagen has taken a pivotal step towards democratizing electric vehicle ownership by securing substantial funding for its highly anticipated ID.1 model. This strategic move solidifies the automaker's commitment to producing an entry-level EV, making sustainable transportation more attainable for a broader consumer base. The ID.1, designed to be the most compact and cost-effective electric offering from Volkswagen, is poised to reshape the urban mobility landscape.
Volkswagen Accelerates Affordable EV Initiative with ID.1 Production in Portugal
In a significant development for the electric vehicle market, Volkswagen officially secured 30 million euros (approximately $35 million USD) on Tuesday, August 20, 2025, to facilitate the production of its new, highly anticipated ID.1 model in Portugal. This substantial investment marks a critical milestone in Volkswagen's journey to deliver its most affordable electric vehicle yet, with a projected starting price of around 20,000 euros ($22,000 USD).
According to Thomas Schäfer, CEO of the Volkswagen brand, the ID.1 represents "the final element" in the company's comprehensive electric vehicle strategy. This compact EV's development follows the earlier unveiling of the ID.EVERY1 concept in September, a design prototype that previewed Volkswagen's vision for an accessible 20,000-euro electric car. Unlike many conceptual designs, Volkswagen is now actively transitioning the ID.EVERY1 concept into a tangible production model, reinforcing its dedication to bringing affordable electric mobility to the masses.
The agreement was formalized on Tuesday with the Portuguese government, underscoring a collaborative effort to bring this innovative vehicle to market. Thomas Hegel Gunther, President of Volkswagen's Autoeuropa plant in Portugal, confirmed that production of the ID.1 is targeted for mid-2027. This timeline positions the ID.1 as a key component of Volkswagen's expanding Electric Urban Car Family, a new series focused on entry-level electric vehicles.
The Portuguese government's contribution of up to 30 million euros in state aid is instrumental in initiating this project. Manuel Castro Almeida, Portugal's Minister of Economy, highlighted Autoeuropa's enduring significance, noting that for over three decades, the plant has been a cornerstone of the national economy, a legacy now further reinforced by this new commitment.
Measuring a compact 3,880 mm in length, the ID.1 will strategically position itself between the former Up! model (3,600 mm) and the upcoming ID.2 (4,050 mm), and it is slightly smaller than the Polo (4,074 mm). Following the anticipated launch of the ID.2 and its SUV variant next year, the ID.1 will debut in 2027. Notably, thanks to a strategic partnership with Rivian, the ID.1 is not only set to be Volkswagen's most budget-friendly EV but also its inaugural software-defined vehicle (SDV) model, signifying a forward-looking approach to automotive technology and user experience.
The news of Volkswagen's commitment to the ID.1 and its strategic production in Portugal resonates deeply within the automotive sector. This initiative signifies a pivotal shift towards making electric vehicles genuinely attainable for a broader segment of the population, moving beyond premium offerings to embrace mass-market accessibility. From a consumer perspective, the promise of a capable, environmentally conscious vehicle at a competitive price point is incredibly compelling, potentially accelerating the global transition to sustainable transportation. For the industry, this move underscores the increasing importance of strategic partnerships and government support in fostering innovation and expanding the reach of EV technology. It’s a clear indication that the future of mobility is not just electric, but also inclusive and economically viable, paving the way for a greener, more accessible automotive landscape.