Talks between the Volkswagen Group and Renault about a joint electric car have allegedly been going on since December: VW's €20,000 (approx. £17,000) car and the Renault Twingo were to be developed together. However, the talks (which were never officially confirmed) have now broken down, reports Reuters, citing insiders.

According to the report, the cooperation did not materialise because it was not possible for the two sides to agree on the production location. Renault now wants to continue the development of its entry-level model alone. The Twingo was presented as a study back in November. It is to be launched in 2025, cost less than €20,000 and have an energy consumption of just 10 kWh/62 miles, Renault said at the time.

Renault Twingo Legend Concept (2023)

A new Twingo Electric is set to replace the current model in 2025

VW ID. 2all vs. VW Polo

A study of the 20,000 car is still missing, this is the 25,000 euro model ID. 2all.

Volkswagen has also announced a €20,000 model. It is to be launched before 2027 and, according to rumours, could be called the ID.1. If no other partner is found, VW will now have to develop and produce this vehicle on its own. Both companies had hoped to reduce costs through cooperation as European manufacturers are under pressure from cheaply producing competitors from China. The two companies did not wish to comment on the matter to Reuters.

One of the information sources said that the VW works council played a role in the breakdown of the talks. Another source said that the talks were broken off primarily because Renault wanted to build the car in one of its plants, while VW wanted to fully utilise its European production network. The two companies were very close to reaching an agreement, but VW then decided to develop its own car after all, said another source.

Leapmotor T03

Stellantis has already found a solution for a low-cost electric car with the Leapmotor T03

According to an insider source, VW wants to decide on its next steps in the coming weeks. Renault wants to continue development of the new Twingo E-Tech Electric without VW, but is also open to other partners, a source said.

Renault boss Luca de Meo had only recently campaigned in February for greater cooperation between European car manufacturers. He said that only a cooperation similar to that of the European aerospace group Airbus would enable them to compete with Chinese rivals. The joint development of a low-cost electric car could have been the basis for such cooperation.

The bottom line

Everything would have been so perfect: Renault could have developed the Twingo, perhaps with some input from VW, and then the car could have been manufactured jointly - with corresponding scaling advantages. But large car companies have to utilise their plants to capacity or they put jobs at risk. And due to the current weakness in demand, things are looking bad at the moment.

But if the cheap electric cars are built in China in the future, that won't help European employees either. Stellantis has already found a partner from the Middle Kingdom with its cooperation partner Leapmotor and will be launching a low-cost Chinese car on the European market in the autumn. Perhaps Renault and VW will also follow this path in the near future?