Despite looking like a Golf, the VW ID.2all concept car presented last month may not enter production (target 2025) as an electric successor to the iconic VW Golf, but a replacement for the VW Polo.

In an interview with Automotive News Europe, VW CEO Thomas Schafer said the company has not come to a decision on the next generation Polo, as the European Union’s upcoming Euro 7 emission regulations will push prices too far up for the Polo to still have a business case.

Ford for example, has already confirmed that 2023 will be the final year for the Ford Fiesta, and there will not be a replacement for the model.

The current Mk6 generation VW Polo starts at 20,830 Euros in Germany but to comply with Euro 7 emission regulations, which will come into force on 1-July 2025, prices will have to be increased by 5,000 Euros – a quarter of the car’s current price.

“At the moment, you can buy a Polo with a manual gearbox and 1.0-liter engine, but under Euro 7, this would be not be possible anymore. You need an automatic gearbox and you need hybridization. The future of Polo depends on the outcome of Euro 7,” said Schafer.

The proposed Euro 7 has received severe criticism, with Stellantis CEO Carlos Tavares calling Euro 7 a ‘useless distraction’ when Europe’s high energy cost makes it nearly impossible to produce affordable battery EVs.

The EU has agreed to review the standards for Euro 7 but final targets for emissions cap, which now include not just exhaust gases but also brake dust, have yet to be decided.

When asked if the VW ID.2all, which has a target starting price of under 25,000 Euros – close enough to match a high specs Polo variant – will replace the Polo, Schafer said it is possible but it’s not a direction that VW wants to pursue unless all options to sustain the Polo have been exhausted.

“I wouldn't categorically say no, but at the moment it's not the preferred choice. The question is: What will the Polo cost after Euro 7 [emissions regulations] take effect? We don't know yet,” he said.

Even with the VW ID.2all starting at under 25,000 Euros, VW will still struggle to replace the Polo because it is ultimately still a significantly more expensive car than the 20,000 Euros plus Polo.

On the struggle to make cheap, small BEV models, Shaefer said, “Either you solve the riddle with scale, downsize the battery, or you find a partner and scale it even more. It's not clear yet. We have four working streams in parallel at the moment.“

Skoda, a VW Group’s subsidiary and sister-brand of the group’s namesake VW brand is working on a sub-20,000 Euros BEV model but that project is focused mostly on India.

Schafer also confirmed that the VW T-Roc, essentially an SUV version of the Polo, will be the last combustion engine VW model for Europe. By 2033, VW will go 100 percent electric.