Skoda is reassessing the potential for a revival of its Citigo city car, but a return hinges on a significant reduction in battery costs, according to company statements. The Czech automaker previously offered the Citigo as a rebadged version of the Volkswagen Up, and while demand for affordable small cars remains, the economics of electric vehicle production currently present a substantial hurdle.
The company has effectively ruled out a direct successor to the Citigo based on the forthcoming Volkswagen ID Polo or similar small electric platforms. Klaus Zellmer, Skoda’s CEO, stated the company “consciously designed not to be part of that market,” preferring to concentrate on its existing internal combustion engine (ICE) models – the Fabia, Kamiq, and Scala – where it believes it can achieve stronger profitability. This decision aligns with a broader strategy within the Volkswagen Group, where Volkswagen itself is taking the lead on developing and marketing a new generation of entry-level electric vehicles.
Volkswagen is progressing with a production version of the ID Every1 concept, aiming for a target price of around £17,000. This vehicle is intended to revive the Up nameplate as an electric city car. However, Zellmer emphasized that Skoda’s focus remains on maximizing returns from its current ICE lineup, arguing that the profitability of these models currently outweighs the potential gains from entering the highly competitive sub-£22,000 EV segment.
The current market landscape presents a challenge for automakers seeking to produce affordable EVs. Martin Jahn, Skoda’s board member for sales and marketing, explained that We do not see a way how to produce such a car profitably, so we do not have any immediate plans for a smaller electric car than the Epiq.
This sentiment reflects a wider industry concern that electric cars generally offer lower profit margins compared to their combustion engine counterparts, with Jahn noting that electric cars in general have much lower profitability than combustion-engine cars, and that’s true for 99 per cent of car makers.
Skoda’s forthcoming Epiq crossover, slated for release this summer, will be the smallest electric vehicle in its portfolio. Priced from around £25,000, it will be among the more affordable EVs available, though still more expensive than the current Kamiq. The company’s decision to forego a smaller, cheaper EV is partly influenced by the Volkswagen Group’s overall strategy, where Volkswagen is positioned as the brand responsible for covering the full spectrum of vehicle segments. Zellmer articulated this division of labor, stating that You have to make decisions and say ‘do we want a BEV-only vehicle in that segment or do we believe in the Fabia, Kamiq and Scala being the ones that deliver the most for us in terms of profit and getting our investment back?’
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The potential return of the Citigo, is directly linked to advancements in battery technology and a corresponding decrease in battery prices. Skoda has indicated it will revisit the possibility of producing a smaller EV when battery prices fall
, suggesting that a significant cost reduction is a prerequisite for re-entering that market segment. This aligns with broader industry expectations that falling battery costs will be crucial for making EVs more accessible to a wider range of consumers.
The current situation highlights the complex interplay between market demand, technological advancements, and profitability considerations in the automotive industry. While the European Union is pushing for more affordable EVs, automakers like Skoda are prioritizing financial sustainability and focusing on segments where they can achieve acceptable returns. The decision to let Volkswagen lead on the development of a smaller electric city car underscores the importance of avoiding internal competition within the Volkswagen Group and maximizing overall market coverage.
The Skoda Citigo e iV, an electric version of the original Citigo, is currently available on the used car market, starting from around £6,995. However, the future of the Citigo nameplate beyond the used market remains uncertain, contingent on the evolution of battery technology and the broader economic landscape for electric vehicles.
