Volkswagen Weighs Audi and Skoda Small EV Output in Spain and Portugal

Volkswagen Group reviews small EV production in Spain and Portugal after the EU’s M1E move. Plans involve Audi and Skoda models within the Iberian hub. Read more.

Volkswagen Group is returning to the topic of compact electric vehicles, driven in part by new regulatory signals from Brussels. Following the European Union’s initiative to create the M1E category for small electric cars, the company is reassessing previously shelved projects and evaluating an expansion of production in Spain and Portugal. At the centre of this discussion are potential models under the Audi and Skoda brands, alongside a broader reinforcement of the so-called Iberian production cluster.

The proposed M1E category is designed as a sub-class of M1 for fully electric vehicles measuring up to 4.2 metres in length. Manufacturers could benefit from a “super credits” mechanism, under which each qualifying vehicle may count as 1.3 units when calculating compliance with corporate CO₂ targets. Importantly, these vehicles would remain within existing M1 safety standards, a point that has sparked debate among industry stakeholders. Overall, the initiative is widely seen as an effort to stimulate the production of affordable small EVs built in Europe.

Against this backdrop, the Iberian Peninsula is steadily evolving into a strategic hub for Volkswagen Group’s electric urban car family. In Martorell, preparations are underway for the series production of the Cupra Raval and the production version of the Volkswagen ID.2, with manufacturing scheduled to begin in 2026. The site has been equipped with a new battery assembly facility covering around 64,000 square metres and designed for a capacity of up to 300,000 battery systems per year. These systems will be delivered directly to the assembly lines via automated logistics, including a 600-metre bridge linking production buildings.

Meanwhile, Volkswagen Navarra in Pamplona continues to produce the T-Cross and Taigo models, with total output reaching 225,225 vehicles in 2025. This underlines the region’s current industrial weight as it becomes increasingly integrated into the Group’s wider electrification strategy.

Technically, the small EV projects are based on the updated MEB+ architecture, incorporating the Unified Cell concept and a cell-to-pack battery layout, with flexibility for different chemistries including LFP. Looking further ahead, the next major step will be the Scalable Systems Platform (SSP), whose debut is expected around 2028. Key architectural parameters were reportedly frozen in 2025, positioning SSP as a unified next-generation electric platform for multiple brands within the Group.

As for the potential Audi A1 e-tron and Skoda Fabia EV, no official confirmation of series production has been announced. However, Skoda has publicly discussed plans for an entry-level electric model, while Audi’s earlier A1 e-tron project demonstrated a compact electric hatchback concept. In light of regulatory incentives and ongoing investment in Iberia, the prospect of small EVs under different Volkswagen Group brands has returned to the strategic agenda.

Final decisions are expected within the framework of the 2027/2028 product strategy. What is already clear is that compact electric cars are once again gaining strategic relevance for Volkswagen Group, and the Iberian Peninsula is strengthening its position as a cornerstone of this transition.