Volkswagen walks away from talks with Renault on building electric car

Volkswagen broke off discussions mainly because Renault had wanted to build the car in one of its plants at a time when VW is seeking to fully utilise its European production network, one of the sources said. 

Volkswagen has walked away from talks with Renault to jointly develop an affordable electric version of the Twingo car, sources said, in a setback for the carmakers' efforts to fend off Chinese rivals.

The collapse of negotiations could mean the German carmaker may have to go it alone in developing its own affordable electric car. 

Renault will continue designing its electric Twingo, scheduled to hit the market in 2026. 

Both had hoped that sharing the work would cut costs that represent a key hurdle for European carmakers in the face of cheaper cars from China

Volkswagen broke off discussions mainly because Renault had wanted to build the car in one of its plants at a time when VW is seeking to fully utilise its European production network, one of the sources said. 

Ampere, Renault's electric car operation overseeing the Twingo programme, declined to comment. 

A spokesperson for Volkswagen also declined to comment on the talks between the companies but said that the German carmaker was still studying its options on cheap electric cars. 

The companies "did not succeed in finding an agreement" after several months of negotiations, one of the sources said. 

Another source said that an agreement had been very close, but that VW walked away from the talks and has decided to develop its own car. 

VW sources said a decision on the electric car plan is expected within weeks. Thomas Schaefer, chief executive of the Volkswagen brand, has said he wants to launch a lower-priced electric car by 2027.

The second source said Renault would continue work on the Twingo without VW, but also remained open to other partners, for instance from the alliance with Nissan and Mitsubishi. 

It is also a blow for Renault chief executive Luca de Meo's hopes for greater cooperation between European carmakers against their Chinese competitors, akin to Airbus which has stakeholders and operations across European countries. 

The VW-Renault tie-up for the Twingo could have formed the "basis" of an Airbus for cars, the second source said.

China's automakers, the world's top electric car producers, are making fast inroads in the European market, pressuring incumbents like Renault and VW to cut costs and speed up the time it takes to bring a new model to market. 

European automakers are aiming to produce smaller electric cars that sell below €20,000 to help them compete with Chinese brands like BYD.

• Reuters