WOLFSBURG, Germany—Volkswagen AG plans to produce a low-cost, entry-level electric vehicle at its flagship factory here. When it goes into production in 2027, the compact EV will cost around $20,000. The automaker expects to unveil the car sometime next month.

According to Thomas Schäfer, CEO of Volkswagen Passenger Cars, the new model will be attractive for a wide variety of user groups. “An affordable, high-quality and profitable electric Volkswagen from Europe for Europe—that's the Champions League of automotive engineering,” says Schäfer, making a reference to the popular European football championship.

“We are pursuing an ambitious path to ensure we achieve our shared goals with full commitment,” claims Schäfer. “A key step in this is making e-mobility attractive for everyone—that is our brand promise.”

To appease labor unions, Schäfer also proclaimed that Wolfsburg will be “the capital of our new all-electric compact class. The Scalable Systems Platform will represent the next generation of an all-electric, fully digitalized, highly scalable mechatronics platform based on a uniform system architecture.”