Volkswagen beats Elon Musk in the race to cheap EVs, revealing a car it plans to sell for $26,600

• Elon Musk has been talking about the $25,000 electric car for years.
• Volkswagen just beat him to the punch with an EV it expects to sell for 25,000 euros ($26,600). 
• But the newly unveiled ID. 2all concept car won't ever make its way to the US.

For years, Elon Musk has talked about Tesla's plans to reveal a $25,000 electric car for the masses. Volkswagen just beat him to the punch. 

The German automaker on Wednesday revealed the ID. 2all concept: a small, battery-powered hatchback that it plans to sell for 25,000 euros ($26,600) or less when it goes into production in 2026.

A vehicle at that price point would represent a huge step forward for the EV market. The average new EV sold for $58,385 in February, according to Kelley Blue Book, and the cheapest Tesla is the Model 3, which starts at $42,990.

The ID. 2all show car is an early preview of an actual vehicle to come later down the road — one which may be called the ID.2. (VW currently sells an ID.3, ID.4, ID.5, and ID.6.) It hints at the overall design and capabilities we can expect from the real deal when it arrives by 2026.

According to Volkswagen, the EV has a range of up to 280 miles, front-wheel drive, and a single motor delivering 223 horsepower. 

Interior photos show a sleek, minimalist cabin with few buttons and two large screens. The accelerator and brake pedals are styled as play and pause buttons, which is a quirky touch.

There's just one snag for US-based buyers: Volkswagen has no plans to bring the future model stateside, a company spokesperson confirmed to Insider.

And that makes sense, as the ID. 2all would be a tough sell for American shoppers, who have increasingly favored SUVs over the small hatchbacks that remain popular in Europe. 

Musk's complicated, yearslong journey with the $25,000 EV 

In 2020, Musk promised a fully autonomous, $25,000 vehicle as battery costs came down. At the time, he targeted a timeline of about three years. 

But in January 2022, Musk told investors his company was too busy working on other projects — that included a humanoid robot — to pursue the cheaper venture. 

At Tesla's first-ever Investor Day earlier this month, which many anticipated would bring news about a sub-$30,000 model, Musk mentioned almost nothing of the sort. In fact, the event fell short of expectations, and Tesla only teased a next-gen vehicle that would be smaller and cheaper than the Model 3.  

Why automakers are racing to make cheaper EVs

In the meantime, other automakers are targeting the low price point as the holy grail to mass EV adoption. A Deloitte study earlier this year found that 70% of US consumers don't want to spend more than $50,000 to buy an EV, and that cost is the biggest hurdle to their adoption.

Leadership at EV startup Lucid, whose vehicles cost $87,400 and above, has said smaller and less expensive battery packs, consumers leaning into needing less range, and more accessible infrastructure will be key to the company's pursuit of a $25,000 car.

Legacy auto companies are racing to get cheaper electric models on the market. Some of the most affordable EVs drivers can buy now include the $26,500 Chevrolet Bolt EV, the $27,800 Chevrolet Bolt EUV, the $27,800 Nissan Leaf, the $33,550 Hyundai Kona, and more.