The move to electric vehicles will make cars significantly more expensive, meaning they may become unaffordable for people on low incomes in the future, the chairman of Volkswagen said in an interview published on Sunday.
The German carmaker is still reeling from a 2015 scandal over cheating on emissions tests and needs to ramp up production of electric vehicles to meet toughened European emmissions-cutting targets.
"We have the clear goal of making electromobility accessible to a broad section of the population, that is to make it affordable," Hans-Dieter Poetsch told the Welt am Sonntag newspaper.
But he said it could be difficult to maintain the prices of many entry-level vehicles.
"The current price level cannot stay the same if these cars are equipped with electric motors," said Poetsch. "Therefore, it will inevitably lead to significant price increases in the small car segment."
Poetsch referred to the tougher-than-expected targets to cut greenhouse emissions from cars by 37.5 percent by 2030, which the European Union agreed in December.
Volkswagen said in December it may have to step up plans for mass production of electric vehicles to meet the EU targets.
VW plans to spend almost 44 billion euros on developing electric cars, autonomous driving and new mobility services by 2023.