Volkswagen is committed to launching an entry-level sub-£18,000 electric ID ‘people’s car’ – but company boss Herbert Diess has admitted there is a long way to go before it can offer enough range to make it viable.

Autocar exclusively revealed the firm's plans to develop an entry level small hatchback on its new MEB architecture earlier this year. The machine, set to be called the ID 1 or 2 in keeping with the numbering convention for the firm's new electric car range, will be comparable in size to the Volkswagen Polo.

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Volkswagen has set a price target of under €20,000 euros for the machine. Speaking at this year's Frankfurt motor show, where VW unveiled the Golf-sized ID 3 and a major brand revamp, Diess said the small car "make a lot of sense" from an environmental standpoint. But he said the production version was unlikely to arrive before 2023.

But he added: "There’s a long way to go. It’s really tough to get a decent range for a car under €20,000."

When Volkswagen confirmed the nomenclature for its ID range at the pre-booking launch of the ID 3, sales boss Jurgen Stackmann noted that calling the first Golf-sized model the 3 allowed for the range to be expanded with both smaller and larger models.

With the Golf-sized model taking the ID 3 tag, the Polo-sized entry level car will be called the ID 1, and accompanied by an ID 2 compact crossover SUV.

Stackmann noted that the larger ID models, based on the already seen Crozz (set to be called the ID 4), Buzz, Vizzion and Roomzz concepts, would be the next cars to reach production, but emphasised the firm’s commitment to making genuinely affordable electric cars.

“In the long term we clearly need to scale down and be more aggressive on prices,” said Stackmann. “That will be a scale of industrialisation, and it will take some time until we bring it into classes.”

Said to be part of a modern-day 'people's car' project, the compact crossover utility vehicle was confirmed by product strategy head Michael Jost. It will arrive by 2023, or 2024 "at the latest".

The compact five-seater will have a raised ride height and exterior dimensions similar to the existing combustion-engined T-Roc, forming part of Volkswagen’s upcoming line-up of I.D. battery-powered models that will kick off with the launch of the ID 3 hatchback in 2020.