VW struggling to adapt quickly enough to stringent rules introduced after the carmaker was found to have cheated diesel emissions tests. Photo: Supplied

FRANKFURT – Volkswagen intends to sell electric cars for less than €20 000 (R321 000) and protect German jobs by converting three factories to make the Tesla rival, a source familiar with the plans said.

VW and other carmakers are struggling to adapt quickly enough to stringent rules introduced after the carmaker was found to have cheated diesel emissions tests, with its chief executive Herbert Diess warning last month that Germany's auto industry faces extinction.

Plans for VW's electric car, known as "MEB entry" and with a production volume of 200 000 vehicles, are due to be discussed at a supervisory board meeting on November 16, the source said, adding that it is also looking to roll out 100 000 of the "ID Aero", a mid-sized sedan.

The Wolfsburg-based carmaker, which declined to comment on the plans, is also expected to discuss far-reaching alliances with battery cell manufacturer SK Innovation and rival Ford, the source said.

VW's strategy shift comes as cities start to ban diesel engine vehicles, forcing carmakers to think of new ways to safeguard 600 000 German industrial jobs, of which 436 000 are at car companies and their suppliers.

An electric van, the ID Buzz, is due to be built at VW's plant in Hannover, where its T6 Van is made, the source said.

To free up production capacity for electric cars in Hannover, VW's transporter vans could be produced at a Ford plant in Turkey, the source added.