EU pushes for affordable small EVs to win back reluctant buyers

In response to the challenges facing its automotive industry, the European Union has announced new measures aimed at promoting the production of small electric vehicles. This decision comes after years of struggling to compel consumers to adopt electric vehicles, which many found unaffordable. European Commission President Ursula von der Leyen emphasized the importance of offering affordable options to bridge the gap between consumer preferences and environmental targets. The initiatives surrounding the production of smaller electric vehicles echo successful models seen in Japan, with hopes that they can reignite the European car market and allow automakers to meet their increasing EV sales targets. During the recent IAA Mobility 2025 event in Munich, numerous smaller EV models were showcased, including the VW ID.Polo and the Kia EV2. Priced between €20,000 and €30,000, these vehicles still fall outside the budget of many potential buyers in the region. French automotive consultancy Inovev, which has closely followed the market trends, pointed out that there is a gap between regulatory ambitions and actual consumer needs. Many automakers, including Renault and Stellantis, have lobbied for changes to regulations in order to better facilitate the creation of affordable EV options. The EU's current environmental regulations were designed to lead toward a net-zero goal by 2050 but have also inadvertently hampered the ability of automakers to create lower-cost models. As pressure mounts from both consumers and the auto industry, von der Leyen announced she would be collaborating with manufacturers to establish more feasible solutions for producing small, affordable cars. Automakers have expressed their concerns regarding the 2035 CO2 targets set by the EU, describing them as unfeasible amid current market conditions. To strengthen the EU's position against potential competition from countries like China, there is a necessity to produce cars that appeal to typical consumers. A shift towards smaller, less expensive EVs represents a critical turning point for European automotive manufacturers, as millions of European citizens express the need for more reasonably-priced vehicles. With the next round of strategic discussions scheduled for December, the outcome will be crucial for determining the ongoing viability of Europe's automotive industry in the face of evolving market demands and external pressures.