Europe is warming up for the arrival of kei-cars, a symbol of affordable mobility in Asia. The president of the European Commission, Ursula von der Leyen, has thrown her weight behind calls from Renault and Stellantis for a new generation of cheap, lightweight cars, pledging to work with manufacturers to make them a reality. But conformity rules will need to change to make it happen.
“Millions of Europeans want to buy affordable European cars. We cannot let China and others conquer this market,” von der Leyen told MEPs in Strasbourg in her annual State of the Union address.
The commission, she said, would launch a “Small Affordable Cars Initiative”, aimed at ensuring Europe produces its own budget-friendly vehicles instead of ceding the segment to Asian rivals. Its name? E-car, with the ‘E’ standing for both ‘Europe’ and ‘Electric’.
‘Regulations unprofitable’
The plan is a nod to growing alarm within Europe’s car industry, where executives fear that climate regulations and the looming 2035 ban on combustion engines are squeezing consumers out of the new car market while creating space for an influx of cheaper Chinese electric vehicles.
The call was jointly made by ex-Renault CEO Luca de Meo and Stellantis chairman John Elkann in an interview where they pledged to affordability.
There’s a sense of nostalgia in their plea. Once, Europe’s roads were filled with diminutive, practical cars, like the Fiat 500 or the Renault Twingo. Today, the market for sub-€15,000 cars has almost disappeared.
Elkann noted that as recently as 2019, one million such vehicles were sold annually in Europe, but today the figure hovers around just 100,000. “The regulations have made small cars unprofitable,” he said earlier this year, warning that manufacturers could be forced into “painful decisions” about production if the situation did not change.
Exempt from safety?
Carmakers say the rules are not only pricing buyers out but also damaging the industry’s ability to compete globally. Stellantis’ new chief executive, Antonio Filosa, bluntly told investors in Paris last week that the EU’s climate targets were “frankly unattainable”.
His prescription was simple: smaller cars. “Independently of the powertrain, a small car will always pollute less,” he argued, urging Brussels to grant incentives or “super-credits” to encourage their purchase.
Stellantis’ Europe boss Jean-Philippe Imparato has gone further, calling for exemptions from some safety and emissions equipment for the E-car, including advanced driver-assistance systems and Euro 7 brake-dust limits.
The result, he said at the Munich motor show, could be a new class of affordable city cars, sized up to 3.5 meters and capped at highway speeds of around 110 km/h.
Clearly, Imparato doesn’t want to take a leaf from the Smart playbook. Mercedes took crash safety to long lengths on the smallest car it ever built – the original Smart – which drove prices above €20,000.
On the agenda
And then, there are formidable hurdles. EU lawmaking is slow, with years of negotiation before any new category can be agreed, followed by several more before vehicles are developed and reach showrooms.
Also, creating an exemption category would be difficult to align with the EU’s ambitions on traffic deaths, set to reach zero by 2050. If the crash results of micro-cars are anything to go by, the prospects aren’t great. And when carmakers aren’t regulated, they often choose profit over safety.
Still, European lawmakers are taking the idea serious and have already commanded under summer a study by consultancy agency EY to tap into the opportunities.
The issue is also on the agenda of today’s meeting between the Commissioner and the auto industry. However, the German premium brands show lukewarm enthusiasm for the E-car.
Honda’s electric kei-car
The idea is not entirely European, either. Renault’s former chief executive Luca de Meo, in his ex-role as head of the European carmakers’ lobby ACEA, has repeatedly invoked Japan’s kei cars – tiny models with tiny engines – as a template for the European E-car.
These cars don’t require proof of off-street parking space, have fiscal advantages, and cut costs on safety equipment. Output is limited to 64 hp and displacement to 660 cc on combustion models.
The importance of kei-cars in urbanized Japan is illustrated by Honda, which on Thursday launched sales of its first electric iteration. The N-ONE e delivers a “class-leading” range of up to 295 kilometers on a 29.6 kWh battery and is priced from about €15,600 in Japan.
Kei-cars are small in size and big in sales, and make up more than 40% of new car sales in Japan. Honda might actually be pioneering the E-car idea. The N-ONE e was also shown on the latest Goodwood Festival of Speed. And why would Honda do that if it has no intention to bring the car to Europe?
But whether European buyers can be enticed into these dwarfs on wheels is far from sure. Kei-cars are a cultural phenomenon, born from Japan’s geographical profile, which led to the construction of tightly spaced metropolitan areas. Europe’s network is much more distant.
