Europe may come up with a new category of city car, similar to Japan’s kei car classification, in order to keep Chinese automakers at bay.
Ursula von der Leyen, president of the European Commission, has thrown her weight behind creating a class of small vehicles primarily for the European market, and built in Europe.
During her annual State of the Union address, Ms von der Leyen said, “Millions of Europeans want to buy affordable European cars, so we should also invest in small, affordable vehicles, both for the European market but also to meet the surge in global demand.”
She called for the creation of a new “E-car” category, with the ‘E’ standing for environmental, economical, and European.
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The naming seems to indicate a preference for electric propulsion, but drivetrain constraints have yet to be confirmed, with Ms von der Leyen only saying, “No matter what, the future is electric, and Europe will be part of it.”
While there are still many details to be worked out, she stressed E-cars should “built here in Europe with European supply chains because we cannot let China and others conquer this market”.
To counter the inroads Chinese manufacturers were making in the bottom end of the bloc’s EV segment, the EU imposed 45 per cent tariffs on electric vehicles imported from China in late 2024.
This has resulted in some brands pivoting to plug-in hybrid vehicles, while others are speeding up plans to build EVs in Europe. This month, Magna Steyr began building EVs for Xpeng and GAC at its facility in Graz, Austria, alongside the likes of the Mercedes-Benz G-Class, BMW Z4, and Toyota Supra.
In her speech she said she would “work with industry on [the] new small affordable cars initiative”.
Back in July from Stellantis chairman John Elkann, and then Renault CEO Luca de Meo voiced support for a new small car category with looser safety regulations based roughly on Japan’s kei car rules.
The kei car category was created by the Japanese government as a response to post-war shortages, and as a way to stimulate domestic car production and promote car ownership.
At present, kei cars must be under 3.4m long, 1.48m wide, 2.0m tall, and have an engine smaller than 660cc. Power is limited via a gentleman’s agreement to a maximum of 47kW. In return, kei cars attract significantly lower sales tax and annual road tax.
While kei cars have become popular in Japan — sometimes reaching 40 per cent market share — only a few have found favour overseas. Notable successes outside of Japan include the Suzuki Jimny and earlier generations of the Suzuki Alto, all of which are fitted with larger engines and body addenda in overseas markets.
Although there are no rules against kei cars coming from overseas, their small form factor, low performance and small profit margin act as a natural barrier. Only a few foreign vehicles have qualified, including a specially modified version of the Smart ForTwo.