European carmakers Stellantis and Renault have launched a joint campaign urging Brussels to carve out a new, less‑stringent vehicle category to shield domestic manufacturers from an influx of low‑cost Chinese small electric vehicles. Facing mounting pressure from competitively priced mini‑EVs that skirt the high engineering and regulatory costs imposed by the European Union, the two companies argue that a dedicated “urban mobility” class could revive Europe’s struggling city‑car segment and protect local jobs.

Surge of Chinese Mini‑EVs Shakes Up European Market

In recent months, Chinese automakers have accelerated their push into Europe’s entry‑level electric vehicle space, offering compact models at prices tens of thousands lower than traditional European rivals. Brands such as BYD and Great Wall Motor have introduced the Dolphin Surf and Ora Black Cat, respectively, priced from under €20,000, equipped with features like rotating infotainment screens and advanced driver‑assistance systems. Even smaller players such as SAIC’s MG and Chery have announced plans to import mini‑EVs aimed squarely at urban commuters.

These models are rapidly gaining traction in Western Europe, where rising energy and living costs have spurred demand for economical city transport. Dealers report waiting lists for Chinese mini‑EVs, with deliveries often booked months in advance. By contrast, Europe’s homegrown contenders—Renault’s forthcoming electric Renault 5 and Stellantis’s proposed new “e‑car” offering—struggle to match the price points of their Asian rivals, largely due to the hefty price tags attached to meeting EU safety and emissions mandates.

Industry analysts estimate that Chinese imports could capture up to 10 percent of Europe’s volume for sub‑€25,000 EVs within two years, siphoning sales from legacy players. “Consumers who once opted for sub‑compact models like the Fiat 500 or Peugeot 108 are now switching to affordable Chinese electric cars,” notes a European auto industry consultant. “This migration threatens a segment that was once the bedrock of local manufacturing.”

Regulatory Burden Drives Calls for a New Vehicle Class

At the heart of Stellantis and Renault’s push is the EU’s General Safety Regulation 2 (GSR 2) and the pending Euro 7 emissions standard, which together mandate a suite of advanced safety systems and stringent pollutant controls. Under current rules, even the smallest cars must carry side‑impact airbags, driver‑drowsiness monitors, autonomous emergency braking, lane‑keeping assistance and pass the same high‑speed crash tests as large sedans and SUVs. These requirements add between €1,000 and €1,500 to the bill of a sub‑compact EV, a burden that Chinese manufacturers can avoid by producing in lower‑cost domestic markets and complying only with Chinese or international UNECE standards.

Stellantis Chairman John Elkann has publicly compared the situation to Japan’s “kei car” framework—a category of ultra‑compact vehicles subject to relaxed size, engine and safety rules that has thrived for decades. “If Japan can sustain a 40 percent market share for its kei cars, Europe deserves an equivalent, ‘e‑car’ segment tailored to urban mobility,” Elkann declared at a recent industry forum. Renault CEO Luca de Meo echoed the suggestion in a joint newspaper editorial, urging the European Commission to introduce an “M0” classification for city cars exempted from certain high‑end safety mandates.

Proponents argue that a lighter regulatory regime for M0 vehicles would reinvigorate local production lines, create a new entry point for young buyers and help automakers meet Europe’s ambitious electric vehicle adoption targets. By lowering development costs, manufacturers could deploy smaller, more efficient EVs throughout dense urban centers, reducing carbon emissions without sacrificing safety in low‑speed environments. “We must balance child‑seat‑level safety with city‑speed risk,” says Renault’s head of public affairs. “Tailoring rules to urban conditions makes sense.”

Safety Trade‑Offs and Consumer Trust Challenges

Critics warn that carving out a special class could undermine decades of progress in vehicle safety and expose vulnerable road users to greater risk. Euro NCAP, the independent Euro pean crash‑test authority, maintains that reducing safety requirements—even for low‑speed cars—would lead to poorer crash‑test ratings and erode consumer confidence. “Small cars still collide with larger vehicles at highway speeds,” points out a senior Euro NCAP engineer. “Compromising on side‑impact protection or lane‑keeping assistance is a false economy.”

Consumer surveys confirm that safety ratings remain a top priority for buyers, even in budget segments. A recent pan‑European poll found that over 70 percent of city‑car shoppers would pay a premium for a five‑star safety rating. European fleet managers, too, stipulate minimum safety standards that preclude two‑ or three‑star models from corporate car pools. In practice, any M0 vehicles lacking conventional safety equipment could struggle to win insurance coverage or fleet adoption, limiting the market for pared‑down EVs.

Brussels policymakers acknowledge the complexity of the proposal. A spokesperson for the European Commission noted that designing a separate vehicle class would require extensive technical studies, legal amendments and alignment with international trade partners—a process that could take years to finalize, if approved at all. Regulators are particularly wary of granting exemptions on pollution controls, fearing that any rollback in Euro 7 standards could derail Europe’s broader decarbonization objectives.

Strategic Responses Beyond Regulation

Meanwhile, Stellantis and Renault are exploring additional strategies to counter the Chinese assault without relying solely on deregulatory wins. Stellantis has accelerated development of modular small‑EV platforms, aiming to share components across multiple brands to drive down costs. Renault is deepening partnerships with Korean battery suppliers to secure lower‑cost cells and reevaluating local assembly options in Eastern Europe to benefit from lower labor costs.

Both companies are also investing in subscription models and urban micro‑mobility services that bundle EV access with charging and maintenance, offering consumers an alternative to outright ownership. Pilot programs in Paris and Milan test pay‑as‑you‑drive pricing, which can make small EVs more affordable for infrequent city users. Automakers hope that value‑added services, rather than regulatory rollbacks alone, will help them compete against vertically integrated Chinese entrants.

Analysts caution that these internal efficiencies may only partially offset the price gap. “Unless European OEMs can halve their cost base within 24 months, Chinese mini‑EVs will continue to undercut them,” says one industry veteran. “Lobbying for fewer rules is a short‑term tactic, but the long‑term solution lies in leaner engineering, local sourcing and digital sales channels.”

As Stellantis and Renault press their case in Brussels, the debate underscores a broader dilemma for the European auto industry: how to balance safety, environmental commitments and competitive viability in the face of disruptive new entrants. Whether the EU embraces an “e‑car” category—or opts for incremental reforms within existing frameworks—will have far‑reaching implications for the future of city‑car manufacturing on the continent. For now, the prospect of Chinese‑priced small EVs flooding European streets has Europe’s legacy players racing to reshape the rulebook before their next generation of micro‑cars even hits the showroom floor.

(Adapted from Reuters.com)