Brussels wants smaller, simpler electrics priced between €15,000-€20,000 to compete with subsidised Chinese imports. By Stewart Burnett
Brussels is creating a new compact electric vehicle (EV) classification featuring relaxed technical requirements as continental automakers struggle to match Chinese competitors on pricing. The European Commission has confirmed it will soon release draft proposals for the ‘E car’ category, defining vehicles by size, weight and motor displacement to achieve cost reductions of 10-20%, landing sticker prices between €15,000-€20,000 (US$17,500-US$23,200).
Current regulations mandate drowsiness detection systems, lane positioning assistance and sudden stop signalling across all EVs—equipment designed for long-distance motorway travel that inflates production costs. The new classification removes these requirements for urban-focused compact models. Member states will separately discuss tax exemption mechanisms for qualifying vehicles.
Western automakers like Volkswagen, Stellantis and Renault stand to benefit most from the classification. Volkswagen’s ID.Polo launches in 2026 priced at around €25,000 (US$29,000), while the smaller ID.1—based on the concept ID.Every1—arrives in 2027 targeting sub-€20,000 (US$23,200) pricing. Ford has also just announced a partnership with Renault to develop two affordable EVs using the Ampere platform underpinning the Renault 4 and 5, scheduled for early 2028 delivery from Renault’s plant in northern France.
Chinese automakers have a growing presence in European markets, capturing 7% of Europe’s overall car market during July-September 2025, doubling year-on-year according to Schmidt Automotive Research. Meanwhile, EV share reached 12% from 9% previously, with BYD leading the charge rather than any Western brand. Brussels currently imposes import duties up to 45.3% on Chinese-made EVs, making the new classification crucial for European price competitiveness against their heavily-subsidised rivals.
BYD operates the sole Chinese-owned vehicle plant in Europe via its site in Hungary, with a second to follow in Turkey next year. This could potentially qualify it as the only Chinese automaker eligible for development subsidies and tax credits likely conditioned on EU production. GAC manufactures the Aion V electric SUV through contract assembly with Magna at its Graz, Austria facility, though uncertainty remains whether permanent fixed manufacturing presence will satisfy the “made in Europe” criteria versus flexible contract arrangements.
Great Wall Motor is expected to join the Chinese automakers with a European footprint, targeting 300,000 annual European production by 2029. The automaker is currently evaluating Spanish and Hungarian sites, although it faces an uphill battle standing apart from the competition: 2024 sales collapsed 41% to just 3,706 units under its Ora brand.
The compact classification potentially revives interest in Japanese kei cars previously criticised by Brussels as non-tariff barriers, with US President Donald Trump directing Transportation Secretary Sean Duffy last week to approve domestic “tiny car” production, opening export opportunities for specialised Japanese models.
