EU proposes new 'e-car' category inspired by Japan's kei cars to spur affordable EVs

European Commission President Ursula von der Leyen on Tuesday proposed a new initiative to develop a class of small, affordable electric vehicles for Europe that would be loosely modelled on Japan’s kei-car rules, part of an effort to strengthen the bloc’s auto industry and counter low-cost competition from Asia.

Von der Leyen said the initiative would be developed with industry and described the concept as an "e-car" — E for environmental, economical and European — aimed at producing clean, efficient and inexpensive cars for millions of consumers and to shore up European supply chains.

The proposal resurrects ideas first promoted this year by senior industry figures including Stellantis chairman John Elkann and former Renault chief Luca de Meo, who have urged regulators to allow a distinct small-car category to reduce production costs and lifecycle emissions. In her State of the Union address von der Leyen said the European Commission would "work with industry on a new small affordable cars initiative" and warned: "We cannot let China and others conquer this market."

Kei cars, known in Japan as keijidōsha, are tightly regulated "light automobiles" with strict limits on dimensions and propulsion. The current Japanese rules require vehicles to fit within 3.4 metres in length, 1.48 metres in width and 2.0 metres in height; the regulations were introduced in 1949 and the dimension and power limits in force today date to 1998. The proposed European e-car concept would adopt a similarly constrained technical envelope to prioritise low cost and low lifecycle impacts.

Manufacturers and some European officials argue that allowing a smaller, simpler regulatory class would permit manufacturers to sell competitively priced EVs — Stellantis executives have said the company could build an electric car for around €15,000 with a roughly 70-mile range only if compliance costs and safety equipment requirements were eased. Industry lobbyists have pointed to a collapse in sub-€15,000 offerings in Europe, saying there were 49 such models in 2019 and only one in 2025.

A central element of the discussion is whether some advanced driver assistance systems (ADAS), such as lane-keeping assist, could be exempted from mandatory fitment for the new category. ADAS components — which rely on cameras, radar, lidar and significant software — represent a substantial portion of modern vehicle costs. Manufacturers contend that mandating full ADAS suites on low-cost models would push retail prices beyond the target affordability range.

Stellantis said in response to von der Leyen’s comments that an affordable vehicle segment would deliver cleaner air, safer roads, greater industrial production and faster decarbonisation, and called the president’s initiative "both visionary and urgent." The company and other automakers have also urged regulators to evaluate vehicle lifecycle CO2 emissions rather than focusing solely on tailpipe measurements, a change that would allow a wider range of powertrains during the transition away from internal combustion.

The European Union is tightening rules on combustion-engine vehicle sales, with many member states and the European Commission targeting bans on new internal-combustion cars as early as 2035. Automakers have requested regulatory flexibility during the transition to electric mobility, citing battery and semiconductor supply constraints, rising costs of raw materials and the need to maintain industrial capacity in Europe.

Analysts caution that any new legal category will require significant rulemaking and testing, and will face scrutiny from safety regulators and consumer advocates. Changes to vehicle regulations in the EU typically take years to negotiate and implement, meaning the e-car initiative is unlikely to produce showroom vehicles immediately.

Designers and manufacturers also point to the creative demands of a small-car segment: kei-car success in Japan has relied on innovative packaging, distinctive styling and high efficiency within tight dimensional limits. Any European variant would need to balance cost savings against occupant safety, crashworthiness standards and regulatory compliance while meeting consumer expectations for connectivity and basic comfort.

The proposal underscores the intersection of automotive policy and technology: decisions about exemptions for ADAS, choices of sensors and semiconductor content, and methods of assessing lifecycle emissions will shape the technological profile of the vehicles that eventually emerge. For now, von der Leyen has signalled political will to explore the idea further with industry, leaving the timeline and technical specifications to be worked out through consultation and subsequent rulemaking.