Europas kleine (Elektro-)Automobilindustrie muss ihr Va-va-voom wiederentdecken

Affordable and largely homegrown iconic vehicles have been disappearing from much of Europe as manufacturers have actively chosen to chase higher profits by shifting their line-ups towards large SUVs. Will a “small affordable car initiative” be the answer?

In the 2000s, France and Arsenal footballing superstar Thierry Henry became the face of Renault’s Clio adverts. It typified the swagger of Europe’s small car industry. The intervening years have been less kind, but a new initiative could put the va-va-voom back into Europe’s small (electric) car industry.

If you holidayed in Italy or Spain recently, chances are you noticed a once familiar sight on the roads. Small, nimble cars – like the Fiat Panda and Seat Ibiza – are the preferred choice for locals.

Yet for decades, these affordable and largely homegrown iconic vehicles have been disappearing from much of the rest of Europe. Across Europe, small car sales accounted for 10% of the market in 2010. That dropped to only 3.8% in the first half of 2025. Saving them would not be a conservation project but an important part of securing the European car industry’s future.

While the industry often blames regulations for the decline, manufacturers have actively chosen to chase higher profits by shifting their line-ups towards large SUVs. In doing so, they sacrificed cheaper, smaller mass market cars that once underpinned European industrial strength. It’s a trend that continued in the ‘early adopter’ phase of electrification, with a focus on big, high-end EVs. Only a quarter of new EVs are small, compared to 40% of the overall car market.

But with European car sales well below their 2019 peak, and Chinese brands like BYD filling gaps in our EV market, the big-margin big-car strategy has come back to bite.

So Commission President Ursula von der Leyen announcement of a “small affordable car initiative” in September’s State of the Union address could provide an answer to two challenges of the EV transition: affordability and industry competitiveness.

Demand for small electric cars is big but largely untapped, given the lack of affordable options. In Spain and Italy, smaller cars account for 53% of sales, but just 6% of the overall market is electric. For Europeans, the main barrier for EV adoption today is upfront price – the average European is willing to pay at most €20,000 for an electric car.

Small electric cars are perfect for city traffic (which is where most people live and most traffic happens – therefore where the switch from ICE to EV has the most impact). The fact that carmakers ignored that market for way too long is the main issue now. People are buying cheap chinese brands because they do offer those models.

You can always keep making larger models as well to sell to the crowd with families or the need for longer range, but you shouldn’t exclusively focus on them.