EU Plans New Compact EV Class to Undercut Chinese Rivals – Report

The European is reportedly planning to create a new compact electric vehicle class in a bid to undercut rivals from China.

The European Union (EU) is reportedly planning to create a new compact electric vehicle (EV) classification that features more relaxed technical requirements in a bid to match the growing Chinese automakers on pricing.

As reported by Automotive World, the European Commission (EC) has confirmed that it will soon release draft proposals for this new ‘E car’ category, which will define vehicles by size, weight, and motor displacement to achieve cost reductions of 10-20%. With this reduction, sticker prices for some European-badged EVs could go down somewhere around €15,000-€20,000 (RM71,785 to RM95,714).

The new classification will focus on removing some mandated requirements designed for long-distance travel, such as drowsiness detection systems, lane positioning assistance, and sudden stop signalling for urban-focused compact EVs. The report suggests that this equipment may not be necessary for these compact urban EVs, and they have also been identified as the things that inflate production costs for these EVs.

Volkswagen ID.Polo (left) & ID.Every1 concept (right)

Should this vehicle class be approved by the EC, European brands like Volkswagen, Renault, and Stellantis stand to benefit the most from it. Compact European EVs like the upcoming Volkswagen ID.Polo and the smaller ID.1 could be priced lower than their respective estimated pricings of sub-€25,000 (RM119,642) and €20,000 (RM95,714), respectively.

As mentioned above, the growth of affordable cars from China in Europe is said to be one of the main reasons for this new classification proposal, as Chinese automakers now have captured 7% of Europe’s overall car market during July-September 2025. While EV market share has increased to 12% so far this year, they are being dominated by China’s BYD, and that is despite the current 45.3% import duties imposed by the EU on Chinese-made EVs.

From another perspective, this new compact vehicle classification could also potentially revive the EU’s interests towards Japanese kei cars, which were previously classified as non-tariff barriers by the union. This growing trend of leaning towards more compact cars is also being shown by the US, with its president Donald Trump previously approving domestic “tiny car” production, opening export opportunities for specialised Japanese and even Malaysian models too.

Source: Automotive World