EU Plans December Announcement For Affordable Small EVs To Counter Chinese Competition

The European Commission will announce a new regulatory category for affordable small electric vehicles in December, aiming to enable manufacturers to produce EVs priced between €15,000 and €20,000 ($16,000-$21,000) as Chinese competitors continue gaining market share with lower-cost models.

European Commissioner for Industry Stephane Sejourne confirmed the timeline during the Automotive Industry Day in Paris on Tuesday, stating the framework will be included in the Commission’s December 10 announcements. The move creates an intermediate regulatory category between lightweight quadricycles and standard passenger cars, allowing small EVs to skip some safety equipment and technology requirements mandated for larger vehicles.

Regulatory Relief For European Automakers

The new category addresses a critical challenge facing European manufacturers: producing affordable EVs while meeting the same comprehensive safety and technology standards required for full-size luxury sedans. Renault Group CEO François Provost recommended freezing automotive regulations for this new class for 10 to 15 years to give manufacturers time to optimize costs.

“The goal for manufacturers is to bring new small vehicles priced between 15,000 and 20,000 euros to the market, and since regulatory constraints also factor into the price, we are going to create this regulatory framework,” Sejourne said at the Paris event.

Provost specified the new category could include vehicles up to 4.2 meters (13.8 feet) long with battery capacities limited to 50-60 kWh. This would encompass vehicles slightly larger than Renault’s current R5 and R4 electric models, positioning them as genuine small cars rather than micro-vehicles.

Chinese Competition Drives European Response

The regulatory initiative comes as Chinese EV manufacturers rapidly expand their European presence with aggressively priced models. Chinese brands captured 8% of European EV sales in 2024, up from 6% the previous year and 4% in 2021, with at least 11 mass-market Chinese EVs planned for European debuts by the end of 2025.

European automakers face mounting pressure from Chinese competitors who benefit from established battery supply chains and lower production costs. BYD sold 2,158 cars in Spain in July 2025—nearly eight times its volume from the previous year—while Tesla registrations tumbled across multiple European markets.

The Commission has been developing this intermediate category to prevent small electric vehicles from requiring the same comprehensive equipment packages as large saloon cars. Until Sejourne’s announcement, the timeline for implementing such reforms remained uncertain, leaving European manufacturers in regulatory limbo while Chinese competitors moved forward with affordable models.

Price Gap Widens Between Europe And China

The affordability challenge facing European manufacturers has become increasingly stark. An International Energy Agency report from May 2025 revealed that 39% of EV models in China were priced under $25,000 in 2024, compared to just 3% of models in Europe reaching that price point.

This pricing disparity reflects fundamental differences in market structure. In China, 95% of small car sales were electric last year, driven by intense competition and manufacturing scale. European manufacturers, meanwhile, struggle with higher production costs, stringent regulations, and limited battery manufacturing capacity compared to their Chinese rivals.

BYD’s Dolphin Surf launch in Europe in May 2025 demonstrated the pricing pressure European automakers face. The Chinese manufacturer offered its compact EV starting at €22,990 ($26,100) with a 322-kilometer (200-mile) range, positioning itself as one of the more affordable options in Europe’s market where only a handful of models like the Dacia Spring retail below €20,000.

Parliamentary Approval And Implementation Timeline

The December 10 announcement represents the Commission’s policy proposal, which must still navigate parliamentary approval before implementation. Sejourne’s comments suggest the Commission views this as urgent, given the accelerating pace of Chinese market penetration and struggling European EV sales.

European car sales jumped 10.7% in September 2025, but the growth was driven primarily by profitable plug-in hybrids rather than money-losing pure electric vehicles. The battery-electric car market share held steady at 16.1% year-to-date through September, still below the pace required to meet emission targets.

Several major European automakers have publicly pushed for regulatory changes to support affordable small EV production. Provost told French television on Monday that Renault was requesting a 10-year delay on the EU’s ban on thermal engines, underscoring the industry’s broader struggle with the electric transition timeline.

EVXL’s Take

This regulatory relief package reveals how differently the world’s three major markets are approaching EV affordability—and America’s strategy looks increasingly backwards.

Europe is creating regulatory pathways to make EVs cheaper. China already achieved near-price parity between EVs and gas cars through manufacturing scale and brutal competition. Meanwhile, the United States removed the $7,500 tax incentive and continues raising tariff walls that make affordable EVs MORE expensive for American consumers.

As EVXL reported in May, Chinese EVs now cost nearly as much as gas cars in their home market, with 39% of models priced under $25,000. Europe’s new regulatory category aims to enable similar pricing through reduced compliance costs. But America? U.S. tariffs on Chinese EVs hit 100%, with battery components facing at least 145% duties.

The contrast couldn’t be sharper. Europe recognizes that small EVs don’t need the same safety systems as seven-passenger SUVs. China flooded its market with affordable options until EVs became the default choice for small cars. America built tariff walls so high that consumers can’t access the affordable EVs that exist.

Ford CEO Jim Farley warned last week that Chinese manufacturers could “put us all out of business” with their existing capacity—and he’s driving a Xiaomi SU7 in Chicago because he recognizes how good Chinese EVs have become. Yet American policy continues prioritizing protection over competition, keeping those superior, affordable vehicles away from U.S. consumers while domestic automakers lose $1.4 billion per quarter on EVs.

The federal EV tax credit expired on September 30, 2025, making new EVs even more expensive for American buyers at precisely the moment when China and Europe are racing to make them cheaper. Europe’s December announcement will create a regulatory framework enabling €15,000 EVs. China already sells them. America keeps them out.

As we noted when covering Chinese EVs in Mexico, budget-conscious buyers south of the border access $17,000 vehicles with impressive efficiency while Americans pay premium prices for limited options. Mexico became the world’s largest destination for Chinese cars in early 2025, proving demand exists for affordable EVs when policy allows it.

The question isn’t whether Europe’s regulatory relief will help manufacturers produce cheaper EVs—it will. The question is how long America can maintain its tariff fortress before consumers and policymakers recognize that “protection” from affordable, high-quality EVs isn’t protection at all. It’s economic self-sabotage disguised as industrial policy.

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