European carmakers for years focused on building electric SUVs because squeezing expensive, heavy batteries into smaller vehicles was not profitable. Improved battery technology and falling production costs have changed that calculus, according to executives and engineers quoted in a report published Sunday.
Renault’s chief design officer, Laurens van den Acker, who led development of the new Twingo E-Tech, said small electric cars are critical for reducing the industry’s environmental impact. “The world is not going to be saved by big SUVs that are electric,” van den Acker said. “The world is going to be saved by small electric cars. We need more of them and not less. We need them to become as popular as other cars.”
The Twingo, with its bulbous headlights and “mango yellow” paint, is the latest entry in a growing field of small EVs. Citroën sells the ë-C3 and is planning to revive the 2CV name for a forthcoming model. Peugeot, also part of the Stellantis group, offers the E-208. Renault has already scored a hit with the slightly larger Renault 5 E-Tech, which won Europe’s Car of the Year award in 2025. The Mini Cooper Electric, Fiat 500e, and Volkswagen ID. Polo are also on sale or planned, along with niche “quadricycles” such as the Citroën Ami and Micro Microlino.
The trend toward smaller cars comes after decades of vehicles getting bigger. Cars manufactured in 2024 were on average 5% longer and nearly 4% wider than those produced in 2016, according to Dutch government statisticians — a 14-foot-5-inch average length and 5-foot-10-inch average width that makes navigating narrow Amsterdam streets particularly difficult.
Small cars had largely disappeared from the European market because safety regulations required extra equipment that was hard to package in compact frames, and early EV batteries were too expensive for affordable models. Renault addressed those constraints by designing the Twingo in two years instead of four, doing some engineering work in China, and cutting the number of parts from the typical 1,500–2,000 to only 750.
The Twingo’s 27.5 kWh battery gives it a range of 163 miles. A Guardian reporter who tested the car said a weekend return trip from London to Oxford required a 20-minute charging stop.
Smart Europe, the joint venture between Mercedes-Benz and China’s Geely, is developing a new electric version of its two-seater Fortwo called the #2 (“hashtag two”). The company’s director for product, marketing and communication, Xuan-Zheng Goh, said making a small EV poses unique challenges.
“Making a big car is easy,” Goh said. “Making a small car is a real big challenge. You need to make some careful decisions.”
Demand for smaller vehicles has always existed in Europe, Goh said, but falling battery costs are the key to making them financially viable.
Cupra, owned by Volkswagen, is shrinking its product line with the Raval, an electric hatchback starting at £23,785. The car’s chief executive, Markus Haupt, called it “a gamechanger” for the company. “We said, OK, now is the moment to bring these cars,” Haupt said, pointing to increased EV demand in the UK and Europe. “With this car we have the perfect package to convince [customers] that electro mobility is not the future, it’s the present.”
Getting production costs down required billions of euros of investment across the Volkswagen group to develop a new shared manufacturing platform, Haupt added. He said production costs should be about level with petrol cars “by end of this or beginning of next decade.”
Carmakers face pressure from European emissions targets that will require EVs to become their top sellers in order to avoid fines. However, governments setting those rules, including in the UK, have faced industry pressure to slow the pace of change. Some manufacturers may sell more hybrids, such as the Toyota Aygo and Fiat 500, to meet legal obligations, albeit with higher carbon emissions.
Chinese competition looms over the European small-car push. BYD, the world’s largest EV maker, sells the Dolphin Surf city car. Stellantis is distributing the Chinese manufacturer Leapmotor’s T03. Smart’s cars are designed in Europe but engineered and made in China.
Haupt said European manufacturers welcome competition but argued that Chinese makers should be pushed to source components and produce cars in Europe, given the huge government subsidies that prompted the EU to impose tariffs on Chinese cars last year. New EU “Made in Europe” rules are expected to give strong incentives for local production, though the UK risks being shut out.
“I think for Europe, looking where we are standing now on our industrial basis, it will be super-attractive,” Haupt said. “This would create employment. This would attract investment to Europe.”