European carmakers are finally producing small electric cars for city streets, after years of focusing on bloated SUVs that struggled to squeeze down medieval lanes and canal-side roads. The winding backstreets of London, Paris and Rome have long posed a problem for electric vehicle manufacturers: big batteries were too expensive and too bulky to fit into the smaller, cheaper cars that suit European cities. But battery technology has improved and manufacturing costs have fallen enough that a new generation of compact EVs is now arriving.
The Renault Twingo E-Tech is a case in point. Driving it through London attracts quizzical looks, its bulbous “frog” headlights and “mango yellow” paint job a deliberate departure from the anonymity of many electric cars. “The world is not going to be saved by big SUVs that are electric,” said Renault’s chief design officer, Laurens van den Acker, who led development on the Twingo. “The world is going to be saved by small electric cars. We need more of them and not less.” The car is priced from €19,490 in France and is expected to sell for about £18,000 when it launches in the UK next year.
The shift comes after decades of vehicles getting bigger. At 4.41 metres on average, cars manufactured in 2024 were 5% longer than in 2016, according to Dutch government statisticians, and nearly 4% wider at 1.82 metres – a particular problem for anyone navigating the streets of Amsterdam. Smaller cars had started to disappear because it became harder for manufacturers to make money on them. Safety regulations added extra kit that was tricky to package, and when the shift to electric came, batteries were initially too expensive for the most affordable segment.
Road transport currently accounts for about a fifth of EU emissions, and switching from a small petrol hatchback to an electric SUV represents two steps forward and one step back: no direct tailpipe emissions, but more bulk and bigger batteries mean higher manufacturing emissions and more energy needed to move. “We need more small electric cars,” van den Acker added, “and we need them to become as popular as other cars.”
Shrinking batteries, shrinking costs
The key to making smaller EVs financially viable has been the falling cost of batteries, according to Xuan-Zheng Goh, Smart Europe’s director for product, marketing and communication. “Making a big car is easy,” he said. “Making a small car is a real big challenge. You need to make some careful decisions.” Demand for smaller cars had always been there in Europe, he said, but the economics only began to make sense as battery prices dropped.
Manufacturers have pursued several technological and process innovations to bring costs down. Renault pushed to design the Twingo in two years rather than four, and did some of the engineering work in China. It also slashed the number of parts from between 1,500 and 2,000 found in other cars to only 750. Within those constraints, van den Acker said the company sought to make “EVs that you could actually fall in love with”, resulting in quirky touches such as the single-line profile of windscreen and bonnet, sliding back seats for extra legroom or boot space, and bright colours. “It’s French and good taste,” he added. “What you guys in England love.”
The trade-off is range: the Twingo has a 27.5kWh battery giving 163 miles – enough for the school run but requiring a 20-minute charge on a weekend return trip from London to Oxford. Cupra, owned by Volkswagen, has taken a different approach with its electric Raval, launched across Europe in April 2026. Starting at £23,785, the car is “a gamechanger”, according to Markus Haupt, chief executive of Cupra and its Spanish sister brand Seat. The Raval offers a choice of 37kWh or 52kWh batteries, the latter providing a range of around 280 miles. “With this car we have the perfect package to convince [customers] that electro mobility is not the future, it’s the present,” Haupt said.
Getting production costs down required billions of euros of investment across the Volkswagen group to produce a new platform – a shared manufacturing blueprint used for several cars across different brands. Haupt expects production costs to be about level with petrol cars “by the end of this or beginning of next decade”. The Smart brand, which became a joint venture between Mercedes-Benz and China’s Geely in 2019, is also returning to its small-car roots with an electric version of the two-seater Fortwo, called the #2 (pronounced “hashtag two”). Smart Europe’s boss, Wolfgang Üfer, told an industry conference last month that the #2 was the model everyone – including his own mother – had been asking for. The car is designed to be the smallest electric car on the market, undercutting the Fiat 500e by almost a metre, with a claimed range of nearly 186 miles and a 10-80% charge time of under 20 minutes. Developing it took longer because of the challenge of packaging everything into a footprint less than three metres long.
European carmakers have another big reason to push small EVs: they need to hit emissions targets to avoid fines. Switching to electric is impossible without making EVs their top sellers. However, governments have come under pressure from the industry to slow the pace. The UK government is reportedly considering relaxing its 2030 Zero Emission Vehicle mandate, potentially lowering the requirement for new car sales to be electric from 80% to 50%. A relaxation could increase reliance on hybrids such as the Toyota Aygo and Fiat 500 – an option that still produces higher carbon emissions than pure electric. The UK also offers an Electric Car Grant of up to £3,750 for eligible new EVs priced at or below £37,000, running until March 2030.
Renault has already had a hit with the slightly larger Renault 5 E-Tech, the 2025 winner of Europe’s Car of the Year award, which offers a range of up to 248 miles and is built on the AmpR Small platform, unique in Europe. The Mini Cooper Electric – the Cooper E with up to 190 miles and the Cooper SE with around 250 miles – and the Fiat 500e have been on sale for several years. More are on the way, notably the Volkswagen ID. Polo. There is also the niche of even smaller “quadricycles” such as the Citroën Ami, which starts from £7,695 in the UK with a range of up to 46 miles and a three-hour recharge time, and the Micro Microlino. Citroën is planning to revive the venerable 2CV name for a forthcoming small electric model, and its sister company Peugeot offers the E-208, which has an RRP of £29,095 and qualifies for a £1,500 Electric Car Grant, bringing the on-the-road price down to £28,650.
The Chinese question
But, as ever in the European car industry, there is an elephant in the room: Chinese rivals. China’s relatively new cities and wide roads do not necessarily need smaller cars, but its carmakers know there is a market for them in Europe. BYD, the world’s largest electric carmaker, has the Dolphin Surf city car, while Stellantis is helping to distribute the Chinese manufacturer Leapmotor’s T03. Smart’s cars are designed in Europe but engineered and made in China. Cupra’s Markus Haupt said European manufacturers welcomed the competition, but that Chinese firms should be pushed to source components and produce cars in Europe, given the huge government subsidies across Chinese industry that last year prompted the EU to impose tariffs on Chinese EVs – additional duties that can exceed 30% for some manufacturers. The EU is also preparing to impose tariffs on Chinese plug-in hybrid vehicles to close a loophole.
The EU’s new “Made in Europe” rules are expected to go further, giving a strong incentive to build within the bloc, with the UK at risk of being shut out. That may well mean European buyers will always pay more for small cars, but the upside could be more Chinese carmakers setting up factories in Europe. “I think for Europe, looking where we are standing now on our industrial basis, it will be super-attractive,” said Haupt. “This would create employment. This would attract investment to Europe.”
