The European Commission is creating a new classification for compact electric vehicles (EVs) to support European car manufacturers struggling with price competition in the European market and to combat heavily subsidized Chinese rivals.
Will electric car prices fall?
Brussels has confirmed it will soon publish draft proposals for this category, dubbed “E-cars.” This new classification defines vehicles based on criteria such as size, weight, and engine displacement. The aim is to achieve a 10 to 20 percent reduction in production costs and bring the sticker price of vehicles down to between €15,000 and €20,000.
Current regulations required all-electric vehicles to be equipped with mandatory equipment such as fatigue detection systems, lane positioning assistants, and emergency braking signaling, designed for long-haul highway driving, but which increased production costs.
The new classification removes these requirements for compact models focused more on urban use. Member states will also separately discuss tax exemption mechanisms for these vehicles.
Western car manufacturers such as Volkswagen, Stellantis, and Renault stand out as the companies that will benefit most from this new classification. Volkswagen’s ID.Polo model is expected to launch in 2026 with a price of around €25,000, while the smaller ID.1 model is expected to arrive in 2027 targeting a price under €20,000.
Furthermore, Ford announced a partnership with Renault to develop two affordable EVs using the Ampere platform, which forms the basis of the Renault 4 and 5. Deliveries of these models are expected to begin in early 2028 from Renault’s plant in Northern France.
The presence of Chinese car manufacturers in European markets is rapidly increasing; according to Schmidt Automotive Research, they captured 7% of the overall European car market in July-September 2025, a double the previous year.
