Europe will have a hard time selling enough electric cars to reach the European Union’s mandate of a market share close to 60% by 2030, but a swift switch to mass-market small EVs might save the plan.

The European Union is leading this charge, which seeks to create a near EV monopoly in new car sales by 2035. The mass-market requirement would restore the opportunity, pre-Covid, that allowed average earners in the EU to afford to buy a new car. There’s always the danger though that China will simply dominate this crucial market segment.

The latest forecasts from major banks underline the upcoming dilemma. EV sales in 2026 won’t reach much higher than 25% of the market. Investment researcher Jefferies reckons European EV market share in 2030 will reach 42%. Investment bank UBS sees a 48.9% market share or 6.9 million EVs in 2030, while HSBC Global Investment Research sits in the middle with a forecast of 45%.

Reaching 60% might require a sharp change of direction by automakers. Manufacturers started producing EVs by taking an existing internal combustion-powered car and adding a battery. This has become more sophisticated, but they are still making EVs which seek to replicate the utility of a traditional car. Sure, prices are becoming more affordable, often approaching €20,000 ($23,100), but averaging closer to €50,000 ($57,700).

If manufacturers concentrated on maximizing all the attributes of electric power at the lowest cost, they could construct an urban runabout costing say, €10,000 ($11,500), with a range of 100 miles, small battery, capacity of 2 adults plus two children. Ideal for commuting, shopping and the school run. No long-range pretensions and catering for maybe 90% of motoring requirements. Japanese Kei cars, which have a long tradition of providing small but impressive and affordable ICE transport, are now being redesigned as EVs. Other ideas include taking golf carts, adding windows and doors and slightly bigger batteries for targeted urban motoring. Would these not fly off dealer forecourts, rather like mobile phones back in the day, selling because buyers were excited by their affordability and without the need of any government subsidies?

Give them an electric car which makes economic sense

“I think there is a very interesting question here. I would take the argument one step further: the missing mass-market EV may be less about persuading people to want an electric car and more about giving them an electric car that makes economic sense,” said Michael Fisher, data scientist at the financial analysts TradingPedia in an email exchange.

Michael Tyndall, autos analyst with HSBC Global Investment Research, isn’t so sure, wondering if the economics of a cheap EV can make sense.

“The big EV volume push is already coming from the bottom end, with the likes of the Renault 4 and 5 and Twingo, and the Volkswagen ID family under €25,000 ($28,800) and the upcoming ID.1 under €20,000. The €10,000 EV is a noble ambition but I’m not sure the costs will allow it to happen. Cheaper EVs are coming but that level looks out of reach,” Tyndall said in an interview.

Tyndall pointed out that the EU’s Industrial Accelerator Act is trying to prepare the ground for a new, smaller class of European car that would have easier safety targets and less expensive safety technology demands.

The IAA is expected to be passed by the European Parliament next Spring.

Paul Bennett, Managing Partner at Madox Square LLP , said the EU wants to allow its manufacturers to meet the mass-market question but needs to move faster.

“The EU’s new “M1E” category, explicitly modelled on Japan’s kei-car logic, will carry 1.3 times super credits against CO2 targets through 2034 and a “Made in EU” test requiring 70% of non-battery component value to originate in the Union, is now written into the revised CO2 standards and the Industrial Accelerator Act,” Bennett said in an email exchange.

“So the mandate finally has a mass-market answer on paper. Whether it reaches that price point without Chinese-style cost engineering is a different question altogether, and (the proposal’s) own logic suggests the honest answer is no, not by excluding Chinese capability but by absorbing it,” Bennett said. He is also Senior Advisor at Genpact Banking and Capital Markets.

“Europe can absolutely run its own small-car program; getting it to €15,000 at real volume by 2028, on the timeline the market needs, most plausibly means leaning on Chinese platform economics, battery costs or manufacturing partnerships rather than reinventing them from first principles,” Bennett said.

Berenberg Bank said the biggest sufferer from the huge product loss in Europe since the Covid pandemic has been small cars, which faced two regulatory-driven headwinds – the push towards electrification and rising safety and emissions compliance costs.

Before Covid, there was a thriving entry-level ICE sector including the Fiat 500, Ford Ka, Citroen C1, Peugeot 108 and Renault Twingo, with prices starting at around €10,000. As part of the plan to force people out of ICE vehicles and into EVs, the EU tightened emissions rules, which soon made them too expensive.

Battery price component falls

Berenberg Bank said, in a report, that expensive battery packs had made small EVs too expensive. But prices have now fallen from between 35 and 45% of the total cost to around 20 to 30%.

“This explains why most early-generation EVs from European mass market (manufacturers) have focused on the C segment (family sedans and compact SUVs) and above, where battery costs represent a smaller share of total vehicle cost. Meanwhile, the A/B segment (entry-level sedans) experienced market share losses during the period of rapid EV adoption in Europe,” the bank said.

“The electrification of the small-car segment poses a clear challenge but also will be key to regaining some European production momentum. While we believe European production peaks to be firmly behind us, there is now scope for stabilization, or even a slightly more optimistic growth outlook, should regulation keep positively evolving,” according to the bank.

Fisher said TradingPedia’s research shows Europe’s transition so far is more about hybrids than pure EVs.

“Hybrids are currently the largest part of the new-car market. In the first half of 2026, hybrids accounted for 37% of new sales, compared with 32.5% for EVs and PHEVs combined. Gasoline and diesel were down to 28.5%,” Fisher said.

“PHEVs are another part of that story. Their appeal is obvious: they offer electric driving for shorter journeys while retaining the combustion engine for everything else. But if Europe needs to move a much larger proportion of new-car buyers towards genuinely zero-emission vehicles, neither a conventional hybrid, nor a PHEV solves the affordability problem in the same way as a very cheap, simple BEV could,” Fisher said. “This is why I find your idea of a €10,000-€15,000 electric runabout particularly interesting. The industry has largely approached electrification by taking the existing car and replacing its powertrain. That produces electric SUVs, electric executive cars and electric versions of increasingly sophisticated vehicles - but it doesn’t necessarily produce the cheapest possible form of electric mobility.”

Small EVs should handle typical journeys not exceptional ones

“There is a fundamental economic advantage that has not really been exploited at the mass-market end. If the average European driver doesn’t need 500 km (310 miles) of range every day, why build a car around a battery capable of providing it? A smaller battery, lower vehicle weight, simpler equipment, and a much smaller physical footprint could change the economics considerably. The car could be designed around the typical journey rather than the exceptional one.

“The really interesting question is whether manufacturers are willing to go far enough. A €10,000 electric car cannot simply be a cheaper version of today’s €30,000 ($34,600) car. It would need to be conceived from the outset around low cost: modest range, small battery, light construction, fewer features, and inexpensive charging requirements. In other words, the industry would have to stop asking how to make an electric version of the conventional car and start asking what the cheapest useful electric car could actually look like,” according to Fisher.