Affordable city cars are vanishing across Europe, and not in a cool, mysterious way. Their disappearance is being driven by a mess of regulations and a market increasingly tilted toward heavier, pricier vehicles.

Now, the heads of Stellantis and Renault are calling on European regulators to rethink the rules in order to make building small cars viable again. Their proposed fix? Borrow a page from Japan’s playbook and support the development of compact EVs, or as they’ve been dubbed, E-Cars.

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The decline has been dramatic. Stellantis chairman John Elkann says Europe once saw around 1 million new cars priced under €15,000 (roughly $17,400) sold each year. That number has collapsed to just 100,000. For automakers, the financial incentive to produce such vehicles is fading fast, largely due to European Union regulations that make designing and manufacturing them less and less attractive.

“We are going to face more than 120 new regulations by 2030,” Elkann said. “If you look at our engineers, more than 25 percent just work on compliance, so no value is added. There’s no reason why if Japan has a kei car, which is 40 percent of the market, Europe should not have an E-Car.”

New Regulations Are Needed

Before his unexpected resignation earlier today, Renault CEO Luca de Meo echoed Elkann’s concerns in an interview with Autonews. He called on countries like France, Spain, and Italy to take the lead in reviving the dwindling small-car segment. In his words, “driving around every day in an electric vehicle weighing 2.5 tons is clearly an environmental nonsense,” and he pushed for “the mass development of small cars for urban travel and last-mile deliveries.”

“What we are asking for is a differentiated regulation for smaller cars,” de Meo added. “There are too many rules designed for bigger and more expensive cars, which means we can’t make smaller cars in acceptable profitability conditions.”

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Stellantis, to its credit, still offers a few tiny transport options, including the Citroen Ami, Opel Rocks-e, and Fiat Topolino. All three fall under the EU’s quadricycle category, a niche regulatory loophole that allows ultra-light, low-speed vehicles to exist, barely. But to spark a broader return of small, cheap cars, European lawmakers may need to revisit those definitions entirely, either by tweaking quadricycle regulations or creating a fresh classification for compact EVs.

Researchers from the Gerpisa automotive research center are urging regulators to permit car companies to sell Kei car-like vehicles locally, believing this will help local brands compete with Chinese competition.