In Japan, one in three new cars is a kei car. The European Union, meanwhile, is preparing a category of small, affordable electric cars. Is this a European take on the kei car?
Kei cars (‘keijidosha’, or light vehicles) date back to 1949, when the Japanese government created the category to motorise a country ruined by war and revive its industry. The Subaru 360, launched in 1958 with 16 PS, became the first kei car built in volume. Since 1998, the size limit has been 3.40 metres in length and 1.48 metres in width, with an engine of no more than 660 cc. Power is capped at 64 PS under an informal agreement between manufacturers, intended to avoid a power race. In return, owners benefit from lighter taxation and cheaper insurance.
In 2025, 4,565,777 new vehicles were sold in Japan (+3.3%). Kei cars accounted for 1,667,360 of them, 7% more than a year earlier and around 36% of the total. Far from being a niche, the category attracts all the major Japanese manufacturers. Suzuki leads it, with around 35% of the segment in the first nine months of 2025. Daihatsu, a Toyota subsidiary held back in 2024 by a certification scandal, saw its sales jump 46.2% in 2025. As a sign of the segment’s appeal, BYD launched the Racco in 2026, the first electric kei car from a foreign manufacturer, from 2.1 million yen (around US$12,800).
Brussels is drafting the M1E category
Keen to make electric cars more accessible, the European Commission is working on a sub-category close to Japan’s kei cars. For now, this category, dubbed ‘e-cars’ by manufacturers and M1E by the EU administration, would sit between heavy quadricycles (L7e) and conventional cars (M1). In detail, the vehicles would be under 4.2 metres long and built in the EU. To make the segment attractive, Brussels plans to freeze regulatory requirements for ten years to limit costs, and to grant CO2 ‘super-credits’ (1.3 credits per car sold, until 2034). It also recommends that member states offer tax incentives. The stated aim is to revive an affordable offering in the face of Chinese competition.
Fewer rules, a more affordable price
On 12 October, at the Paris Motor Show, Citroën unveiled a 3.76-metre electric 2 CV concept. The brand is aiming for a weight of around one tonne and a starting price of around €15,000 for the production model, expected in 2028. It would sit between the Ami and the C3. No power limit has been announced for the M1E. While Japan’s kei cars are capped at 64 PS, one can imagine models of around 80 PS, such as the electric Renault Twingo (82 PS), paired with a small 27.5 kWh battery for 263 kilometres of WLTP range. Lighter regulation and simpler technology would make it easier for manufacturers, particularly European ones, to offer new electric models at around €15,000.
The next steps depend on the EU’s legislative calendar. The Commission presented its automotive package, including the omnibus that creates the M1E, on 16 December 2025. Member states opened discussions in the Competitiveness Council on 24 September 2026. In Parliament, the vote in the Transport committee on the CO2 part, scheduled for 5 October, was postponed by around two weeks, and talks between political groups remain difficult. Plenary votes are expected in November. The Council will then set its position, before a trilogue brings the three institutions together. No final adoption date has been set at this stage.
Customers still to win over
At 4.2 metres, the M1E is 80 centimetres longer than the Japanese limit and takes in models such as the Renault 5. Some will say Europe is working on a new segment of superminis rather than a European ‘kei car’. The ETSC, a European road safety NGO, also fears that a ten-year freeze would lock in outdated safety standards, to the detriment of pedestrians and cyclists. It also remains to be seen whether this type of car will find its buyers, and whether manufacturers can really offer attractive prices to get the new segment off the ground. That may seem to run against the trend, given that SUVs accounted for almost 60% of European sales in 2025, according to Dataforce. But if price, safety, practicality and design are right, this type of car can carve out a place in the European market.
