Europe's carmakers are finally building EVs small again — and it matters more than it looks

Climate & Energy 5 min 80 sources

A wave of small, cheap electric cars is arriving in Europe just as a record heatwave bakes the continent. The two stories share a root: for years, the easy money pulled the energy transition toward bigger, heavier, more wasteful — and that bias has a cost.

Key takeaways

Europe's carmakers are launching small, cheap EVs again — the Renault Twingo starts near €19,490 — after a decade of pushing heavy, profitable SUVs that waste more energy and material per mile.
A record-class heatwave hit Europe this week, with France placing 35 departments under red alert and banning festival alcohol to spare its hospitals; forecasters likened it to the deadly summers of 2003 and 2019.
Both stories turn on the same thing: how much energy and waste we build into the system. A bigger "green" car still helps, but the bill for the extra bulk lands at the mine, the grid, or in hotter summers.

For the better part of a decade, “going electric” in Europe mostly meant going big. Carmakers poured their batteries into heavy, expensive SUVs because that is where the profit was. This week brought the clearest sign yet that the trend is reversing — and it lands in the same days a punishing heatwave is forcing crisis meetings across the continent. The two are not the same story, but they rhyme.

The small car comes back

Renault has put its new Twingo E-Tech on the road, a city car priced from €19,490 in France and expected to sell for about £18,000 in the UK next year [19]. It is part of a cluster: Citroën’s ë-C3, the Cupra Raval at £23,785, Volkswagen’s coming ID. Polo, Fiat’s 500e, the Mini Cooper Electric [19]. After years of EVs creeping upward in size and price, smaller is suddenly the pitch.

Why now? Two things changed. Batteries got cheaper, so a small battery no longer wrecks a cheap car’s economics. And carmakers cut build costs hard — Renault designed the Twingo in two years instead of four and stripped it to 750 parts, down from the 1,500 to 2,000 in a typical car, doing some of the engineering in China [19].

Why it matters beyond the showroom: road transport is about a fifth of the European Union’s greenhouse gas emissions [19]. And size is not a detail. A bigger car needs a bigger battery, which means more mining, more energy to build, and more energy to move every mile [19]. Swapping a small petrol hatchback for a large electric SUV, as the Guardian puts it, is “two steps forward and one step back” [19]. The carbon you save at the tailpipe, you partly spend at the factory and the mine.

Here is the quiet number underneath it. Cars built in 2024 were on average 4.41 metres long — 5% longer than in 2016 — and nearly 4% wider, according to Dutch government statisticians [19]. Small cars did not vanish because drivers stopped wanting them. They vanished because they got harder to make money on: safety rules added kit that was hard to fit in a small shell, and early EV batteries were too dear for a budget car [19]. The market optimised for margin, and margin lived in big cars.

What’s pulling it back is partly the law. European carmakers face fines if they miss emissions targets, and they cannot hit those targets without making EVs their top sellers — which means making affordable ones [19]. Partly it is competition: BYD, the world’s largest electric carmaker, already sells the small Dolphin Surf, and Chinese small cars are eyeing European streets [19]. “The world is not going to be saved by big SUVs that are electric,” says Renault’s design chief Laurens van den Acker. “The world is going to be saved by small electric cars” [19].

The catch is range. The Twingo’s 27.5kWh battery gives about 163 miles — fine for a school run, tight for a long weekend [19]. That is the deal small cars ask you to take: less stored energy, less waste, lower price, shorter legs.

The heat that’s setting the stakes

While the cars shrink, the weather is doing the opposite of subtle. A severe heatwave has gripped much of Europe. France expected 39 to 40°C on Sunday across a band from the southwest through Paris into Burgundy, with some areas possibly hitting 41°C and a peak forecast for Monday [10]. Météo-France put 35 of the country’s departments under red alert, affecting roughly three-quarters of the population, and said it was uncertain how long the heat would last [57].

The response shows how heat strains a whole system, not just thermometers. France banned alcohol at state-run events during the Fête de la Musique — the summer-solstice music festival that drew about two million people in Paris last year — explicitly “to preserve emergency and healthcare services and allow medical staff to focus on caring for the most vulnerable” [57]. Dozens of trains were cancelled and some classes suspended [57]. Germany issued near-nationwide heat alerts as temperatures neared 38°C [10]. Météo-France compared the episode to the deadly heat of 2003 and 2019 [10].

One hot spell is weather, not proof of a trend — but it does not sit alone. The reason small, efficient cars and a brutal heatwave belong in the same brief is that both turn on the same quantity: how much energy we add to the system, and how much waste we build in along the way.

The money is starting to price it

Investors are noticing. With the Iran war receding from the front of traders’ minds, Bloomberg reports that a high probability of a “Super El Niño” heading into 2027 is pushing a reassessment across markets [37]. El Niño is a recurring warm phase of the Pacific that nudges weather worldwide; a strong one can drive temperatures up in places, surge power demand for cooling, hurt crop yields, and stir inflation [37]. That puts pressure on agriculture, insurance, and central banks at once [37].

The thread tying these together is plain. The cheaper and lighter we make the energy transition — smaller cars, less wasted electricity, less material per mile — the less heat we add and the less strain lands on the grid, the harvest, and the hospital. The expensive, heavy version of “green” still counts as progress. It is just slower, and the bill for the difference shows up somewhere — at the factory, on the grid, or in a July that keeps breaking records.

02 · Lesson · why it matters

The thing you make money on is the thing you make more of

When the easy profit sits in the big version, "going green" quietly means going bigger — and the saving you celebrate at one end gets spent at the other.

A green car that grew

For ten years, Europe’s carmakers added electric models and, almost without anyone deciding it, the cars got heavier. Average new cars in 2024 were 5% longer than in 2016 and nearly 4% wider. The batteries went into SUVs, not city cars. Nobody set out to bloat the fleet. It just happened, because the money was in the big ones.

That is the pattern worth carrying out of today’s news. A system rarely moves where its slogans point. It moves where its rewards point.

What you measure is what you maximise

A carmaker does not wake up choosing “bigger.” It chooses “more profit per car.” But profit per car was easiest to win in a large, expensive SUV — more room to add features, more margin to charge for. So “maximise profit” became, in practice, “build bigger.” The goal was money; the side effect was bulk.

This is how an incentive becomes a shape. You pick a number to chase — margin, market share, range on the spec sheet — and the product slowly deforms toward whatever scores highest on that number, whether or not it was the point. Small cars did not disappear because drivers stopped wanting them. They disappeared because they were hard to earn a profit on once safety kit and early batteries piled on cost.

The saving you spend at the other end

Here is the part the headline number hides. An electric SUV burns nothing at the tailpipe, so it looks like a clean win. But a bigger car needs a bigger battery, and a bigger battery means more mining, more energy to build, and more energy to push down the road every mile. The carbon you save driving, you partly pay back at the mine and the factory.

Swap a small petrol hatchback for a large electric SUV and you take, as one account put it, two steps forward and one step back. It still counts as progress — just less than the brochure claims. The cost did not vanish. It moved upstream, to a place the driver never sees.

Why it’s turning now

The small car is coming back, but notice it is not goodwill bringing it. Batteries got cheap enough that a budget EV finally makes money. The law threatens fines if carmakers miss emissions targets, and they cannot hit those without selling affordable electric cars. And Chinese makers are arriving with small, cheap models, so European firms have to answer.

Three forces — cost, regulation, competition — all started pointing the same way at once. The moment the reward moved, the product followed. Same companies, same engineers, opposite direction. The behaviour never came from values. It came from where the profit sat.

Who else is in this

This is not only a story about cars. The thing you measure is the thing that grows, and the rest of us live inside the result. The heatwave baking Europe this week — France under red alert, hospitals bracing, trains cancelled — is downstream of how much energy and waste the whole system builds in, ton by ton, car by car. A heavier fleet adds a little more heat to a summer that lands on a stranger with no car at all.

And the lever is rarely held by the person who feels the cost. The driver picks a model from a lot someone else stocked, shaped by margins someone else set, under rules a government wrote. By the time the choice reaches you, most of it has already been made.

On the whole

The useful, humbling thing to hold is this: when you want to know which way a system will move, don’t read what it says it wants. Find what it is paid to do. The slogan was “clean”; the reward was “big”; the fleet grew. Now the reward has shifted and the fleet is shrinking — not because anyone got wiser, but because the cheque changed hands.

It is worth being slow to credit virtue, and slow to blame greed, when an incentive explains the whole curve. We are all standing inside a web of rewards we mostly didn’t set and can barely see — choosing from what it put in front of us, paying for bulk we didn’t ask for, in a summer none of us can opt out of. Seeing that doesn’t tell you what to do. It just makes the judgement a little more careful.

03 · Lab · your turn

What You Reward Grows

Set a carmaker's incentive and watch the fleet deform toward whatever it's paid for, not what it claims to want.

04 · Hope · carry this

The fleet bent toward bulk for ten years, and now it is bending back — proof that no trend is fixed, only paid for, and what one set of incentives built another can rebuild.