China’s micro EVs are filling European streets – but for how long?

Recently, Henry, a Chinese expat in Spain, noticed a display of neighborhood electric vehicles (NEVs) at a shopping center in Madrid. Over the past six months, while traveling across Italy, France, and other European Union countries, he had seen more of these compact electric cars—once a familiar sight in China—now appearing in Europe’s urban landscape.

These small electric vehicles, often called microcars, are designed for urban commuting at lower speeds. The most basic three-wheeled models, excluding shipping costs, can sell for under EUR 1,000 (USD 1,090), while four-wheeled mini cars range from EUR 8,000–20,000 (USD 8,720–21,800). Their rising visibility in Europe marks a striking contrast to their presence in China, where they initially gained traction in rural areas before expanding into cities.

At the 2019 Paris Motor Show, French President Emmanuel Macron even took a test drive in a small electric car of a similar category, signaling broader recognition of the microcar trend.

Unlike in China, where NEVs are commonly associated with elderly drivers, Henry observed that European buyers include younger demographics. In some middle-class families, parents are purchasing them for their teenage children as a practical and affordable way to commute to school. The low cost, ease of driving, and legal eligibility for young drivers make them particularly attractive in regions where public transportation options are limited.

A representative from a Chinese microcar manufacturer told 36Kr that in China, NEVs have long operated in a regulatory gray area, with inconsistent policies governing their use. However, in international markets, particularly in Europe and the US, entry requirements for both passenger and commercial vehicles are much stricter. This has forced Chinese exporters to refine their product categories, ensuring compliance with safety and performance standards.

According to the same manufacturer, demand for Chinese NEVs has surged in the first half of 2024, with US orders nearly doubling year over year. Despite this growth, Europe remains the company’s primary target for global expansion.

At the same time, as Chinese regulations tighten, restricting the use of NEVs in urban areas, domestic manufacturers are accelerating their push into overseas markets. In just a year, the number of Chinese firms entering the NEV export race has multiplied, while established European automakers are also investing in the low-speed EV segment.

Europe’s the new hotspot

Europe has emerged as a particularly promising market for NEVs, driven by aggressive electrification policies. In 2022, the European Union officially confirmed a 2035 ban on new gasoline vehicle sales, allowing only battery-powered EVs and cars powered by electrofuels (e-fuels) to be sold beyond that date.

This policy shift has directly boosted demand for electric vehicles across Europe. According to the European Automobile Manufacturers’ Association (ACEA), sales of pure electric and hybrid vehicles grew significantly in January 2024, with EVs capturing nearly 17% of the market, while gasoline cars continued to lose ground.

In China, NEVs are seen as distinct from electric cars and are categorized separately. However, in Europe, there is no such distinction. Instead, NEVs are classified under the quadricycle category, meaning they share many of the same road-use rights as other electric vehicles.

Currently, EU regulations divide low-speed electric vehicles into two primary categories:

• L6E, refers to light quadricycles that weigh under 350 kilograms, have a maximum speed of 45 km/h, and a motor power below 4 kilowatts. These vehicles can be driven by teenagers as young as 14.
• L7E, applies to heavier quadricycles with a weight limit of 400 kilograms and a motor power of up to 15 kW, which require a driving test and a minimum age of 16 to operate.

Strict speed limits cap NEVs at 45 km/h, with an average driving range of about 75 kilometers per full charge.

Henry pointed out that due to these relatively low barriers to entry, many NEV drivers in Europe are teenagers. In rural areas with limited public transportation, schools often provide shuttle buses, but fixed schedules restrict students’ mobility. As a result, European parents increasingly view NEVs as a practical solution for their children’s transportation needs.

Beyond accessibility, NEVs’ compact size and maneuverability make them ideal for Europe’s narrow streets. In cities like Madrid, where downtown areas are full of one-way roads and major thoroughfares are often only two lanes wide, smaller vehicles are a natural fit. Compact cars have long been favored in Europe for this reason.

According to data from CarSalesBase, in 2019, microcars accounted for 7.7% of all new car sales in Europe, compared to just 0.5% in the US and 0.3% in China. European automakers have been catering to this market for decades. Fiat, for example, introduced a two-seater microcar in 1955 designed for Europe’s dense urban environments, a design that closely resembles modern Chinese NEVs. In 2023, Fiat revived this model as an electric vehicle under the Topolino name, with prices starting at EUR 7,544 (USD 8,223).

However, NEVs face stiff competition not just from Chinese rivals, but also from established European microcars that benefit from legal recognition and ingrained consumer habits. With legacy automakers now investing in the segment, Chinese NEV makers may struggle to sustain long-term success abroad.

The challenge of going global

While demand for NEVs is rising, Chinese manufacturers face growing competition—not just from fellow Chinese exporters, but from European brands with stronger legal standing and long-established consumer trust.

A recent industry report estimated that in 2023, the global NEV market was valued at approximately RMB 62.64 billion (USD 8.8 billion) and is projected to reach RMB 79.45 billion (USD 11.1 billion) by 2029, growing at a compound annual rate of 3.3%.

According to QYResearch, Europe has long dominated the global four-wheeled EV market, accounting for 56.3% of global revenue as early as 2019. A Chinese manufacturer told 36Kr that while Europe has always been a key market, many Chinese firms were slow to expand overseas. But after national NEV regulations tightened in 2023, limiting domestic road access and sales, companies began aggressively targeting international markets.

Despite fewer regulatory barriers in the EU compared to China, exported NEVs must still meet minimum safety standards, including seat belts, windshield wipers, and headlights. Many vehicles require modifications before they can comply with European safety regulations, as China’s domestic NEV market has long lacked uniform standards.

For now, most Chinese NEV manufacturers produce vehicles domestically and assemble them overseas for international sales. Distribution is largely handled by foreign partners, who take an average 5% cut of the retail price.

Beyond Europe, some Chinese companies are also targeting emerging markets with fewer regulations. Levdeo, for instance, partnered with an Ethiopian company to export thousands of NEVs to Africa, where, like in Europe, the target customers are budget-conscious young drivers.

Despite the initial enthusiasm in overseas markets, long-term success is far from guaranteed. NEVs remain budget vehicles, which makes them highly competitive but difficult to sustain as a long-term business.

China’s manufacturing advantage is undeniable, but price alone isn’t enough to ensure success abroad. While NEVs may enjoy a surge in popularity in Europe and other international markets, their future in the global automotive landscape remains uncertain.

This article was written by Yuan Silai and originally published on 36Kr.