For Electric Vehicles, Smaller Is Better
The electric vehicle (EV) market is showing steady growth in many parts of the world. In 2023, nearly one in five cars sold worldwide was electric, with China, Europe and the United States accounting for 95% of those sales. In 2025, Europe’s average electric car market share is expected to reach 25%, a trend driven by increased manufacturer competition, declining battery costs and ongoing policy support for clean technologies. To meet decarbonization goals, specifically to limit warming to 1.5 degrees C by 2050 (ITDP), both electrification of vehicles and shifting passengers to more sustainable modes will need to happen in tandem.
Switching to electric cars and buses is a vital part of decarbonizing transportation. But as EV adoption grows, a concerning trend has emerged: the dominance of larger consumer models such as SUVs and pickups
While these still represent a major improvement over fossil fuel-powered vehicles, they bring a new set of challenges.
If left unchecked, this trend risks undermining many of the environmental, social and equity benefits of electrification by straining energy systems, increasing demand for scarce minerals and hindering efforts to deliver a green, fair and inclusive transition to cleaner, renewable energy sources.
Examining these trends offers a critical look at the growing challenge — and an opportunity to lead with smarter, more sustainable solutions.
A Growing Global Trend: Electric Cars Are Getting Larger
In 2023, two-thirds of battery-electric models on the major EV markets were SUVs, pickups or large cars — a dramatic increase from just one-third in 2017. In Europe, fewer than 40% of the battery electric vehicles (BEVs) were small and medium cars, compared with just 25% in the U.S. and 50% in China. This trend mirrors the broader rise of larger internal combustion engine (ICE) vehicles across Europe, where more than half of ICE vehicle sales in 2023 were SUVs. Since 2011, sales of small cars in Europe have dropped by 50%, while SUV sales have tripled.
A mix of factors is driving this trend.
Buyers often associate larger vehicles and SUVs with greater safety, space and versatility, making them the preferred choice for their primary vehicles — even though smaller EV models are often better suited for urban environments and short-distance trips.
The preference for larger vehicles is further driven by the availability of electric models that cater to this demand. Projections suggest that only about one-quarter of new EV models expected through 2028 will be small or medium-sized cars.
In some cases, government policies and incentives are structured in ways that favor larger vehicles. In some U.S. cities, for example, tax credits of up to $7,500 are often more advantageous for electric SUVs. In the EU, fleetwide carbon dioxide emission targets allow car manufacturers to offset the emissions of larger, higher-emitting vehicles by producing smaller, cleaner models. This flexible compliance system was designed to lower compliance costs for carmakers while providing emissions leeway for heavier vehicles.
The Advantages of Smaller EVs Over Larger Models
The rise of larger EVs presents a wide range of challenges. They can consume up to 20% more energy than smaller EVs, placing greater demand on electricity demand and grid infrastructure. They require more critical minerals, such as lithium and cobalt, to produce larger batteries, which increase lifecycle emissions (the total amount of greenhouse gases released over the vehicle’s entire lifespan). More concerningly, larger vehicles pose greater safety risks for pedestrians, cyclists and other vulnerable road users, particularly in dense urban areas.
Smaller EVs offer several significant advantages that can help address some of the downsides associated with larger models:
More efficient for urban mobility
Smaller EVs take up less space, making navigation and parking easier in dense urban environments. When supported by adequate charging infrastructure, they can be effectively integrated into car-sharing services, offering a convenient and attractive mobility option.
This is particularly well suited to many European cities, which are typically compact and densely populated. Historic city centers, narrow streets and mixed-use zoning — where residential, commercial and public spaces are closely integrated — naturally discourage the use of larger vehicles. With the average daily travel distance in European countries at just 12.4 kilometers per person, smaller EVs are a better fit for urban commuting, leisure and short-distance travel. Even the smallest electric models, such as compact family cars, typically have a minimum driving range of 135 kilometers.
The electric vehicle (EV) market is showing steady growth in many parts of the world. In 2023, nearly one in five cars sold worldwide was electric, with China, Europe and the United States accounting for 95% of those sales. In 2025, Europe’s average electric car market share is expected to reach 25%, a trend driven by increased manufacturer competition, declining battery costs and ongoing policy support for clean technologies. To meet decarbonization goals, specifically to limit warming to 1.5 degrees C by 2050 (ITDP), both electrification of vehicles and shifting passengers to more sustainable modes will need to happen in tandem.
Switching to electric cars and buses is a vital part of decarbonizing transportation. But as EV adoption grows, a concerning trend has emerged: the dominance of larger consumer models such as SUVs and pickups1 . While these still represent a major improvement over fossil fuel-powered vehicles, they bring a new set of challenges.
If left unchecked, this trend risks undermining many of the environmental, social and equity benefits of electrification by straining energy systems, increasing demand for scarce minerals and hindering efforts to deliver a green, fair and inclusive transition to cleaner, renewable energy sources.
Examining these trends offers a critical look at the growing challenge — and an opportunity to lead with smarter, more sustainable solutions.
A Growing Global Trend: Electric Cars Are Getting Larger
In 2023, two-thirds of battery-electric models on the major EV markets were SUVs, pickups or large cars — a dramatic increase from just one-third in 2017. In Europe, fewer than 40% of the battery electric vehicles (BEVs) were small and medium cars, compared with just 25% in the U.S. and 50% in China. This trend mirrors the broader rise of larger internal combustion engine (ICE) vehicles across Europe, where more than half of ICE vehicle sales in 2023 were SUVs. Since 2011, sales of small cars in Europe have dropped by 50%, while SUV sales have tripled.
A mix of factors is driving this trend.
Buyers often associate larger vehicles and SUVs with greater safety, space and versatility, making them the preferred choice for their primary vehicles — even though smaller EV models are often better suited for urban environments and short-distance trips.
The preference for larger vehicles is further driven by the availability of electric models that cater to this demand. Projections suggest that only about one-quarter of new EV models expected through 2028 will be small or medium-sized cars.
In some cases, government policies and incentives are structured in ways that favor larger vehicles. In some U.S. cities, for example, tax credits of up to $7,500 are often more advantageous for electric SUVs. In the EU, fleetwide carbon dioxide emission targets allow car manufacturers to offset the emissions of larger, higher-emitting vehicles by producing smaller, cleaner models. This flexible compliance system was designed to lower compliance costs for carmakers while providing emissions leeway for heavier vehicles.
The Advantages of Smaller EVs Over Larger Models
The rise of larger EVs presents a wide range of challenges. They can consume up to 20% more energy than smaller EVs, placing greater demand on electricity demand and grid infrastructure. They require more critical minerals, such as lithium and cobalt, to produce larger batteries, which increase lifecycle emissions (the total amount of greenhouse gases released over the vehicle’s entire lifespan). More concerningly, larger vehicles pose greater safety risks for pedestrians, cyclists and other vulnerable road users, particularly in dense urban areas.
Smaller EVs offer several significant advantages that can help address some of the downsides associated with larger models:
More efficient for urban mobility
Smaller EVs take up less space, making navigation and parking easier in dense urban environments. When supported by adequate charging infrastructure, they can be effectively integrated into car-sharing services, offering a convenient and attractive mobility option.
This is particularly well suited to many European cities, which are typically compact and densely populated. Historic city centers, narrow streets and mixed-use zoning — where residential, commercial and public spaces are closely integrated — naturally discourage the use of larger vehicles. With the average daily travel distance in European countries at just 12.4 kilometers per person, smaller EVs are a better fit for urban commuting, leisure and short-distance travel. Even the smallest electric models, such as compact family cars, typically have a minimum driving range of 135 kilometers.
Less demanding on the environment
Smaller EVs consume less energy and require fewer critical minerals for battery production, helping to lower lifecycle emissions and reduce pressure on supply chains. According to an analysis by Transport & Environment, prioritizing smaller EVs in Europe could reduce demand for critical minterals by 25%. Similarly, a report by the International Energy Agency shows that targeted measures to curb the demand for large vehicles could cut global mineral demand for EV batteries by 18% to 20% by 2050.
Better for safety
In cities designed for people — and not just cars — promoting smaller vehicles can help align road design with broader urban sustainability goals. Studies show that larger vehicles, due to their greater mass and higher front ends, increase the risk of fatal pedestrian accidents by 45%. One European study found that increasing a vehicle’s mass by 300 kilograms raises the risk of fatal injury for vulnerable road users, including cyclists, motorcyclists and pedestrians, by 30%.
How to Sustainably Expand EVs
Sustainably expanding EV adoption depends in part on consumer choices — but effective policy plays an even more important role. Well-designed incentives can help guide buyers toward smaller EVs instead of SUVs or pickup trucks.
Curbing the trend toward bigger cars
Some policymakers are already taking steps to counter the rise in vehicle sizes. France has introduced weight-based taxes for ICE and plug-in hybrid vehicles over 1,600 kilograms, while the city of Paris has tripled parking fees for SUVs. In Norway, EV purchase taxes are based on vehicle weight and emissions, making larger, high-emission models significantly more expensive.
Designing cities for compact urban mobility
Ongoing policy innovations reflect a growing commitment to prioritize sustainable urban mobility, with a focus on smaller EVs. Across Europe, more than 320 cities have introduced low-emission zones that restrict the use of large, high-polluting vehicles in city centers.
However, switching to smaller EVs alone won't solve the broader challenges of car dependence. While compact EVs reduce energy use and could cut critical mineral demand, they don't address congestion, urban sprawl or the induced demand created by more private vehicles on the road. In cities, sustainable urban mobility will require a broader shift toward prioritizing public transport, cycling and walking. Smaller EVs have an important role to play in general car use, but they need to complement — not replace — efforts to reduce overall car reliance.
A market shift toward affordable, smaller EVs
Chinese automakers are rapidly expanding their presence in Europe. BYD, for example, has announced plans to build an EV manufacturing plant in Hungary and is introducing budget-friendly and subcompact models like the BYD Seagull and Wuling Bingo, both priced under €10,000. In response, European automakers including Volkswagen, Renault and Stellantis are rolling out smaller, more affordable EVs, with new models expected to launch under €25,000. These companies also plan to ramp up local production as supply chains in the region continue to strengthen.
Driving Uptake Through Incentives and Awareness
Governments can accelerate the adoption of smaller EVs through targeted financial incentives such as subsidies and favorable financing terms, making them a more attractive option for consumers. Expanding charging infrastructure is also key to easing consumer concerns about range limitations often associated with smaller EVs. At the same time, raising public awareness about the economic, environmental and social benefits of compact EVs, particularly in urban settings, is essential to support long-term behavior change.
The growing shift toward larger vehicles is not just a matter of consumer preference — it also represents a missed opportunity to align Europe’s urban mobility with its sustainability and decarbonization goals. By prioritizing smaller, more affordable EVs and promoting a systems approach, European cities — and other cities around the world — can create cleaner, safer and more livable urban environments.
A broader move away from large, private vehicles toward active mobility, public transportation and smaller EVs where appropriate can help shape global EV markets and manufacturing, setting the tone for a more inclusive and competitive transition to electric mobility.
Cover photo: Darkdiamond67/iStock
