Ursula Kicks EU Car Industry into Gear Making Affordable Small BEVs

Ursula von der Leyen gave her State of the European Union speech Wednesday 09/10/2025. It is not a main event like the similar speech of the USA president — only half of the members of the EU parliament were present. But I decided to listen to it.

With the war at our doorstep and the climate getting worse, those were the main topics. Those were followed by the normal good intentions for the next year of governing, the main policies that would see new regulations, legislation, and spending. There was one that was of special interest to me:

“… millions of Europeans want to buy affordable European cars.
So we should also invest in small, affordable vehicles.
Both for the European market, but also to meet the surge in global demand.
This is why we will propose to work with industry on a new Small Affordable Cars initiative.

I believe Europe should have its own E-car.
E for environmental – clean, efficient and lightweight.
E for economical – affordable for people.
E for European – built here in Europe, with European supply chains.
Because we cannot let China and others conquer this market.

No matter what, the future is electric.
And Europe will be part of it.
The future of cars – and the cars of the future – must be made in Europe.”

It is like Ursula has been listening to my wishlist for the future of Europe, and especially to my belief that we need affordable, capable small cars for the millions who are not willing to sell their parents or their soul for a car. This was a rebound from her being especially nice to the car industry half a year ago.

These policy initiatives are always supported by a small pouch of money, likely half a billion euros or more. The EU role in the economy is traditionally limited to the agricultural sector. Not long ago, over 80% of the EU budget was for farmers and fishers. Industrial policy was considered a national priority. EU intervention was limited to forbidding national governments to help local industry get an advantage over the competition in other member countries, creating a level playing field and preventing a race to the bottom.

This “no-interference” rule towards the industry made competing with companies outside the EU often harder. The result is known as Fortress Europe to keep competition out. It is often disguised as regulations to make competition fairer. Chinese BEVs, for example, are taxed with a tariff that is supposed to be the equivalent of the subsidies that went into making them. The tariffs were calculated after studying the ledgers and regulations of the OEMs and governments in China for half a year.

But now, starting with the defense industry and followed by other industries that are important for Europe’s safety and climate action, we see a European industry policy emerging. My opinion is: better late than never.

Instead of competing French, German, Italian, and other national industrial policies, we must transition to the EU competing with China, Korea, Japan, India, Brazil, and what is left of US industry. This will be a shock for the competition.