European regulators are poised to define a new category for affordable electric vehicles, potentially opening a substantial market for automakers like China’s BYD, which has already showcased its compact Racco model with a keen eye on the continent.
The European Commission is expected to unveil updated details by December 10 on a proposed “E-Car” category. This initiative aims for 100% electric, locally produced vehicles with target prices between 15,000 and 20,000 euros (approximately $16,050 to $21,400).
This move seeks to revitalize a segment that was popular before the pandemic but declined due to increasing prices, industrial challenges, and stringent regulatory demands. A new regulatory framework could benefit numerous manufacturers, including the globally expanding BYD.
BYD appears well-prepared for this potential shift. The company unveiled its Racco, a 3.4-meter electric “kei car,” at the Tokyo Motor Show, designed to compete with compact, economical alternatives from Japanese brands like Toyota and Honda.
Stella Li, BYD’s Vice President, indicated that the company is closely monitoring European Union legislation. She stated that the Racco could be introduced to the European market if the regulatory environment allows.
The proposed E-Car category could create this opportunity by permitting models to bypass some current safety and emissions requirements. This would facilitate lower production costs and enable the target price point.
While Europe aims to bolster local production, BYD is rapidly expanding its manufacturing footprint on the continent. Its first European factory in Hungary is slated to begin operations this year.
A second plant in Turkey is scheduled for 2026, and discussions are underway for a third, with Spain being a strong contender. The BYD Dolphin Surf is set to be the first model produced in Hungary, but the Racco could fit naturally into a European production line if the new category advances.
Li also clarified that the Racco’s arrival in Europe is not an immediate priority. BYD is currently focused on launching new electric and plug-in hybrid models, expanding its brands, and developing charging networks.
For the Japanese market, the Racco features a single electric motor, a 20 kWh LFP battery, and offers a range of 112 miles (180 km) with fast charging up to 100 kW.
Should it launch in Europe, the Racco might undergo minor adaptations, including a slight increase in size. It would serve as BYD’s accessible entry-level model, strengthening its competitiveness in the urban vehicle segment.