A lack of profits is seeing European automakers jettison or heavily revise their plans for future generations of their subcompact cars, especially ones powered solely through internal combustion. In moves paralleling those made by American automakers and their smallest models, VW has ceased development of a successor to the eensy Up!, Renault isn’t planning to replace the Twingo in its current form, and Opel won’t create a new version of the funky Adam. What future such cars may have—on both sides of the pond—may involve China and the volumes partnerships there can provide, as in the case of Mini/Great Wall and Smart/Geely.
Which is to say the European makers will not abandon the segment, but entries are almost certainly to be more environmentally focused—think EVs and plug-ins—and thus more expensive. Take for instance VW’s recently approved Urbanout model, an MEB-based fully electric subcompact crossover. Listed internally as MEB-AO, the Urbanout is about 61 inches tall (about four shorter than a Ford EcoSport) and has the footprint of a Polo, but boasts the interior roominess of an MPV from one class up. Of course, it’s expected to start at 25,000 euros, reflective of the 5,000-euro premium required to fit it with batteries. This remains the fly in the business-case ointment for every affordable BEV, and until the first affordable solid-state energy cells arrive, the road forward for such EVs is likely to remain bumpy.
“Small” May Eventually Be Synonymous with “EV”
We’re on a path toward an inflection point between small cars and full electrification. While data shows demand for small and very small cars will increase slightly globally over the next five years—with FCA, PSA, and Hyundai-Kia emerging as the leaders—the game will change between 2024 and 2030. While some brands will pull out of the small-car arena altogether, an armada of startups from all over the globe will fight for what will increasingly be an EV-focused segment. There may even be a high-volume effort led by VW and Ford, and the Chinese will want to play, too, just as that country prepares to phase out its compulsory joint-venture arrangement in 2022.
The danger, however, is that EV adoption rates aren’t expected to rapidly expand in a parallel fashion. A survey from JP Morgan Chase suggests that the global EV penetration will increase rather slowly from three percent in 2020 to 18 percent by 2030. While the same study foresees only marginal growth for plug-in hybrids, conventional and mild hybrids are predicted to rocket from seven to 39 percent. At 41 percent, vehicles powered solely by internal combustion will still top the table, if only by a small margin.
Now that VW has officially announced its intention to make its MEB components set available to third parties, it’s only a matter of time before a single-DNA multi-brand strategy happens. VW’s first partner in Europe will likely be Ford, while the group’s Chinese allies are FAW, SAIC and JAC. By 2025, the Volkswagen Group intends to build 15 million MEB-based vehicles. Out of its total investment of €80 billion ($90.4 billion), €50 billion ($56.5 billion) will be devoted to batteries, which explains the Germans taking interest and positions in mining, new raw materials, and shared sourcing and assembly.
By comparison, Fiat—0currently the clear leader of the subcompact market—intends to spend less than €5 billion ($5.6 billion) on no more than four new EVs by 2022. Although Chinese customers can already purchase entry-level EVs for as little as the equivalent of $5,700, these products are not yet fit for exportation. This may change after 2025 when several local brands such as BAIC and Changan will stop selling combustion-engine vehicles altogether. At this point in time, only a handful of manufacturers like Nio or Exceed by Chery plan to ship EVs to Europe, and all of them aim exclusively at the more profitable B and C segments.
Mini’s Chinese EV Future
While the Nissan/Renault/Mitsubishi alliance, PSA, and GM are doing their own things in the bargain basement, BMW and Daimler are strengthening their China connections. Together with Great Wall, BMW is investing $770 million to build Mini EVs in a highly efficient greenfield site. Designed and engineered in Germany, the new Mini-E will be sold across the world starting in 2023. The first version out will be a shortened three-door city car still known as MiniMini and possessed of proportions not unlike those of the Rocketman concept of several years ago. We hear that the Great Wall joint venture will eventually produce three body styles: the MiniMini, a regular three-door, and a chunky, radically compact neo-SUV along the lines of the VW Cross Up! show car. In this context, BMW must also decide on the future of the two Mini plants in Oxford, England (ex-Rover), and Born, Netherlands (ex-Mitsubishi/Volvo). Since China wants to be a 100-percent EV market by 2030, tie-ups such as this one may be the safest and most cost-effective bet to fill the slots at the bottom end of the market.
What’s going to happen to the rest of the Mini range? An inside line suggests that the clock is ticking for the five-door hatch and the cabriolet which won’t go electric and are too small to dock onto BMW’s FAAR architecture. Another endangered species is the Clubman, sources claim. Having said that, we would not be surprised if Mini were to select FAAR as the way to go for the next Countryman and its two sister models. Offered in fwd and awd guise, powered by a 2.0litre four instead of the breathless 1.5litre three and available in different stages of electrification, we expect to see a dramatically dynamic and quite stylish coupé-like Sportsman (unlike the slow-selling three-door Paceman, this one has five doors) as well as a rough & tough SUV-like version described as one-third Land Rover and two-thirds Range Rover which may be badged Bushman. In total, this strategy would spawn four crossovers, thereby reflecting the continueing change in buyer preference.
Those other Models
As for the Up!, 2020 will see its final update with the addition of three EV versions with battery packs that store 24, 36, or 49 kWh of energy and are powered by electric motors with respective outputs of 94 hp and 170 lb-ft, 121 hp and 243 lb-ft, and 148 hp and 317 lb-ft. Range is expected to fall at 190, 250, and 310 miles on the more optimistic European cycle, while prices will fall between 20,000 and 27,500 euros. The Up! is the last Volkswagen model still based on the ancient PQ architecture conceived way back when under Ferdinand Piëch.
According to sources from within Daimler and Renault, their Smart-related tie-up will expire when the Forfour/Twingo runs its course. For the Germans, the tentative plan for 2025 and beyond is to align Smart with Geely. Less likely is a partnership with BYD, the Chinese home of the only mildly successful Denza EV co-engineered with Mercedes. In contrast, Geely is investing $5 billion in its EV activities, which already include a cheap model marketed under the Kandi name. Other potential candidates are the brand’s long-term partners BAIC and BJEV who may start building electric smart Fortwos in the not too distant future. Smart 3.0 will however feature a completely new bespoke EV architecture. The first fruit from this affordable, scalable, and globally compatible matrix is claimed to be a small crossover dubbed Formore due in 2025 at the latest. Meanwhile, the Fortwo and Forfour replacements have been penciled in for 2026 and 2027.