The EU is considering a "small affordable car initiative" to benefit consumers and the domestic car industry by focusing on small, affordable electric vehicles. The initiative aims to address the challenges of consumer affordability and industry competitiveness in the EV transition. Demand for small electric cars is high but uptake remains low due to limited options and higher upfront costs. European carmakers are preparing to launch new small BEV models to meet this demand and potentially boost production volumes back to pre-Covid levels. The initiative could lead to the sale of up to 1.5 million additional small EVs in the EU annually and create around 120,000 new jobs. The Small Affordable Electric Vehicle (SAEV) strategy aims to make clean mobility more accessible by producing compact electric cars in Europe with European-made batteries, targeting a price range of €15,000–€20,000 to put electric vehicles on par with small combustion cars. The strategy involves launching an Affordable EV Platform using ETS2 revenues to support the production of small electric cars in Europe, emphasizing the need for reforms in car labelling, favorable tax treatment, and targeted purchase support to make small EVs more affordable for low and middle-income drivers.