Microlino electric car on display at IAA Mobility 2023 in Munich, Germany.

Arjun Kapal | CNBC Money

MUNICH, Germany — Small cars appear to be making a comeback.

At this week’s IAA Motor Show in Munich, some small vehicles were on display.

They’re similar to so-called microcars or “bubble cars” from decades ago, such as the Italian-designed Isetta, which was first produced in the mid-1950s.

In recent years, the Smart car and the Fiat 500 have become some of the more compact vehicles on the market. But with the growing need for clean vehicles in urban environments, underlying demand for small EVs appears to be increasing.

At the IAA, the Swiss company Micro presented the Microlino, a small battery-powered vehicle.

Micro says it can be fully charged in four hours from a household plug. It has a range of 230 kilometers (about 143 miles) and a top speed of 90 kilometers per hour.

In Europe, it’s not technically classified as a car. It’s a “heavy quad” – somewhere between a motorcycle and a car. This means it is less regulated and can reach the market more quickly.

Another car on display at the IAA is the Yoyo, a car from Italian-Chinese start-up XEV. The Yoyo has a range of 150 kilometers.

Yoyo on display at IAA Mobility 2023 in Munich, Germany.

Arjun Kapal | CNBC Money

The cars are aimed at Europe, said Peter Richardson, director of technology strategy research at Counterpoint Research. This is because the roads in many cities on the continent are narrow and old. They can also be attractive in heavy traffic cities like India or Thailand.

Some of their uses can be as a second car for the family, or primarily as a vehicle for town or city driving that doesn’t require long drives.

However, the appeal of these types of subcompact cars remains in question.

The cheapest Microlino model starts at 17,990 euros ($19,316). It’s also unlikely to qualify for any EV subsidies in major countries, since it’s not technically a car.

That price may be too high for buyers who can afford an EV with the same or even cheaper financing options and EV subsidies.

“These microcars don’t get these subsidies … so you can get a smart car that’s actually an all-electric car, and it’s going to be cheaper than a Microlino,” Richardson added.

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