The US auto market has long been defined by size. Trucks and SUVs dominate showrooms, and small cars have repeatedly failed to find an audience. A combination of regulatory pressure, affordability stress, and new product launches is now creating real momentum for a category most Americans have never considered buying.
Trump cleared the regulatory path
At a rally in Michigan, President Trump told the crowd he was giving automakers the green light to build what he called "tiny little tiny cars."
He cited his travels to Europe and Japan as the inspiration. He also said he pressured Transportation Secretary Sean Duffy on Air Force One to clear the regulatory path immediately, and that Duffy complied.
Historically, Japan's kei cars and European micro-commuters couldn't meet National Highway Traffic Safety Administration crash standards. That's kept them off US roads entirely.
The NHTSA is now reportedly in the process of "clearing the deck," according to Duffy, though former agency officials say the agency could either amend existing standards or create a new vehicle category.
Kei cars in Japan start at just over $10K. The average new car in the US now costs roughly $50K. That gap is the entire commercial argument for this category.
Who's already moving product
Several companies aren't waiting for kei cars to clear customs. They're building street-legal electric low-speed vehicles designed to fit within existing US rules.
LSVs are four-wheeled electric vehicles that top out at 25 mph and are allowed on roads with speed limits up to 35 mph. They don't require airbags, and many can be charged from a standard household outlet overnight.
Stellantis is the highest-profile entrant. Its Fiat brand is launching the Topolino in the US, starting at roughly $15K. Fiat CEO Olivier Francois has been direct about the strategy: he wants Fiat to become Stellantis' micromobility brand, using the US as a test market. Fiat sold only roughly 1.3K vehicles in the US last year, so the bar for success is low.
Startup Chip Motors is targeting a similar price point with its four- or six-seat vehicle called the Chip, also starting at $15K. CEO Jameson Detweiler estimates the current street-legal LSV market at hundreds of thousands of units annually but below 500K. He believes new entrants will grow awareness and pull total volume higher.
Waev, which owns legacy LSV brand GEM (formerly part of Polaris), is already an established player. CEO Keith Simon points to a growing number of new entrants as evidence the category is expanding beyond its traditional use case in retirement communities and gated developments.
The market ceiling is still unclear
The honest assessment from analysts is more cautious. Stephanie Brinley, principal automotive analyst at Mobility Global, notes that LSVs are recreational vehicles for most buyers but not daily commuters. She doesn't see them displacing conventional transportation.
The data offers some support for both views. McKinsey estimates the global micromobility market could grow from $160B in 2022 to $340B by 2030.
North America's slice is projected to grow from $20B to $35B over the same period. That's meaningful growth but still a fraction of the broader auto market.
US subcompact car sales (the closest comparable segment to kei cars) have fallen 86% over the past decade. Fewer than 89K subcompacts sold last year, less than 1% of total vehicle sales. That history is a real headwind.
Still, the golf cart market offers a precedent. It grew from roughly $1B before the pandemic to roughly $5B recently, driven by street-legal customized models spreading into suburban neighborhoods for everyday errands.
BYD is watching this trade too
China's BYD recently launched a mini EV called the Racco in Japan, priced under $12K after subsidies, targeting Japan's kei car segment.
BYD is aiming for 10K orders by year-end. Japan's kei segment makes up roughly a third of that country's total auto sales, a segment served almost entirely by domestic brands until now.
BYD's Japan move signals that global EV makers see the small-vehicle category as a credible growth front. If US deregulation follows through, that competitive dynamic could eventually reach American shores.
For investors, is the only publicly traded company with a product entering the US LSV market. The rest are private startups. The opportunity is taking shape, but demand has yet to prove it can match the hype.
