Are Americans ready to embrace tiny 'cars'? These companies think so

A growing number of companies, including auto giant Stellantis, are betting Americans are ready to embrace smaller, less expensive vehicles amid yearslong affordability concerns for the U.S. auto industry.

But the vehicles aren't technically "cars." They're electric low-speed vehicles, or LSVs, that are essentially a step above a traditional golf cart but below a typical light-duty car or truck sold in the U.S.

"We have seen the popularity of many different form factors of electric, small low-speed vehicles continuing to grow," Keith Simon, co-founder and CEO of Waev, which owns several LSV brands such as ex-Polaris brand GEM, told CNBC. "I think it's evident by the number of new entrants across many different vehicle types. There's a lot of new players. … It's been growing significantly."

Attention on such vehicles has been magnified during the past year by President Donald Trump. He has discussed opening U.S. roadways and regulations to better allow for smaller vehicles, including LSVs from Europe and Japan's "Kei cars," on U.S. roadways.

"I'm giving all American car companies the right to build what are known as tiny little tiny cars," Trump said during a speech last week at General Motors' Milford Proving Grounds in Michigan. "I go over to Europe and I see these little cars all over the place and I say, 'Why aren't we making them?'"

Small cars have historically not performed well in the U.S., but those involved with LSVs believe they could be a growth market for Americans who want an affordable, easy-to-drive vehicle for short distances. They also can typically be charged overnight with a traditional household outlet compared with regular, more expensive EVs that need special chargers that can cost thousands of dollars.

Reliable data on the U.S. LSV market is limited since of the vehicles don't need to be registered, but they're part of a larger "micromobility" segment, which consulting firm McKinsey & Co. last year estimated could more than double in size globally by 2030.

"The global micromobility market is on the upswing. McKinsey estimates that the market was worth about $160 billion in 2022; by 2030, it's estimated to reach $340 billion," according to its McKinsey's Center for Future Mobility. That includes North America's market growing from $20 billion in 2022 to $35 billion by 2030.

For U.S. consumers, companies such as Stellantis' Fiat, Waev and startup Chip Motors are focusing on electric streel-legal LSVs, many of which are starting around $15,000, a fraction of the nearly $50,000 average price tag for a new traditional car or truck.

LSVs vary in form and can be heavily customized, including the number of seats, electric range and available features, such as optional doors. They're typically used for short distances, often for people living in closed community settings such as retirement homes or condominium complexes. Their main competition has traditionally been golf carts, not small cars.

"The use case for these kind of vehicles has become more interesting as people have evolved their lifestyles, and a vehicle like this fits into their lifestyles," Simon said.

The market is loosely regulated compared with the light-duty vehicle market that dominates the U.S.. but the vehicles must not go faster than 25 mph and have to be equipped with standard safety features such as headlamps, turn signals, mirrors and a windshield that conforms to the federal motor vehicle safety standard. They're not required to have airbags and they're allowed on roadways with speed limits of up to 35 mph.