*

Elkann proposes 'e car' as Europe's kei car equivalent

*

Cites drop in affordable car models since 2019

*

New CEO Filosa's experience aligns with Stellantis' ( STLA )

regional

focus

(Adds context on regulations in paragraphs 4-5)

By Giulio Piovaccari

TURIN, Italy, June 12 (Reuters) - Europe needs to

develop smaller and cheaper vehicles in the style of Japan's

so-called 'kei cars', Stellantis ( STLA ) Chairman John Elkann

said on Thursday, as high prices, which he blamed on regulation

in the region, weigh on consumer demand.

Kei cars are urban vehicles traditionally sold in Japan with

size and engine restrictions, enjoying lower tax and insurance

costs. Elkann said the European equivalent could be called the

"e car".

"There's no reason why if Japan has a kei car, which is 40%

of the market, Europe should not have an e car," he said at an

Automotive News Europe conference in the Italian city of Turin,

the home of Fiat, now part of Stellantis ( STLA ).

Elkann and Renault CEO Luca de Meo last month urged the

European Union to lighten the regulatory burden for smaller cars

by introducing different rules for models of varying sizes.

For example, some safety features such as sensors detecting

whether a driver is falling asleep or an SOS button are required

on cars from the smallest ones up to larger SUVs, with a

disproportionate impact on the cost of vehicles used mainly for

short city journeys.

Speaking on Thursday, Elkann noted that in 2019 there were

49 models sold in Europe for less than 15,000 euros ($17,400),

versus just one now. In 2019 a million cars were sold below that

price level compared to fewer than 100,000 now, he added.

"If you actually look at the (cars') cost increase... that

has primarily been driven by regulation," Elkann said.

"If you actually look at our engineers, more than 25% just

work on compliance. So no value added."

Fiat has a tradition of making small, affordable cars, from

the "Topolino" of pre-war years to the famous "600" and "500" of

the 1950s and 1960s, which helped Italians to take to the roads

and turned Fiat into a European giant.

Elkann is still steering Stellantis ( STLA ), as newly-appointed CEO

Antonio Filosa formally takes the job later this month.

Filosa, an Italian national, led Fiat Chrysler and

Stellantis' ( STLA ) operations in South America, before being appointed

head of the automaker's North American market last year.

Elkann said Filosa was the right choice in an automotive

industry that is shifting from global to "multi-regional".

"The experience that Antonio had running Argentina, running

Brazil, running South America, and recently running North

America is very much in phase with how the world is going

between regulations, tariffs, and how you ultimately navigate

that constructively with political forces," he said.

($1 = 0.8625 euros)