At one point it looked as if luxury carmakers like Bentley could have been banished from European roads by Brussels, but behind the scenes last year a deal was struck that will, in exchange for a binding fleet average target of 130g CO₂/km by 2012, allow the likes of Bentley to ‘offset’ its very high emissions by chaining them to parent company VW’s much larger fleet of highly efficient BlueMotion cars. The draft legislation adopted by the Commission last December noted: “Under the legislation, several manufacturers will be able to group together to form a pool, which can act jointly in meeting the specific emissions targets.” This was a significant concession on the part of the Commission, beset with angry carmakers, mostly German, whose fleet averages are even higher than the currently still high 163g CO₂/km EU average. The same issue was almost certainly one strategic factor behind Porsche’s recent move to assume control of VW, since it must rapidly find a way of diluting its very high fleet average emissions of almost 300g CO₂/km.

What is driving rapid change in the industry is the EU’s insistence that failure to meet the targeted 130g CO₂/km limit will result in stiff cash fines after the 2012 deadline. Another tollbooth on this particular highway could be changing attitudes towards running costs. In the UK, London mayor Ken Livingstone recently revised the city’s congestion charge, imposing a £25 (€31) a day gas-guzzler tax but allowing cars with fewer than 120g CO₂/km to roam the zone for free. But seen from Delhi, Shanghai or Rio de Janeiro, the car is only just becoming accessible to the masses for the first time. In many ways the automotive story of the year, the diminutive Tata Nano upstaged the rest of the industry on its Delhi launch in January, reversing the bigger and bigger assumptions of the post-war era by weighing just 580kg, yet not making any leap forward beyond the internal combustion engine.

Back in the US, a gallon of unleaded might have breached the symbolic $5 mark in some states of the US, but analysts say it needs to double again to transform consumer habits. Small-car sales forecasts for this year are just 397,549 in the US, compared to actual sales last year of 588,952 Ford F-series pickups – America’s favourite vehicle. Its weight ranges from 2,948kg to 3,720kg – nearly four tons – making a 2.3-ton Bentley look positively anorexic.

The other factor is profits. Simply put, small cars are typically less profitable than larger ones. New technologies come at a premium and Norway’s state-of-the-art Think electric car costs €23,000. Although BMW’s Mini has been highly profitable and Fiat’s new 500 is predicted to be, Daimler’s Smart division has spent most of its life on the verge of bankruptcy while Audi’s last attempt at a small car, the aluminium-bodied A2, was a commercial failure. The decision of the big German carmakers to go electric will rest on their ability to make electric cars that are still perceived as being chic, premium and, of course, reliable. BMW has until the end of the year to decide whether or not to build its electric car. By then, it will have also decided whether to launch it as a new brand or to call it a Mini or a BMW.

Perhaps the most striking evidence that the car world is poised for radical change is the recent decision of Formula One’s International Automobile Federation (FIA) to insist on hybrid technology. Beginning next year, the energy created by the vehicles’ fierce braking will be regenerated through batteries as electrical power.