this post was submitted on 16 Sep 2023
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I doubt it was for anything to do with compliance. More that it was just PSA trying something out. PSA Group marques are fairly well known for doing unusual things, even if it isn't financially viable.
From the wiki:
https://en.m.wikipedia.org/wiki/Peugeot_106
To me that reads like the French govt thought that a fleet of small EVs would be useful for their staff to use for short metropolitan/LA travel thinking that it would reduce fuel/servicing costs or something. For that, it's specs are totally adequate.
Seems that they outsourced the manufacturering to Heuliez who are a coachbuilder who probably sourced some kind of milk float drive train and stuck in the body and chassis delivered to them by Peugeot.
Selling it on a wider market beyond the French govt was likely a 'well, we've gone through this effort, and we're building them anyway, might as well sell them to the public and see what happens'.
Obviously, like everyone else who tried it around the same time, they realised that it was just too soon to try tech wise. And the French govt also realised that there was little benefit to overcome the list of negatives. From things I read in trying to find out more about them, at least some are being kept on the road by replacing the batteries with LiOn and more modern e-motors. One example had a BMW i3 motor retrofitted.
This particular example was in the middle of the Angus countryside, with two toddler sized car seats on the back bench, so I suspect that it wasn't entirely as it was as it left the factory in 1998 and likely had a bit more power at its disposal.