Well. It is actually pretty complex but in general you can simplify into two topics - safety regulation and lately all the laws and rules about climate. Those are making cars unnecessary expansive.

Take a simple cheap car, such as Dacia Sandero or whatever. In EU even this totally basic car has to have complex systems like reading of road signs (which is not really about safety, but that is another story). And that is just one example, this is of course running for decades, and it stacks.

But lately even more problematic is so called CO2 penalty. Each automobile maker must reach average target of CO2 per car. This is simply not technically possible because of how it is set in favor of EVs.

So, in standard car price there is usually hefty part of price for it. The more simple (reliable, cheap) the bigger issue it has reaching those limits.

This is effectively killing small and cheap cars in EU, since you can`t hide this price increase in price of such car (it will be no longer cheap).

As an example, I have at hand table from Czechia in 2020 (today situation will be worse, the penalties are increasing/limits are harsher). Top ten cars, inclusive detail about CO2 limit, CO2 car produce (on paper of course) etc., and in percentage price increase from this penalty (second column from right). As you can see it can make 35% i a small and cheap car such as Hyundai i20...