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NEVs are certainly not exempt from regulations. The convenience of having small EV limits are quite convenient for automakers - 'prevents' them from having the ability to produce a viable city-class car. And since (as you stated) all that safety equipment costs so much and weighs too much, no wonder it won't all fit in a small, economical vehicle.
In short, they encourage 'safety' laws that suit their short term goals, and discourage legislation that might negatively affect it. If Big Auto could produce one car, and only that class of vehicle were allowed to be produced, and the competition was limited in some fashion by convenient legislation, they would probably be quite happy.
If legislation were passed to encourage the purchase of large SUVs (remember the $25k tax write off for heavy vehicles like the Hummer?) and that legislation made them relatively cheap to buy, there would be an instant market. Smaller SUVs are just an extension of that trend - Keep up with the Jonses. Clever marketing makes people believe they are safer. And since they are (were) hugely profitable, keep the propaganda machine running at full speed ahead!
Unfortunately, they glutted the market with large vehicles at the wrong time, and are in the same position they were in during the fuel crisis of the '70s - Unable to produce anything but a big vehicle, and tied to very slow production and engineering processes.
But sometimes things like tax legislation don't work out as well as intended. Big Three said hybrids were a flash in the pan, no good, wouldn't work, a small tax break won't help them sell all that complex, new technology anyway. No worries - Keep producing those behemoth vehicles - They're safer for your kids, after all. You wouldn't want to endanger your family! The minivan is old hat - Buy a SUV!
Interesting to see that US auto now has to license Hybrid technology from the competition to stay afloat in the game. Congress didn't come up with these laws by themselves - Auto lobbyists made sure they passed.
If Big Auto wanted to produce city-class vehicles (with appeal, moderate range, and speed) they could - they are produced and driven every day in Europe and Japan. Believe it or not, Europe has safety laws, as does Japan. They could ensure laws were passed to make certain types of vehicles were exempt, or at least kept up with current consumer desires - You don't see side air bags on a motorcycle... Or 5 MPH bumpers. Or safety belts.
As with motorcycles, there would have to be an implied operator consent that some classes of vehicles just wouldn't be as 'safe' as a Kenworth. They won't be for everyone (nor are motorcycles or semi-tractors) but at least there would be a choice. There are options in many small cars - Auto, manual, 1.5 liter or 2.0 liter engine, stereo, GPS, etc. - why not make '40 mile electric' an option in a Toyota Yaris or Ford Focus? People convert cars to have less range than that, and use them every day; certainly there would be a market. Technology exists to make a 'safe' vehicle with two to three times this range so 40 miles isn't much of a stretch - the EV1 and RAV4 are examples.
If someone chooses to buy a large vehicle - OK. If they want to buy a 50cc scooter - no problem. Want to buy a sports car that'll do 165 MPH? Sure! Have fun!
Why the 'special' problem when it comes to electric vehicles? Personally, I'd prefer to have the choice than be forced to buy a particular type of car because that's all that was available.
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