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Innovative technological solutions have become increasingly critical in addressing the transportation sector's environmental impact. Passenger vehicles present an opportunity to introduce novel drivetrain solutions that can quickly penetrate the electric vehicle market due to their shorter development time and lifetime compared to commercial vehicles. As environmental policy pressure increases and customers demand more sustainable products, shifting from a linear business approach to a circular economy model is in prospect. The new generation of economically competitive machines must be designed with a restorative intention, considering future reuse, refurbishment, remanufacture, and recycling possibilities. This review investigates the market penetration possibilities of permanent magnet-assisted synchronous reluctance machines for mini and small-segment electric vehicles, considering the urban environment and sustainability aspects of the circular economy model. When making changes to the materials used in an electric machine, it is crucial to evaluate their potential impact on efficiency while keeping the environmental impact of those materials in mind. The indirect ecological effect of the vehicle's use phase may outweigh the reduction in manufacturing and recycling at its end-of-life. Therefore, thoroughly analysing the materials used in the design process is necessary to ensure maximum efficiency while minimising the environmental impact. [ABSTRACT FROM AUTHOR]