I do not know what regulations do or do not apply to Electric cars and very small "City" cars, but the normal regs for cars are amazingly complex, covering things like the size of all lights, what height they are above the road and how close to the side of the car they are. There are regs for impact resistance, the potential risk to pedestrians and bikes, and thousands of other regs concerning the safety and behaviour of cars, and these put major limitations on how a production car can look.
Then when you reduce the size of a car to really small things get really difficult. If you take a Heinkel as an example of a classic small car, it has a very compact air-cooled engine and transmission stuck in the back. next there are arches for two front wheels to revolve and steer in. The rest of the space in this small car is available for passengers and cargo. If you want to make any modern "equivalent", the power plant/transmission/fuel tank and/or batteries is almost certainly going to be far less compact, as people expect water cooling and radiators and heaters, plus all sorts of extras including more bulky and sophisticated steering, suspension and braking. Then add in all the modern safety equipment, and suddenly you find that the space available for passengers is much less than in a Heinkel, so the designers immediately have to get the most space available from the floor-plan, so it will inevitably be boxy. Lastly, it is actually much easier to design a medium to big car to look better. For a start the size will make it look more impressive, but you can also get long flowing curves and swooping lines, whereas a small car is very likely to look boxy. If you look at really basic cars, e.g. Sans Permit cars like the Acoma Comtesse they are all fairly boxy. Add to that the fact that you more-or-less have to keep the price down to attract sales also means you have to design it to be cheap to make.
