The Jaguar XE faces a monumental task—challenging the status quo of a compact-sedan market composed primarily of German models, while simultaneously rebuilding a tarnished reputation brought on by the X-Type back in 2001. The good news for the British automaker is the XE has been well received by the press and buyers wanting something a bit different. For 2018, Jaguar is making some significant changes to their smallest sedan. The first major update for 2018 is to the XE’s engine lineup. The base XE 25t gets an all-new, in-house-designed turbocharged 2.0-liter Ingenium 4-cylinder engine that’s good for 247 hp and 269 lb-ft of torque, making 7 hp and 18 lb-ft more than the outgoing 2.0-liter. On the other end of the spectrum, the S trim’s supercharged 3.0-liter V6 has been tweaked for an even greater output of 380 hp. The 20d trim’s turbodiesel 2.0-liter 4-cylinder, good for 180 hp and 318 lb-ft, and the 35t’s supercharged 3.0L V6 with 340 hp and 332 lb-ft remain unchanged. All engines come equipped with an 8-speed automatic transmission and the choice of rear-wheel (RWD) or all-wheel drive (AWD). In terms of fuel economy, the XE 20d trim is rated at 32 mpg city, 42 highway, and 36 combined with RWD and 30, 40, and 34 with AWD, while the 35t gets 21, 30, and 24 with RWD and 20, 29, and 23 with AWD. Official EPA figures for the updated 25t and S trims are not yet available. Jaguar hasn’t messed with the XE’s exterior for 2018—and that’s a good thing. It follows the same design as the larger XF sedan with a long front, short rear, and coupe-like roofline. The front end stands out with narrow headlights and rectangular grille, and wheels range in size from 17 to 19 inches. The XE’s interior is clean and uncluttered, something you cannot say about other models in the class. But the cabin doesn’t have the premium feel you would expect from a luxury car, in part due to the lower quality of materials used. The XE also has one of the tightest back seats in the class, with limited head and legroom for an average-size adult—although the trunk does offer a decent 15.9 cubic feet of space. Models equipped with Jaguar’s 10-inch InControl Pro infotainment system will come with a new 12.3-inch virtual instrument cluster system configurable to the driver’s preferences. New for 2018 is an in-car payment system that allows you to fill up at a Shell gas station and pay for it with PayPal or Apple Pay through the infotainment system display. Android Pay will be added at a later date. The only major trim update for the 2018 XE is the introduction of a new 35t Portfolio trim. Features include a range of unique exterior colors, heated and ventilated front seats, heated rear seats, a motorized blind for the rear window, a hands-free trunk lid, the InControl Pro infotainment system, and an 825-watt 17-speaker Meridian Surround Sound system. For the 2018 XE, Jaguar has increased the number of optional driver-assistance technologies. Now available are blind-spot monitoring, forward-traffic detection, forward vehicle guidance, and automatic emergency braking with pedestrian detection. All XEs come with a full set of airbags and traction and stability control. When the 2018 Jaguar XE hits dealers in May, it will carry a starting price of $35,725 for the base 25t trim.