An electron in solid can be dressed by the lattice distortions of surroundings, forming a localized composite quasiparticle called small polaron, whose formation has been customarily attributed to the electron-phonon couplings that the ion polarization traps the excess electron. Here we present a theory of electron-polarization induced small polaron (EPI-SP), in which the carrier localization happens spontaneously and drives subsequent ion relaxation. This mechanism of polaron formation is qualitatively different than the Mott-Stoneham picture in that there is no need to overcome a kinetic barrier for the carrier to self-trap to form a polaron. Through a combination of first-principles theory and model Hamiltonian, we show that this is the mechanism for polaron formation in the monolayer 2D transition metal halides, CrI2, CoCl2 and CoBr2. These findings may explain the exceptional stability and manipulability of polarons in this class of materials by scanning tunneling microscopy.