The Case for Simplicity: The Need for Basic
May 2025
Car prices have soared in the last few years, driven by the pandemic-era semiconductor shortage and the resulting shift by automakers toward high-margin, high-cost vehicles. In the U.S., new tariffs are set to push prices even higher — the opposite of what’s needed in a market where many buyers are already priced out. So, what can automakers do to ensure more people can afford a decent new car?
In March 2024, I explored this question in “A Critical Need for Lighter, Smaller Vehicles”, focusing on size, weight, and safety. Before that, in February 2023’s “Are Frugal Minicars the Future of Urban Mobility?” I examined the global low-price segment ($5–15k): quadricycles (Europe), Kei cars (Japan), mini EVs (China), and low-speed vehicles (U.S.). While promising for urban or rural transport, these niche vehicles don’t meet broad consumer needs.
In the U.S., the average transaction price hit $47,462 in February 2025 — up 24% from March 2020 and 43% over the past decade, far outpacing the 34% rise in cumulative inflation. France mirrors this trend: the average new car now costs 34,732€ (before options and discounts), and battery electric vehicles (BEVs) come at an even steeper premium.
Europeans Have Options Below 25k€
Across Europe, buyers can find BEVs under 25,000€ and gas-powered models closer to 16,000€. Stellantis and Renault are leading the charge with the Citroën ë-C3 (starting at 23k€) and the retro-styled Renault R5 (25k€) shown below, offering WLTP ranges of over 300 km with 44 and 40 kWh respectively. Dacia’s China-made Spring starts below 17k€, with 225 km of range — far enough for most daily needs. Note: prices are before incentives on the French market.
Volkswagen will join the segment in 2026 with the ID.2 BEV, expected around 25k€. Meanwhile, conventional gas cars from Japanese, Korean, and European brands remain widely available for budget-conscious buyers, especially for city driving.
Chinese automakers are also pressuring the European market with ultra-competitive pricing, though tariffs are giving domestic brands some breathing room. Still, companies like BYD are already building European plants to bypass those tariffs entirely — a sign of how serious they are. Competition is also good for customers, but European OEMs need time to adjust.
Limited Offering and No BEVs Below $25k in the USA
The U.S. landscape is starkly different. The number of affordable models has shrunk dramatically, Ford, and Stellantis having mostly left that segment. Only a few vehicles now sell below the $22–25k range, with the Nissan Versa standing out at $17k. And what is the cheapest BEV? It could have been Tesla’s “$25k car” but unfortunately the company opted for the CyberTruck instead. As a result, it is the aging Nissan Leaf at $28k with 40 kWh, before incentives: Note: sales taxes are extra in the USA, e.g., 8.625% in San Francisco.
Could Chinese automakers fill the gap? Not likely in the near future, but most likely at some point. The Biden administration’s 102.5% tariffs effectively shut them out. Setting up local manufacturing might be the only economically viable route in — but that’s a long game. They would have to set up shop either locally, or in Canada or Mexico (where they already have a substantial commercial presence) and meet USMCA’s local content requirement. Meanwhile, U.S. automakers risk falling behind on cost-effectiveness and product development efficiency, thus losing competitiveness in global market.
Can Startups Bring Lower-Priced Products on the U.S. Market?
Startups may offer a path forward. Detroit-based Slate, founded in 2022, is bringing to market a refreshingly modest pickup with a well-thought-out modular approach. Just 4.45 meters long with a rather narrow body, “Truck” is priced under $27.5k (pre-incentives), i.e., half the price of the average U.S. BEV. Features are intentionally simple: manual windows, unpainted panels, and a “bring your own tech” approach to infotainment.
I had a chance to see a mock-up in person in Los Angeles in April (images above): it is refreshing and great news for the US market where too many vehicles have become obscenely large and heavy. Slate plans to boost profit via accessories — body wraps, front grills, kits to convert the pickup into an SUV, and more — thanks to a modular design. The company has raised $700 million to date and will need more funding as it builds up towards start of production in Indiana in late 2026.
Then there’s Also— yes, that’s the company name — an affordable EV company recently spun off from rugged EV maker Rivian. It has raised $105 million while Rivian maintains a substantial minority stake. The company plans to bring a range of small, lightweight “micromobility”-type vehicles to market with a high degree of vertical integration. I look forward to seeing Also’s first vehicle due in early 2026 and hope it will help provide more people access to new (electric) wheels, clearly in this case for short distances.
Marc Amblard
Managing Director, Orsay Consulting