The withering dream of a cheap American electric car

I’ve never spent more than 20k for a car. With prices like this, I’m just going to keep my old one as long as I can.

Of course that's without without the $1,155 "destination" fee, so even the Forte really starts at $21,145.

But considering inflation, $21k isn't a bad price.

You can't have it because of existing tarrifs.

But with so few options, like the parent, I'm planning to keep my current car (a 2008 Prius) indefinitely, just paying for repairs as needed until parts are unavailable or nobody is willing to do the work.

My worry is that US automakers have all but abandoned the compact and midsize economy car segments, and I don't know what tariffs will mean for the Japanese and Korean automakers that do cover these segments. But see my other comment about the pendulum swinging back and forth.

Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?

Manufacturers make more money off selling luxury cars. The poors can just buy used luxury cars for all they care. We see the same problem with housing and luxury vs spartan options. The spartan option exists, but only begrudgingly so.

I cannot get the car without registration. I cannot get the car without 'destination' fee.

Bake it into the price.

1) amortizing the assembly line and upfront platform design costs

2) the raw materials of the basic car components, e.g. power train, chassis, and body

3) getting the car into consumer hands (distribution fees, taxes, advertising, dealership margin, etc).

Everything else like labor and upgraded trims works out to a relatively small percentage of the overall price, often under 20%.

Since you can't make enough impact by cutting amenities, you have to cut one of the listed things. You mostly can't build things more efficiently than major manufacturers do (though Tesla is quite good here), so that's out. You can't shave 50% off the basic materials costs because you run into basic FMVSS issues. Kia's strategy is to get as close to this line as they can though. That means you need to cut from the third category. No company wants don't want to cut their own margin, so that's out. Manufacturers can't work around the dealers by law, so they need to keep some dealer margin. Manufacturers can't stop advertising because the advertising department has significant political power and can get anyone proposing that fired. Manufacturers can't avoid taxes for consumers either.

The only real paths to cheaper cars involve opening the market to competitors that aren't limited like this, for instance foreign companies that don't need dealers and are okay accepting lower margins and not advertising.

with the American consumer buying 15M cars a year at those average $50K there isn't an opportunity for the low end. And if such market really appears - i.e. if the American consumer would hit hard economic patch and would really need cheap car - it will be at any moment filled by cheap Chinese EVs.

In 1998 a Chevrolet Metro could be optioned without a radio or rear defogger, even. New purchase price was about $9k (equivalent to $14.5k today). Somebody was buying those, enough for it to be worth the manufacturer’s effort to produce it.

I suspect a whole segment of people would be willing to consider a no-frills EV at a comparable price point. Hell, if somebody made something new like a base model 90s Civic into a $15k EV without extra luxury nonsense I don’t actually need, I’d be in the dealership tomorrow.

GM made that play with the Bolt. It was routinely available for just over $20K. Still sat on lots, not getting a lot of love. People shopping for new cars want nicer toys, people who cannot afford new shop used and enjoy getting those nice toys at a discount. I bet the subset of buyers looking for a bare bones no frills brand-new car is quite small.

I think you're correct; we're probably talking about a portion of the weirdly minimalist and frugal crowd pursuing FIRE. Also, most folks in that small subset wouldn't even consider buying a GM product; it's going to be either a Toyota or Honda for them.

Source: I'm one of them, still driving my base-level trim 2008 Prius.

As an aside, I'm reading that the new Bolt sold nearly as well as the Tesla Model S in 2017. Before that, I think the similarly basic Nissan Leaf was the best selling EV. Since then, however, my sense is that EV purchases became more about "fun" (which Tesla has emphasized and provided) than anything else.

It is worth recognizing the role that ZIRP played in all of this. Artificially low interest rates allowed payments on more expensive premium vehicles to be much more manageable for a much larger portion of the population.

It was a totally functional vehicle. The radio sounded good enough. The seats were comfy enough. It was a bit of a slug, but it had enough power so that you weren't scared for your life when merging onto a highway.

If those sound like low standards... well, this was not always the case for bargain basement cars...

Not new, but does that matter so much?

Vehicles at that price are usually crap, esp. the Versa with the CVT engine. And, at least last year, there was a shortage so that you'd be paying a few grand above that price just to get it. I'd bet it's still the same where you're paying closer to 20k for this car.

Now, if you could get a Versa with the simpler engine (I think it was a manual shift), it's apparently a decent car. But finding that model is like a full-time job for a week, then either flying out to whatever dealership has it or getting it shipped which is another grand.

CAFE regulations (in a nutshell) require automakers' vehicles to meet a particular fuel economy per size of footprint, averaged across the vehicles they sell. So, they can meet the standards either by increasing the footprint of the vehicle, or by increasing the fuel economy of their vehicles, or both.

Maybe you're thinking of the strict emission laws regarding NOx and SOx that prevent diesel cars.

They are. CAFE target formulas have the footprint of the vehicle(s) in the denominator. Larger footprint = easier fuel economy targets

https://www.nhtsa.gov/sites/nhtsa.gov/files/cafe-ghg_my_2012...

> would you want to be making major investments in ICE car production right now?

I would if I were a car manufacturer, at least in addition to other projects that I may have investing in alternative fuels. I haven't dug deeply into all the issues VW is dealing with today, but it does seem at least in part due to an over investment in electric vehicles.

If I were really in that situation, though, I'd personally be investing heavily in designs more similar to the Chevy Volt with an electric drivetrain and onboard gas generator. Range anxiety goes away without having to pack a massive battery pack in the car, and the gas engine is much less stressed meaning easier maintenance and a longer life.

That's true, but US fuel economy standards don't actually require vehicles to be more fuel efficient in a direct way. They require vehicles to be a certain fuel efficiency for their footprint.

Unintuitively, while making a car larger doesn't make it more fuel efficient, it might make it better meet US fuel economy standards.

That's also what fuels some of the demand for high-margin cars, because of the perverse incentive that over-sized delivers higher margins. People will be too easily convinced to pay extra (generally at linear relationship) for size and there's not a linear relationship in size versus margins.

    Hell, if somebody made something new like a base 
    model 90s Civic into a $15k EV without extra 
    luxury nonsense I don’t actually need

The cost of much of the "luxury nonsense" like power windows and heated seats is heavily amortized since the tooling etc. is shared with the more expensive vehicles, and the actual material costs are low.

Think about it; heated seats are just some simple heating coils. You can get something functionally equivalent that plugs into your cigarette lighter adapter for like $10 from Amazon. It ain't adding that much to the cost of your car.

It might sound silly, but not everyone looks at things through a utilitarian view.

There are a bunch more in this price range due to launch next year.

Cheap-ish electric cars exist, they're just not, generally, suited to US consumer preferences.

This is exactly the kind of problem regulations are meant to solve. Preventing false advertising and bringing information to all market participants make the market more efficient.

One way of looking at it, validating the point that others have already made in their comments, it is that there are no bargain basement cars anymore; everything now comes with an automatic transmission, air conditioning, power locks and windows, cameras and sensors, etc. As recently as 2008 when I was buying my Prius, these things were optional on many models. Today's compact cars are, I think, the size of midsize cars from 20 years ago too.

It's kind of like housing in America where the cost per square foot didn't actually rise much in some places, but the average home is now twice the size, so the average home price doubled.

I think they're referring to the practice of making cars larger to pass as trucks so they are faced with more lax fuel-efficiency standards.

The problem is that cars are not treated like most other commodities. E.g. You don't have to buy a license to use a microwave or register it with the government. The closest analog is if you live somewhere with sales tax.

With the move to trucks and ethanol credits, those hacks are no longer cost-effective.

There are also choices you can make during the registration process that will change the costs a bit. Quoting a fixed price for that would require yet more small print disclosing that certain choices were made.

I just don't see how it works out. Registration costs money. Not just when you buy the car, but over and over and over throughout the time you own it. You should know this as a driver. Further, the registration cost does not vary by dealer, so you don't need to know it in order to negotiate the best price.

Correct. Instead of a vague "registration fees may apply" disclaimer now there's a "registration fees assuming <city>, <state>" disclaimer. It's definitely not worse for anyone, and is arguably better for the customers who will register in <city>, <state>. That's a green light for a utilitarian.

Some of the brands you listed aren't even really available in the US, or if they are that are 100% marked up with tariffs.

Big cars are definitely a thing in the US, but I'd kill for a ~$20k smaller EV hatch commuter to swap out my Model 3.

Dealerships generally get your name and phone number if you call them to ask about the price including fees and taxes. If you make them post defaults online, they get nothing from you. Clearly better.

> There are also choices you can make during the registration process that will change the costs a bit.

I'm curious about this. Do you have some examples?

Besides GP is also talking about things like the shipping fee, which are decidedly not variable or unknown. The dealership knows how much it costs them to ship the car from the factory and how much they want to charge you. They just choose not to disclose it.

Ultimately, you CAN "win" by doing really well with a low-end model, but the chance of losing big is there, too.

I email, not call, and I lie. About my name, phone number, all of it. Best they will ever get is zip code. They could post defaults, but then I still don't know the actual OTD price -- it's already a hassle today because I have to be aware that dealers will advertise discounts that are only available in-state, and only mention that detail in the small print. I live in a metro that spans two states so this is common.

> I'm curious about this. Do you have some examples?

My state has a plethora of plate designs, and how much you pay depends on which you pick (it's really just a scheme for getting more revenue, of course). I can also choose (dependent on the vehicle, not all qualify) to pay for an extended registration period.

> They just choose not to disclose it.

I agree that they should disclose it. And they are required to by law. It's on the Monroney sticker, and it is included under "Total MSRP".

That assumption has been dead since cash for clunkers. Even American made cars will hit 200k miles. There's ZERO value to a "new" car. You would be outright stupid to pay $10k for some probably not possible "bare bones" car when you could just buy the decade old Corolla down the street with 100k miles that's only $5k. It will even have fairly modern safety. This is true even in the modern post-COVID hyper contracted used car market.

This page from KBB says that the 2008 Chevy Aveo "had a starting MSRP of $10,610 when new." https://www.kbb.com/chevrolet/aveo/2008/

However, KBB's page for the 2008 Versa also says that it "had a starting MSRP of $14,025 when new" so maybe you're right? Maybe they're adjusting for inflation? It was a crazy time, obviously, with deflation so maybe there were huge discounts.

I bought my only-ever (and probably last-ever, as I can't stomach the prices now) new car as a 2012 Nissan Sentra, and I think it was around $14k and was definitely a way, way better car than the infamous Chevy Aveo (and a big step up from the Versa in size, power, et c., for that matter).

Electrifying the locks led to the idea of RF transmitters as a secondary switch. Now there’s hardware for that, and a radio receiver. Gotta make it flash the lights, so that’s another relay and a wiring harness to the lighting system. Gotta beep the horn too, more wires. Maybe make it so you can hold the button to crack the power windows on a hot day; it’s just wire.

Fast forward 30 years, now everything talks to everything and I’d argue they don’t want to have to maintain a bunch of different firmware configurations to support fine-grained dealership options.

That’s my hunch anyway.

The "light truck" designation is made on the basis of features like cargo capacity and ground clearance. The Subaru Outback was properly classified as a car until the smaller PT Cruiser got its truck designation and they justifiably complained.

It's a combination of everything. Trucks keep getting bigger because it's how they game the fuel efficiency requirements. Small cars get bigger because of safety standards. Consumers in the US don't really want small cars, partly because we've gotten bigger a partly because it's terrifying to be on the road with the aforementioned trucks.

Similarly, cars seem really boring these days because most people want something big enough (i.e. CUV like the RAV4), and because safety standards for things like pedestrian impact have constrained the designers. So, we end up with a bunch of CUVs that I can't tell apart.

So 25 years on, without even looking anything up, it's pretty reasonable to assume no one was selling a car for that same price and adding airbags and ABS for the U. S. market. But if one insists on a source, Motortrend said they sold for around $12K in 2010: https://www.motortrend.com/cars/chevrolet/aveo/2010/

If cars only lasted 3 years instead of the 20+ they do today (average car is 12 years old), there would be demand for cars that don't even have a heater by people who want to save money.

Since the fee doesn’t actually reflect anything related to cost of delivery, it’s hard to see it as anything other than hiding part of the MSRP so that they can lie about cheaper prices in advertisements.

It's almost like there is a lesson to be learned. Make a "cheap" electric car worth buying, and people will buy it.