The $25k car is going extinct?

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR.

The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-road vehicles are classified as non-passenger automobiles with everything that entails, notably much less stringent emission standards) and made the small cars unprofitable to make in comparison.

They are disappearing in europe too. Emissions and other required by law equipment costs just as much on cheap car as it does on expensive one. At some point, cheap cars stop beinf cheap, just a bit cheaper but with way worse quality, so they stop making sense.