$25,000 Electric Cars Getting Further And Further Away

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The world is screaming, crying, begging for a $25,000 EV but the mainstream automakers are either unable or unwilling to manufacture them. Perhaps they cannot be manufactured at a profit or perhaps the profit margin on affordable electric cars is simply too small to convince companies to build them. After all, it wasn’t that long ago that all traditional car companies in the US just up and decided one day to stop building sedans so they could concentrate on SUVs and pickup trucks — vehicles with higher profit margins.

Volkswagen is hard at work on two electric cars that will slot in below the ID.3, but when they will come to market is anyone’s guess. The two cars are set to be called ID.2 and ID.1, with the first rumored to be about the size of the Volkswagen Polo and priced at under €25,000 and the other about the size of the Volkswagen Up! and priced at under €20,000.

Auto, Motor und Sport is one of Germany’s most respected news sources for the automobile industry. It said this week that, based on reports from a reliable source, it will be 2026 before the ID.2 goes on sale, although it is expected to be introduced publicly in the fall of 2025. According to the source, production of the ID.2 is not expected to begin now until May of 2026.

“When we defined the price, it wasn’t based on wishful thinking. We defined clear measures, including at battery level, to ensure that we also achieve the price,” VW Board Member for Development Kai Grünitz is quoted as saying in the AMUS story. “Originally, the ID.2 was supposed to cost less than 24,000 euros, but this is no longer the case thanks to an increase in the price of raw materials and inflation. “The boundary conditions change almost weekly, that’s true,” says Grünitz. “You have to adapt to that.”

The upcoming EU7 emissions standard is less stringent than expected, which means small cars with combustion engines that are significantly cheaper than the ID.2 will also remain on the market. The basic version of the Polo is currently €21,590 euros. The ID.2 will face stiff competition from Chinese manufacturers and other European manufacturers.

Citroën is already accepting orders for the ë-C3, which is positioned as a city car that starts at €23,300, while Renault wants to launch the €25,000 R5 at the end of 2024. Renault has also announced an electric Twingo for under €20,000 will arrive in 2025. There are reports that Volkswagen may be interested in a collaboration with Renault to jointly develop a low priced small electric car based on the Twingo.

Affordable Electric Cars From Tesla?

Rumors of a new Tesla model priced at around $25,000 have been circulating for quite a while but there is little indication the company is close to building such a car. During the last earnings call, Elon Musk moped that high interest rates were slowing down plans to build the car in Mexico. Then it was rumored that it would be built in Austin or possibly Germany. The logical place for it would be China (you heard it here first), since that country already has a number of inexpensive electric cars available from a variety of companies, including BYD.

Writing for Bloomberg Hyperdrve on January 3, 2024, correspondent Craig Trudell said, “As 2023 came to a close and it became clear Tesla would lose its global electric car sales crown, I couldn’t help but think about what might have been had Elon Musk delivered on a prediction made years earlier.

“In September 2020, Musk put a bow on an event dubbed Battery Day by declaring that a series of innovations Tesla was working on gave the company confidence it could make a $25,000 EV within about three years. The lack of such a model in Tesla’s lineup three years later is proving costly. China’s BYD, which offers a bevy of even cheaper battery-electric models, became the new No. 1 in EVs last quarter.

“Worse yet for Tesla, the company appears to be years away from launching a $25,000 vehicle because Musk himself apparently stymied work on the project.” He then refers to the biography of Musk by Walter Isaacson in which he recounts that Musk repeatedly vetoed the idea of moving forward with the low priced car because he was fixated on his dream of building robotaxis.

“The pushback Isaacson depicts is head-scratching for several reasons,” Trudell writes. “For one, Musk’s master plan for Tesla from the very early days was to offer a wide range of models, including affordable family cars. Seventeen years after Musk authored a semi-famous blog post about Tesla’s road map, the company has just four vehicles for consumers to choose from. While Tesla added a fifth model late last year, it charged initial customers more than $120,000 for its debut pickup, the stainless steel-clad Cybertruck.

“Another reason this chapter of Isaacson’s book threw me was his recounting of Musk’s rationale. He said the CEO believed a self-driving robotaxi the company was working on ‘would make the other car unnecessary,’ referring to the $25,000 Tesla. What’s puzzling about this is that Musk described the cheaper Tesla during Battery Day as both $25,000 and fully autonomous. Putting aside whether that was realistic, it was clear that in his mind, this was a both/and proposition, not either/or.

“What held the project up, according to Isaacson, was Musk’s insistence that his designers come up with a car with no steering wheel or pedals. ‘We are not going to design some sort of amphibian frog that’s a halfway car,’ Isaacson quotes Musk as saying in an August 2022 meeting. ‘We are all in on autonomy.’

The Takeaway

The world clearly needs quality electric cars that are priced so ordinary drivers can afford them. They don’t need 500 miles of range but they do need to charge fast enough so people can drive them on trips if they so choose. In other words, they should be real cars, not urban scooters.

Here’s our prediction and it’s worth exactly what you paid for it. When it comes to inexpensive electric cars, China is going to eat everybody’s lunch, at least in those countries that don’t impose high tariffs on them.

In the US, there is no interest in this segment of the market. Ford and GM are laser focused on trucks, trucks, and more trucks. Stellantis only wants to sell Jeeps and Ram pickups (although it is bringing a refreshed Fiat 500e to America). GM has promised “affordable” electric cars but they always seem to be priced $10,000 to $12,000 more than expected. Don’t expect the second generation Bolt EUV to be the savior for Americans who need affordable electric cars.

As for Tesla, when Elon gets an idea in his head, nothing short of a nuclear bomb can dislodge it. Some people think that is his greatest asset while others think it is his greatest weakness. Either way, there is no credible evidence that a more affordable model from Tesla is just over the horizon.

The result is, America will lag the rest of the world in the percentage of electric cars on the road. Eventually, the competition from Chinese companies will overwhelm all trade restrictions. When that happens, several well known automakers are going to go running to Uncle Sugar screaming about how they are too big to fail and demanding a bailout. If you are in the market for a truly affordable electric car in America, you may be in for a long wait.