The $25,000 Electric Car is Coming Soon to the US

The BYD seagull costs about $10,000 in China. (Qilai Shen/Bloomberg News)

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The price of electric vehicles is falling rapidly in the U.S. but the cheapest models are still more expensive than those offered by other countries. The BYD seagull costs about $10,000 in China. The Dacia Spring starts at $20,000. In Europe, the Renault Kwid e-Tech is $19,000. And the Kia Ray is $22,000.

Where is America’s $25,000 electric vehicle?

It’s coming. Although it may not appear so at first, the average price of a U.S. car has risen to $47,000. Prices for electric models have also risen. Even after price reductions, the country’s most popular electric sedan, Tesla Model 3, starts around $40,000.

Manufacturers have been working to make a significant shift from luxury to practicality, as the premium EV market has shown signs of slowing down. The industry’s new goal is to produce a $25,000 economy electric vehicle. Several models will be on the road within the next year. The ability to squeeze in as many features and range as possible will determine whether they can attract the next wave of American electric car owners and keep Chinese imports at bay, which are currently being held back by 102.5% tariffs.

Four initiatives are underway:

General Motors Revamps Chevy Bolt

The new electric version Chevy Equinox may be the leader in EV affordability in the United States. The SUV has a 319-mile range for about $42,000. Federal tax credits can knock off $7,500 from the price. These incentives will lower the price of a base-model, which will be available later this year below $28,000.

The updated Chevy Bolt will soon surpass it in price. Marissa West, GM’s North American President, claims that the Bolt will become “the most affordable car on the market by the year 2025.”

The original Bolt was the most popular EV in the U.S. alternative to a Tesla for seven years. The car was known for its mediocre ride, limited range, and slow charging. But it won over a large fan base thanks to a starting price of $26,500.

GM says that the updated Bolt has a lower production cost, while also improving styling, handling and charging times. The new North American Charging Standard will be used for charging, which is compatible with Tesla Superchargers. It will also use low-cost lithium iron phosphate battery packs on GM’s Ultium EV Platform.

The price and specs are not yet announced, but this is a contender for the best range in the new $25,000 class of EVs.

Stellantis and a $25,000 Jeep Renegade

Carlos Tavares, CEO of Stellantis, said that the company has been slow in offering electric models in the U.S. He stated at a Bernstein Conference on May 29, “We will launch a $25,000 Electric Jeep very soon” as part a large scale EV offensive. Stellantis confirmed later that the EV will compete with the Jeep Renegade and be one of three new Jeeps available in the U.S. before 2027.

Stellantis introduced its first EVs in the U.S. last year: the Fiat 500e, a subcompact car starting at $32,500, and the Wagoneer S which starts at around $70,000. The new model, priced at $25,000, would be the cheapest Jeep available in the U.S. It would also undercut the gas-powered Compass small crossover, which is priced at $26,000.

Tavares stated that in order to survive the transition to electric cars, it is necessary to offer prices comparable to those of gas-powered vehicles. This will require severe cost reductions and fewer profits throughout the supply chain for the transition years. The key is to achieve economies of scale.

Tavares stated, “If you asked me what an affordable [battery-electric vehicle] is, I would say that it’s 20,000 euros in Europe or $25,000 in the U.S.” “Our job is to bring a safe, clean, and affordable BEV — $25,000 — to the U.S. We’ll do it.”

Ford goes back to the drawing board

Ford has reversed its course after being burned by high costs, and a lackluster demand for its two EVs. It reduced spending on battery-powered vehicles by 12 billion dollars, delayed battery plants, and delayed electric F-Series pickups and a three-row vehicle until 2026 and 2027 respectively.

Ford has decided that large electric SUVs and pickup trucks are too expensive for mainstream customers. So it is looking at smaller models. Ford quietly began developing a line of more affordable EVs two years ago. The work is being carried out by a team of engineers in Irvine (California), led by Alan Clarke. He was previously the head engineer for Tesla’s Model Y.

According to Bloomberg Businessweek, CEO Jim Farley confirmed that the first of three new EVs based on this platform will be available in late 2026 at a starting price of around $25,000. Ford’s new objective, he said, is to produce mainstream EVs within a year of their arrival on the market. This is a stark contrast to its current lineup’s losses.

Farley stated on an earnings call held in April that Ford’s internal data shows that most EV buyers are suburbanites, who drive short distances and care more for cost-effective features than high-end ones. “That’s the place where adoption of EVs is going to grow the fastest,” he stated. “Our bet will increasingly be on our small affordable platform, developed by our West Coast team.”

Unboxing Tesla Mystery EV

Tesla, the leading manufacturer of fully electric vehicles in the world, has been the most significant source of pressure and uncertainty to develop a $25,000 vehicle in the U.S. Musk has been promoting a $25,000 Tesla in public for years, but he seems to have argued against it in private. According to reports, Musk told suppliers to prepare for a launch in mid-2025 in January and then told his engineers to scrap the plans in April. Musk flatly denied shutting down the program, but then refused saying he remains committed.

If the goal is to keep everyone guessing, then mission accomplished.

The question is whether Tesla will build cars for its moonshot self-driving cab or small, low-cost cars that can compete against the rising seas of Chinese challengers. Musk is the only one who knows why these two things are mutually exclusive. And he hasn’t shared this information, at least not yet.

In an earnings call held in April, Musk stated that Tesla has accelerated rather than delayed its future-products roadmap and that “more accessible models” will be coming in late 2024 to early 2025. These models will be manufactured on Tesla’s current production lines instead of using the experimental production method Musk called “unboxed” that was originally planned.

Tesla confirmed last weekend that three vehicles were in development – the Roadster supercar, announced in 2017, the driverless Cybercab roboticaxi to be unveiled in august, and the budget vehicle yet to be named.

Who knows what will happen, but if Tesla can win over American drivers by offering a small, lightweight personal vehicle, as it did with its large electric SUVs in the past, it could do more than any other thing the company has done to date to reduce road pollution and transform U.S. roads. Tesla will not be the only company to try this time around, as there are other companies that will also be competing in the $25,000 EV segment.