The $25 000 EV is just about here!

I recently had a wonderful chat at a dinner party with a friend. Briefly, my friend was convinced that EV’s would take off immediately once an EV could be had for $25 000. While automakers can certainly build one (in fact the Nissan Leaf in some parts of Canada comes in at just about $25 000). Further discussion over after dinner drinks revealed that my friend drove a Mercedes that he purchased for triple said $25 000 EV budget. Automakers it seems, believe most people feel that way. But automakers will build cars if people buy them, so, if you believe in the $25 000 EV, please buy yourself a cheap EV.

Availability of the “cheap-mass-market-EV” has long been touted as the end of the gas car (source). Certainly it seems the end of the gas car is within sight, with some suggesting 2035 as the end of the gas car in Canada (source).

So what does the mass market EV look like?. Even if you exclude subsidies, in fact the Dacia Spring is available in some European countries for about $20 000 Euros (about of $27 000 Canadian dollars) (source). It seems like a solid, albeit compact EV. A 26 kWh battery seems similar to my old 2015 Nissan Leaf, which I have taken all over Ontario. The cabin, particularly the back seats, look small (source). Perhaps not the car for a family with teenagers in the house, but as a commuter, a grocery getter, the second car urban runabout or for someone in their prekids life, this might be a perfect fit.

Now to the harder question, would anyone actually buy it? The Dacia spring sold about 25 000 units in 2021 (first full year of sales, source), so the sales situation is not entirely hopeless, far from stellar, compared to say the 250 000 Nissan Rouges sold in Europe during 2021 (source). After all, the market for small cheap cars appears to be shrinking. The worlds cheapest car, the Tata Nano (source) is no longer in production, nor is the Nissan Micra available in Canada(source) or anything smaller than an SUV at Ford (source). There still is the Chevrolet Spark (source), but the trend is clear, customer interest in small cheap cars is clearly waning (source).

So, if cheap cars are no longer selling, then what is? Well, crossovers and SUVs (source) are notching up more and more sales records. Hence it comes as no surprise that automakers are willing to invest in developing electric crossovers and SUVs, particularly as ever tighter EU emissions rules throw an ever darkening cloud on the crossover sales boom (source). In fact some worry that the EU will refuse sales of any fossil fuel car after 2035 (source).

Can automakers build a $25 000 EV? Absolutely, the Dacia Spring comes close, as does the base Nissan Leaf, particularly in markets with generous subsidies (source). But what you get is a basic car, and it seems most car shoppers prefer something more grand these days, hence few automakers are willing to spend the small fortune required to develop a car that might find few customers. The Nissan Leaf gobbled about $5.6B of development costs (source), for the 500 000 or so Nissan Leaf’s sold thats about $10 000 per Leaf sold, just for development. Add production costs, and its easy to see why automakers are hesitant.

So, if you really want automakers to build a $25 000 EV, the best thing you can do is buy one. The 2022 Nissan Leaf SV has an MSRP of $37 498, if you live in Quebec, that could be $25 498 provided you can get both the provincial EV incentive of $7 000, and the federal $5 000. Automakers are very good at building cars that sell, so please, help move the needle.