How cheap could a new car be built?

Supposedly ~98k Smart Fortwo (all sub types) sold in US from 2008-2019, https://carsalesbase.com/us-smart/

The Smart's unibody w/ color-coded types of steel:

edit: changed the image, page seemed to be loading weirdly, dunno just coincidence

I'm not even half way through reading this drama and have some comments:

1. The number being tossed around for "how cheap a car could be built" appears to be around $7K. That may well be - for parts. Employee salaries, factory costs, safety testing, emissions testing, manufacturer mark-up, and distribution costs make it a lot higher.

2. "All this is avoided by going 3-wheeler"... yes... and no. What 3-wheeler manufacturers ignore is the stigma. Potential buyers suspect that they'll be teased about it not being a "real" car, illogical or not. Many people are affected by how they think others view them, and I think 3-wheelers will always have an image as being "one wheel short of a whole package" whether deserved or not.

A current real-world example is Aptera, trying (again) to produce an EV 3-wheeler. They're burning through millions in investor money, all of which has to be paid back before they make any profit. Sure they have "thousands" of people who've put down deposits, but they can't (or better not) spend that before starting real production. My opinion is that they'll implode again, due in part to their overzealous marketing, not helped by trying to present the car as a "lifestyle" that that fantasy owners are enthusiastic about.

3. I live in a middle class town near a high school, where they have neither buses nor parking. Predictably, the kids park in the only places they don't get barred from - neighborhood streets, including ours. I mention this because it gives me a real-world view on what kids drive these days. I dunno where you guys live but around here, I'd guess the Average value of the cars I see is at least $25K+, with most newer than 10 years.

3a. Parents understandably want their kids to drive reliable and SAFE cars. Newer cars are far safer than old ones, and sure enough, that's what are parked around here. How many parents are going to buy a 3-wheeler for their kid because it's cheap (and never crash tested)?

4. The original VW Beetle keeps getting referenced as a baseline - apples and oranges. In 1973 (50 years ago), they cost about $2000 out the door. That's about $14K in today money, underscoring the unlikely chances of anything being cheaper - and that was basically a deathtrap chassis and smog-generating machine. Once those two enormous factors are added in, it's likely to push any modern equivalent much higher.

In reply to kb58 :

Thanks for your input.   This is purely hypothetical, I wonder, kind of question.  So obviously nobody's right nobodies wrong. 
  My thinking is at one point America was the worlds car production king.  Selling a car that cost less than $500  ( Model T) using a lot of hand labor. 
  Technology has moved on and Robots are now the go to for labor.  Plastics are the new steel. Short range EV's  make fuel costs affordable. And the world has a lot of poor people that basic transportation would massively improve their life.  
       Nobody with resources wants the cheapest thing.  But even here in America we have some extremely poor even homeless people. Many of them cannot get a job because they can't afford to live where the jobs are and they don't have the means to get to the jobs because of where they live.  
  Those middle class students driving moms old car (that dad handed down to her).   Or stepping up and financing a car themselves. ( spending money better used to pay student costs at college) instead of  cool car for high school . Have those resources. 
   The market for a car like this is  that 2-3 jobs single mom with kids at home and mouths to feed instead of repairing the old beater.  The out of prison guy trying to put his life back together.  Young couple who want to save to buy a house and not have a heavy car payment to obstruct them from home ownership. 
  And the third world's poor. 
     So, no it's not a choice car for those with resources.  10% down. $700, 48 months payment. $135 a month ?   For that waitress working 2-3 jobs  a monthly transportation cost of $150/ mo is affordable.    To a used $7000 car add a significant budget for maintenance. 

ProDarwin said:

Nobody in their right mind would consider 3d printing anything used on a product being manufactured in those quantities.

You're probably right. But really do you think bigger faster ones couldn't be made?  
   I suppose we'd still need to look at other options.  For example the Saturns with their plastic body panels how were those made?   

bearmtnmartin (Forum Supporter) said:

This is the strangest conversation. Hypothetical prices and configurations are proposed, real world examples are posted, and the arguing continues about the hypothetical building of what has already been built. 

It's all hypothetical.  The reason is you question everything if you want to make the world better. 
      The first question is pared  to the bone how cheap could a car be made with quality and low operating cost.  Henry Ford became the richest man on earth replacing the horse. 
       Realize up front this is not something you'd buy or anybody with resources and choices. 
    It's for that waitress working 3 jobs to make ends meet. The kid from the poor neighborhood to get to where the jobs are but living where he can afford to. 
  3rd world  employee with no affordable alternative.   I. Suspect those cheap cars made in India lacked quality to make them reliable enough to depend on. 
 

Clarkson already covered this.

TLDR so maybe this has already been covered but...

1.  Only use three wheels so the DOT categorizes it as a motorcycle (so long safety stuff).

2.  Make it a kit so the "manufacturer" is the customer (so long liability insurance).  

Tata nano GenX is what $3500 when last made. 
 

The tata Tiago is like $5500 

The entry level Aptera 3-wheel EV is $26K with the smallest battery (250 mile range). Reducing the battery to 100 miles might decrease the price to... I dunno, $19K? Still expensive for the topic at-hand, but provides a fair real world example of how low it can go, though non-existent at this point.

In reply to RX Reven' :

That's the thinking at this point.  I wonder what it would cost to bribe politicians  to allow it ( everything's for sale now isn't it)? They wouldn't allow it without the required bribes? 

RX Reven' said:

TLDR so maybe this has already been covered but...

1.  Only use three wheels so the DOT categorizes it as a motorcycle (so long safety stuff).

2.  Make it a kit so the "manufacturer" is the customer (so long liability insurance).  

Okay.... Three wheels? Check.  Kit? Check.  Absurdly unsafe? Check.  Cheap?  Nope, not at all.

New replicas of Peel P50 and Trident are being made by P50 Cars, but the cheapest kit version is almost $13k:

I'll admit the Trident is kinda cool, but not at 50mph, on the street, on 13in OD tires.

The Microlino (modernized BMW Isetta EV) is not that much more expensive, and has a steel unibody plus actual modern tech  (but also 4 wheels, so it is not universally street-legal in the US).

Interesting topic. I used to work for an engine manufacture and the markup between "hardware" cost and sell was about 600%. Yes, 600%. And that's before distribution (not owned by the manufacture) added their markup of 25-40%.

This seemingly large markup resulted in a EBITDA of 16-18% at the end of the fiscal year. 

So my question to the OP is are you asking how cheaply a new car could be "Built" or how cheap a new car could be "Sold".

Huge difference.

Just looked online and it seems a Tata Tigor EV is approximately $16597.16  US or 1375000 Rupees.  

And how much are those little Chinese trucks that can be bought here?

Oh wait.  Those are not EV.

In reply to 67LS1 :

If that was completely accurate for all new cars, OEMs would be swimming in money every single year. In my 30 years, I don't recall one fiscal year that was near your estimate, let alone all 30 of them. 

I had a friend (now deceased) that worked as security for a major automaker. Her job as she described it was to monitor entry to a building that was used to warehouse employed, but non-working employees. Basically a sign-in desk for autoworkers being paid to not work. I'm sure that type of thing ads significantly to the cost compared to more efficient means of manufacture.

I find it funny that the Model T $500 thing gets used so much in these. Sure, the bottom dollar "get them in the door" car was $500. The touring cars were more like $850. Better yet the average income was around $1400 when it was released., so that car would cost over half a persons YEARLY salary. Currently that's $82000, so that would equate to around $50k new car.

In reply to bobzilla :

I'm guessing $82K is a family income--last I heard the average personal income was about $40K.  I could be wrong. 

EDIT:

That's interesting. 
   Using those numbers  we can see why 17%  of new car buyers  have monthly payments over $1000 per month. .  ( before the pandemic it was 4.3% ). 
 

What that stat doesn't tell you is how many of those were pay it off in 1 or two years. And how many were 6/7 years. 
  Nor does it tell you how many were for cars over the $48,800 average  and how many were for cars below $30,000. 
    My wife and I are debating  the one or two year choice.  

alfadriver said:

In reply to 67LS1 :

If that was completely accurate for all new cars, OEMs would be swimming in money every single year. In my 30 years, I don't recall one fiscal year that was near your estimate, let alone all 30 of them. 

I specifically pointed out that I worked for an engine manufacture but I'm 99.9% sure the margins would similar at auto manufactures.

Think of the profits required to cover all of the non-manufacturing costs associated with running a car company.

The C-Suite, Engineering, warranty reserves, government compliance, real estate, parts distribution for the aftermarket, pensions, carrying costs, etc. Even dealer incentives which we've all seen offered up to $2, 3, 5k per vehicle. Or free/cheap financing which we all know is neither.

That's why when you get down to profit before EBITDA, the margins have fallen to to mid-double digits. And why I specifically asked if the OP was truly asking how cheaply a new car could be built or how cheaply a made.

67LS1 said:

Interesting topic. I used to work for an engine manufacture and the markup between "hardware" cost and sell was about 600%. Yes, 600%. And that's before distribution (not owned by the manufacture) added their markup of 25-40%.

This seemingly large markup resulted in a EBITDA of 16-18% at the end of the fiscal year. 

So my question to the OP is are you asking how cheaply a new car could be "Built" or how cheap a new car could be "Sold".

Huge difference.

Very valid question. Built/sold. 
  But also along your line, Elon Musk said**the motor for the model 2 would cost $1000* and the batteries would cost $4000.   
 

* It would be the new design with no rare earth components and the new Hairpin radial design. Weighing in at around 100 pounds. 
  ** at the investors day meeting. 
    I believe that's roughly 1/2 of what the motor and battery pack on the model 3 is.  But they are forecasting a 250 mile range. Which is really efficient compared to the battery's/ motor on the model3.    I'll go back and try to find the KWH  of the battery packs. 
 

kb58 said:

I'm not even half way through reading this drama and have some comments:

1. The number being tossed around for "how cheap a car could be built" appears to be around $7K. That may well be - for parts. Employee salaries, factory costs, safety testing, emissions testing, manufacturer mark-up, and distribution costs make it a lot higher.

2. "All this is avoided by going 3-wheeler"... yes... and no. What 3-wheeler manufacturers ignore is the stigma. Potential buyers suspect that they'll be teased about it not being a "real" car, illogical or not. Many people are affected by how they think others view them, and I think 3-wheelers will always have an image as being "one wheel short of a whole package" whether deserved or not.

A current real-world example is Aptera, trying (again) to produce an EV 3-wheeler. They're burning through millions in investor money, all of which has to be paid back before they make any profit. Sure they have "thousands" of people who've put down deposits, but they can't (or better not) spend that before starting real production. My opinion is that they'll implode again, due in part to their overzealous marketing, not helped by trying to present the car as a "lifestyle" that non-existent owners are enthusiastic about.

3. I live in a middle class town near a high school, where they have neither buses nor parking. Predictably, the kids park in the only places they don't get barred from - neighborhood streets, including ours. I mention this because it gives me a real-world view on what kids drive these days. I dunno where you guys live but around here, I'd guess the Average value of the cars I see is $25K+, and are appear newer than 10 years.

3a. Parents understandably want their kids to drive reliable and SAFE cars. Newer cars are far safer than old ones, and sure enough, that's what are parked around here. How many parents are going to buy a 3-wheeler for their kid because it's cheap (and never crash tested)?

4. The VW Beetle keeps getting referenced as a baseline. Apples and oranges. In 1973 (50 years ago), they cost about $2000 out the door. That's about $14K in today's money, underscoring the unlikely chances of anything being cheaper - and that's basically a deathtrap chassis and a smog-generating machine, so once those two enormous factors are added in, it's likely to push any modern equivalent much higher.

 In 1962 my dad bought me a new Honda.  They were all the rage, the Honda 50 cub.    At the time the Honda Cub made less horsepower than the cut off between Scooter/motorcycle. So 14 year old kids could buy them.    Then when you turned 15 and could get your license  they'd trade them in for a Honda 90,   
 They also had the 150 dream. Which was a 2 cylinder . More of a cruiser than a sport bike.  
   The Cub and the 90 the dealer couldn't keep them in stock. But the dream had been sitting there not selling.   He made my dad a deal and I bought the 150 dream for what a new Cub cost.  
   My point is when you are young or broke. ( or both). It's about what can you afford. Not what is popular.  

In reply to frenchyd :

All I can comment on is what I see around our area, which admittedly is higher than average income. The oldest cars I see high school students driving are maybe 10 yrs old - or newer. I doubt that any of these kids bought them themselves and I think those days are gone. How many high school kids have after-school jobs? I don't know but suspect it's much less than when I was a kid - back when the world was black-and-white... Anyway, we're getting off-topic, about how cheap a car could be sold and still keep the manufacturer in business. My opinion is probably somewhere around $22-24K, but I have no evidence.

frenchyd said:

67LS1 said:

Interesting topic. I used to work for an engine manufacture and the markup between "hardware" cost and sell was about 600%. Yes, 600%. And that's before distribution (not owned by the manufacture) added their markup of 25-40%.

This seemingly large markup resulted in a EBITDA of 16-18% at the end of the fiscal year. 

So my question to the OP is are you asking how cheaply a new car could be "Built" or how cheap a new car could be "Sold".

Huge difference.

Very valid question. Built/sold. 
  But also along your line, Elon Musk said**the motor for the model 2 would cost $1000* and the batteries would cost $4000.   
 

* It would be the new design with no rare earth components and the new Hairpin radial design. Weighing in at around 100 pounds. 
  ** at the investors day meeting. 
    I believe that's roughly 1/2 of what the motor and battery pack on the model 3 is.  But they are forecasting a 250 mile range. Which is really efficient compared to the battery's/ motor on the model3.    I'll go back and try to find the KWH  of the battery packs. 
 

Tesla's internal cost or your/my cost? Rarely would a manufacture talk about internal cost so I would assume Musk threw out a number closer to the retail cost. And as much as I admire what he has been able to with Tesla, hitting his early sell prices is not a strong suit for him.

That may be true  about prices.  Until  it's actually in peoples hands one never knows. 
   The market for sub $30,000 cars is estimated at 7 million annually. Elon has projected it will outsell every other Tesla. Combined.  So his projection of 2 million annually  and amount divided between China, Germany and Mexico  seems to be do able. There is also talk of a plant in India. 
       He may sell briefly at his talking price until demand reaches the point where  increased pricing is justified. 

67LS1 said:

I specifically pointed out that I worked for an engine manufacture but I'm 99.9% sure the margins would similar at auto manufactures.

The major auto manufacturers all typically run EBIT margins floating between 5% and 10%.