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Electric vehicles (EVs) are the future, but there’s a big problem—they’re still too expensive for many buyers. While more people want to switch to EVs, high prices remain a major barrier. In fact, the average transaction price for an EV was $55,614 in January, according to Kelley Blue Book. That’s way higher than most gas-powered cars.
For EVs to truly go mainstream, they need to be affordable for the average buyer. Automakers know this and are racing to bring down costs. The competition is especially fierce as Chinese companies push out budget-friendly EVs at a rapid pace. BYD Co Ltd. is already leading the charge in low-cost EVs. The company controls its entire supply chain, which allows it to keep prices down. BYD’s cheapest model, the Seagull, starts at under $10,000. It has been a massive success. Now, the Seagull is getting an upgrade with advanced driving features, making it an even more attractive option for budget-conscious buyers.
Let’s take a look at how major automakers like Toyota TM, Volkswagen VWAGY, Tesla TSLA, General Motors GM and Ford F are stepping up their game.
TM’s Push for Affordable EVs in China
Toyota has made a big move in China, the world’s largest EV market. The Japanese automaker just launched its cheapest EV in China, the bZ3X, for around $15,000. That’s about 30% cheaper than the bZ3 sedan, one of Toyota’s mid-to-high-end EVs in China.
The demand was so high that Toyota’s server crashed after receiving over 10,000 orders in an hour. The bZ3X is a compact electric SUV designed to compete with budget-friendly Chinese EVs, especially those from BYD. This marks a major shift for Toyota as it seeks to gain a stronger foothold in the growing EV sector.
Pre-orders for the bZ3X began in December, with prices starting at just under $14,000 (100,000 yuan). The SUV comes in two versions—one standard and another with advanced smart driving technology. The base model starts at 109,800 yuan ($15,000) and offers five trim options, while the smart driving version is priced at 149,800 yuan ($20,500).
Volkswagen’s Budget-Friendly Models
Volkswagen is focusing on affordable EVs, particularly in Europe. The company recently announced plans to launch two models in the coming years. The ID.2all, expected to arrive in 2026, will cost around $27,000. Following that, VWAGY will introduce the ID. EVERY1 in 2027, priced at approximately $21,500. The EVERY1 will be the first model to feature Rivian’s vehicle architecture and software, developed through a $5.8 billion joint venture established last year between the German automaker and the U.S. EV maker. These models cater to European consumers who favor smaller, entry-level cars.