The latest full-sized all-electric pickup truck from Detroit’s big three, is the 2025 Ram 1500 REV – burly on the outside, plush on the inside and with enough power on tap to tow 14,000lbs or light your home in a blackout. Formally introduced at last month’s New York International Auto Show, the REV is the no-compromise electric vehicle for the red meat-hungry American who would not be caught dead biting into a Beyond Burger. But it will cost you $58,000 to start. More than the average yearly wage in many US states.
At the top end, the REV will cost you $100,000 – money that could buy a three-bedroom house in Milwaukee or Cleveland. And there’s every reason to believe the trend will continue as automakers unveil more new products at the North American International Auto Show in Detroit this fall.
The days of the big city auto show luring in potential buyers with high-priced dream machines to sell them reasonably priced cars are gone. Now reasonable options are priced high enough to make wallets groan.
According to the latest data from the car consumer guide Edmunds, the average transaction price for a new vehicle was $47,713; that’s a third more than what Americans paid five years ago. “We’ve come to this where you look out there in the field, and there are so few options that are even cheap,” says Jessica Caldwell, Edmunds executive director who analyzes the habits and transactions of car consumers. “Just talking with my team in the genesis of our research, I was like, ‘Can you even buy anything new for $20,000?’”
At the New York show, on the Jacob Javits Center floor, the pickings were sprawled out, slim and largely confined to the subcompact class. The Corolla, Toyota’s entry-level four door, can still be had at that price – as can the rival Honda Civic. A fully loaded Kia Rio rings in at around $20,000; $5,000 more buys a four-wheel drive Subaru Impreza. Throw in the plucky Nissan Versa and the market has essentially belonged to the Asian automakers since the big three scrapped small sedan production three years ago to focus on higher-returning SUVs and trucks.
“And people were only buying those small cars because they offered a ton of rebates and discounts on the hood to make them cheaper than the imports,” says Tom McParland, a veteran car buying consultant. “They were losing money on every unit they sold.”
Overall, the segment of $20,000 or less vehicles has shrunk to 0.3% from 8% five years ago, according to Edmunds. Equally stunning: the market of new vehicles priced under $30,000 has diminished to 17% from 44% over that same span. For the most part, adds Caldwell, people aren’t snatching up these cars for individual use. “It’s fleet buyers and rideshares,” she says. “Individuals aren’t saving their money with the goal of buying one of these either.”
Automakers have demand for trucks and SUVs to thank for the record profits they have hoovered since 2020. (And this despite the pandemic seizing up the global supply chain and launching the current era of remote work.) It further doesn’t help that the electric revolution started with manufacturers taking cheap cars and bolting expensive battery technology to them, leading the government to step in and offer tax credits to make them more affordable. Even so, that didn’t stop Chevrolet from announcing plans to discontinue its Bolt electric line at the end of this year’s production run. Never mind that it would be the best EV starter car option if its price maxed out at $25,000.
Now $60,000 is a normal asking price for a new vehicle. Half of all new full-sized trucks sell at that price now (compared to just 5% five years ago) and so do 94% of large SUVs – today’s traditional family cars, in other words. Stable fuel prices, improved overall efficiency and an increase in viable electric options have only helped sustain the enthusiasm for bigger, more expensive cars. They’re also a good deal more safe than small cars. The Subaru Crosstrek is the exception among the aforementioned subcompacts to receive a passing grade for rear occupant protection from the Insurance Institute for Highway Safety.
Among the biggest draws at the New York Auto Show: the Volkswagen ID.buzz retro van (starting MSRP about $45,000), the Jeep Wrangler 4xe ($55,000) and the 2025 Genesis GV80 Coupe (about $70,000).
“Frankly, the people who have money to spend, who are established in their careers, who have a steady income, have a good credit score, all that other stuff … they’re not buying a Honda Civic,” says McParland. “They’re buying family cars.” What’s more, they haven’t much balked at the dubious charges dealerships slipped in to keep their pandemic-stricken profits from dipping too low.
The high price of cars is contributing mightily to US household debt. Auto loans nowadays are basically drawn up like mortgages, with some terms carrying over eight or 10 years. The Federal Reserve reckons Americans are holding $1.55tn in auto loan debt and taking out $62.2bn in new loans every month. Altogether, auto loans compose the third highest share of consumer debt behind mortgages and student loans, the average payment soaring to a record high $716 a month. It could become an even bigger liability if the banks holding these notes keep on failing.
Worse, there isn’t much relief to be found in the used car market – where the average price of a three-year or older vehicle isn’t cheap ($27,768 in 2022, according to the consumer credit firm Experian), monthly payments are dear ($526) and loan interest rates are generally two points higher than for a new car loan (10.26%). And that doesn’t even include the similarly steep costs for registration, insurance, maintenance and repairs.
In the end it makes far more sense for a young, urban dweller at the low end of the income spectrum to Uber around town than sign up for an auto loan that could quickly turn them upside down. And as automakers shift gears to meet that demand and race perfect driverless technology, it might not be much longer before the idea of having your own car seems as implausible as home ownership does for many in this economy.
“Cars are still an emotional purchase at the end of the day,” Caldwell says. “You see a car and you get excited. Once you get inside and picture your life in it, that’s when you’re sold. But how strong is that pull gonna be as we move toward taking the emotion out, the driving experience out – that sense of freedom that kids already have by not having to own their own car?” The world where the cars drive themselves may indeed be a ways off. But it feels that much closer now that the cheap thrill is gone.
