What drives American automakers to produce affordable vehicles?

The American dream, symbolized by cars, has evolved into a luxury product, causing dissatisfaction among customers and auto dealers.

In the U.S., the average price for a car has increased by nearly 30% in the past five years, reaching almost $50,000, according to Kelley Blue Book. This increase has led to monthly payments that are close to an all-time high. Additionally, a record number of car owners are underwater, paying more than the vehicle is worth, according to Edmunds.

Although automakers experienced record profits in 2023, they face challenges such as the need to invest billions in software and electrification, as well as a global market where Chinese and other foreign automakers can produce cars at a lower cost.

According to research firm AlixPartners, Chinese startups that produce EVs and plug-in hybrids have a 30% cost advantage over global automakers, even without government support.

Although the U.S. currently imposes 100% tariffs on Chinese vehicles and President-elect Trump has pledged to increase these tariffs, AlixPartners managing director Mark Wakefield stated that automakers cannot depend on protectionism to reduce costs.

"Wakefield stated, "To prepare for a fight, you must first get ready." If you inquire, "How do I get ready to fight?" he suggested examining the techniques of those who grow faster."

Watch the video to learn more.