By Kalea Hall and Nora Eckert
(Reuters) -When Will Haseltine saw images online of a small, boxy electric pickup from startup Slate Auto this past spring, he got on the waitlist right away. The sparse interior and crank windows reminded him of the no-frills pickups he grew up around in Memphis, Tennessee – but he was most enamored with the sub-$20,000 price tag.
That price, though, factored in a $7,500 federal tax break, which is set to expire Sept. 30, a casualty of the budget package U.S. President
Donald Trump signed into law earlier this month. Now Haseltine isn’t sure the truck will fit his budget when it comes out, expected late next year.
“The Slate was the first time that I looked at a car, wanted it, and could also really make it happen," said Haseltine, a 39-year-old musical instrument technician. Without the tax credit, he said: "That's just plain too much."
Michigan-based Slate has raised $700 million from investors, including founder Jeff Bezos, and has racked up more than 100,000 reservations for its cars. But the company is launching into a tough U.S. market.
A few years ago, the electric-vehicle space was awash in hopeful entrepreneurs looking to cash in on the global transition to electric cars. But U.S. EV sales growth has cooled as consumer interest has faded. The loss of federal tax breaks will further hurt demand, auto executives and analysts predict.
Like other EV startups, Slate likely faces a long road to profitability. The EV business has proven to be a money loser for most industry players, partly because batteries remain relatively expensive. Even in China, where smaller, inexpensive EVs have proliferated and companies enjoy a cost advantage over Western automakers, most are unprofitable.
Slate founders believe the company can overcome those obstacles by offering something that is in short supply in today’s U.S. car market: affordability. The average new-vehicle selling price is above $45,000.
“We are building the affordable vehicle that has long been promised but never delivered,” Slate CEO Chris Barman said at a Detroit conference in July.
The company has a chance to fill a void left by Tesla, which has backtracked on plans to introduce a mid-$20,000s electric vehicle.
The startup has taken a bare-bones approach to its two-seat pickup, which is slightly smaller than a Honda Civic hatchback. How bare-bones? A stereo and power windows will cost extra. Slate hasn't disclosed the cost of such add-ons.
'IT'S A COOL IDEA'
Slate’s creation started with an idea from Miles Arnone, the CEO of Re:Build Manufacturing, a Massachusetts-based startup that includes several former Amazon employees. Arnone believed workers needed better access to affordable vehicles.
Arnone shared his idea with Jeff Wilke, the company’s chairman and a former Amazon executive, and eventually, a small team was formed. The group hired Barman, who spent most of her career as an engineering executive at Fiat Chrysler, now part of Stellantis.
Barman told Reuters recently that Slate will be able to absorb the loss of the $7,500 tax credit because the truck’s price still will undercut competitors.
The company plans to build the pickup at an old catalog factory in Warsaw, Indiana. Executives are taking steps to hold down costs, starting with a simplified design that uses about 500 parts in the truck’s assembly, compared with a few thousand for a traditional truck.
The plan to build all of its trucks in a basic package – what the company calls a “SKU of one” – allows customers to choose to add a stereo, center console, special lighting, and other features later.
The pickup will be built with composite body panels in gray, with an option for a vinyl wrap. That will sidestep the need for a paint shop, which is one of the most expensive investments in a typical car factory.
Slate’s minimalist approach is a leap of faith that Americans will forgo creature comforts they have been increasingly willing to splurge on. Last year, U.S. buyers spent 33% above the base price on average, springing for higher-end trim packages and extra features, according to . That was up from 28% in 2014.
But there is mounting evidence that new cars are becoming out of reach for many Americans. That could worsen under the effects of the Trump administration’s tariffs, which threaten to increase prices on popular budget cars imported from Mexico, Korea and elsewhere.
From that standpoint, Slate’s price-conscious pickup might be hitting at the right time, said Paul Waatti, director of industry analysis at AutoPacific.
“There's a growing appetite, especially among younger drivers, for vehicles that are more honest, more modular and less over-engineered,” he said. “Slate taps right into that.”
Traditional automakers and startups have found mixed success rolling out larger electric pickup trucks in recent years. Now, startups like Slate and California-based Telo are focusing on smaller electric pickups.
In a town hall meeting in early May, Ford CEO Jim Farley and Executive Chair Bill Ford told employees they admired the company's customer-centered ethos and focus on affordability.
Tim Kuniskis, Stellantis' head of American brands, called Slate “super interesting” at a June event, while also questioning how affordable it would be for some shoppers once they added all the options they wanted.
“The idea behind it, we've talked about that idea a million times,” he said. "It's a cool idea.”
(Reporting by Kalea Hall and Nora Eckert in Detroit; Editing by Mike Colias and Anna Driver)
