Why Slate Auto’s Truck Is an EV and Not a Gas Vehicle

Many people on social media have said they would buy Slate Auto’s new fully electric compact truck/SUV if it ran on gas. However, even with President Trump’s promise to have his EPA rework the CAFE standards, a gas version of the truck still wouldn’t fall into the $20,000 range.

Compact trucks have a hard time meeting the Corporate Average Fuel Economy (CAFE) standards due to their smaller size, which requires higher fuel efficiency targets. The CAFE standards calculate fuel efficiency based on a vehicle’s footprint—essentially, the area defined by the wheelbase and track width. For example, a compact truck like the Ford Maverick, with a footprint of around 40 square feet, must meet a fuel economy target of about 50-55 mpg under test conditions (~35-40 mpg in the real world) for model year 2025. To achieve these targets, automakers need to use small, highly efficient engines, often involving hybrid technology.

Electric vehicles (EVs) aren’t subject to these strict rules, making them a more feasible option for meeting fuel efficiency requirements. In fact, EVs like Slate Auto’s truck are really the only viable and affordable option to bring back trucks like the Jeep Comanche, Chevy Luv, and Toyota SR5 in the United States. The stringent fuel efficiency standards tied to the smaller footprint of these vehicles make meeting them with just an internal combustion engine no longer practical.

While traditional automakers can still produce compact trucks that meet CAFE standards, they have to rely on hybrid technology. The 2025 Ford Maverick offers a standard hybrid starting at $28,590, with higher trims or all-wheel drive pushing the price to $30,000-$35,000. However, since the Maverick’s hybrid is not a plug-in hybrid electric vehicle (PHEV), it doesn’t qualify for full federal tax credits under the Inflation Reduction Act. If it were a PHEV, it could qualify for partial credits, but the added cost would likely push its price to $32,000-$38,000.

Why EVs Are Simpler and More Cost-Effective to Produce?

Producing an EV is less complex than manufacturing a traditional internal combustion engine (ICE) vehicle, both in production processes and supply chain logistics. This simplicity comes from differences in design and componentry, which streamline assembly, reduce part numbers, and simplify sourcing and production workflows.

EVs are built around a minimalist architecture, with core components such as the electric motor, battery pack, and power electronics (including the controller and inverter). These systems have fewer moving parts compared to ICE vehicles, which rely on complex assemblies like the engine, transmission, exhaust system, fuel system, and various mechanical linkages. A typical ICE engine contains hundreds of moving parts—pistons, valves, camshafts, and crankshafts—that require precise engineering and assembly. In contrast, an electric motor has as few as 20 moving parts, drastically reducing the potential for mechanical failure and simplifying the manufacturing process.

This simplicity results in a more streamlined assembly line. EV production requires fewer steps, as there is no need to assemble complex subsystems like multi-speed transmissions or fuel injection systems. For instance, Tesla’s Gigafactory has shown how EV assembly can be optimized through modular designs, where the battery pack and motor are integrated into the vehicle chassis with minimal additional components. This modularity accelerates production, reduces the need for specialized labor and tooling, and cuts costs while improving scalability.

The supply chain for EVs is also simpler. ICE vehicles depend on a wide range of suppliers for components like spark plugs, catalytic converters, and radiators, many of which require raw materials sourced from diverse and sometimes geopolitically sensitive regions. EVs, while reliant on materials like lithium, cobalt, and nickel for batteries, have a more consolidated supply chain. The battery pack, which accounts for a significant portion of an EV’s cost and complexity, is typically sourced from a single supplier (e.g., SK On will supply the batteries for Slate’s truck) or produced in-house by manufacturers like Tesla or BYD.

Furthermore, EVs benefit from the absence of auxiliary systems required in ICE vehicles, such as oil pumps, engine cooling systems, or exhaust after-treatment systems. This reduces the number of unique parts that need to be designed, tested, and integrated, lowering production costs and minimizing supply chain disruptions. For example, during the 2021 global chip shortage, EV manufacturers were less affected than ICE producers because their vehicles required fewer electronic control units.

The reduced complexity also extends to maintenance and lifecycle management. With fewer components prone to wear and tear, EVs require less frequent servicing, simplifying post-production logistics for manufacturers. This durability can enhance brand reputation and customer satisfaction, encouraging further investment in EV production.

However, challenges remain, particularly in scaling battery production and securing sustainable domestic raw material supplies. While ICE vehicles face their own supply chain issues, the EV industry must expand mining and refining capacities to meet growing demand. If not the ability to create affordable EVs in the United States will continue to be delayed and even become unattainable.

This simplified manufacturing and supply chain are why startups like Slate Auto can create EVs and remain profitable, even though they won’t directly compete with giants like Tesla or Ford. Their lower production volume and more efficient manufacturing process allow them to capitalize on EV advantages without the massive overhead required for traditional ICE production.

CAFE Credits and Automaker Profitability

CAFE standards play a significant role in shaping automakers’ strategies, particularly in EV production. These regulations require manufacturers to meet stringent fleet-wide fuel economy targets that become more demanding over time. The goal is to promote efficiency and reduce emissions. CAFE credits, earned by exceeding these standards or producing zero-emission EVs, are an important financial and strategic asset. They allow automakers to balance their portfolios and avoid penalties.

Automakers earn credits when their fleet’s average fuel economy surpasses the CAFE standard. EVs provide a major advantage because their zero-tailpipe-emission status counts as near-infinite fuel economy for compliance. These credits can offset the production of less efficient vehicles, like gas-heavy trucks or SUVs, which are still profitable but often fail to meet CAFE targets. Credits can be banked for up to five years, sold to other manufacturers, or used to avoid fines—currently $14 per 0.1 mpg shortfall per vehicle, which can add up to millions for non-compliant automakers.

This system explains why companies like Ford continue to produce EVs, even if they incur financial losses. EVs like the Mustang Mach-E or F-150 Lightning generate significant credits, improving the fleet’s overall efficiency and ensuring compliance with CAFE standards. Without these credits, Ford and other automakers would face large penalties or be forced to cut production of high-margin, less-efficient vehicles, impacting profitability.

Tesla has capitalized on this system by generating substantial revenue from selling surplus CAFE credits to legacy automakers struggling to meet the standards. Smaller EV producers, like Slate Auto, also benefit, though on a smaller scale. Despite lower production volumes, Slate Auto can use CAFE credits as a financial cushion, offering flexibility to scale EV production while offsetting losses. As CAFE standards continue to tighten, credits will remain a key driver, incentivizing EV adoption and shaping the automotive industry’s shift toward electrification.

Conclusion

The stricter CAFE standards over the years have made it nearly impossible for automakers to produce affordable compact gas-powered trucks. The smaller footprint of these vehicles requires meeting high fuel efficiency targets, which internal combustion engines can’t achieve without significantly raising the price. While automakers like Ford still offer hybrid options, they come at a higher cost. Electric trucks, like Slate Auto’s model, offer a solution, bypassing these efficiency constraints. With fewer moving parts and a simpler production process, EVs are not only more practical to manufacture but also the only affordable option for compact trucks in the future.

DISCLAIMER: This article should not be construed as an offering of investment advice, nor should any statements (by the author or by other persons and/or entities that the author has included) in this article be taken as investment advice or recommendations of any investment strategy. The information in this article is for educational purposes only. The author did not receive compensation from any of the companies mentioned to be included in the article.