Anyone can build a great $100,000 car," goes the auto industry saying, "but it takes talent to built a great $20,000 car." So what does that make the engineers at Tata, India's giant automaker, which this month unveiled the $2,500 Nano minicar? The Nano bears the mark of relentless engineering technology to achieve Tata chairman Ratan Tata's goal of a 100,000 rupee, which is currently $2,540. No chrome dubs here: The steel wheels are 12 inches and use three, not four or five lug nuts. The engine is two cylinders and 624cc (38c cubic inches), less than some American riding mowers. The Nano weighs 1,280 pounds, has a top speed of 64 mph, gets 50 mpg, and seats five.

Rather than go with separate gears, the gearbox is a lighter, continuously variable transmission (CVT). There's one wiper blade not two. And it uses less metal: the car is just 122 inches long, nearly two feet shorter than a Mini Cooper. Power steering, power windows, air conditioning? Fuggedaboutit. Not only is there no HD Radio, there's no radio, at least on the base model.

Is it really a $2,500 car? Yes but ...
So is it really a $2,500 car? Sort of. In India, there's a 12.5% value added tax. An upscale model Nano (Tata calls it the "luxury model") will be on the order of $3,500 (inset). The Tata press release talks about the Nano meeting crash and emissions regulations, but those are India's and they're not as strict as in the U.S. or Europe. But it suggests the floor price for cars can be a lot less. Right now it's about $10,000 in the United States, $5,000 in emerging countries. Tata's engineering miracle suggests it's possible to cut the base price of a new vehicle by at least a third. And that's going to keep prices in check on cars higher up the pecking order. Just don't look for a $50,000 Bentley anytime soon.