Today Tata Motors of India announced that they had developed the World's Cheapest (my word not theirs!) car. This is a real-life functioning car for $2500 for the base model.
The car is missing some of the finer things in life like: radio, A/C, Right-side mirror and only has one wiper blade. It also has 2-Cylinder, 33-HP engine, but has a top speed of 60MPH.
Now this car will probably not pass US safety laws at this price, but still I could see a US version for $4000. This really reminds me of the Yugo back in the 80's that was going to take over the world since they were so cheap, but never caught on here in a mass way. They just weren't of enough quality.
Tata is no Yugo though, they are the largest car builder in India and currently the leading bidder to take over Jaguar and Land Rover from Ford. With the SMART car from Mercedes also coming to the US, along with $3 per gallon gas, it may just be the beginning of a new era of tiny cars...