It's quite possible to make a safe, no frills vehicle for significantly less than standard cars.

Look at the Chinese cars we aren't allowed to buy here. But even more, look at "quotas" for Japanese cars from much earlier - these had the result that the Japanese and the Americans upped the features and price of the vehicles since how many they could sell was limited. Now, the basic situation continues with multiple means of maintaining.

And oh, look at how zoning keeps people from building small houses, etc. etc.

And there are many factors with environmental regulations sometimes being involved but a whole of the situation being tacit collusion to sell only "big" things.