Tata Motors is expected to announce its long-awaited $2500 People’s Car this Thursday. Many analysts are predicting that the car, designed from a clean sheet of paper for extreme low cost and for user needs in the developing world, will be to developing countries in this decade what the Model T was to a developing USA a century ago. But some are also saying that the cost-cutting measures Tata is putting into the design will spread like a virus through the rest of an auto industry pressed on every side by saturating mid-range markets, expensive credit, and recession. That is news SoC design teams need to read twice.

The reason is that a lot of business plans for chip companies have at their foundation strong growth in complex SoCs for the automotive market: whether for infotainment, active safety, or vehicle management. All of that electronics is supposed to add substantial cost to a car every year, and it’s supposed to provide SoC developers with a growing, high-margin market for sophisticated designs on which they can differentiate themselves.

But Tata is going in exactly the opposite direction. As a New York Times article points out, Tata will sell it’s entire People’s Car for about the price of the optional DVD player on a Lexus. In fact, one of the things Tata’s designers have systematically stripped from their design is electronics content. High-end electronics content was a non-starter.

That’s not to say that you can build a better car without electronics, although some enthusiasts would embrace that argument after less than one beer. It’s to say you can build a good-enough car for the developing-world driver—a car that will far exceed his or her experience with a light motorcycle, for instance—without electronics. But why is this relevant to our mid-range automotive market in the industrialized world?