Are Electric Vehicles Being Sold at a Loss? Kelley Blue Book Seems to Think So
Ford’s slashing of $4,000 off the price of its Focus Electric for Model Year 2014 prompted a negative response article by Forbes. In it, the author argues that Ford was the last major holdout in the EV price wars that began when Nissan introduced the base LEAF S for the 2013 Model Year.
The Forbes article goes on to say that “Ford couldn’t afford to be out of sync with the competition” and notes that LEAF sales increased by “18 percent” … “after the price cut.”
But the main point of the article is not price cuts. Forbes turned to Karl Brauer, senior analyst at Kelley Blue Book, to drive the point home:
“Manufacturers are realizing that selling an electric car at a loss is better than not selling one at all. And because these vehicles still make up a tiny percentage of total sales these automakers can absorb the financial loss with minimal pain. But at some point electric cars will have to stand on their own in terms of generating a profit. In the meantime, if you’re a buyer looking to try out an electric car there are some excellent deals to be had.”
Brauer is making assumptions there that we don’t know to be true. While Fiat openly admits that it’ll lose up to $10,000 on each 500e it sells, other automakers don’t say they’re losing money on the sale of electric vehicles. And with some degree of certainty, we can say that Nissan profits from LEAF sales and that Tesla makes money on each Model S it sells.
There are certainly some automakers who may lose money on the sales of electric vehicles, especially when they move in low volumes. In fact, almost all low-volume vehicles are money-losers for automakers.
But the end goal for most automakers is to go from low-volume, low- or no-profit to high-volume money makers. It takes time though and, for all intents and purposes, the modern-day electric vehicle is still less than 3 years old.