Kia Sees Profitable Future In Electric Cars

NOV 13 2018 BY MARK KANE 40

Profitability of Kia EVs is within 3 years.

According to Autocar, Kia expects that break even on EVs is achievable in Europe within 2-3 years, which would be somewhere near the end of 2021.

Currently, the South Korean manufacturer is offering two models: Soul EV andΒ e-Niro.

“Making profit out of electric cars is not easy, but Kia reckons it will break even in Europe on its range of two battery-electric cars within two to three years – even at the competitive price of Β£30k for the e-Niro unveiled recently. Kia plans to sell 30,000 electric cars annually by 2020/21.”

The thing that catches our attention is the planned volume of 30,000 electric cars annually by 2020/2021, which sounds low, not only for the booming EV market, but also from a profitability standpoint. Maybe the number concerns only Europe though?

Source: Autocar

Categories: Kia

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40 Comments on "Kia Sees Profitable Future In Electric Cars"

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Why only Europe? And with 30k how exactly are they recovering their r&d? The number is way off.

Kia likely has much higher operational efficiency numbers than Tesla. Volume is not the only way to making a profit. You can keep a small volume but make each unit in a highly efficient manner. Many car makers only target 30-50k a year per model and still manage to break a decent profit.

Or the claimed figures is for the overall line and not this individual model.

I highly doubt that. Sandy Munroe remarked at how efficient the Tesla was in design and build, and he tears down most cars.

He said the electronics were efficient. He panned the actual unibody panel design. But the way Tesla incrementally improves their cars I am sure they will have class leading operational effciency in 1 or 2 years.

Low-volume cars are only profitable in high-priced segments.

Probably because they will make a lot of different but similar models. Even the Bolt EV is close to break even on a marginal sense (or even slight profit). It might be they aren’t counting development costs or something like Tesla likes to do.

Good point. Most of the parts have already been paid for on the backs of other models.

No idea why you’re getting downvoted. What you said is obsiously, patently true. If you can find KONA production numbers (I saw them before but couldn’t find them quickly now), the electric share is so tiny it is almost comical – like they made 17,384 KONA in a month, 7 of which were electric, that kind of thing. At 30k it won’t be quite as silly as that, certainly the total KONA volume will be *much* higher than the electric alone.

Besides, I believe you save quite a lot on sharing the development/testing/homologation cost of literally *everything else* on the car besides the driveline with the fossil version. The electric car has a body, it needs suspension, it’s got windows and seals and lights and infotainment… and nearly all of it is identical to any other KONA variant.

True.πŸ‘πŸ‘πŸ‘πŸ‘πŸ‘

Good points.

Actually, the fact that they are planning for a break-even point some years into the future, strongly suggests that they *are* counting upfront investments, and expect to recoup them at some point…

(Also, according to UBS estimates based on Munro’s teardown, Bolt has clearly positive margin — just not enough to ever offset the investments…)

I think the conclusion is that they expect to be able to ramp up production within that time frame to a lot more than 30K… And recall the next-year Soul drivetrain will also be used in an upgraded Ioniq (39kWh) — AFAIR, same battery in Ioniq, Soul and shorter-range Niro & Kona.
Kia & Hyundai each have 2 BEV models, so that’s already 80K next year, and maybe 120K if they do 30K for each model. If they manage to ramp up the battery production, they can easily hit 300K-400K (requires 40% CAGR over 3 years) annual production.

There are also 4 PHEV models (Sonata/Optima, Ioniq and Niro PHEV); a PHEV version of the Santa Fe has already been announced — could be a big seller in the US if they produce enough since it’s a mid-size SUV, and the ICE Santa Fe is one of Hyundai’s top sellers in the US.

Hopefully they do this and help light a fire under the laggard asses of the legacy LICE manufacturers like the Detroit 2 1/2.

Bingo. I keep saying here that I think H/K will trigger the effect you mention, but to be honest, I don’t care which company does it, so long as at least one starts it.

A big part of this is psychology. The Legacies by and large perceive Tesla as an anomaly — higher priced cars, no franchises, Apple-like fans, etc. Many of the Legacy execs won’t take EVs seriously as a threat until one of their longtime competitors is not only selling a significant number but stealing sales from their company.

If VW comes through on even half of their grandiose promises, then they’ll blow right by H/K, but right now I have no faith in VW to deliver.

The future of transportation is a lot of things, but “dull” ain’t on the list…

How can the conclusion be something that is in direct, stark contradiction to their explicit statement? It sounds to me like your hopes are clouding your perception…

Face it: although Kia expects their current BEVs to be profitable down the line — which is a bit of a surprise TBH — they are *not* planning on making them in significant numbers in the foreseeable future πŸ™

Their cost is low because they shove electric components in their current models. The big cost item is large stamping for the body structure and panels. By sharing these components with ICE models, they can break even in much lower numbers.

There’s also the Kia Optima PHEV (even available in the US, since 2016), available as wagon or sedan, and Niro PHEV.

Without a larger battery and an electric heater, what’s point making or buying them. Basically, they are Calfornia cars. The Honda Clarity runs circles around them.

I have the Sonata and I hate the car!

I’m putting words in their mouth. What they said is the battery cost will keep dropping, and by 2021 it will drop to the point that they can make money on EV.

Battery cells will become a commodity, there will be huge scale from Samsung SDI, Panasonic, LG, …
Battery packs cost is not that big. Electric motors and transmission are way simpler.
All the rest is similar in EVs or ICE vehicles, scale savings are there.

The Kia Niro is a great vehicle. I had it for 2 weeks as a rental. Very chic vehicle. I wish it say a tab bit higher because I’m not too keen on cars that sit that low. I also managed to figure out theacceleration quite well. If you take your foot off the brake and let it rock it’ll take off like you want it to.

Did you have the electric or ICE version?

Cheap gas prices won’t help. The gas price needs to keep skyrocketing for people to buy EV.

This is not true. In Ukraine where I live people have bought thousands of used Nissan Leaf. The reason is simple – to drive 100 km in Leaf costs less than 1 dollar. Ten times cheaper than driving ICE vehicle.

So what is not true? You confirmed Edward, that the price difference between the fuels matter a lot.

The gas price needs to do nothing and evs still make sense….actually, the gas prices need to drop alot for ice to make sense.

I like KIA because they don’t want to rip off customers on service like almost all other car manufacturers. The second thing is Niro – that’s nice car but the problem is that it is made for Hybrid, PHEV and EV on the same platform. It is visible for the user of PHEV/EV as strange design choices (eg. battery in trunk).

The number of car manufacturers making a profit on selling EV’s is very small indeed. Maybe only 2 (Nissan, Tesla)?

In 2-3 years they may be forced to lower the price because of competition. Did they factor that in?

Good point, I can’t see Hyundai models selling for Model 3 money so if/when that $35K Model 3 becomes available a lot of non premium brands will have that much more of a challenge selling premium (in terms of production cost) EV drivetrains in their non premium EV offerings at a profit.

Volkswagen! The don’t lose money with their E-Golfs and E-UPs.

I wish VW would lose money on press releases and empty promise prototypes.

Any source for that claim?

Actually, maybe they *did* factor that in, and that’s why they are only planning such tiny production numbers?…

> Maybe the number concerns only Europe though? No way. It is a press release, the number is supposed to sound impressive. If they only knew (or wanted to disclose) the plan in Europe, they would have carefully specified it. 30k is ridiculously low. How many did they make last year..? About 20k, I guess? But it is probably enough to keep fleet emissions within the regulations. I have been saying for a long time that regulations, not Tesla, has been the driver producing what little electrification the car industry has undertaken. Lately I started to believe Tesla was starting to have a real effect on incumbents, because of Model 3. Perhaps that was naΓ―ve of me. After all, Tesla supplying 5% of the global car market – about 5 million cars a year – is not going to happen in just a few years. Time and time again, we see the same pattern: Manufacturers complain and lobby against tighter regulation, claiming it is impossible or very difficult to achieve. And then, they meet all the requirements with laughable ease, not really changing very much at all (in the big scheme of things). It is the regulators, not the car… Read more »

It’s more complex than that. Even if it’s true that the market is still mostly driven by regulations, Tesla’s success is still crucial both for making regulars bolder in setting the requirements, and making other car makers bolder in what investments they make in order to meet the requirements. Without Tesla showing that EVs are viable when done right, we would be seeing considerably less serious efforts across the board.

“It is a press release”

It is? Do you have a link, I couldn’t find it.

Until they’re for sale in Pennsylvania, they’re vaporware to me.

Kia is doing it the smart way by just copy + pasting the same exact drivetrain between multiple different EVs, with the only real difference being the battery pack size/shape between the different models. Once you get a 200-ish horsepower EV drivetrain you’ve pretty much solved the problem of performance for the vast majority of passenger car applications. Only sports cars and heavy duty trucks would require their own specialized motors.

That’s what pretty much all car makers are doing nowadays, not just Hyundai/Kia…