Moody’s Says Automakers Lose $7,000 To $10,000 Per Electric Car Sold

Electric Car

JAN 29 2018 BY DOMENICK YONEY 81

Losing money is not sustainable business, but linking that loss, which mainly comes from large capital investments, to each individual car isn’t really how the auto industry judges itself either.

Moody’s Investor Services has put some numbers on one of the reasons traditional automakers have generally been less than enthusiastic about building electric vehicles. Besides plain old inertia, the resistance to change, building cars powered by electricity is expensive. And, it will continue to be cost companies copious coin into the  near-term future.

Tesla Destination Charging

Tesla Model X

In fact, the credit rating agency says that even though they expect sales will see strong growth over the next dozen years, accounting for as much as 17 to 19 percent of the market by 2030, automakers are currently losing about $7,000 to $10,000 per vehicle and they will keep losing some amount on them for the next few years.

The cost, they say, arise from the need for large capital investment into the new tech. The situation is expected to improve, with prices for batteries moving lower as the scale of their production moves upward. Improvements in the technology, that will see more range per battery pack cost, will also be a driver of improved margin.

Speaking of margins, Moody’s leaves Tesla out of its equations, saying that the automaker manages a profit on its cars because of their price premium. While many would argue that, since the company is losing money as a whole, it also suffers from the same need for large capital investment. Tesla does, though, make strong margins in its automotive business.

Source: Financial Post

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81 Comments on "Moody’s Says Automakers Lose $7,000 To $10,000 Per Electric Car Sold"

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G2

More negativity addressing short term stock prices over long term benefits beyond financials.
Boring.

pjwood1

Moody’s also said in a residential grid-defection analysis (30KWh daily consumption), I quote: “Days of battery required 55”, “Capital cost ($) 355,428”.

This is laugh your a$$ off bad financial analysis. Made utility investors feel great, though.

I wish they would stop saying “lose $x per car sold”, this gives people the idea that more sales is a bad thing. It should just be stated as the loss that it is, not per vehicle.

mx

It gives FORD CEO excuse to do nothing.
Tesla will take over the industry.

Six Electrics

So far Tesla has lost $25K per car sold. I’d like to say that number is improving with additional sales, but it is not.

The Dude

It makes money on every car sold. It just spends more than it makes for new factories and R&D.

Get Real

More BS FUD from short-selling troll 6 FoolCells/Pretend Electrics as he desperately tries to cover his shorts.

Pushmi-Pullyu

Six Pretend Electrics said:

“So far Tesla has lost $25K per car sold.”

Congratulations, your Big Lie here is even more brain-dead than the one in the headline of this article. That’s a pretty high bar to overcome, but you managed it! 🙄

Hey, how is your TSLA short investment going, hmmm? Lost any money lately? 😆

Where do you get that made up number? Tesla’s income has been about -4B USD over 10 years and they have sold about 279000 cars. If you insist on putting this as net income per car sold you come up to about $15k per car, which is still a lot, but much less than you state.

That being said, Tesla is growing their revenue dramatically and providing jobs to something like 33,000 people. I don’t expect them to make a profit ever until they are done with their growth, which I don’t think will happen in the next 10 years.

Typo: net income per car is about -15K USD per car (not plus 15), but as stated, this is a bad metric to measure the company (it makes sense long term, but not for the growth phase that Tesla is in).

Nix
I’m pretty certain you know you are exhibiting 2 classic math errors, but for the sake of everybody else, here are the problems with the -15K number: 1) It presumes that 100% of the money spent on developing the Model 3, building the Gigafactory, the Semi, Roadster, expanding the charging network, stores, and service in anticipation of massive growth can all be attributed 100% to prior Model S and Model X sales. Which is insane. The money spent on all those things will be recouped on the future Model 3 sales, not on past Model X/S sales. That is the definition of investing into new product development and production. Money spent upfront is recouped in sales that come later. This is basic Capitalism 101. 2) The -15K number fails to account for the equity that Tesla has built. Yes, Tesla has -$4.3 Billion in Retained Earnings. But they also have +4.7 Billion more in Assets than they have liabilities. So the only way to correctly do the math would be to note that for each car they sold, they lost ~$15K in cash, but built just a bit more than ~15K in net Assets like factories. They are just a… Read more »
Doggydogworld

“1) It presumes that 100% of the money spent on developing the Model 3, building the Gigafactory, the Semi, Roadster, expanding the charging network, stores, and service in anticipation of massive growth can all be attributed 100% to prior Model S and Model X sales.”

This is a flat-out lie, and you’ve been corrected on it many times. Only a tiny fraction of Gigafactory, Fremont assembly line and store/service center capital costs are included in the -15k/car calculation.

Feral Ghoul

So far Tesla has made $25K per car sold.

I will offer as much proof as you. None!

Stimpacker

So by the same logic, buying a house cost more money than renting. At the beginning you have to spend to furnish, renovate, etc.

Hope these investor services screened their analysts better. In the past, some dude from ISS lied about his degree.

Ash09

Haha, you just reminded me of this hilarious dialogue from Fallout: New Vegas, when talking to a guy literally named “Fantastic”, who’s supposedly a scientist working in a solar power plant.

“They asked me how well I understood theoretical physics.

I told them I had a theoretical degree in Physics.

They told me, Welcome aboard.”

Gotta love Fallout! Especially New Vegas … great stuff for sure!

CCIE

These people are ridiculous. Of course R&D costs will take time to payoff. They’re re-inventing the automobile.

I don’t see articles like this about pharmaceutical companies. They spend billions to create a drug, so technically the first units made are a huge loss. Then they sell enough units to get in the black.

Aviation companies actually have custom accounting standards that let them count future profits now. Otherwise the huge expenditures now would make them look insolvent.

Brian

The reason for the loss, they say, is the high up-front investment. To me, it sounds like an argument to increase production rates as fast as possible, at least with designs already invested in (e.g. Bolt, Leaf)

theflew

You can only increase production if you have buyers. The market is growing, but it’s not there yet.

earl colby pottinger

Yea. that why so many people report that they have to wait over a year to get a Leaf, Bolt, Tesla …. a lack of demand is limiting production.

NOT!!!!!!!!!

Mike

This is an analyst from the company that brought you the “Great Recession”, courtesy of their bond ratings.

I like to look at evidence from other sources to get an idea of what reasonable costs are. For example, the Tesla Powerwall is ~5000$ for a 15 ish kWh hour battery, inverter, packaging, software and profit margin. Cut that down to one inverter, a single package, spread the profit margin to the rest of the car (a Bolt shares a lot with a Sonic and those aren’t expensive) and I bet you can “make” money at 25,000$. If you took the Moody’s analysis at face value then the Bolt is a 45-50,000$ car.

Radstag Yearling

15 ish kWh vs 50 KWh in the lower end Model 3.

islandboy

“they expect sales will see strong growth over the next dozen years, accounting for as much as 17 to 19 percent of the market by 2030”

Meh! Tony Seba, author of the book “Clean Disruption”, with several presentations based on his book on Youtube, repeats in each presentation that “it’s usually the experts and the insiders that fail to anticipate, let alone lead disruptions”. Chalk this up as another example of what Seba is talking about.

Seba projects that cars with infernal combustion engines won’t be able to compete on price at even the low end of the market by 2025, moving the target he projected in the first of his presentations I ever saw (back in 2014) up five years from 2030! That’s EVs making up roughly 100% of the market five years before 2030! An upper limit of 19% by 2030? I’m with Seba, whom I was introduced to by a comment on this very site.

MikeM

This puts me in mind of the early Prius days (by which I mean the arrival of the 2004 model in the USA).
Early naysayers would guffaw that each one was losing Toyota over a million dollars.

The only really worthwhile response was to yawn and move on!

ffbj

I think it’s fair, and probably close to reality, since they don’t include stranded capital.
Legacy car makers are in world of hurt, and it’s only going to get worse, for them.

William

+1

pjwood1

Stranded capital is a problem of a failing business model. The “old way”. It shouldn’t be hung from the neck of EVs. Cars get better. “Lead or get out of the way”, etc.

theflew

It’s not reality because the world isn’t going to switch to EV’s overnight so all the capital legacy makers have will be sunset at some point or converted. A company like GM only makes engines in a couple of locations. As time goes by those locations will consolidate or transition to electric motors.

The main problem with the EV revolution is it’s going to be harder to stand out of the crowd. If you want a fast car add a large pack and motor – done. EV’s are naturally quiet. So in the end it comes to style, features and cost.

Pushmi-Pullyu

“A company like GM only makes engines in a couple of locations.”

That fails a reality check. GM has many different factories around the world producing gas engines, and parts for them.

https://en.wikipedia.org/wiki/List_of_General_Motors_factories

yogurt

Nothing to see here but FUD…

Without specifics I simply see this as manufactured numbers showing a negative intended result for legacy auto makers…

Tell me the manufacturing parts and R&D costs of a BEV and tell me how they were spread out over a car or cars lifecycle and then tell me the manufacturing parts and R&D costs of an ICE and how they are spread out over a car or cars lifecycle…

If the American Auto Cos dont want to man up then the Chinese have already shown they will and then some…

Alan

Accountancy clearly not their strong point,

Include all the R&D and sell 25k Bolts then just divide the lot by 25,000.

Q: So what happens if you sell 1m of them over the next 10 years.

A: Err, Errm !

Another Euro point of view

We know about the issue of the Li-ion battery price but what about the other components of a BEV ? Are the electric motors expensive for example ? It would be so nice to have less “flame throwers” sort of articles and more articles about the very basics of electric cars.

Alan

They have a Scorched Earth policy for anything non Tesla !

Dr. Miguelito Loveless

I find it difficult to believe that a 4 cylinder ICE would be more less than an electric motor. The latter has way fewer parts and is cheaper to build (and harder to build “wrong”).

Another Euro point of view
I found this: “UBS recently commissioned a Chevrolet Bolt tear-down and cost analysis. They compared it to a gasoline-powered “hot hatch” of similar size, the VW Golf Wolfsburg 1.8 TSI. Base price (w/o destination charge) is 36,620 for the Bolt vs. 23,515 for the Golf. Most of a car: sheet metal, chassis, interior, wheels, suspension, controls, etc. have similar costs for gasoline and electric. The big differences are powertrain and fuel tank (aka battery pack) The Bolt’s motor is roughly $1000 less expensive than the Golf’s engine. The Bolt also saves on Transmission, Exhaust and such but gives all that savings back and then some with the inverter and other electronics plus high voltage cables. Total Powertrain savings is only about $800. $800 isn’t much, but it’s still a savings. Unfortunately Bolt’s 60 kWh battery pack costs $12,000 vs. perhaps 200 for the VW’s gas tank. This is the real reason EVs cost more than gascars, and it won’t change any time soon. You can cross-check this concept by comparing the Bolt to the Chevy Volt plug-in hybrid (33,220 MSRP) which saves perhaps $6000 by having a smaller battery but adds back $1000 or so with its small, gasoline engine”… Read more »
Pushmi-Pullyu

“Powertrain savings is only about $800.
$800 isn’t much, but it’s still a savings. Unfortunately Bolt’s 60 kWh battery pack costs $12,000 vs. perhaps 200 for the VW’s gas tank. This is the real reason EVs cost more than gascars, and it won’t change any time soon.”

Define “soon”. The average price for battery pack is dropping pretty significantly on a year-on-year basis. Many or most industry analysts (the real ones, not the FUDsters) are predicting price parity in 2020, are they not?

I think your estimate for the unit price of $12,000 for the battery pack is a bit high, and I question that the unit cost for a mass produced gas tank is $200, too.

mr. M

i also think both prices are too high. A cheap gas tank can be bought for 50$. Whereas the Bolt cells cost around 135$/kWh. Add another 2000$ for packaging and the price drops to ~10000$.
Since ICE drive trains become more complex, the cost saving will increase (2000-3000$) within the next 5 years. packaging will become cheaper (500$ maybe for a big pack). leaving 2500 available for batteries. meaning in 5years the BEV will be cheaper if cells accieve a price point of 40$/kWh.

Another Euro point of view

Agreed but if an EV has to sell as many copies worldwide as a Golf I think it will likely need a 75Kwh battery. We should never remember that mass market adoption will no win through people’s awareness of climate change so practicality is of importance. We should see when the tip over point when a 75Kwh Bolt is same price (or not much more expensive) than a 1.8 petrol engine Golf. That may take some time as their will be likely a raw materials issue (cobalt) in the 2019-2025 that may somewhat slow down in the short term the price decrease of the batteries.

ziv

I am not sure how fast the price per kWh will continue to drop. The materials cost is not huge but it won’t drop much if at all. And a great deal of the economies of scale have been factored in to the pack price already. GM and Nissan have been building packs in decent numbers for 7 years now, and Tesla in even larger numbers for the past several years. I hope we see the Big 3 get their pack prices down to $80 a kWh and their their pack thermal management systems down close to $1000 in the next 4 to 5 years, but it won’t be easy. A 70 kWh pack would be a decent base BEV size for a full utility vehicle and it would still cost $6,600, using my arbitrary, back of an envelope numbers. 😉
But $6,600 is still a lot more than a gas engine, CVT and a gas tank. BEV’s will win on quality, not price, at least in the near term, say 4 to 5 years.

Ron M

Automotive companies seem to always cry that there losing money. It took over 20 years to get CAFE standards raised. Automotive companies were saying they didn’t have the technology and the costs will be to high customers wouldn’t want the vehicles. All of this was nonsense as soon as CAFE was passed higher mileage vehicles were being sold and record number of cars sold. The next round of CAFE standards and an increase in the motor fuel tax will increase and speed up adoption of EV’s.

JR

Typical FUD, nothing new! just riding on the wave!
you cant take this serious
PS:We don’t forget what you did in 2008

Ron M

What does FUD mean?

JR

Fear, Uncertainty, & Doubt

Pushmi-Pullyu

From Wikipedia:

Fear, uncertainty and doubt (often shortened to FUD) is a disinformation strategy used in sales, marketing, public relations, talk radio, politics, religious organizations, and propaganda. FUD is generally a strategy to influence perception by disseminating negative and dubious or false information and a manifestation of the appeal to fear.

Dan S

Moody’s is likely to be correct in their analysis. The corporate accountants can forecast unit sales over the design life of a car model and determine the cost per vehicle after factoring in all the costs including R&D. Some people commenting say they should sell more cars to be more profitable or have less of a loss on each vehicle. The demand for plug ins is currently about 4% of the car market in the US and has not changed much over the last five years. There isn’t a magic wand to get people to go electric. The percentage of BEV’s in New York State is 0.25% Almost everyone in the rural area I live in says a BEV will not meet their needs as a primary vehicle. The only way to increase demand (except for Tesla and after they exhaust their early adopters they will have issues too) is to dramatically lower the price and that again means losing money or require the sale of BEV’s by passing laws like some countries in Europe are doing.

Alan

It’s strange Nissan aren’t complaining about losses on the Leaf ?

Troy

Nissan isn’t exactly killing themselves expanding their EV lineup, either . . .

Pushmi-Pullyu

“Moody’s is likely to be correct in their analysis. The corporate accountants can forecast unit sales over the design life of a car model and determine the cost per vehicle…”

But they never do. All these brain-dead fake analyses are done by charging the entire cost of development against a single year’s estimated production.

Please don’t defend these fake analyses which are at best kindergarten-level, and at worst intentionally dishonest.

pjwood1

“The demand for plug ins is currently about 4% of the car market in the US and has not changed much over the last five years. There isn’t a magic wand to get people to go electric. ”

Dan S, Hang around InsideEVs some more and you’ll see how quickly the field of BEVs has changed. In just months, a crop of ~200+ mile cars will be competing. Yesterday, we had “100 mile cars” and Tesla.

Beyond range, “magic wand” = good tires, a sales team, windows, or actually delivering sufficient stock like the Panamera SE Hybrid (only 14KWh, but can you imagine a Mission E that isn’t “suicide”?). The magic starts when manufactures stop the voodoo.

Pushmi-Pullyu
“Moody’s Says Automakers Lose $7,000 To $10,000 Per Electric Car Sold” Every brain-dead, kindergarten-level (if not intellectually dishonest) statement like this should come with an asterisk (*). Because every one of them can only be true if the entire cost of developing that model of car (R&D plus tooling-up) is charged against a single year’s worth of production. But if the car were to be produced for two years at the same volume, then the development cost would “magically” be reduced to half! And guess what? Auto makers generally don’t expect to make any money on the first year of production of their gasmobiles, either. Generally they only start making an overall profit on the model in the second year. For EVs, overall profits won’t come as soon, but that doesn’t mean they never will. To say the auto maker is “losing” money on every car it sells is just brain-dead. If that was really true, then the auto maker should stop making them immediately! But of course it’s not true. It’s lumping the “sunk costs” of development in with the unit costs of making each car. Once the car actually enters production, the sunk costs don’t matter; it’s money… Read more »
earl colby pottinger

And throw in the Nissan Leaf, and we see Nissan and Tesla have now spread their R&D costs over ten+ years.

Even the Bolt has been out three (?) years now, so using just the sales of the first year is rigging the number badly.

Pushmi-Pullyu

Actually the Leaf’s development costs have only been spread out over slightly over 7 years of sales. You can of course say that Nissan’s bean-counters would have spread out their cost accounting for R&D over several years, but if we’re talking about balancing development costs with profits from sales, then we should only be talking about the number of years the Leaf has actually been sold; sales started in December 2010.

Trying to analyze Tesla’s costs would be far more complex, since they have now put three different models into mass production starting in 2012. That doesn’t count the Roadster, which was produced in only limited numbers, and the gliders for the car were produced by Lotus. Tesla’s costs also include building and staffing stores, showrooms, and service centers; Nissan and other gasmobile makers don’t have to pay for those because they depend on independent dealers for that. Of course, those legacy auto makers also have to give those dealers a cut of their profits, which Tesla doesn’t.

HVACman

A well-worn flawed-analytcal process, but at least the absolute amount of the error is going down. That’s progress, I guess.

I remember when the “analysts” and pundits charged the entire $1b GM EV technology development program cost to the Gen 1 Volt and said GM was losing $100,000/vehicle.

As GM pointed out last November, they are on-target to further reduce EV per-unit costs by another 30% or more and become make EVs profitable by 2021 with their new EME 1.0 platform and by 2025 to be selling 1 million EVs per year with an even-higher profit margin than they have now with their ICE vehicles. So that $1B investment, plus ongoing “learning” from their current money-losing EV, will pay off – and they know it is the only way. To NOT invest and develop in EV technology NOW would mean not being competitive by 2025 and bankrupt (again) by 2030.

Another Euro point of view

Probably the only BEV likely of breaking even currently at some point is the Nissan Leaf 2.
Now it is correct that low volumes production are probably more responsible of the losses than the BEV concept in itself. As for Tesla, it is a very costly experience that helps the OEM’s as it points out were the market for BEV possibly is and also shows them what to not do.

Get Real

LMAO, Another Euro Troll POV once again shows how his Serial anti-Tesla bias skews his “point of view” in favor of the laggard, legacy OEMs that are heavily uncompetitive/unprofitable in this transition.

As Tesla eats up the vaunted German luxury/sport market-share with first the Model S heavily eroding high profit MB S class, Audie A/S 6-8 and BMW 7 series and next Model 3 doing the same to BMW 3 series, Audie A/S 4, MB C class.

The laggard, legacy OEMs are in a world of hurt trying to navigate this transition due to their:
#1 Backwards looking company cultures highly resistant to change.
#2 Massive sunk costs in ICE as their only real IP.

Dav8or

Get real, when are you going to get real? BEV sales are less than 1% total vehicle sales and are struggling to break into 2%. You say the legacy automakers are now “in a world of hurt”. Talk about LMAO.

Meanwhile, Mr. Musk has to sell toy flamethrowers to keep his crazy ideas alive and is giddy with joy about shooting his old car into space. Get real indeed.

It is Tesla that will soon be in a world of hurt if they can’t focus, “get real” and become a true car company pronto. All the legacy manufacturers are waiting for is a demonstrated demand for *real* sales of BEVs and they will open the flood gates and they will not have “bottlenecks”, or “production hell”.

Get Real

Well Dave, “Skate to where the puck will be” best sums it up.

Actually, in California PEVs are already at 5% of new sales and headed for 10% with the advent of Model 3 and new Leaf.

In other words the world is not static and Tesla has already laid the groundwork to expand rapidly in this growing market for compelling PEVs and as they (and others) drive bsttery costs to under $100/kwh the growth curve will trend up sharply.

And for other haters like Euro Troll, Tesla already makes amongst the best margins on its car sales but is plowing those profits and additional funds raised back into a huge expansion of their assets to get to that dominate position of high-mid range compelling PEVs.

Pushmi-Pullyu

Dav8or continued his Tesla Hater cultist campaign:

“Meanwhile, Mr. Musk has to sell toy flamethrowers to keep his crazy ideas alive and is giddy with joy about shooting his old car into space.”

Did you have your sense of humor surgically removed when you became a serial Tesla basher, or were you always this determined to stamp out fun in your lifetime?

Thank goodness Elon Musk doesn’t take himself too seriously! Too bad about you, Loser.

Get Real

We found another Tesla shorter!

I wonder how much money this idiot has lost.

theflew

You must not have noticed overall BMW’s sales are up. Yes the sedans are selling less but the SUV’s are selling more. This has little to do with Tesla and more to do with the general trend from sedans to SUV/CUV. It’s one of the reason why the Model 3 is actually a missed opportunity by Tesla. The Model Y would have been the real game changer. Instead by the time the Model Y hits there will be several other EV CUV’s out.

pjwood1

Exactly, Another Euro. Tesla’s bush-whacking forges the path. A start up, without a massive cash engine, going it alone. I’d say the others are doing great by their shareholders, by keeping Moody’s and their customers fleeced.

Another Euro point of view

“A start up, without a massive cash engine”

But it has a mighty cash engine, that very engine that is piling up billions $ at a current rate of 2 per year right now. It is nick named “Wall Street”.

Pushmi-Pullyu

You appear to be confused about which Big Lie you’re telling on what day. Is Tesla having cash-flow problems and having trouble raising investor money, or is it getting into debt too fast?

It gets complicated trying to make all your Tesla Hater cultist lies match, doesn’t it?

O, what a tangled web we weave when first we practice to deceive! — Walter Scott

Pushmi-Pullyu
“That’s EVs making up roughly 100% of the market five years before 2030!” That’s not how the S-curve of market penetration for disruptive new technologies works. There is accelerating adoption until ~60% of sales, then the adoption rate tapers off as sales continue to grow. Achieving 100% of the market will take much longer than that, if it’s ever achieved. More likely for BEVs it’s going to top out at 90-95% or so, because there will remain a niche market serviced by fuel-powered cars in areas where electricity supply is too hard to find or too erratic. But perhaps much or most of the remaining 5-10% will be serviced mostly by PHEVs rather than gasmobiles. We can hope so, anyway! 2025 is only 7 years from now. By then I hope plug-in EVs (BEVs and PHEVs) will have a 20-25% market penetration, but I don’t think it’s realistic to think we can possibly have a 50% or greater market penetration that quickly. Auto manufacturing requires a heavy capital investment, and even major auto makers don’t try to develop more than 5 new models at a time. Large legacy auto makers really are dinosaurs; heavy, ponderous, and very slow to turn.… Read more »
Pushmi-Pullyu

Oops, that was intended to be a reply to the comment above by “islandboy”.

islandboy
I am aware of the S curve thing and actually don’t believe that Seba’s projections of EVs being 100% of the market by 2025 is realistic. On the other hand, on a personal level I want to put my days of driving an ICE powered vehicle behind me. I cannot afford to buy new vehicles but, on the island where I live there is a thriving market for used Japanese Domestic Market (JDM) imports. There is a Leaf at one of the dealers in used JDM cars and another dealer that I have been in dialogue with imported one last year to try it out. The same dealer has an e-NV200 on the way, on the wharf to be cleared through customs. I am going to do everything possible to buy it because my interest in EVs is way higher than the general public. I am seeing quite a few Leafs on the Japanese web sites that export vehicles and I expect that to continue with increasing numbers over time. When folks like myself and other early adopters get out there with our EVs and people become more comfortable with the idea that EVs can be just as useful as… Read more »
earl colby pottinger

I follow what you mean, 10 years ago no-one had smart phones, today it must be like 90% in Europe, Canada and USA have them. But I still have a standard flip phone and have no desire to spend money on a smart phone.

But if ten years ago you predicted how fast smart phone would take over almost no-one would believe you. But it happened.

Lawrence

“The cost, they say, arise from the need for large capital investment into the new tech.“

So this would apply to NEW entries to EV but of course companies that have a product in market already would not recur this large cost as they continue to design new products. All new entries get to 200,000 in tax credit so they can effectively charge an extra $7500 on their sell price to offset their R&D.

orinoco

Yes, they loose money with the production of BEVs. It’s a strategical investement for them. Profit not required. The problem right now is not the “large capital investement”. The problem right now are the low production numbers of small and mid-range BEVs, you cannot sell for a lot of money and that the large automakers simply don’t want to cannibalize their ICE production profits and don’t want to produce BEVs.

Chris O

It’s in line with the $7k loss per vehicle UBS calculated for Bolt. However that number is due to limited scale (UBS assumed ~30K/year), which makes it hard to make up for overhead, it actually calculated a positive 10% contribution margin. With the right scale profits are a possibility (UBS anticipated net profits on well specced Model 3s). Of course for the right scale one has to offer a better value proposition than Bolt, there is only so many $40K hatchbacks one could sell. Next gen Bolt was projected at $6k a pop profits due to larger scale made possible by lower component prices.

PHEVfan

It’s called ROI: “return on investment” Any company knows they will have to front a large sum of money for a new product just to get it out to the market. They evaluate the success as a business by calculating when the “break even point is”, that is, ROI. For some companies a 2 or 3 year ROI is the limit, for others it is 7 years or more. That number is known long before the first product gets to the market. Business 101.

Murrysville EV

And the True Believers wonder why ICE car companies don’t see the light and change their entire production over to EV.

It’s because they’re not interested in losing money. The mfrs are not tree huggers, and they’re not charities. Every company (.com) exists to maximize profits for shareholders.

They understand how investment in new technologies and new products work, and they understand that you ‘lose’ money at first. But they won’t invest in products that *never* make money.

What sane company would actually want to walk in Tesla’s shoes, with a ‘maybe’ hope of profitability on the 12th of Never?

Tesla stays afloat due to hyped investors. Every other EV-only company has foundered, or is close. The ICE-EV companies are able to hide their EV losses, and hope they recoup some from carbon credits.

Get Real

Looks like Murrey has exposed himself as another flat-earth society, anti-EV troll.

The world is changing. Within just a few years battery costs will have dropped so low that the price of EVs will be just as cheap as ICE and the operating costs/TCO will always be cheaper.

Kind of like how RE is disrupting the fossil fools/fuels by being cheaper (because of the free fuel) then the dinosaurs.

Cheaper always wins.

Murrysville EV

I’ve had a Leaf and am a Day 1 Model 3 reservation holder, so I’m no anti-EV troll.

I’m well aware that operating costs of an EV are very low. But I also watched the value of my leased Leaf drop by 75% in 3 years, and that was *after* discounting the incentives. Anyone who actually purchased a Leaf knows how sky-high their TCO is.

When grandmothers, soccer moms, and cowboys start buying EVs, then mfrs will be able to get their cost and price structure to show a profit. But as long as F-150s and SUVs print money for their mfrs, don’t expect the mfrs to change direction because of what is now 1% market share.

jim stack

All new vehicles in small numbers lose money since they count R&D. Then they ramp up like FORD did with the model T and the price drops and they make money on each one.
I’m pretty sure the Vette and Viper lose money since they are Halo low volume vehicles. Who cries about that?

Don Zenga

+1
Viper is discontinued in 2017 while Corvette will soon face still competition from Model-S since both are in same price range.

Don Zenga

“What the Hair” does this “Nonsense Analysis” means.

15 years ago, these same groups said that Hybrids will eventually fail.
One of the groups by the name Rand Corp even said that Hummer H2 is more fuel efficient than Prius. And the Hummer (H2, H2-SUT, H3, H3-SUT) all went to the trash bin.

And today there are 15 million hybrids in Worlds road with another 3 million plugins and all this keeps growing. These companies have their investments in Oil and they spread such false news.

Don Zenga

Lets do this simple calc between Prius and Leaf.

Prius starts at
$23,400
+$8,000 (Battery @ $200 * 40 KWh)
+$1,000 (More powerful motor)
-$4,000 (Engine being absent)

$28,400 (Net price)

With the price of Leaf being $29,990; Nissan makes $1,600 profit on top of what profit Toyota makes from Prius.

If the guys at Moody’s are using Smart For-2 and Fiat 500e as examples, then their analysis is correct.

Bill Howland

I never trust these things: to me the Bolt ev is very economically constructed and I doubt they lose any money on it at all, except perhaps in Canada where the complaint there is that GM is shipping so few there..

The problem of course is that they are selling a more ‘loaded’ car there (more expensive stuff included ‘standard’) and they’re not even charging what they are in the states for the car.

If someone says they’re losing money on each sale in Canada I’d believe them.

But the states is a different story. Dealerships in my are had 20 cars EACH from ZERO options to fully loaded and everything in between. If they weren’t profitable the first thing they’d do is get rid of the zero option models.

When I say the car is economical, I’m not complaining: that is what the car is supposed to be: a cheap ev that can really go places, with a huge motor up front to make the ride really sporty, if you like driving that way.

Nix

This is just a mindless repeat of the same type of math that got us the supposed $100K per GM Volt fail.

Funny how those nutters never re-do THAT math now that GM has sold a ton of Volts….

bob

Well if it is true, Get digging you lazy child miners of the Congo.