Reuters Paints Gloomy Picture About EV Profitability

OCT 3 2018 BY BRADLEY BERMAN 119

Analysts rehash arguments that electric cars are not currently profitable, overlooking the inevitable shift to EVs.

It’s well known that new automotive technologies, and brand new car models, require billions of dollars of upfront investment before the costs can be recouped. But that didn’t stop Reuters from issuing an alarming news report this week suggesting that auto company investments in EVs are threatening the entire industry.

According to the article, automakers are in a terrible bind because environmental regulations are forcing them to produce EVs. The Reuters article suggests that customers don’t want to pay more for electric cars, which cost more to produce. Rebecca Lindland, a senior analyst at Kelley Blue Book, told Reuters, “Demand doesn’t justify investment at all. It’s all regulation.”

Laurent Petizon, a managing director at consulting firm AlixPartners, adds fuel to the fire. Petizon told Reuters that automakers prefer to lose money on electric vehicles rather than pay environmental fines. The firm pegs the extra cost for an electric car versus a conventional vehicle at 7,800 euros (or $9,000). He overlooks the fact that the cost difference for an EV is a lot less for luxury vehicles.

So even before promising new EVs—like the electric DS 3 Crossback and Mercedes-Benz EQC electric SUV—are shown this week in Paris, these models and others that are battery-powered are already dismissed as money-losers.

The timing is not surprising. Lobbying groups, such as the European Automobile Manufacturers’ Association (EAMA) are now warning of “an imminent threat to the region’s 3.4 million automotive manufacturing jobs.” News flash: The entire global economy is going to be shaken up by the shift to electric, connected, and self-driving vehicles.

What appears to be taking shape (again) is the dividing line between auto companies who are willing and able to invest the time and resources to make a major technology pivot, and those who will resist the change. Either way, there’s no turning back on EVs. As Reuters points out, more than 200 electric and plug-in model launches are scheduled to launch in the next three years.

Of course, with any shift of this magnitude, there will be winners and losers. According to Reuters, larger automakers such as the Volkswagen Group could “put up with losses on electrified vehicles if it enables them to keep selling their biggest earners, upscale SUVs and large sedans.” Meanwhile, mid-market competitors such as PSA and Renault could face a much tougher challenge.

Source: Reuters

Categories: General

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119 Comments on "Reuters Paints Gloomy Picture About EV Profitability"

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Roy LeMeur

Less cost per mile, less maintenance and repair costs. Definitely less profitable.

viriato

But what about buying and finantial costs?. Is not so clear that the EVs TODAY, are profitable for every consumer.

Anyway, this situation is going to be better every year, because more EVs they build, more cheap they will be. For DS for example, the curves of owning costs, will cross the ICE ones for near 2025. In that point, the electric car will be allways a better economic option.

And then is the profitability for the makers, is clear that the huge investments in development, may affect the costs and profits, but in a future, sure the EVs will be cheaper to build and give more earnings than petrol cars.

Jean-Baptiste Labelle

I am always amazed at this statement, as if people could not make the simple calculation: i switched from an Audi A6 3.0 TDI Quattro to a S75D.
For the SAME conditions, (20k€ down payment, 5 years, 25000kl/year), i have a leasing of 680CHF ~600€ for the Tesla versus >1050CHF~900€ for the Audi which is even not really comparable as the closest comparable car is the Audi S7 at >1500€ leasing per month.
Then, i factor in 380CHF~300€ of saving every month in diesel vs electricity and road taxes and the ICE is roughly TWICE the cost of the better EV.
Two times!!

And people claimed that EV are more expensive?!? I have no fuc… clue where they are taking their numbers because the reality is that, at least in Europe, an EV is already quite cheaper on cost, by a long shot if you drive a lot and take competitive EV (as the Teslas).

Andy

It’s because the market for US$80k vehicles is minuscule compared to the market for average vehicles. Most cars sold are way less than half that price.

For someone doing above average miles in an expensive vehicle, yes, a Tesla may well be a cheaper option than another premium car, but vehicles that fit into that usage scenario are just a few percent of those on the road. For the average driver, paying less than US$30k, driving 13,000-15,000km a year the sums aren’t nearly as good.

As an example there is around a £15,000 uplift from the ICE version of the Leaf to the base model Leaf. For someone driving the average European (and North American, they’re pretty close) annual mileage its going to take at least 15 years to break even. So for a significant majority of the cars on the road ICE has a lot TCO and up front cost. That’s why many countries have significant incentives, to try and reduce the cost differential until EV’s are cost parable.

Scramjett

Ah, but you see, no one cares about the savings the consumer sees. It’s all about corporate profit! Gotta keep those profit margins up or the investors will rebel…or something.

God/Bacardi

I’m a big fan of Tesla, yet that doesn’t mean I don’t like certain aspects such as them still charging $5K for the PUP on the Model 3 which most likely has to do with profitablity…

Big Solar

what is PUP???

TM3x2 Chris

A young dog usually referred to as puppy.

TJKR

$5K for a PUPpy is crazy expensive.

TM3x2 Chris

That depends on a puppy. If its parents are champion show dogs, you could be looking at more than that amount.

I know this first hand as I used to own a champion-bred Rottweiler.

William

If the “crazy expensive PUPpy” can drop me off at work EVery day, and pick me up when I’m off, and do Uber/Lyft in between, I’d say, at almost any price, that is one GOOD PUP!

TJKR

Your wish has come true.
https://goo.gl/images/vyds6i

Bryan

Premium Upgrade Package.

Wade Malone

+ 1 For actually answering his question. 😉

TM3x2 Chris

Research shows that not answering the question directly encourages discovery and learning.

Pushmi-Pullyu

CAPTAIN KIRK: You should sell an instruction and maintenance manual for this thing.

CYRANO JONES: If I did, what would happen to man’s search for knowledge?

— (classic) Star Trek: “The Trouble with Tribbles”

* * * * *

But I confess the first time I encountered the term “PUP” in IEVs comments, I had to exercise my Google-fu.

TM3x2 Chris

Hehe, good old google-fu.

William

PUP, is the Tesla add on, that keeps its owners tail wagging!

Doggydogworld

PUP = Profit Upgrade Package

ffbj

CIN (Canine Information Network)

Chacama

Poly Urethane Phosphorus – The last coating they spray through all the car once it is at the end of the assembly lane to give the car its particular “New Car” smell.

throwback

They are in business to make money, no matter what Elon tells you.

Anthony Fiti

According to the article, automakers are in a terrible bind because safety regulations are forcing them to produce cars with airbags. The Reuters article suggests that customers don’t want to pay more for cars with airbags, which cost more to produce. Rebecca Lindland, a senior analyst at Kelley Blue Book, told Reuters, “Demand doesn’t justify investment at all. It’s all regulation.”

Andy

Poor analogy. Airbags cost pocket money on the price of a vehicle. EV drivetrains are a significant part of the cost of an EV, and currently cost a lot more than their equivalent ICE versions. Yes, some of that can be recouped by the buyer if they’re willing to pay the additional up front cost, but even then, with current EV prices it’s generally only cheaper overall if you’re doing way more than the average amount of miles a year.

BoltUp

They didn’t cost pocket money when they came out, each airbag requires a complete redesign of the area it is installed in plus all the sensors that are required. I’m sure it was no small endeavour to add all that tech into the old models.

Andy

When they came out they weren’t a requirement, they were accessories on high end vehicles. They gradually trickled down to lower end vehicles and then it became regulation to have them.

Either way it was a much smaller and cheaper job than rebuilding an entire drivetrain and chassis and installing a drivetrain that costs an order of magnitude more than the previous one into a car that will sell.

Philip

Perhaps the major manufacturers should have bitten the bullet years ago, when Tesla introduced the Model S, and started doing their own customers a favour by redesigning the top range models as EVs. They’ve continued to tell us that they could do what Tesla is doing without breaking a sweat, in which case, they would by now have reached the point where they were in a position to introduce the technology to cheaper models.

By moving to full EV (not their half-baked PHEV nonsense), their premium customers would, by now be shouting the praises of EVness and they would have no problems with having customers for the same “premium” technology in their cheaper models. Goodness knows, they could even have joined Tesla in the SuperCharher program – just imagine how big that could be already, with backing by the giants of the auto industry!

Sadly, the major players have spent all those years denying the inevitable, and wasting their resources continuing to develop ICE systems and denigrating Tesla. They have no one to blame but themselves.

Gasbag

“Poor analogy. Airbags cost pocket money on the price of a vehicle.”

Pocket money today but as mark points out that wasn’t the case before regs required them so it seems you are arguing for more aggressive regulations to force the shift which will make the price delta of BEVs pocket change.

Andy

Quite possibly yes. Regulation is what’s forcing manufacturers to move to EV and I like it. Regulation can only go so far though and needs to tally with reality, which is why manor manufacturers usually have a hand in shaping them. You can regulate all you want but it it’s economically impossible then it’s pointless.

G2

Regulations work because it forces the entire industry onto a level playing field, and they “like” it when everyone has to do the same thing.

Pushmi-Pullyu

“You can regulate all you want but [if] it’s economically impossible then it’s pointless.”

That’s true, that’s why California’s 1999-2000 attempt to impose a zero-emissions mandate was a failure.

But Tesla has proven that now it is economically possible, at least for $40,000+ cars.

Costs will continue to fall for EVs, and the economics make it inevitable that gasmobiles will become obsolete, sooner or later. If government regulations will help make that happen sooner, then I’m all for such regulations.

Up the EV revolution!

Pushmi-Pullyu

No, it’s a perfect analogy! It’s the same thing with seat belts. Auto manufacturers didn’t want to install seat belts because it drove up the cost of their cars slightly. It wasn’t until first States and later the U.S. Federal government mandated that auto makers start installing seat belts (and later shoulder harnesses) into their cars, that they became standard, despite the fact that they unquestionably save many lives.

And auto makers have been resisting taking the plunge into making EVs because they cost more to make, despite the fact that gasmobiles are a major contributor to global warming, which is adversely affecting every single person on the face of this planet… whether they will admit it or not.

Once all auto makers are making and selling EVs in significant numbers, then the economy of scale and amortization of development costs will drive down the costs for making EVs. If it takes government regulation to force auto makers to spend the money to get over that hump, just like seat belts and air bags, then so be it. We’ll all be better off for it, despite the whining from some people about “a free market” and “the Nanny State”.

Andy

Yes in the future EV’s will be cheaper, but we’re talking about now.

As you say yourself “Auto manufacturers didn’t want to install seat belts because it drove up the cost of their cars slightly”. Slightly, much like airbags. Moving from ICE to EV increases the cost SIGNIFICANTLY. As has already been pointed out multiple times the battery alone costs more than the entire ICE drivetrain, sometimes by a factor of 2-3. It’s not “just” a few hundred $ here and there, we’re talking high four to five figure increases.

Do you really think manufacturers would have installed the first Airbags if they cost $5,000 on a $10,000 car? Would there be regulation in place to force car manufacturers to install them if the price was that much? No, because it’s not economically feasible without increasing the cost of a car significantly.

Djoni

Andy, you have to put the investment in EV against the require investment in the ICE engine to make them cleaner and meet the stricter upcoming regulation.
This way, it’s probably not that much of an investment.

Andy

I’m not discussing investment here, I’m discussing build price and sale price of a vehicle.

Jean-Baptiste Labelle

A 75kWh battery is supposed to cost Tesla around 12000$. Electrical motor of a few thoudand euros. You need the inverter and… that’s it.

How much do you think cost a 400HP four turbo diesel engine + AWD transmission + tank + exhaust system + dual clutch or 8+ gears gearbox?

Because i have a news, it is AT LEAST as expensive as Tesla battery + 2 Induction Motors + inverter.

Andy

You can buy brand new crate V8 5.0 (460HP, 420ft/lb) and 10 speed transmission for a Mustang for around $8,000. Ford probably pay around half that for them so you’re realistically talking about half the price for the drivetrain than the EV model. Once battery prices come down over the next few years then sure, they’ll be cheaper, but currently there’s a difference of close to 5 figures in drivetrain cost. That difference will be even greater in every day vehicles like the Neo and Nero, where the smaller ICE engine will be a lot cheaper than the engine above.

If EV drivetrains were less expensive than their equivalent ICE then EV’s would be cheaper no? Why are they not, and why are there EV incentives and rebates?

Andy

According to the article, automakers are in a terrible bind because safety regulations are forcing them to produce cars entirely from Carbon Fibre. The Reuters article suggests that customers don’t want to pay more for cars built entirely from Carbon Fibre, which cost more to produce. Rebecca Lindland, a senior analyst at Kelley Blue Book, told Reuters, “Demand doesn’t justify investment at all. It’s all regulation.”

Is more of a cost relative analogy.

Pinewold

If you keep a car 10 years, and drive 12k miles 100% of the extra cost is covered.

Andy

For some specific usage cases sure. You’d need to be spending close to $2,000 in fuel a year to do so, and have the car for 10 years (average new cas is owned for around 6).

Jean-Baptiste Labelle

False. See above my real life example.

Andy

For someone buying a car for twice the average selling price, doing twice the average mileage, sure… For the average person not so much – hence the rebates and incentives governments give out for EVs’..

Yves Laurin

“The Reuters article suggests that customers don’t want to pay more for electric cars, which cost more to produce.”

Come on, Tesla had 500K reservation before it was even out, How many ICE model did that?

TM3x2 Chris

Look at the numbers of TM3s sold every month at an average of $60k.
Reservations are a good indication of a pent up demand although it seems the majority of reservation holders are waiting for the base $35k version.

Yves Laurin

I would not be in a hurry to push the base model since Tesla production is maxed out anyway

Pushmi-Pullyu

^^ this.

Altho everybody and his brother would love to see Tesla deliver on the promise of a $35,000 Model 3, from the business perspective it doesn’t make any sense for Tesla to put that lower trim level into production, so long as demand for the higher trim levels exceeds supply.

God/Bacardi

Demand of the congifuration…It seems before the first AWD or Performance Model 3 was delivered, Tesla opened up orders to the entire USA if you wanted the LR with PUP Model 3…Now they’re being delivered in Cananda and it seems Europe and Austrailia will be next…By no means is this a bad strategy but it does appear LR with PUP demand is nearing an end in the USA, how long will it last globally?

Alex

Tesla is selling majority of the cars in the US where most buyers most be saving $7500 in taxes. Half of the cars in the US are going to California where they’ll get another extra $2500. Probably cars sold outside geographies I’ve mentioned are receiving similar incentives, in Holland a $100k Tesla is receiving close to $20k in tax savings.
Those incentives are ending and if the tech doesn’t become cheaper buyers will feel less interested in EVs. Denmark and Hong Kong are good (bad) examples of demand for EVs without discounts.
Obviously EVs will go down in price/cost and there will be plenty of profits for everyone.

Andy

Yes, it’ll be interesting to see how the repeal of incentives impacts sales. In many locations it’s the only thing that makes EV’s economically sensible for the average buyer. We shall see what happens in Ontario, Holland and the US as we get sales data through the periods incentives are scrapped/reduced.

REXisKing

Tesla has LINES to view their 3 at the Paris show.
( There will be international demand. )
Tesla is still not offering leasing for the Model 3, this is another Explosion of demand 2x to 3x more demand with leases available.

People can afford the Model 3 with a lease.
At end of lease they can buy or upgrade to another Model 3.
Tesla of all companies Does Not Have a Demand Issue.

LOL. Funny Trolls. No matter how many they sell, no matter how long…

Alex

Let’s wait for 2019.
I agree that other markets can increase demand.
But I doubt Tesla can keep growing sales (quarterly) in the US – during 2019, not going behind that for now.
I’m issuing my opinion, why that aggressive language?

I’m right about Tesla in more occasions that Elon Musk himself, but sometimes I’m wrong too.

Jason

That’s right, and Tesla only has three vehicles and each only has one body shape, so they have a long way to go to catch up to ICE manufacturers who typically have several models and different body shapes.
Next year Tesla should reveal the Model Y, let’s see if they get a repeat of reservations like we saw with the Model 3.

Pushmi-Pullyu

“Denmark and Hong Kong are good (bad) examples of demand for EVs without discounts.”

Hong Kong is an example of what happens when a totalitarian government imposes regulations making it almost impossible to own a car. Ending the EV tax credit didn’t help, but it certainly wasn’t the primary reason why EV sales suddenly dropped off a cliff there.

You need to find an analogy which actually works; that one doesn’t.

Alex

Take Denmark.
Let’s wait to see Holland and US in 2019.

Do Not Read Between The Lines

Yes, let’s take Denmark. It has very high vehicle taxes. That meant that the Model S and X, were relatively cheap and sold well. What that tells us that reducing the cost of electric cars increases sales significantly.

Model 3 LR+PUP is 2/3 of the cost of a base Model S (75D), has more range, is more efficient, charges faster at DCFC (in mph), and is a mid-size instead of large car.

So, demand will be higher.

Another Euro point of view

For sure I am always amazed how cheap it seems to build ICE cars. Rule of thumb is that total of parts + labor should be no more than 50% of retail price VAT not incl., remaining 50% of costs being made of R&D, administration, marketing exp., cost of capital (interest) etc.

Thus if I look at the cheapest car on sale in Europe, the Renault group Dacia logan for example which is for sale between EUR 7’700 and EUR 11’000 depending on version. Let’s take an average price of EUR 9’000. To this price I need to deduct 20% VAT so remains EUR 7’200.

50% of EUR 7’200 is EUR 3’600. Thus for EUR 3’600 an efficient car manufacturer can make an entire car as far as cost of parts and labor is concerned. For EUR 3’600 we don’t even have a Leaf 2 battery , and then one needs to build a car around it .

deine Mutter

A 3 cylinder petrol turbo engine including gearbox, exhaust and cooling system costs less than $300. The savings from omitting the ICE parts are negligible.

Alex

Developing a new small 4 cylinders engine costs about $500 millions, just to pay for that it’s required 1 millions $500 engines.

REXisKing

Build 1 and it’s a Multi-million dollar engine.
But, 3 million and it’s a $300 dollar engine.

VW planning their own GigaFactory for Batteries.
I think VW will survive.

Jean-Baptiste Labelle

No because it is not just development.
I can assure you that a modern 200HP+ diesel engine with one/two turbo, 2000 bars+ common rail injection system, all the accessories, the 8 speed automotic gear box, the depollution system, the tank and its pump… cost far more than 300$ or even 3000$ and clearly more in athe 5 dgits range.

Pushmi-Pullyu

“A 3 cylinder petrol turbo engine including gearbox, exhaust and cooling system costs less than $300.”

Really, that’s the unit cost including transmission and exhaust system? Well whatever it is, it’s the result of the auto industry having more than a century to figure out how to bring down the costs of making gasmobile powertrains. It won’t take anywhere near that long for them to figure out how to make BEV powertrains cheaper than ICEV powertrains, once they start making BEVs in quantity.

eject

The Tata Nano is a car with an engine using a Bosch Multitronic injection system and the whole thing including seats, tyres, speakers ect. costs $2000 and somehow Tata must still earn money with it.
There is just no expensive material in an ICE car, it is all just steel, aluminium, plastic, natural fabric and glas. A high numbers you just pay energy and material costs. Todays price for 1kg of cobalt on the spot market $545. Batteries with current technologies rip a big hole in the cost construction of any car below $15000 and this is the market where you can really achieve scale and replace fossil fuel cars.

Doggydogworld

$545/kg for cobalt? That sounds too high by 10x.

Doggydogworld

Yeah, fans who say “ICE will die when batteries hit $100/kWh” aren’t doing the math.

BEVs have cheaper power trains but REALLY expensive fuel tanks. They compete best against ICEVs with powerful engines and small fuel tanks, like sports cars and performance sedans. The numbers just don’t work for small economy cars.

BEVs are also cheaper to operate. You want to drive lots of miles to maximize that advantage. That’s why robotaxis will be BEVs. Metro area utility trucks are another good one. Lots of miles at low MPG.

Personal pickups and full size SUVs are a problem due to large fuel tanks. You need 400 kWh to tow a large trailer any reasonable distance.

ffbj

400 kWh seems to overstate the case. Also I think the superior torque at the low end, which is what trucks want, at least working trucks, the ev actually beats the ice, along with acceleration. We just haven’t seen one yet.

Andy

Torque isn’t really an issue in most trucks now. People will have to weigh up if they are happy with greater torque but a reduced hauling/towing capacity (due to battery weight) or whether they want more torque, similar haul/towing capacity but a much shorter range.

The reality is without an increased towing/hauling capacity (which is affected by a lot more than just torque) I doubt many would be satisfied with the significantly reduced range a small battery would provide. It may be an option for some fleets that use vehicles for specific purposes though (like metro area cable/phone/electricity companies, that don’t travel far in a day).

To get the equivalent range of current trucks you are looking at 300-400kWh of battery, whereas a 100kWh battery is probably equivalent in weight to the current ICE drivetrains in those vehicles – that’ll give you less than 100 miles of range with a trailer. Something has to give, unless we can reduce battery weight significantly.

Pushmi-Pullyu

I gave you a thumbs-up, but I’ll quibble about one thing: It’s not the weight of a 400 kWh battery pack which would be a bar to putting them into a practical pickup, it’s the size (and of course, currently, the cost). But size, weight and costs will continue to come down. Theoretically at least, a reduction by one-and-a-half orders of magnitude in size and weight is still possible. We don’t need nearly as much reduction as that; probably a three-fold reduction in cost and size would be sufficient for a 400 kWh battery pack to become practical.

Andy

Agreed, I’ll take a bit of a guess and suggest 200 kWh is probably the maximum you could comfortably fit into a pickup chassis with current technology. That’s going to weigh around one ton. Reduce current weight and size by around 1/3rd and you could probably fit a 300kWh battery in. I think that weight/size reduction is around what Tesla have done so far between the original Model S and the new roadster, so it could well be possible in 5-10 years even without solid state tech.

LevinK

I don’t think 400kWh is much of an overstatement. According to the Edmunds test here:
https://www.edmunds.com/tesla/model-x/2016/long-term-road-test/2016-tesla-model-x-tow-test-reboot-with-a-happier-camper-trailer.html

Model X P90D had just 135 miles of range with a modest 1,300 pound trailer attached. Extrapolating to 135 * 400/90 = 600 miles. This of course would be an overkill; 200kWh and 300miles seems more reasonable.

However some capacity needs to be added to compensate for the increased weight and size of the battery itself, then maybe some to compensate for the longer recharge times (which would put an incentive to make less stops). In the end of the day one may find they need 250-300kWh battery pack to find an EV practical for towing on long trips.

Andy

People don’t buy trucks to tow a small 1,500lb caravan like that, they buy trucks to tow 5,000lb+ trailers like this:

http://image.trucktrend.com/f/58211598+w660+h495+q80+re0+cr1+ar0/toyota-tundra-towing.jpg

Just a little bit more weight and wind resistance. A pickup is also going to be less aerodynamic than a Model X too.

Take the proposed figures for the Rivian pickup – 180kWh for 450 miles, that’s 225 miles with a small teardrop camper behind it, so you’re probably looking at close to 150 miles with a proper trailer behind, so a 300kWh battery would give you around 250 miles of towing, which is why 400kWh may be a requirement for some people.

Another Euro point of view

Great comment, as always.

REXisKing

Once the engine is out of compliance it’s not a cheap engine any more.
Also catalytic converters aren’t cheap either.

LevinK
Doggydogworld, it’s true that BEVs are currently cheaper to operate, but I think that may change over time. One big source of less cost per mile is the absence of fuel taxes for EVs, which in USA are in the order of ~50c/gallon (state + federal); this works to about 2c/mile using 25 MPG average, or ~$240/year if driven 12,000 miles. In Europe and the rest of the world taxes tend to be much higher, up to $5/gl in places like Norway. At $5/gl we are talking about $2400 a year in fuel taxes alone. It is a matter of time the governments start collecting those taxes from EVs too. They won’t let EVs enjoy the free ride if they become wide-spread. For example here in GA, they already started taxing EVs a flat $200/year for fuel taxes. In terms of cost per mile the cost difference then closes and for some economy cars almost disappears, a simple back of the envelope: 1) ICE car 25MPG, $2.80/gl -> 11.2 c/mile 2) Toyota Prius HEV 52MPG, $2.80/gl -> 5.3 c/mile 2) Typical EV, 4 miles/kWh, 10c/kWh rate -> 2.5c / mile + 2c (tax) = 4.5c /mile. It’s true that EVs… Read more »
Doggydogworld
You’re right about taxes, LevinK. I usually do my math on a pre-tax basis. As you show, BEV fuel is usually a little cheaper than Prius (or Camry Hybrid), a lot cheaper than normal ICE. That 7 cent/mile advantage is $10k over a 150k mile typical car life cycle. I also agree the maintenance advantage is overblown. I’ve spent less than $0.01/mile on my van. 100k miles with original spark plugs, brake pads and transmission fluid (Tesla recommends gear oil and filter change at 50k, I think). Robotaxi operators should pay less than 10 cents/kWh, especially if they provide FCAS and other grid services. A 3 cent/mile fuel+maintenance savings is $15k over 6 years/500k miles. I don’t share your battery concern. Tesloop’s original Model S needed a new battery at 200k miles. Bjorn’s early Model X battery died after 67k miles of abuse. It seems Tesla/Panasonic made a change in mid-2016 which improved longevity, though. Tesloop’s five 2016+ Model Xs with 200k+ miles and two with 300k+ are all are all on the original battery and drive train. In theory the NMC most BEVs use should last even longer than Tesla’s NCA. Nissan Leaf’s LMO is a different story, of… Read more »
Jean-Baptiste Labelle

They already beat ICE, today. See my real life example above.

Pushmi-Pullyu

“BEVs have cheaper power trains but REALLY expensive fuel tanks. They compete best against ICEVs with powerful engines and small fuel tanks, like sports cars and performance sedans. The numbers just don’t work for small economy cars.”

But over time, as auto makers figure out how to build EVs more cheaply, the numbers will work for less profitable market segments. This isn’t generally the way that disruptive tech revolutions progress; generally the new tech enters the consumer market at the bottom and works up. (For example, the earliest consumer-grade digital cameras had lousy pixel resolution.) With BEVs, oddly enough it’s the reverse.

comment image

Jean-Baptiste Labelle

We are not saying it, we are seeing it. Watch what is happening. A 60k$ EV is killing the ICE, TODAY, in front of us.

Steve

Reuters has about a month longer to peddle this nonsense.

After that, Tesla’s financial results will be out, and it will be plain that you only lose money making BEVS if you don’t know how to do it properly.

Andy

And then we can say what?

EV’s are profitable if in the luxury vehicle segment?

I’m sure most EV’s will become profitable in future, but there’s going to be quite a large transition time where regulation is the only thing forcing manufacturers to make EV vehicles as they’ll be losing money on vehicles that have a TCO greater than their ICE equivalent. The up front cost and the TCO will be putting off a lot of buyers, which is one of the reasons the established manufacturers are taking small steps into the EV market, rather than jumping in wholesale.

G2

BEV TCO has been lower for years; go peddle that garbage on the ignorant, Andy.

Andy

Nope, it’s very dependent on what you use it for and what vehicle it is. The ICE equivalent of the Leaf for example (the Nissan Pulsar) is around half the price of the Leaf, that’s a lot of fuel and a lot of miles needed to pay that back – more than the average driver does.

If TCO has been lower for years then what’s the point of all these rebates and incentives? If they’re not needed then they can be scrapped right?

Jean-Baptiste Labelle

Which comparable ICE is half the price???

Andy

Nissan Pulsar. But most compact hatchbacks start in the 15k-18k price range. The Leaf is around 30k+ starting (note Nissan roll in rebates and incentives into their website prices, hover over the * on their price to see the actual price sans government rebates).

Admittedly trim for trim it’s not half price, but that’s largely because the EV models don’t have the lowest trim levels. Trim for trim it’s around 10k more, which means it’s still >10 years to pay back the difference for the average driver.

This price variation isn’t unique. Just have a look at vehicles like the Hyundai Nero. There’s a £12k difference between the EV and ICE version at the same trim level (the ICE version has a lower trim too, so base trim is around £14k less).

REXisKing

We’ll say EV’s are profitable for Tesla, and no one else, as they didn’t attempt to get battery unit costs down.

deine Mutter

Renault Nissan is profitable in the EV segment. The i3 is profitable. The Smart ED is profitable.

pjwood1

Reuters and KBB are part of the status quo sewer, where “form follows function” doesn’t matter. Even if batteries become cheaper, there’s friends in racing, parts manufacture, auto journalism, oil…

Most aren’t aware Tesla’s ecosystem avoids the normal channels of used car’dom, where KBB and Rebecca Lindland make their money. It’s getting to the point fealty has claimed sports car writers, who’d sooner get paid waxing about CUV/SUVs, than a visceral electric ride.

This is “follow the money”, 101.

Andy

normal channels? Care to expand.

People still sell used EV’s, people will still get a garage to check them over etc etc.

What’s the difference between selling a used EV and a used ICE?

Pushmi-Pullyu

The difference is that Tesla has a very attractive CPO program, paying top dollar for used Tesla cars. It’s strange that anyone would choose to sell their used Tesla car outside that program. I put it down to many people not recognizing that they might well be better off selling their old car rather than trading it in as part of the deal for buying a new one.

Yes, I’m sure that Kelly Blue Book very much sees Tesla’s business model as a threat to their company. It is a threat, and a very serious one.

However, I’m rather skeptical that Reuters is part of the vast array of organizations working against Tesla. I see per the Wikipedia page that Reuters has been accused of having a bias toward denying climate change, but I don’t think they have a strong political bias in the way that, say, Fox News or The Guardian have.

TJKR

This is pure stupidity. The only reason why EV’s are not profitable is because no one is making like 100 million of them a year. Once there are a handful of gigafactories built crankingout batteries to build a few million cars a year, battery pack/power train will reach cost parity with engine, transmission, exhaust system, fuel enjection system, ignition motor, catalytic converter.. etc.. all junk that is obsolete and will never see again in 10 yrs. This Rebecca Lindland is just another FUD that works for an organization designed to inflate used car values… specifically ICE used cars. Too bad ICE used car market is bound to crash as people will considere them to be about as practical as a horse and buggy.

Roy LeMeur

I miss the sound of buggy whips and horse hooves 😀

William

I want the artificial sound ” of buggy whips and horse hoofs”, coming out of my EV, while at low speeds!

TJKR

And I want my EV to fart rotten egg smell out of a fake exhaust!

Pushmi-Pullyu

Just have your passenger bang two halves of a coconut shell together rhythmically, with an occasional pause to slap the dash with a ping-pong paddle.

Pushmi-Pullyu

But… but… but.. how can people possibly drive cars without experiencing the pleasure of that delay between pressing the gas pedal and the car surging forward, or without smelling the sweet perfume of a noxious poisonous exhaust pumping massive amounts of CO2 into the air?

(Warning: The above comment may contain traces of sarcasm.)

Alaa Sadek

Jerks

Another Euro point of view

You did not get it.

Instead:

1/ agree/disagree

2/ explain why.

A third option is to vent the fact that you had a bad day by being vulgar but to avoid when possible.

James P Heartney

I’ve said before, given the complexity of ICE drivetrains, it’s amazing humans have built so many, and have made them dependable enough to use as daily transportation. As EV production ramps up, EV drivetrain prices have a long long way down to go, given how much simpler they are and how cheaply they can be made in mass quantities by a mature industry. The battery pack has always been the hard part, but give engineers another decade to optimize them and they’ll be much cheaper.

Alex

I agree with you, but if you look at prices of electric motors they’re not that cheap, and the market for them it’s just gigantic.
While motors for cars aren’t like any other motor they’re based on same principles and tech that exists for decades.

Another Euro point of view

Yes I also found out that electric motors are expensive despite being made in millions, not yet found a good explanation for that.

Magnus H

A lot of copper in the windings? Complex build process?

Another Euro point of view

Gut feeling we have is that lots of moving parts and complicated system are expensive and unreliable. Car industry is the living evidence that our gut feeling is wrong. No moving parts inside my laptops/smartphones however each of them proved a lot less reliable (due to software bugs) than any of the cars I had in the last 30 years.

James P Heartney

Pretty sure your laptop isn’t designed to last for decades. If someone wanted to spend the money, they could make the hardware much more robust.

I’m remembering the old 300 baud modems we used to have. Built like tanks, and thrown out while in perfect working order because they were obsolete. Engineers learned their lesson, and now we get hardware that’s meant to die in time to make us buy the next generation.

Get Real

LMAO, Another Euro is still trying to justify his owning a “clean diesel” Audi instead of an EV.

Pushmi-Pullyu

Right. The idea that EV powertrains can’t be made cheaper than ICEV powertrains, when the gas engine alone has 200-300 moving parts… that’s pretty myopic thinking. The costs for BEV powertrains — even including the batteries — will come down quite quickly when auto makers actually start building them in quantity.

Patrick

Electric Powertrain prices are dependent on the price of copper. ICE are made out of cheap materials like aluminum and steel and are more depending on volume an complexity.

If you got up to 30 kg copper in your motor your paying (5.44 €/kg) over 150€ just for materials. Depending on the volume you might get anywhere form 200 to 500€ to manufacture.

Jean-Baptiste Labelle

Model III PSRM motors have nearly no cooper.

Jiri

What a BS.
So if it’s only caused by regulations why on earth are people (ordinary people, not millionaires) are buying Tesla vehicles for over 50 000$???
Because they are better to own, much more fun to drive and we don’t give a st how much gasoline jumps.

G2

Nice LICE paid for PSA Reuters! In other news, LICE Overhead ensures they lose money continuing to produces complex, expensive, wasteful, polluting and slow vehicles.😀😀

Pushmi-Pullyu

“The Reuters article suggests that customers don’t want to pay more for electric cars, which cost more to produce. Rebecca Lindland, a senior analyst at Kelley Blue Book, told Reuters, ‘Demand doesn’t justify investment at all. It’s all regulation’.”

Yeah, that’s why Tesla got an unprecedented 455,000 paid reservations for the Model 3, and that’s why sales of that car have grown so much faster than any other in the entire world. It’s because of the regulations.

Oh, wait…

* * * * *

The world, it is a-changing. In the EV revolution, players in the automotive industry can lead, follow, or get out of the way. They can’t stop it, no matter how hard they try!

John

Analysts talk about McDonalds in the 3 minute conversation that follows electric cars. And then they talk about pharmaceuticals for another 3 minutes. And then move on to a company in the defense industry. Wash, rinse, and repeat. Analysts know a smidge about a lot of companies, period. And like lobbyists, they pander to the companies that they serve. And run down the competition. The fact that emotional sheeple even regard them as experts defines the phrase, “There’s one born every minute.” It’s pathetic the power that they wield, added to the fact that they have no accountability on their coin-flip predictions.

Paul GOVAN

Carmakers want it both ways:
– on the one hand they tell us that EVs require far fewer production workers and that 100’s of thousands of jobs will be lost globally because EVs are far simpler to produce – and yet they’ll still cost more to produce.
All those salaries, pensions, health insurance contributions etc that won’t need to be financed…

See TWO Reuters reports:

“Switch to Electric Cars Threatens 75,000 German Auto Industry Jobs” :
https://www.reuters.com/article/us-germany-electromobility-jobs/switch-to-electric-cars-threatens-75000-german-auto-industry-jobs-idUSKCN1J115L

“Hyundai Union Head says Electric Cars Destroy Jobs – EVs are Evil” :
https://www.reuters.com/article/us-hyundai-motor-union/hyundai-union-head-fears-gm-like-crisis-says-electric-cars-destroy-jobs-idUSKBN1H20YZ

Paul G

CarGuy

Reuters in general is anti EV and anti Tesla. I am not sure why.

Samwise

Maybe someone at fuddy duddy old Reuters should talk to Carlos Ghosn, after all he has been selling EVs at a profit in Japan and Europe for several years now. It’s simply a question of scale, any manufacturer who can build 100,00 electric vehicles a year can make a profit.

Antonio Briz Ena

Underline reading: if you focus your manufacture in big SUVs and luxury berlines you have to fight with Tesla, so you’ll loose money for sure. Jaguar ipace, MB EQ and audi etron too expensive while Tesla is better tech, real supercharging charging mesh and same price.

Leo B
The Reuters piece seems to expand on a report published earlier by European car industry lobby group ACEA. The original report is here: https://www.acea.be/press-releases/article/negative-job-impact-of-forced-electric-car-push-underestimated-by-european This report was released as lobbying material for the EU vote on future CO2-emission regulations. Currently car makers must have a fleet average CO2-emission of all cars sold in the EU of 130 gr CO2/km or less. In 2021 this number will drop to 95 gr CO2/km. Up until recently there was no legislation beyond 2021. The European Commission however filed a proposal with the European Parliament for their approval with the following emission goals: 2025: -15% (or 81 gr CO2/km fleet average) 2030: -30% (or 67 gr CO2/km fleet average) The ACEA report was then released to encourage members of the EuroParl to vote against this proposal, because the car makers found it too restricting. However, the environmental sub-committee of the EuroParl took the Commission’s proposal, modified it and put it up for a vote in the EuroParl. Their revised targets were: 2025: -20% (or 76 gr CO2/km fleet average) and minimum ZLEV (*) market share of 20% 2030: -45% (or 52 gr CO2/km fleet average) and minimum ZLEV market share of 40% Yesterday the… Read more »
G2

Good info; thanks Leo B!

Steven

If you’re going to be that way about it, we may as well go back to riding horses. After all, they manufacturer themselves, and left to their own, they will refuel themselves. And when no longer useful, they are very recyclable.

Andy

It’s worth remembering that cars took 30-40 years to become the dominant mode of transport over horses, and some places still use horses. Cities were the first place cars became dominant in 15-20 years, with country taking much longer.

There’s still a lot of life and a lot of ICE models to go before EV’s become dominant throughout the western world, let alone worldwide. We don’t have to go back, we just have to realise that it takes longer than a few years to transition from one mode of transport to another, and in many places the transitioned “technology” will still have it’s advantages.

terminaltrip421

“According to the article” and that’s where you provide a link to said article.