Learn what is needed to make electric vehicles turn a profit.
September 15, 2020
Learn what is needed to make electric vehicles turn a profit.
The global auto industry is scrambling to meet carbon-emission mandates and, currently, EVs appear to be the solution of choice. Unfortunately, advances in battery technology and cost are not cooperating.
Cutting the cost of batteries is probably the industry’s most urgent challenge. Batteries are estimated to account for 35%-45% of EV total costs. Unless EV costs/prices fall, absent major incentives most consumers are likely to continue to opt for traditionally powered motor vehicles.
To date, EV sales in most jurisdictions have been supported by unsustainable incentives. Recognizing this, regulators have begun to shift away from incentives and are moving to mandates. Mandates require manufacturers to either meet specific fleet emission goals or to sell a specified number of EVs, regardless of consumer interest.
This could lead to very attractive pricing for EVs as manufacturers scramble to meet quotas. In effect, the cost of subsidizing EV sales has shifted from government (incentives) to manufacturers (lower prices).