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> I'd spend nothing until the EV I can produce is expected to have profit margins on the order of my other vehicles in that class I think posing the question a
by dv_dt 8y ago
> I'd spend nothing until the EV I can produce is expected to have profit margins on the order of my other vehicles in that class
I think posing the question as a ROI calculation misses context that going forward at some level of risk is how you get the data to model a much better profitability operating point.
Until you produce a few models of EV yourself, how can you know your cost estimate is anywhere near accurate? Add in the uncertainty in the speed of drop in the cost of central components like the batteries and I suspect the uncertainty is sufficiently high to surround both sides of the threshhold where if you set up for a go, you don't know if it will be more or less profitable and the ICE equivalent.
However, if you don't start now, and your competitors do start down the path, then you might end up with a ICE line of cars where your competitors are posting costs well below yours and eating your market share.
- Gibbon1 8y ago> I think posing the question as a ROI calculation Posing it as brain dead ROI calculation like an academic economist would just misses pretty much everything about bringing a new design to market and why companies do things. The conundrum is. You never make money on a new blue printed design. You make money reselling tweaks of old stuff. But the reality that you need to innovate or eventually go out of business. Never innovating and eventually going out of business is a valid strategy. That's basically the hedge fund strategy. But companies that aren't controlled by capitalists never do that because there is nothing in it for the people that run the company. Since that's VW they'll they chose to lose money innovating. So the company stays in business and they keep their jobs and status.
- dv_dt 8y ago> But companies that aren't controlled by capitalists never do that I would say that there are a range of companies that are to different mixes of being ruled by accounting vs ruled by innovation. Ironically, I would say the companies most ruled by accounting are the ones with the best foundational resources to make targeted innovation bets (but don't because the ROI doesn't pencil out...).
- Misdicorl 8y agoEVs are tweaks though. Nobody buys ICE vehicles. They buy sedans, trucks, SUVs, etc. What the engine uses as an energy input doesn't matter and won't for another decade.
- Gibbon1 8y agoYou're thinking of classes of vehicles. Where what I'm referring to is major components, engines, transmissions, suspension, structural design. Those designs tend to be very long lived on the order of 15 to 30 years. Designing from scratch takes a long time and results in teething issues as the design flaws get worked out. The expense and time it takes stretches the ROI out. Tweaks involve modifying already well understood systems. Risk is limited, return on investment is quick. Allows you to keep making money.
- Misdicorl 8y agoBut once your competitors demonstrate feasibility, it should be no problem to spin up your own offering, no? You'll be behind by X months, but unless the competitors get an absolute smash hit, thats probably not a big deal.