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> EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers. Please explain. This runs cou

by danans 5y ago

> EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers. Please explain. This runs counter to the common understanding that unless a manufacturer scales up their battery production significantly, their profit margins on EVs are lower due to the high cost of the batteries. The California compliance EVs were sold at a per-unit loss. Tesla shook this up by targeting and marketing to the luxury market, where they could charge a premium. Many smaller scale non-luxury manufacturers have pretty lackluster EV offerings (looking at you, Subaru).

Animats 5y ago
Margins will initially be better on EVs for all EV manufacturers. Right now, where there's an electric and a gasoline powered version of a comparable model, the electric version seems to cost about US$10K more. See Ford F-150, Chevy Bolt, BMW iX. That needs to stop.
- runako 5y ago
  > the electric version seems to cost about US$10K more Disagree. F-150 Lightning XLT is ~$5k more than the ICE equivalent, which means it costs less after the tax credit. (I'm not sure the baseline model is the same as the baseline ICE F-150.) The Bolt and iX are essentially compliance/concept vehicles that don't have ICE editions, so you can't say they cost more than their comparable models. Once those two get real EV strategies, we will be able to make direct comparisons between e.g. the Chevy Tahoe and the Chevy Tahoe EV.
  - nwienert 5y ago
    They are consistently 10k more, see the id.4 or Mach E for better comparisons.
    - runako 5y ago
      Neither of those have ICE versions (and did not have ICE versions in any recent years), so you can make up any number and say the EV versions are $X more expensive. There may be some premium, but arguably some of that is the manufacturers targeting a consumer price net of tax subsidy ($7,500+).
runako 5y ago
EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies. But more straightforwardly, look at Tesla's margins as an object proof. Their gross margin is 50% higher than Toyota's, and Tesla is still sub-scale for an auto manufacturer. I would expect any EVs shipped in any meaningful volume to realize similar margin gains versus ICE vehicles. > The California compliance EVs were sold at a per-unit loss. Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV is when they attach their existing brand equity to an EV. The Chevy Bolt fails this test, as do the BMW EVs. I think this distinction is important because automakers have the capability to sell vehicles that they do not intend to be part of their strategy or scale to meet demand. The California compliance EVs also obviously fail this test. The Ford F-150 Lightning is a real EV, as is the Mustang Mach-E and the Volvo XC40. I don't believe Subaru has even announced a real EV yet, as the Solterra does not count. We will know Subaru is serious when they deliver an Impreza EV; until then, I consider all their EV offerings as compliance vehicles.
- danans 5y ago
  > EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies I agree with all of this, but how can we be so sure that is the reason for: > Their gross margin is 50% higher than Toyota's vs Toyota being an older and larger company with far more overhead due to an older and larger workforce. > Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV Agreed, and I think deciding to make a real EV comes down to investing in battery production at this point. Subaru in particular is really losing the crown in its key markets like CA and CO to the new AWD EVs entering the market.
  - tinyhouse 5y ago
    > Their gross margin is 50% higher than Toyota's > vs Toyota being an older and larger company with far more overhead due to an older and larger workforce. Gross margin is net sales minus the cost of goods sold, hence doesn't include workforce cost.

by danans 5y ago

Animats 5y ago

Margins will initially be better on EVs for all EV manufacturers. Right now, where there's an electric and a gasoline powered version of a comparable model, the electric version seems to cost about US$10K more. See Ford F-150, Chevy Bolt, BMW iX. That needs to stop.

runako 5y ago
> the electric version seems to cost about US$10K more Disagree. F-150 Lightning XLT is ~$5k more than the ICE equivalent, which means it costs less after the tax credit. (I'm not sure the baseline model is the same as the baseline ICE F-150.) The Bolt and iX are essentially compliance/concept vehicles that don't have ICE editions, so you can't say they cost more than their comparable models. Once those two get real EV strategies, we will be able to make direct comparisons between e.g. the Chevy Tahoe and the Chevy Tahoe EV.
- nwienert 5y ago
  They are consistently 10k more, see the id.4 or Mach E for better comparisons.
  - runako 5y ago
    Neither of those have ICE versions (and did not have ICE versions in any recent years), so you can make up any number and say the EV versions are $X more expensive. There may be some premium, but arguably some of that is the manufacturers targeting a consumer price net of tax subsidy ($7,500+).

runako 5y ago

EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies. But more straightforwardly, look at Tesla's margins as an object proof. Their gross margin is 50% higher than Toyota's, and Tesla is still sub-scale for an auto manufacturer. I would expect any EVs shipped in any meaningful volume to realize similar margin gains versus ICE vehicles. > The California compliance EVs were sold at a per-unit loss. Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV is when they attach their existing brand equity to an EV. The Chevy Bolt fails this test, as do the BMW EVs. I think this distinction is important because automakers have the capability to sell vehicles that they do not intend to be part of their strategy or scale to meet demand. The California compliance EVs also obviously fail this test. The Ford F-150 Lightning is a real EV, as is the Mustang Mach-E and the Volvo XC40. I don't believe Subaru has even announced a real EV yet, as the Solterra does not count. We will know Subaru is serious when they deliver an Impreza EV; until then, I consider all their EV offerings as compliance vehicles.

danans 5y ago
> EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies I agree with all of this, but how can we be so sure that is the reason for: > Their gross margin is 50% higher than Toyota's vs Toyota being an older and larger company with far more overhead due to an older and larger workforce. > Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV Agreed, and I think deciding to make a real EV comes down to investing in battery production at this point. Subaru in particular is really losing the crown in its key markets like CA and CO to the new AWD EVs entering the market.
- tinyhouse 5y ago
  > Their gross margin is 50% higher than Toyota's > vs Toyota being an older and larger company with far more overhead due to an older and larger workforce. Gross margin is net sales minus the cost of goods sold, hence doesn't include workforce cost.