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EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies. But more straightforwardly, look at Tesla's marg
by 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.
- runako 5y agoExactly. In fact, Toyota has better economies of scale on its side, so their raw materials costs will be lower than Tesla's all things being equal.
- danans 5y ago> Gross margin ... doesn't include workforce cost. I don't think that's right. From https://www.investopedia.com/terms/g/grossmargin.asp https://www.investopedia.com/terms/g/grossmargin.asp "The Formula for Gross Margin Is Gross Margin=Net Sales−COGS where: Net Sales=Equivalent to revenue, or the total amount of money generated from sales for the period... COGS=Cost of goods sold. The direct costs associated with producing goods. Includes both direct labor costs, and any costs of materials used in producing or manufacturing a company’s products." It wouldn't surprise me if a lot of Tesla employees are compensated in large part via equity, therefore lowering their apparent labor costs. Also, they probably have lower health insurance costs for their relatively young workforce (they are more like a young tech company in this way). Of course, battery prices will continue to decline, so in the long run, yes, EVs will be cheaper to buy, but I'm not convinced we are there quite yet. They are already far cheaper to operate, though.