Regulations are pushing automakers to sell electric vehicles (EVs), and many have confirmed ambitious model launch plans over the next few years. The trouble is that very few are making money on the existing line-up. The latest figures from Ford show that it is losing US$36,000 for every EV it builds. Bloomberg reports that Lucid, which targets the luxury market, makes an eyewatering US$338,000 loss on every car.
And it’s not as if these vehicles come cheap. They still carry a hefty price premium—McKinsey estimates US$15,000-US$20,000 on average—over their internal combustion engine (ICE) counterparts. But at the same time, they cost more to produce, and automakers haven’t been able to recover those costs through pricing. GM has said it aims to reduce fixed costs in 2024 on EVs by about US$20,000 per vehicle compared to 2023.
On top of that, the investment costs are high. In a recent investors note, Morgan Stanley’s Adam Jonas referenced how GM was “spending US$36m per day trying to be the ‘next Tesla’.” It’s not working. All this investment, a range of expensive models, and still EVs don’t represent a lucrative business proposition for most.
