Electric vehicles are supposed to be the future, but right now, many car companies are losing money on each one they sell. A recent study by the Boston Consulting Group found that for every $50,000 electric car (after tax credits and incentives), car companies are losing about $6,000.
So, what’s the deal? The study says that even with improvements in technology and making more electric cars overall, car companies won’t be able to completely close this price gap. This could be a big problem, especially if cheaper electric cars from China start showing up in the US market.
The study suggests a few ways for car companies to start making money on electric cars:
- Get More Efficient: Car companies could find ways to cut costs associated with building electric cars.
- More Government Help: Maybe governments could offer additional financial support for electric car companies.
- Reward Efficiency: Perhaps car companies could get more money from the government for electric cars that can go farther on a single charge or are more energy-efficient.
This is all a bit surprising because some car companies are expecting to be making money on electric cars by now. Looks like there’s still a bit of work to do before electric cars become truly profitable.
Some car companies, like General Motors (GM), were expecting to be making money on electric cars by now. Back in 2018, GM even said they’d be profitable by 2021. It seems like the problem might be volume. Car companies like GM were supposed to be cranking out a ton of electric cars by now, but that hasn’t quite happened.
Tesla, on the other hand, is turning a profit on their electric cars, and it probably helps that they have the most popular electric vehicle on the market (and they don’t have to deal with the cost of making gas-powered cars anymore).
Ford is trying a different approach – they’re focusing on making smaller, cheaper electric cars and building a lot of them. This might be a good strategy to compete with the electric cars that are coming from China.Making electric cars is still more expensive than making gas-powered cars for companies like Stellantis. They can’t just charge a ton more for electric cars to make up the difference.
A few things could help US car companies make money on electric cars: more government incentives, battery prices going down, and maybe even tariffs that make it more expensive for Chinese car companies to sell their electric cars in the US.
So, what’s the takeaway? Making money on electric cars is proving to be a bit trickier than some car companies expected. They’re working on solutions, but for now, electric cars are still a bit of a money loser for many automakers.
