Quote:
Originally Posted by KoenG
Indeed, EVs are much simpler since they can ditch the most expensive mechanical compounds of the car. Also the ones that conceive dominantly the hart and soul of a car, sadly enough.
Nevertheless, when the BEV becomes mainstream, the retail prices will get adjusted also. That's the commodity magnet that translates technology advancements into lower retail prices and this is a dominant law in economics.
Most car manufacturers are not asking for this, they feel obliged to go this direction. Doing this transition is no doubt a very difficult and expensive one. But more and more customers ask for it, mainly because of the lower TCO (tax deductability/running taxes).
In Europe, BMW and some other manufacturers are fighting against this transition and certainly the speed imposed.
|
Don't be so sure that retail transaction prices will decline for EVs, although they are less costly to manufacture than ICEs. Automakers today have a share of consumers' wallets they don't want to give up, for 4 tires and a steering wheel. A vehicle is a commodity, an appliance. Like a toaster.
Did Tesla enter the market with a lower price for an apples-to-apples equivalent transportation solution compared with ICE? They entered the market with a higher price for an equivalent transportation solution.
In 2030 the expectation is that 30% of global new vehicles built will be EV. This means 70% will have an ICE of some type. This means EVs and ICE will live in the same commercial marketplace together for a good long while.
When transportationally equivalent ICE and EV products are sitting in the same showroom, carmakers and dealers will resist lowering price for an EV, for what is essentially the same product delivering most of the same customer benefits as an ICE vehicle. For those who insist on an EV, carmakers and dealers will gladly charge the highest price the market will bear to those consumers. If the consumer balks at a high EV price, they always have the option to buy an ICE vehicle. But for consumers who cannot tolerate ICE, they need to pay the money for an EV.
This is a perfect trap for carmakers and dealers.
Profit margin on the ICE will remain essentially what it is today, with profit margin on the EV substantially higher because it is produced with tens of thousands fewer workers.
KoenG Will you please share your view of price and profit as it relates to ICE, hybrid and EVs? Thanks.