Tuesday, July 5, 2022


Every time it seems like there’s good news for the future of electric vehicles (the YIN), there’s a new delay in delivering the dream (the YANG).

 In the USA, the order books are full of customers who will wait two years before the EV they’ve dreamed about and splurged on sits on their driveway. Not only that, before they take delivery, they’ll be paying more than they planned.


The reality shattering the dream is not new. Huge price increases in the rare metals used in the manufacturing of the huge battery packs; shortage of chips, and the need to make a profit are pushing EV prices higher, and higher.


Ford says recent material cost increases have virtually wiped out profit margins on the Mach-E.

GM has raised Hummer EV prices by almost USD$10 grand, and in a call with analysts last week Elon Musk said Tesla, which has lifted the prices on its Model Y SUV (below) three times this year says it will almost certainly lift prices on all models.

Musk also reported that ALL of Tesla's factories are losing money!

All three companies assured analysts they will attempt to curb price increases over the next 12 months by striking supply deals directly with the source producers of rare earth metals.


Right now EVs are being bought by early adopters, but despite the cost pressures, analysts say the car companies may have to reduce prices to broaden the sales profile. Given that car companies have to answer to shareholders, selling EVs at little or no profit is hardly appealing.

According to the WSJ, EV prices have risen 22% from a year ago, whilst the price of ICE cars has risen only 14%.


Whilst Wall Street analysts are enthusiastic about the potential growth in EVs helping the companies’ bottom line, the levels of investment are rising rapidly.

According to Detroit consultant Alix Partners, the planned investment in EVs has doubled in the past two years, exceeding USD$526bn!


If you’re thinking that EVs are not meant for the hoi polloi you’re not far off the mark. Only the rich will be driving EVs for a long time. In the last year the percentage of EVs in the giant US car market is a flat 5%. In Australia, EV market share is just 2%.


The VP of data and analytics for JD Power said: “Car companies will need to make EVs accessible to more than the affluent.” Well, duh! “For mass consumer adoption the industry still has to find a way to get cheaper EVs to market.” Well, duh! Again!


The cheapest American-built EV in the USA right now comes from GM, the Chevy Bolt, with GM cutting the price by USD$6,000 to USD$27,000.


The cheapest EV in Australia at the moment is the Chinese-built MG HS at around $50,000!


When you can buy a well-specc'd Hyundai i30 ICE for around $23,000, it’s hard to imagine anything less than 10 years to payback the EV investment.

So the for moment would-be EV buyers – dream on.



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