Tesla is one of the few players who actually make money from their electric cars. However, they are manufacturers of one of the world’s best-selling cars and invested in electrification from day one.
The American consulting firm The Boston Consulting Group appreciates that most car manufacturers lose an average of SEK 65,000 per electric car sold, something that seriously affects profitability.
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Many parameters
Achieving profitability in electric car manufacturing is no easy match. Electric cars require huge investments and are decidedly capital intensive.
The most effective way to increase profitability is to ramp up production, but that assumes that the cars are actually sold.
Tesla’s enormous production capacity, well-thought-out manufacturing processes and flexibility in terms of pricing have made them successful in the art of making profitable electric cars.
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Electric cars are a necessary evil, but the question is how to make them profitable. (Photo: Marcus Berggren) Can be problematic
Another way to increase profitability and in turn be able to depress prices can be derived from government subsidies, something that Chinese players benefit from and which we have reported on before.
BCG believes that subsidies are required to stimulate sales, which in turn increases production. In the future, electric cars must become a more realistic option for the common man.
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The solution is volume
BCG believes that the solution has to do with volume. Ford recently communicated a strategy that involves focusing on smaller, cheaper electric cars and, in turn, investing in volume.
Currently, Ford loses close to SEK 400,000 per electric car sold.
Stellanti CEO, Carlos Tavares, has said that electric cars cost 50 percent more to manufacture than the fossil cars, but that it is not something that can be charged for.
More subsidies, increased protectionist measures to prevent the entry of Chinese players, and increased volume are what are needed to make EVs profitable for all manufacturers.
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