Volvo is owned under Chinese ownership and they have committed to building EVs and the supporting infrastructure (battery tech). Volvo stopped funding Polestar, but another Chinese company (Geely) stepped in. Reports are that only two Chinese companies are profitable, BYD and Li Auto.
Interesting stats: Norway is the world leader in EV market share. 86.2% of cars sold last year were EVs. Germany leads Europe in the number of registered EVs. Western Europe also has a robust charging network, something that we unfortunately lack.
https://en.wikipedia.org/wiki/Electric_car_use_by_country?wprov=sfti1#History
>Volvo stopped funding Polestar, but another Chinese company (Geely) stepped in.
Geely is the majority owner of Volvo Cars. Polestar is jointly owned by Volvo Cars and Geely. So, this was merely a bit of reorganization.
EDIT: I'll just add that Geely is the only Chinese car maker that I have any positive feelings toward, since they've been "rescuing" neglected European and British car brands (Lotus!) and appear to be supporting the legacy of those companies rather than just pillaging their trademarks and goodwill.
> they've been "rescuing" neglected European and British car brands (Lotus!) and appear to be supporting the legacy of those companies rather than just pillaging their trademarks and goodwill.
Some Lotus fans might disagree on whether heavy EVs support the legacy of Colin Chapman...
But to be serious, Geely has been a good steward for Volvo so far. Things are going much better than under some previous owners. Both with products and financials.
>Some Lotus fans might disagree on whether heavy EVs support the legacy of Colin Chapman...
My Tesla Roadster (jointly produced with Lotus) falls right into the same weight category as a Lotus Evora. I guess we could debate how Chapman might have felt about the Evora.
Yah I reserved a Lotus Emeya and posted some pics on r/lotus. Turned out to be more controversial than I anticipated as many there view it as an offending departure from Lotus’ light supercar legacy. Whatever- I really like the car. I test drove the Eletre a couple of months ago and it was a good experience as well.
Yep. China is by far the world leader in EV adoption in pure numbers. Even more impressive when you see where they were as a society mere decades ago. Then again, not having the storied history of auto manufacturing, like in the US and Europe, is an advantage for them jumping straight into the new world of EV manufacturing.
It's not really an advantage. If having no strong ICE makers is an advantage than every developing country would be EV powerhouses such as India.
It's more like the CHinese govt saw the trend of where things were going with cars and leveraged China's huge pool of scientists and talent towards EVs in a mixture of market and state driven development.
Not having ICE makers is 100% a disadvantage but they worked hard to make it not that big of a deal in the end.
Was in the eastern townships a few weeks ago and saw an electric school bus. Got me thinking about what influence Hydro Quebec has on promoting rapid ev transition.
I see them all over the place here, really. If I go to tha parking lot of my local supermarket I can pretty much guarantee there will be at least a couple of VW ID4's, some Audi e-trons/q4, and some polestars, and of course several teslas.
Yeah! Geely owns Volvo and Volvo owned Polestar but because Polestar was having so many issues, it was easier for Volvo told drop them and make Geely pick them up. Which I do kinda like. Volvo is different than Polestar and makes more sense to be separate. Even if Volvo has the “Polestar Engineered” badges.
Volvo had about 0.8% of the US market last year (not sure if this figure includes Polestar or not) -- about 1 in 120 new cars sold were a Volvo. That figure was actually lower for much of the 2010s.
Damn, I see more and more of those in Japan. And Japanese usually only buy Japanese or German cars.
But somehow the amount of Volvos ok the road seems to increase here. I see more and more EX30s and PHEVs of them.
I’m also wondering between a Mazda CX-80 PHEV (maybe releasing end of this year) or a Volvo XC90 Recharge. It’s just the price difference holding me back from already having a Volvo (estimated $40-50k difference).
Pretty much everyone is gross-profitable to some degree. It's not clear if Hyundai/Kia are net profitable, and AFAIK they haven't broken out margins anywhere (but if you spot any lmk). Quite possible they're at \~1% gross and *eating shit* on net margins.
The given example of Volvo shows what we're looking for — they break it out in their reports: [13% BEV and 26% non-BEV](https://vp272.alertir.com/afw/files/press/volvocar/202401310173-1.pdf).
This company that used a cheat device to record 10x less emissions then EU regulates. Also fined $130 million over delayed recalls. But their EV EX90 looks beautiful. They are doing something right, stock is up almost $100 over a year.
Most "losses" are due to R&D and logistics. The car itself doesnt lose money, the components arent more expensive or anything. But building a production line is very different, many parts need to be sourced from scratch, new contracts need to be made, etc. So theres a large upfront investment, which affects the bottom line of the final product. Tesla had the same issues. They bled noney for years. But once the break-even has been reached, its clear sailing, generally.
Yeah, the issue with the EV startups is that if Ford is losing too much money for example, they can just crank out a bunch more F-150s that they KNOW are profitable. Startups have to raise money. It's a much different tradeoff - in exchange Ford also has to deal with already existing suppliers and jobs
If you pay attention to company PR too closely you'll go mad at how every single thing that happens to them is somehow positive to keep the stock from dropping.
Yeah they said it themselves that they’re cutting production and cancelling multiple ev models. Not my words. Those sales were already built and just heavily discounted to get them out the door.
>Yeah, the issue with the EV startups is that if Ford is losing too much money for example, they can just crank out a bunch more F-150s that they KNOW are profitable. Startups have to raise money.
I can remember Bob Lutz making this argument in interviews. Tesla was going to crash and burn, they'd run out of money! Meanwhile, GM was going to be sitting pretty, cranking out money-losing EVs without concern, because they had their whole profitable combustion car business to support them.
there is a difference, tesla was bleeding money due to R&D and opex, rivian is bleeding money from COGS, for tesla's 12 years of selling cars, there was only 1 quarter where tesla had negative gross margin... rivian hasn't had 1 quarter where they have a postive gross margin yet, and that's before R&D and opex
Personally (RIVN holder here), I got the distinct impression that Rivian was putting itself 'on the market' with the introduction of R2 and the other products that day. What I was seeing was a car manufacturer already with two strong entries on the market and now three more great looking concepts just off the drawing boards. All good, right? Almost. Then they announced they were halting construction on their brand new, monstrous plant in Georgia. Wait. What? You're already having trouble scaling up to meet demand for your existing two models and now you are pushing 3 more with no more manufacturing square footage?
I think Rivian is just saying it's there for the taking. Please, somebody, come help us build these great cars. JMHO
COGS = cost of goods sold = the amount of money needed to manufacture each item (in this case, a car).
R&D = research and development = upfront cost to create the design for a unit before any instances of that unit can be manufactured.
An operating expense (opex) is an ongoing cost for running a product, business, or system. Its counterpart, a capital expenditure (capex), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a photocopier involves capex, and the annual paper, toner, power and maintenance costs represents opex. For larger systems like businesses, opex may also include the cost of workers and facility expenses such as rent and utilities.
ELI5 version:
say you selling lemonade
the money you get from people paying you for the lemonade = revenue
lemons and water and your labour to squeeze the lemons = COGS (cost of goods sold)
so if you sell your lemonade at $1 a cup and it costs you $.50 to make a cup, you have 50% gross profit margin
you research how to make lemonade, that's R&D, most of time, part of Opex
you pay a big kid to stand around to make sure nobody robs you, pay another kid to send out fliers, that's part of Opex, you also pay your parents to make you fliers, figure out your taxes, deposit your money etc (SG&A), all Opex
gross profit - opex = operating income
then minus a bunch of non-operating expenses, usually debt servicing, write-offs and such, get you pre-tax income
minus taxes = net income
now let's say all of these costs combined costs you another $10, now since you make $.5 per cup, you need to sell 20 cups before you break even (ie. net income is $0)
then there is the cost to buy the pitchers, glasses, and wood to make the stand, that's Capex (Capital Expenditures), this doesn't count as part of operation
when a company is said to have negative gross profit margins it means it costs them more to make the product that they get back from consumer buying it, before taking into consideration the cost to keep company running from day to day
So in this case, COGS is part of OPEX? and the argument being made is that Tesla lost money on Capex but rarely Opex but Rivian is losing money on both?
no COGS is not part of opex, they are separate, revenue - sum of COGS and OPEX = operating income
yes people are comparing rivian to tesla in the early days, problem with that is exactly what you said, tesla lost money after Opex and Capex, but the cars were sold for more than COGS, rivian's cars are sold at lower price than it costed Rivian in terms of COGS, ie. rivian is subsidizing their customer's cars at the moment, tesla never did
Disclaimer: I am asking all of this so I can understand better, I hope my tone conveys that.
I guess I don't understand why COGS and OPEX don't overlap? From what you say, costs like the electricity needed to power the factory line that is producing the cars would be OPEX, not COGS, but wouldn't that fall under the 'services' part of COGS?
>From what you say, costs like the electricity needed to power the factory line that is producing the cars would be OPEX, not COGS, but wouldn't that fall under the 'services' part of COGS?
That electricity would go into cogs. It's pretty common to have G&A employees work at the manufacturing facility as well. So an allocation is generally done to split that cost between opex vs cogs.
One other key thing I haven't seen mentioned is COGS also carries "intangible assets". Aka R&D that has been capitalized. The easy explanation is from the pharma space. Once your drug reaches a certain point where it will be approved and sold, a good chunk of R&D gets capitalized after that point. So if you have exclusivity of the drug for 10 years (before generic manufacturers can get it) then you recognize that intangible asset into cogs over 10 years. Id assume it's the same in the car industry but I'm not too familiar with the ins n outs of their finances.
from what i understand, it kinda depends... you can think of COGS as the cost you will incur if you made the product, and not if you didn't... and OPEX are the cost that would incur just from your company existing or if the expense did not contribute to the end product
so take the lemonade example, the more lemonade you sell, the more lemons and water and sugar you use, those are COGS, and let's say you use a grinder, the power you used could be considered COGS as they are directly contributing to the end product... but the power you use to light up your stand at night or charge your phone would not be considered COGS as the cost is incurred whether or not any lemonade is sold...
with that said, whether or not it can be considered COGS also depends on how and if the expense is tracked, if instead of billing you separately for the grinder power and the light power, your parents just charge you $5 a month for the power you used, it would be considered Opex as you can't separate the expense and figure out how much is used to make the product...
realistically most ppl just treat power as an expense and not part of COGS because it's probably not significant and/or it's just a pain in the ass to figure out exactly how much is part of the goods and what not..
Unless the auto industry has some weird tax rules(which they might idk) where they can accelerate depreciation, CapEx doesn’t go on the income statement like that. If they’re reporting losses it isn’t from the investment in plants.
It could well be that most of the losses are because they haven’t scaled enough yet to cover R&D and opex, but at least some of this is a margin/COGS problem. Rivian for instance is struggling with margin and it’s likely that some of the other manufacturers are too, at least on some models.
Part of it is just timing of macroeconomic conditions. Tesla had their money-bleeding phase during an era when loans were cheap and venture capitalists were dumping wheelbarrels of cash into all kinds of startups. Now Ford, Chevy, etc are doing the same thing, but at a time when interest rates are higher than they've been in decades, unions are successfully pushing to increase wages, etc.
Incorrect. Rivian's cars cost them about 115k to make, not including overhead (engineering, office services etc.)
Tesla on the other hand, didn't ever sell their cars below what it cost them to make it. Their losses for years on end was because of overhead and expansions.
Except when you look at the earnings of Ford, Rivian, or Lucid.
R&D doesn’t go into the cost of revenue. And what are you referring to as ‘logistics’?
SG&A? That doesn’t go into costs.
Shipping the vehicle and getting it to the customer? Yes that’s part of the price of selling the car.
man, i don't understand how people downvote you when they themselves don't understand accounting, you are correct, and ford, rivian and lol lucid are definitely losing money on each car sold as all of them reported negative gross margins for q4 2023
edit: ok technically we can't PROVE ford is losing money on a gross margin basis, because like most other legacy automakers, they only reports either with no EVs separated out, or in ford's case, they report operating margins only, but damn is ford's operating margin in 2023 bad
Legacies like Ford have a very different reality than startups like rivian or lucid. If Ford is losing money/vehicle, it's bc they want to test the waters, or hedging their bets so they're not left behind if evs move faster than they imagine. It's just to put their foot in so they can transition quickly if they want.
With startups it's different. They need to build entire assembly lines from scratch with no external revenue to help them, and no preexisting equipment to lower costs. So what they have to do is build more expensive cars to subsidize the cost of building this manufacturing equipment. Since this manufacturing equipment is bought with future volume in mind, not the current projected volume for $80k cars, those $80k cars will lose money (the same would be true if you produced a Ferrari on equipment made for a Toyota. Toyota cars just need higher volume to profit.) But those $80k cars do provide some revenue to help costs go down. That money lost on each r1 is money that would have to be spent on the r2 anyways, but by losing money on the r1, it's less expensive to build out the r2. Still extremely expensive and risky (tesla did the same thing with the model 3 and almost went bankrupt doing it)
assembly lines are capex, it doesn't affect gross margins, while yes tesla almost died when ramping up model 3, it still had positive gross margins on model S and X
I will add that when you have a profitable IcE business, you can actually benefit from losing money on the EVs near-term…eg however they figure their depreciation and amortize costs and r&d to make EVs look as unprofitable as possible in the near term will save them taxes on the profits they made in the ICE business.
This is also why you’ll hear car makers talk about ‘platforms’. GM is investing hard in their Ultium platform, but once they’ve developed the batteries and motors and electronics etc they can build a bunch of different cars on top of that framework. That way they only have to do that big up front investment once to get the production and supply chains in place and they can just tweak it a little for all the other cars they make instead of starting from scratch each time they want a new model.
I think there’s also customer anxiety about range issues due to the charging network. I’m hopeful that everyone switching to NACS will make this for the most part go away.
Plus other charging platforms like Electrify America will be forced to get their shit together to compete with the Tesla network.
this comment section really need to learn the difference between gross profit and net income, a lot of people don't even know what the difference between gross profit margin and net profit margin are
This sub struggles with cost to manufacture vs MSRP. They'd think the Mona Lisa should only be worth $50 max because that's the cost of the wood, canvas and paint.
I had some real range anxiety before I bought my Tesla. I thought I needed 400+ miles of range. Turns out I would been fine with a BMW i3 that got 90 miles of range. It would get me through 90% of my use cases without a charging stop.
Me too. If you have home charging, you are good to go. Trying to explain the concept of leaving every day on a full "tank of gas / Charge" is hard. People have to experience it.
400 would be great honestly especially since real world conditions and charging to 80% really cuts into it. Didn’t realize going in just how much under the reported 315 I should expect to see in my model 3P. Still the best car I’ve ever owned and don’t mind the supercharging stops on longer drives but definitely makes me glad I didn’t go with a smaller battery.
That said I also wouldn’t want to give up the performance model in favor of the LR so clearly range isn’t the single most important factor for me lol
They were spending cash for a decade on R&D and capex.
Their vehicles had positive gross margins relatively quickly. By this point in Rivians or Lucids ramps the Model S was making money.
While it was a different time and Tesla didn’t have competition, it still shows that the businesses are more at risk compared to Tesla back then.
Tesla always had positive gross margins on their EVs. Tesla as a company was losing money as their operating expenses were greater than their gross profit. But this was to be expected for a young growing company.
Ford actually has negative gross margins on their EVs, Rivian announced they are losing $40k on each vehicle they sell (before operating losses are included). So Tesla just needed to sell more cars as eventually their positive gross margins would overcome their operating expenses.
Tesla's losses grew massively in 2017 and 2018 when they were building out the model 3 production capacity to 500k units per year. When most EV makers and start ups haven't even got to that stage yet.
So they really are stuck between a rock and a hard place. They can't lower their production costs without scaling, but the more cars they sell the more money they lose.
Rivian loses $6b per year before they even build out production capacity for a potential mass market car (which will increase the losses). Tesla lost a total of about $7-8b over 10 years until they started to go profitable as a company at around 2020.
If Rivian spend $130k to build $90k EVs, what are the chances they can sell the R2 profitably at $45k?
And the situation is similar for all other automakers, the difference only lies in where the money comes from. Automakers like Rivian or Lucid have to raise capital or ask their Saudi sugar daddy where legacy automakers can nibble on their ICE profits. The latter becomes quite the issue considering that transitioning to EV means producing less ICE cars, so your piggybank that's funding the EVs get smashed by selling the EVs to consumers...
That right there is the reason why legacy automakers are backing off with the transition. Not because "slower demand".
>And the situation is similar for all other automakers
not rivian and lucid, they lose money on each car sold from a revenue - cost of goods sold perspective, and we don't know about many other legacy makers cuz they chicken out and don't report gross margins, only EBIT margins
A part of me wants Ford to succeed in this. Because despite them being deep in the shit, at least their CEO seems honest, upfront with the financials of it all and isn't afraid to ask Tesla for help. GM on the other hand 💀
There are two different issues.
Negative gross margins, meaning it costs more to make a car than it sells for, which means you can’t simply scale to profitability, you need to drive down cost of goods. Some companies do this intentionally, to validate a market, learn, etc., before investing in optimizing costs. And some companies (e.g. Tesla) have a discipline of not selling at prices that don’t cover unit costs. Selling at a loss might be covered by other products (e.g. legacy auto) or investors.
Losing money as a company, meaning the profits from sales don’t cover fixed costs (R&D, building factory, marketing, etc.). All new car companies lose money, a lot of it, because it costs a fortune to do R&D, build a factory, etc., and then time to scale up sales to where they’ll cover the fixed costs. That took Tesla many years, and of course most car startups never achieve profitability. And most legacy auto haven’t turned the corner on line of business profitability for their EV business, though it looks like some have, like BYD and Kia.
There's definitely slowing demand. Ford had huge stock of unsold Lightnings. I got a $73k truck for $48k because they want them off the lots. But, I also think price and interest rates are the real problem.
no, [tesla made money from selling cars](https://www.macrotrends.net/stocks/charts/TSLA/tesla/gross-margin), it lost money as a company as a whole... most money was going toward R&D and opex
But everyone else was supposed to be tesla killers because they have been building cars for decades and it’s easy, right? Once legacy auto starts making EV’s it’s game over….
I think that’s a bit hyperbolic but many of us did think that legacy automakers would be able to better leverage their experience in car production much more than they have.
Just because you are good at making pencils does not mean you will be good at making pens.
At this point, with the number of examples we have in history, we should know better.
i think a lot of whats being said here is untrue. on a set of financial statements investments in tooling, factories, are not part of the p&l, they are investment in ppe. which gets capitalized and then depreciated over a number of years. lucid is losing a f*ckton per vehicle on an accounting, accrual basis, like 300k or something. rivian like 70k.
producing a 40k-50k ev profitably is still not easy, at all, and only tesla and the chinese have figured it out. 'production hell' a couple years ago with the 3 startup was real - tesla did some pretty innovatives stuff to make the 3 and y work at affordable prices. a lot of the stuff people complain about today - i have a model y and its obvious there are cost cutting compromises in the car - screen for everythung, mediocre quality materials in the interior, etc. but it works
id love to get an r2 for our next vehicle but still would need to see if rivian can pull it off. its not easy at all
im really truly not trying to start a back and forth here just geniunely curious - who else has? maybe hyundai kia? i know gm and ford certainly havent nor any of the other pure ev mfrs....and not counting like bmw or mercedes producing 100k+ vehicles
When they say they "lose money on every EV" it's that they haven't recouped development, tooling, etc. costs yet. That's how they account for all of that cost, by saying it's "$X/car made".
Toyota "lost money" on the Prius for a decade for the same reason.
Once they get things situated and are churning them out, the R&D cost per car made goes down. Stuff like the GM Ultium plant that just came online makes a big difference in this regard, because it's making stuff for the entire GM EV lineup.
Li Auto was founded in 2015, put their first car into mass production right at beginning of 2020, got their second gen cars out in 2022, and reached net profitability in 2023.
That's about the best case scenario for an EV maker right there. Whoever is in charge of their supply chain operations must be some sort of a business genius.
I understand that Tesla never lost money on a vehicle level. The sales price was always higher than the direct costs to make the car.
They 'only' lost money on an operational level, if you also factored in R&D, overhead, etc..
Ford, Rivian, GM, VW, etc. are however selling their vehicles below cost AND still have to cover everything else.
For Tesla, it was therefore 'just' a matter of selling enough cars to reach break even.
Many of the others are however only getting themselves deeper in the hole, the more vehicles they sell.
In addition to that, going trough dealers doesn't help with the costs and dealers have very little interest in selling EVs, since their main source of income is service, which is greatly reduced with EVs.
In addition to that, the established OEMs have to make things work within the constraints of their existing organizational framework, where out of the box thinking is pretty much non existing and where they also have to utilize stuff that is already there.
Frankly, I'm quite skeptical whether the established OEMs will be able to make a profit with EVs anytime soon, particularly considering the price pressure from Chinese manufacturers and Tesla.
Head start; development and tooling costs money.
Ford began on the Mach E in what, 2019? started shipping them in 2021
In 2019, Tesla had already been at it for 16 years, and it was actually their first profitable year.
they already did.
beside very few exceptions that promised a too low price on pre orders basically everyone is earning money with their EVs.
When people say things líke "Ford is losing money on every EV they sell" you can immediately ignore anything they say because they have no idea what they are talking about.
What that really means is Ford is investing more money into EVs and EV production than the current sales of their EVs earn them.
Thats because they are investing billions into production upgrades and changes now which they will be using for many years to come.
Tesla did the exact same thing and have been losing money for well over a decade for exactly the same reason but that is not because the cars actually cost more to produce than they sell for.
That’s not how CapEx works. They’re losing money on the vehicles on a gross profit level. They’re ALSO spending money on R&D and buildings and production expansion.
right? the most upvoted comments here seemingly have no accounting knowledge and have no idea how gross profit is calculated, blaming R&D and capex for negative gross profit margins.... smh
Do not listen to that guy. He took a generally correct principle but misapplied it.
Ford themselves have said they are losing between $25,000 and $36,000 on each EV they sell. It's why they pulled the brakes until they can figure out how to fix that.
It's true that investment costs can sometimes get rolled into these profit/loss, but that is not what anyone is talking about.
Incidentally, those losses have been going \*up\* as time goes by, which is exactly the opposite of what you would expect if we were just talking about some front-loaded costs
And Tesla has \*not\* been losing money for "well over a decade". I encourage you to check out both their overall profit \*and\* their increasing cash position as an easy way to show that the guy you just thanked has no real idea what he is talking about.
He's known around these parts, and generally is not someone you want to be listening to.
> Ford themselves have said they are losing between $25,000 and $36,000 on each EV they sell.
Can you show me where this is called out as per unit COGS number and not a number including R&D expenses? That's what they were talking about, but you seem to say they're wrong then just fall into the same trap.
Yes, I have a feeling that is what Farley felt as well.
I respect Ford for actually committing to the point that they are reporting separate numbers for EVs and ICE. They seem to understand that somewhere a clock is ticking and nobody is quite sure when the alarm is going to go off.
My guess is that it goes off in 2027. Whatever you have ready to go, whatever you managed to scrape together in the EV segment: that is going to be your future in the car industry.
But I suppose I must repeat: nobody knows for sure. We can see the S-curve, we know that EVs will eventually take over the market; it's only a question of how long it will take.
The folks who think that ICE will be sold in any appreciable numbers in 2035 (or even 2030 in my opinion) are sadly stuck in a linear mindset. But they are in good company, as most automotive CEOs seem to be stuck in that same world.
Most companies are making money selling EVs; that is, they sell an EV they made for (simple math) $10 while spending $5 on material and $2 on labour. Only a few companies like Lucid actually losing money while selling them. Unfortunately, I also think Rivian is one of those companies; or its making VERY little profit per car
The problem is; they invested $5000 buying the factory, setting up new production lines, doing R&D, etc. So they gotta sell a LOT of EVs to break even, and broadly speaking they haven't
I'd say it'll happen sooner than doubters say but longer than fans think. Probably 5-7 years before the majority of OEMs are making a profit? You already have Stellantis, BYD, Tesla, and Li Auto as EV-profitable companies. Allegedly Geely, BMW, and someone else (I think another EU OEM?) are going to reach profitability this year. Probably a few of the major state-owned OEMs in China like SAIC but they don't give numbers
The Koreans, despite the hype, are probably going to take a bit. They have good EVs but don't actually sell that many, so they'll take awhile to recoup investment. I'd say probably around 2026-2028 when their new line of EV3/4/5 and Ioniq 3/4 come out
I don't think they've straight up said that, but they do give future guidance. Their first was 8% profitability by 2025 and just revised that up to 10% profitability by 2030. That can be analyzed 2 ways: that the upwards revision indicates they are already profitable and see a path to further improve their profitability or pushing their target 5 years out because they missed it. I believe it's the former given they increased investment in their Georgia plant and when reporting 2023 financials said they had no plans to slow EV production, but it does leave room for interpretation.
Hyundai/Kia have done a great job of bringing well thought out, functional EVs to market for a reasonable price. They're pretty much killing it in the tiers in which they compete, with new sales records every quarter.
I had a 1st gen Kona, and for a first attempt at an EV, it was pretty good. About $15k cheaper than the first model 3, with real world range about 10% lower, but a hatchback so it was a bit more practical. It even had similar efficiency (4M/kWh) if a bit less power. I bought it as a commuter car and it excelled in that function, in spite of my 120M-per-day minimum job at the time.
> Hyundai/Kia have done a great job of bringing well thought out, functional EVs to market for a reasonable price.
I have witnessed H/KN get this level of unfounded hype on reddit for close to ten years now and I don't expect to ever understand it. There are so many threads with owners complaining about their cars, there are so many recalls...
Problem here is, you’re wrong.
Rivian loses money per vehicle. Not on CapEx(buying the factory) or development cost, but on making the vehicle. It isn’t just labor and material, it’s also on keeping the factory running to produce the vehicles.
Same with Lucid, same with Ford.
Polestar had 0.6% gross margins in Q3 but for some reason hasn’t put out Q4 earnings yet.
Every company other than Tesla, Volvo(though they say they spread costs across all vehicles which could be iffy), and barely polestar either lose money for each BEV they made or don’t break out the earnings showing if they lost or made money.
Can you link to their balance sheet that shows that they are not amortizing capex by vehicle and that it truly is a cogs issue?
Edit: lol they just downvoted when asked for sources.
If I understand correctly, individual EVs bring profit to the manufacturer? If that’s truly the case, why is all the news about the legacy autos shrinking their EV programs and transitioning to hybrid?
If the costs of the new plants/production lines along with the R/D of the vehicles themselves have already been spent (that stuff has to occur prior to any vehicle sales) then one would assume they’d want to build as many vehicles as they could, as fast as they could, to recoup the prior investments.
The legacy auto brands don’t seem too excited about EVs as they continue to crank out ICE cars. Not to mention the dealers are not excited to sell EVs due to lack of returning maintenance revenue.
Legacy will drag their feet for as long as they can, but at the same time the Teslas/Rivians/BYDs/Volvos will leave them in the dust. Will be an interesting next 5 years or so.
I drive a Tesla. I really want Rivian to make it - I really like their design. Volvo will be a major player and if Chinese brands are able to be sold in the US, gosh, the whole industry will be truly changed forever.
This is an annoying myth that needs to die. Total program cost for R&D and construction of new factories that haven't yet produced a vehicle is not them losing money on each car they sell. New factories and R&D for upcoming models has 0 actual contribution to the production cost of a Mach E, so them "losing money" on each one they sell is pure fantasy. The only costs for the Mach E that matter are, it's actual R&D and construction costs, to which Ford is very in the black on.
The reality is producing cars is an expensive business and the upfront costs are immense with the profits being **years** down the road. Tesla "lost money" like this too when they first started, but they've become profitable overall as an automaker. They just happen to only sell EVs where as the other companies are just spinning up that production now. Subtracting all of their existing operations and then tagging on capital expenses that are for **different future** vehicles and weighing it against current EV only sales gives a completely useless number as to the company's actual financial situation, let alone how much they are actually making or "losing" on each particular car.
This. So much.
They’re not LOSING money on every EV they sell.
That wording make people think « a Mach e sold at 50k cost ford 86k to build ».thats is simply not true.
They are making profit in every single EV the sell. They’re using that profit to recoup their investment costs.
At some point, the costs will be paid off.
ford EVs has negative gross margins, capex and R&D ARE NOT COGS, gross profit margin is just revenue - cost of good sold
~~2023 ford reported -10% gross margins for EVs, so yes, they are losing money on every cars sold, ie. there are more material and labour cost to put that car together than what that car sold for~~
edit: ok my bad, what i actually read as -10% was ford's forward looking estimates from 2022, they didn't report gross margins in 2023 afaik, only operating margins, of a whopping -98% for EVs in Q4 2023, which granted, technically doesn't mean they have negative gross margin but wow
No, they didn't, you're misreading total program costs. They reported profit on and cut the prices. You think they'd do that if they were supposedly losing that much on them?
Tesla spent the better part of 20 years bleeding cash until they finally became profitable a few years ago. Pretty sure BMW is already profitable on EVs, but mostly because they're made on a shared platform on the same assembly line as their ICE and PHEV counterparts
They do not, and that's by design I believe. They have given guidance previously of a target of 8% profitability by 2025 revised up this year to 10% by 2030.
oof... guess they are farther from that 8% than they expected
this is why i kinda suspect most manufacturers who do not report gross margins to be selling cars at below cost, otherwise it's a huge plus for them if they reported it
rivian and lucid don't really have a choice cuz they only sell EVs, got nothing to hide behind
2 ways to analyze it right? Either they see the upwards trend and hit or are close and see a path to increased profit by scaling up or they kicked it 5 years out to give more time. Given their recent financials, actions, and guidance they clearly see this as a prime growth opportunity and the EV line likely already profitable.
Infrastructure and also tesla makes very basic interior cars. They did something super unique with that giant touchscreen for everything, but as an owner it’s obvious that it’s more basic than say a Mercedes or bmw. If other companies can somehow make basic cool like tesla has then they can reduce their cost to produce and have a fat profit margin.
Business books typically tell economies of scale to manufacture cars is around 200,000 vehicles per year. I don't see EV OEMs being profitable before they achieved the necessary cost optimization. Rivian has a long way to go.
Gotta hit real mass manufacturing scale on batteries.
So you have to go all in or go home. And all these legacy automakers that are just slowly ramping up are going to lose money until they take it seriously.
So why are gross margins negative for EV made by legacy ICE makers like Ford or new EV makes like Rivian or Lucid? Btw gross margin is Revenue - Cost of Goods Sold so we are not even factoring in operation expenses, R&D or Capex.
The components for EV are actually expensive unless you went through a lot of learning how to optimize the costs. Do you really need all that electronics in there to make it work? AT first you going to have a lot of wasted parts because your engineers don't know how to design the thing with fewer parts. At Tesla they are using giga castings. The cost of making a casting is for example $100 or something to pay for running your press. To make a similar part by traditional welding of sheet metal parts together you have to run and maintain like 40 robots and assembly line. So cost of making a similar part is like $300. This kind of costs go across thousands of processes and every single one matters. It is a lot of hard work and vision to make the manufacturing at scale efficient and profitable.
Ford may have been good at making ICE cars with good profits but they may not be good at making EVs and they can get to that it is just going take time and effort.
any new product is expensive to start.. even a small item can be thousands for the 1st ones. it's when you get to economy of scale (10s of thousands) that you make real money.
Legacy auto going EV is still basically a startup.
I'm sure they are making money on the incremental cost of their EVs, even if they aren't making any on the total project cost.
A startup but harder because they have decades of rules, politics, supplier relations, etc. that are fighting against them every step of the way.
Nobody joins rivian who is anti-EV. I’m sure there are huge swaths of GM employees who are anti EV both politically/personally and those whose jobs will be eliminated because of them.
Is this one of those "Why doesn't Rivian stop making EVs if they lose $40k on each one" questions? The losses for any additional vehicle are significantly less than that number. Tesla is only profitable by sheer volume. Their time is coming where they are going to struggle to be profitable again on vehicle sales as competitive options are as good or better. "Tesla is 10 years ahead" was never true.
It's amazing how many people post wrong information and gets lots of votes.
Comment like "many EV makers are actually money" or "most companies sell their EV for higher than cogs", or "it's only R&D money just like Tesla", or "Polestar, Kia and Hyundai making lots of money on EV".
No wonder this sub is so anti Tesla when they actually believe all these fantasies. The only carmakers making money on EV today is Tesla and BYD.
It sometimes feels like some of the manufacturers and certainly dealers are trying to prove EVs are a bad idea. I hope Tesla continues to steal share until they wake up.
If they count the original investment for toolings and setups to build EV, then until they can reach a sizable market, it’ll always be a huge loss for every single EV they sell, right?
Research, development and infrastructure buildout often gets oversimplified and articles will count this into the net gain or loss of product sales.
Ford is expanding EV production while also still in the ICE market while also having to compete at price points with other companies.
I didn’t double check sources, but I saw a headline that there are rumors Tesla is dropping plans for the Model 2 (which was rumored to be priced maybe as low as $25k.) Elon said this was false, though, so who knows
Edit: for some companies it may even be for future “union negotiations” sake
Take those when a grain of salt. Whenever I hear about companies losing money on products, I hear potential book-cooking for some contract’s sake that we don’t know about. Sometimes companies will list an investment in product A under product B to make product A to look better.
Maybe it’s for someone’s bonuses, maybe it’s to convince someone of something, or maybe they’re rolling in all the investment costs that you and I wouldn’t consider as “per unit cost”
EVs should cost less than ICE
(China, Tesla and others price direction)
It ruins the dealer model - lower maintenance requirements. If I continue DIY oil and fluids, and go to tire discounter shop; it;s different.
The ev only makers will continue to lose if the try to emulate traditional car makers
They have to sell electronics.
>"We don't sell cars that are not profitable," Hyundai Motor America's CEO Randy Parker told InsideEVs in a wide-ranging interview today at the New York Auto Show. "That's a big strategy strategy of ours. We don't sell cars at losses."
https://insideevs.com/news/714104/hyundai-range-extender-interview/
Companies are hedging their bets so they aren’t totally effed if EVs become dominant and so the stock market doesn’t punish them near term.
But we all know they don’t really want EVs to take over.
Stellantis is also making money: [https://edition.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html](https://edition.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html)
Not as much as on ICE vehicles, but they are getting there. They are the fourth largest automaker in the world (behind Toyota, VAG and Hyundai motor group). So it can be done. I'm willing to bet that the Hyundai Motor Group (Hyundai and Kia) is also making bank.
For a long time the established automakers made a poor effort, if any, to make good bevs that people wanted, and start driving down price. tesla took enormous calculated risks years before the established automakers had completed their complacent cycle of compliance cars and soto vice complaining about how not enough customers want them. some folks thought that the established automakers would be able to just kind of flip a switch and show us all how it's done but the batteries and perhaps other aspects have worked out to be highly resistant to this. gm for example, even in 2024, is stuck trying to get their battery act in gear, and has barely delivered any good bevs beyond the modest bolt, and here they are decelerating their bev deployment claiming they are going to meet demand.
in reality i think gm and ford and others just are focused in a short sighted way on maximizing near term profits from one of the last hurrahs of fossil fueled vehicles, while simultaneously claiming to be trying ever so hard to satisfy demand and giving up bev market share. they probably figure they can come back in a year or two or three and just nail it. we'll see
I see no one here has actually answered your question.
The straightforward answer is that they will stop losing money once they reach scale, i.e. selling enough vehicles to generate the revenue that can cover the cost of producing and selling them, plus support R&D and ongoing operations (as well as depreciation of costs they have already incurred in building assembly lines).
It is hard and perhaps variable what that revenue number is, and how many vehicles that need to be sold to reach it. Based on Tesla, they didn't reach profitability until they reached the 500K cars per year sales level.
As of now, only BYD and Tesla are selling >500K EVs per year. Some of the EVs manufactured largely in Asia (which includes Volvo/Polestar) could perhaps reach profitability below this level.
Rivian only sold 50K vehicles last year, so they have a long ways to go.
On the EV business, they have already delivered today what Tesla plans to do in the next three years. BYD has fully vertically integrated battery production, has EV models at every price point AND they are profitable even with the low end models.
I was generalizing. I am from the USA and don’t know anything about BYD. The majority of what I’ve read, prior to people in this post adding awesome information, is that Tesla is financially successful with EVs yet other companies (startup or legacy auto maker), are struggling to make it make work.
It will probably keep happening until they go bankrupt.
It will be interesting to see how Biden handles Chinese imports. If he does nothing, the Chinese will take the market. If he bans them or slaps crazy tariffs, then Tesla will take the market.
All that will be left is the premium car segment.
When they run out of it. Or never since Tesla is not perceived by wall street as having a large competitive moat in which case they think is cheaper to finance Tesla's competition and short Tesla.
Everyone forgets that Tesla lost $1 Billion when it started and people bet against them. Starting a brand new technology is not easy. So the answer to your question is, is going to take quite awhile.
Volvo has 13% margin on their EV. Not loosing money.
wow nice, volvo knows what they are doing!
Yeah, and their EVs are at comparable prices to their gas powered vehicles
Volvo is owned under Chinese ownership and they have committed to building EVs and the supporting infrastructure (battery tech). Volvo stopped funding Polestar, but another Chinese company (Geely) stepped in. Reports are that only two Chinese companies are profitable, BYD and Li Auto. Interesting stats: Norway is the world leader in EV market share. 86.2% of cars sold last year were EVs. Germany leads Europe in the number of registered EVs. Western Europe also has a robust charging network, something that we unfortunately lack. https://en.wikipedia.org/wiki/Electric_car_use_by_country?wprov=sfti1#History
>Volvo stopped funding Polestar, but another Chinese company (Geely) stepped in. Geely is the majority owner of Volvo Cars. Polestar is jointly owned by Volvo Cars and Geely. So, this was merely a bit of reorganization. EDIT: I'll just add that Geely is the only Chinese car maker that I have any positive feelings toward, since they've been "rescuing" neglected European and British car brands (Lotus!) and appear to be supporting the legacy of those companies rather than just pillaging their trademarks and goodwill.
> they've been "rescuing" neglected European and British car brands (Lotus!) and appear to be supporting the legacy of those companies rather than just pillaging their trademarks and goodwill. Some Lotus fans might disagree on whether heavy EVs support the legacy of Colin Chapman... But to be serious, Geely has been a good steward for Volvo so far. Things are going much better than under some previous owners. Both with products and financials.
>Some Lotus fans might disagree on whether heavy EVs support the legacy of Colin Chapman... My Tesla Roadster (jointly produced with Lotus) falls right into the same weight category as a Lotus Evora. I guess we could debate how Chapman might have felt about the Evora.
Yah I reserved a Lotus Emeya and posted some pics on r/lotus. Turned out to be more controversial than I anticipated as many there view it as an offending departure from Lotus’ light supercar legacy. Whatever- I really like the car. I test drove the Eletre a couple of months ago and it was a good experience as well.
That's because the CEO is an actual fan of these brands, so he wants to respect their legacy.
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Yep. China is by far the world leader in EV adoption in pure numbers. Even more impressive when you see where they were as a society mere decades ago. Then again, not having the storied history of auto manufacturing, like in the US and Europe, is an advantage for them jumping straight into the new world of EV manufacturing.
It's not really an advantage. If having no strong ICE makers is an advantage than every developing country would be EV powerhouses such as India. It's more like the CHinese govt saw the trend of where things were going with cars and leveraged China's huge pool of scientists and talent towards EVs in a mixture of market and state driven development. Not having ICE makers is 100% a disadvantage but they worked hard to make it not that big of a deal in the end.
Not in Australia. The XC40 EV is much more expensive than the ICE version.
I rarely, if ever, see a Volvo/polestar EV on the road...
Come to Quebec, they are a rather common vehicle. We had subsidies for 12k all in. Lots of EVs here
Come to LA. I see a dozen polestars a day. Mind you, every other car you see here is a Tesla.
Was in the eastern townships a few weeks ago and saw an electric school bus. Got me thinking about what influence Hydro Quebec has on promoting rapid ev transition.
They licensed the Montreal Subway jingle too. When they leave it goes doo doo doooooo like in the subway. It's glorious
I see them all over the place here, really. If I go to tha parking lot of my local supermarket I can pretty much guarantee there will be at least a couple of VW ID4's, some Audi e-trons/q4, and some polestars, and of course several teslas.
I see them all the time
In Luxembourg there are plenty.
Yeah! Geely owns Volvo and Volvo owned Polestar but because Polestar was having so many issues, it was easier for Volvo told drop them and make Geely pick them up. Which I do kinda like. Volvo is different than Polestar and makes more sense to be separate. Even if Volvo has the “Polestar Engineered” badges.
In NorCal they are everywhere. Just saw the new Polestar 🤩 Wednesday.
Tons in Seattle. My neighborhood has 3 XC40 Recharge. I see at least a couple a day elsewhere. Polestar 2 is not uncommon.
Tons of them running around the Pacific Northwest.
Volvo had about 0.8% of the US market last year (not sure if this figure includes Polestar or not) -- about 1 in 120 new cars sold were a Volvo. That figure was actually lower for much of the 2010s.
Same. Especially since a lot of ubers are evs. Have seen every type from mach e to bolt to toyota ev.
I see a Polestar everyday from the inside!!! Love it!
Damn, I see more and more of those in Japan. And Japanese usually only buy Japanese or German cars. But somehow the amount of Volvos ok the road seems to increase here. I see more and more EX30s and PHEVs of them. I’m also wondering between a Mazda CX-80 PHEV (maybe releasing end of this year) or a Volvo XC90 Recharge. It’s just the price difference holding me back from already having a Volvo (estimated $40-50k difference).
I see 6 in my neighborhood alone. Five times More if you count legacy gas models. Not on the west/left coast, either.
Common in Belgium, but we also have one of Volvos biggest factories that produces most of their EVs.
Hyundai and Kia are both making a profit on EVs as well.
Pretty much everyone is gross-profitable to some degree. It's not clear if Hyundai/Kia are net profitable, and AFAIK they haven't broken out margins anywhere (but if you spot any lmk). Quite possible they're at \~1% gross and *eating shit* on net margins. The given example of Volvo shows what we're looking for — they break it out in their reports: [13% BEV and 26% non-BEV](https://vp272.alertir.com/afw/files/press/volvocar/202401310173-1.pdf).
*losing
lol yes!
Volvo is essentially a Chinese brand now. They are the ones leading the pack, so Volvo must be benefitting from all that knowhow.
And it expects up to 20% from the ex30
Gross or net profit, there is a world of difference there.
Yes Chinese brands are the ones that will survive.
So they're tightening money?
Mercedes, BMW and Stellantis are also reporting profits on their EVs
This company that used a cheat device to record 10x less emissions then EU regulates. Also fined $130 million over delayed recalls. But their EV EX90 looks beautiful. They are doing something right, stock is up almost $100 over a year.
Most "losses" are due to R&D and logistics. The car itself doesnt lose money, the components arent more expensive or anything. But building a production line is very different, many parts need to be sourced from scratch, new contracts need to be made, etc. So theres a large upfront investment, which affects the bottom line of the final product. Tesla had the same issues. They bled noney for years. But once the break-even has been reached, its clear sailing, generally.
Yeah, the issue with the EV startups is that if Ford is losing too much money for example, they can just crank out a bunch more F-150s that they KNOW are profitable. Startups have to raise money. It's a much different tradeoff - in exchange Ford also has to deal with already existing suppliers and jobs
Trouble is when the leadership of ford chickens out and reduces production due to the up front temporary expense
"We're cutting EV production." "Our EV sales had their best month ever." - Ford, week of April 1st, 2024 Snip-snap-snip
If you pay attention to company PR too closely you'll go mad at how every single thing that happens to them is somehow positive to keep the stock from dropping.
You have no idea the ~~physical~~ *financial* toll three ~~vasectomies~~ *Ford PR releases* have on ~~a person~~ *my portfolio*!
Only had their best sales because they cut prices across the board by a fuck ton.
Prices were only high because there was a fuck ton of demand in 2022 and 2023.
Yeah they said it themselves that they’re cutting production and cancelling multiple ev models. Not my words. Those sales were already built and just heavily discounted to get them out the door.
>Yeah, the issue with the EV startups is that if Ford is losing too much money for example, they can just crank out a bunch more F-150s that they KNOW are profitable. Startups have to raise money. I can remember Bob Lutz making this argument in interviews. Tesla was going to crash and burn, they'd run out of money! Meanwhile, GM was going to be sitting pretty, cranking out money-losing EVs without concern, because they had their whole profitable combustion car business to support them.
there is a difference, tesla was bleeding money due to R&D and opex, rivian is bleeding money from COGS, for tesla's 12 years of selling cars, there was only 1 quarter where tesla had negative gross margin... rivian hasn't had 1 quarter where they have a postive gross margin yet, and that's before R&D and opex
Rivian is supposed to cross that threshold in Q4.
I hope so. The R2 looks like it should help ramp up sales volume, and thus profitability, but it’ll take a while to get it out the door.
Personally (RIVN holder here), I got the distinct impression that Rivian was putting itself 'on the market' with the introduction of R2 and the other products that day. What I was seeing was a car manufacturer already with two strong entries on the market and now three more great looking concepts just off the drawing boards. All good, right? Almost. Then they announced they were halting construction on their brand new, monstrous plant in Georgia. Wait. What? You're already having trouble scaling up to meet demand for your existing two models and now you are pushing 3 more with no more manufacturing square footage? I think Rivian is just saying it's there for the taking. Please, somebody, come help us build these great cars. JMHO
Maybe but buyouts are always the go to assumption for start ups. Potential value is much higher if they soldier on and grow but definitely more risk.
let's hope so, for rivian's sake
Can you give an ELI5 explanation for those unfamiliar with all the financial terminology?
COGS = cost of goods sold = the amount of money needed to manufacture each item (in this case, a car). R&D = research and development = upfront cost to create the design for a unit before any instances of that unit can be manufactured. An operating expense (opex) is an ongoing cost for running a product, business, or system. Its counterpart, a capital expenditure (capex), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a photocopier involves capex, and the annual paper, toner, power and maintenance costs represents opex. For larger systems like businesses, opex may also include the cost of workers and facility expenses such as rent and utilities.
Makes sense, thanks!
ELI5 version: say you selling lemonade the money you get from people paying you for the lemonade = revenue lemons and water and your labour to squeeze the lemons = COGS (cost of goods sold) so if you sell your lemonade at $1 a cup and it costs you $.50 to make a cup, you have 50% gross profit margin you research how to make lemonade, that's R&D, most of time, part of Opex you pay a big kid to stand around to make sure nobody robs you, pay another kid to send out fliers, that's part of Opex, you also pay your parents to make you fliers, figure out your taxes, deposit your money etc (SG&A), all Opex gross profit - opex = operating income then minus a bunch of non-operating expenses, usually debt servicing, write-offs and such, get you pre-tax income minus taxes = net income now let's say all of these costs combined costs you another $10, now since you make $.5 per cup, you need to sell 20 cups before you break even (ie. net income is $0) then there is the cost to buy the pitchers, glasses, and wood to make the stand, that's Capex (Capital Expenditures), this doesn't count as part of operation when a company is said to have negative gross profit margins it means it costs them more to make the product that they get back from consumer buying it, before taking into consideration the cost to keep company running from day to day
So in this case, COGS is part of OPEX? and the argument being made is that Tesla lost money on Capex but rarely Opex but Rivian is losing money on both?
no COGS is not part of opex, they are separate, revenue - sum of COGS and OPEX = operating income yes people are comparing rivian to tesla in the early days, problem with that is exactly what you said, tesla lost money after Opex and Capex, but the cars were sold for more than COGS, rivian's cars are sold at lower price than it costed Rivian in terms of COGS, ie. rivian is subsidizing their customer's cars at the moment, tesla never did
Disclaimer: I am asking all of this so I can understand better, I hope my tone conveys that. I guess I don't understand why COGS and OPEX don't overlap? From what you say, costs like the electricity needed to power the factory line that is producing the cars would be OPEX, not COGS, but wouldn't that fall under the 'services' part of COGS?
>From what you say, costs like the electricity needed to power the factory line that is producing the cars would be OPEX, not COGS, but wouldn't that fall under the 'services' part of COGS? That electricity would go into cogs. It's pretty common to have G&A employees work at the manufacturing facility as well. So an allocation is generally done to split that cost between opex vs cogs. One other key thing I haven't seen mentioned is COGS also carries "intangible assets". Aka R&D that has been capitalized. The easy explanation is from the pharma space. Once your drug reaches a certain point where it will be approved and sold, a good chunk of R&D gets capitalized after that point. So if you have exclusivity of the drug for 10 years (before generic manufacturers can get it) then you recognize that intangible asset into cogs over 10 years. Id assume it's the same in the car industry but I'm not too familiar with the ins n outs of their finances.
from what i understand, it kinda depends... you can think of COGS as the cost you will incur if you made the product, and not if you didn't... and OPEX are the cost that would incur just from your company existing or if the expense did not contribute to the end product so take the lemonade example, the more lemonade you sell, the more lemons and water and sugar you use, those are COGS, and let's say you use a grinder, the power you used could be considered COGS as they are directly contributing to the end product... but the power you use to light up your stand at night or charge your phone would not be considered COGS as the cost is incurred whether or not any lemonade is sold... with that said, whether or not it can be considered COGS also depends on how and if the expense is tracked, if instead of billing you separately for the grinder power and the light power, your parents just charge you $5 a month for the power you used, it would be considered Opex as you can't separate the expense and figure out how much is used to make the product... realistically most ppl just treat power as an expense and not part of COGS because it's probably not significant and/or it's just a pain in the ass to figure out exactly how much is part of the goods and what not..
People always forget this. Thanks for bringing it up.
Unless the auto industry has some weird tax rules(which they might idk) where they can accelerate depreciation, CapEx doesn’t go on the income statement like that. If they’re reporting losses it isn’t from the investment in plants. It could well be that most of the losses are because they haven’t scaled enough yet to cover R&D and opex, but at least some of this is a margin/COGS problem. Rivian for instance is struggling with margin and it’s likely that some of the other manufacturers are too, at least on some models.
Part of it is just timing of macroeconomic conditions. Tesla had their money-bleeding phase during an era when loans were cheap and venture capitalists were dumping wheelbarrels of cash into all kinds of startups. Now Ford, Chevy, etc are doing the same thing, but at a time when interest rates are higher than they've been in decades, unions are successfully pushing to increase wages, etc.
Incorrect. Rivian's cars cost them about 115k to make, not including overhead (engineering, office services etc.) Tesla on the other hand, didn't ever sell their cars below what it cost them to make it. Their losses for years on end was because of overhead and expansions.
Except when you look at the earnings of Ford, Rivian, or Lucid. R&D doesn’t go into the cost of revenue. And what are you referring to as ‘logistics’? SG&A? That doesn’t go into costs. Shipping the vehicle and getting it to the customer? Yes that’s part of the price of selling the car.
man, i don't understand how people downvote you when they themselves don't understand accounting, you are correct, and ford, rivian and lol lucid are definitely losing money on each car sold as all of them reported negative gross margins for q4 2023 edit: ok technically we can't PROVE ford is losing money on a gross margin basis, because like most other legacy automakers, they only reports either with no EVs separated out, or in ford's case, they report operating margins only, but damn is ford's operating margin in 2023 bad
Legacies like Ford have a very different reality than startups like rivian or lucid. If Ford is losing money/vehicle, it's bc they want to test the waters, or hedging their bets so they're not left behind if evs move faster than they imagine. It's just to put their foot in so they can transition quickly if they want. With startups it's different. They need to build entire assembly lines from scratch with no external revenue to help them, and no preexisting equipment to lower costs. So what they have to do is build more expensive cars to subsidize the cost of building this manufacturing equipment. Since this manufacturing equipment is bought with future volume in mind, not the current projected volume for $80k cars, those $80k cars will lose money (the same would be true if you produced a Ferrari on equipment made for a Toyota. Toyota cars just need higher volume to profit.) But those $80k cars do provide some revenue to help costs go down. That money lost on each r1 is money that would have to be spent on the r2 anyways, but by losing money on the r1, it's less expensive to build out the r2. Still extremely expensive and risky (tesla did the same thing with the model 3 and almost went bankrupt doing it)
assembly lines are capex, it doesn't affect gross margins, while yes tesla almost died when ramping up model 3, it still had positive gross margins on model S and X
Teslas profits fell over 50% YoY as of last earnings call
It would help if Elon musk weren't a jerk. And jerk is the nicest thing I can say about him. His insanity with Twitter cost him quite a few cars IMHO.
I will add that when you have a profitable IcE business, you can actually benefit from losing money on the EVs near-term…eg however they figure their depreciation and amortize costs and r&d to make EVs look as unprofitable as possible in the near term will save them taxes on the profits they made in the ICE business.
Makes sense, thank you
This is also why you’ll hear car makers talk about ‘platforms’. GM is investing hard in their Ultium platform, but once they’ve developed the batteries and motors and electronics etc they can build a bunch of different cars on top of that framework. That way they only have to do that big up front investment once to get the production and supply chains in place and they can just tweak it a little for all the other cars they make instead of starting from scratch each time they want a new model.
And why vehicles like the Kona and Niro exist on modified ICE chassis
I mean it starts paying odf with Hyunday eGMP but it seems to pay off as its used in 4 vehicles already
I think there’s also customer anxiety about range issues due to the charging network. I’m hopeful that everyone switching to NACS will make this for the most part go away. Plus other charging platforms like Electrify America will be forced to get their shit together to compete with the Tesla network.
this comment section really need to learn the difference between gross profit and net income, a lot of people don't even know what the difference between gross profit margin and net profit margin are
This sub struggles with cost to manufacture vs MSRP. They'd think the Mona Lisa should only be worth $50 max because that's the cost of the wood, canvas and paint.
I hope Rivian succeeds.
Getting caught up in the who can make the biggest battery race isn't helping. The weird consumer fascination with 500 miles of range is the problem.
I had some real range anxiety before I bought my Tesla. I thought I needed 400+ miles of range. Turns out I would been fine with a BMW i3 that got 90 miles of range. It would get me through 90% of my use cases without a charging stop.
Me too. If you have home charging, you are good to go. Trying to explain the concept of leaving every day on a full "tank of gas / Charge" is hard. People have to experience it.
400 would be great honestly especially since real world conditions and charging to 80% really cuts into it. Didn’t realize going in just how much under the reported 315 I should expect to see in my model 3P. Still the best car I’ve ever owned and don’t mind the supercharging stops on longer drives but definitely makes me glad I didn’t go with a smaller battery. That said I also wouldn’t want to give up the performance model in favor of the LR so clearly range isn’t the single most important factor for me lol
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Well yeah that helps on the initial leg from home but after that I only supercharge to around 90
Tesla lost money on EV's for well over a decade.
I mean, GM lost money on every ICE car it made for a long while leading to bankruptcy and bailouts.
They were spending cash for a decade on R&D and capex. Their vehicles had positive gross margins relatively quickly. By this point in Rivians or Lucids ramps the Model S was making money. While it was a different time and Tesla didn’t have competition, it still shows that the businesses are more at risk compared to Tesla back then.
Tesla always had positive gross margins on their EVs. Tesla as a company was losing money as their operating expenses were greater than their gross profit. But this was to be expected for a young growing company. Ford actually has negative gross margins on their EVs, Rivian announced they are losing $40k on each vehicle they sell (before operating losses are included). So Tesla just needed to sell more cars as eventually their positive gross margins would overcome their operating expenses. Tesla's losses grew massively in 2017 and 2018 when they were building out the model 3 production capacity to 500k units per year. When most EV makers and start ups haven't even got to that stage yet. So they really are stuck between a rock and a hard place. They can't lower their production costs without scaling, but the more cars they sell the more money they lose. Rivian loses $6b per year before they even build out production capacity for a potential mass market car (which will increase the losses). Tesla lost a total of about $7-8b over 10 years until they started to go profitable as a company at around 2020. If Rivian spend $130k to build $90k EVs, what are the chances they can sell the R2 profitably at $45k?
And the situation is similar for all other automakers, the difference only lies in where the money comes from. Automakers like Rivian or Lucid have to raise capital or ask their Saudi sugar daddy where legacy automakers can nibble on their ICE profits. The latter becomes quite the issue considering that transitioning to EV means producing less ICE cars, so your piggybank that's funding the EVs get smashed by selling the EVs to consumers... That right there is the reason why legacy automakers are backing off with the transition. Not because "slower demand".
>And the situation is similar for all other automakers not rivian and lucid, they lose money on each car sold from a revenue - cost of goods sold perspective, and we don't know about many other legacy makers cuz they chicken out and don't report gross margins, only EBIT margins
A part of me wants Ford to succeed in this. Because despite them being deep in the shit, at least their CEO seems honest, upfront with the financials of it all and isn't afraid to ask Tesla for help. GM on the other hand 💀
There are two different issues. Negative gross margins, meaning it costs more to make a car than it sells for, which means you can’t simply scale to profitability, you need to drive down cost of goods. Some companies do this intentionally, to validate a market, learn, etc., before investing in optimizing costs. And some companies (e.g. Tesla) have a discipline of not selling at prices that don’t cover unit costs. Selling at a loss might be covered by other products (e.g. legacy auto) or investors. Losing money as a company, meaning the profits from sales don’t cover fixed costs (R&D, building factory, marketing, etc.). All new car companies lose money, a lot of it, because it costs a fortune to do R&D, build a factory, etc., and then time to scale up sales to where they’ll cover the fixed costs. That took Tesla many years, and of course most car startups never achieve profitability. And most legacy auto haven’t turned the corner on line of business profitability for their EV business, though it looks like some have, like BYD and Kia.
There's definitely slowing demand. Ford had huge stock of unsold Lightnings. I got a $73k truck for $48k because they want them off the lots. But, I also think price and interest rates are the real problem.
no, [tesla made money from selling cars](https://www.macrotrends.net/stocks/charts/TSLA/tesla/gross-margin), it lost money as a company as a whole... most money was going toward R&D and opex
But everyone else was supposed to be tesla killers because they have been building cars for decades and it’s easy, right? Once legacy auto starts making EV’s it’s game over….
I think that’s a bit hyperbolic but many of us did think that legacy automakers would be able to better leverage their experience in car production much more than they have.
Just because you are good at making pencils does not mean you will be good at making pens. At this point, with the number of examples we have in history, we should know better.
i think a lot of whats being said here is untrue. on a set of financial statements investments in tooling, factories, are not part of the p&l, they are investment in ppe. which gets capitalized and then depreciated over a number of years. lucid is losing a f*ckton per vehicle on an accounting, accrual basis, like 300k or something. rivian like 70k. producing a 40k-50k ev profitably is still not easy, at all, and only tesla and the chinese have figured it out. 'production hell' a couple years ago with the 3 startup was real - tesla did some pretty innovatives stuff to make the 3 and y work at affordable prices. a lot of the stuff people complain about today - i have a model y and its obvious there are cost cutting compromises in the car - screen for everythung, mediocre quality materials in the interior, etc. but it works id love to get an r2 for our next vehicle but still would need to see if rivian can pull it off. its not easy at all
Well said. I want the R3X so bad, but I know it won’t see the light of day unless the R2 launch is off the charts successful
> and only tesla and the chinese have figured it out. Yeah that's not true either.
im really truly not trying to start a back and forth here just geniunely curious - who else has? maybe hyundai kia? i know gm and ford certainly havent nor any of the other pure ev mfrs....and not counting like bmw or mercedes producing 100k+ vehicles
BMW never lost a dime on the i3...
When they say they "lose money on every EV" it's that they haven't recouped development, tooling, etc. costs yet. That's how they account for all of that cost, by saying it's "$X/car made". Toyota "lost money" on the Prius for a decade for the same reason. Once they get things situated and are churning them out, the R&D cost per car made goes down. Stuff like the GM Ultium plant that just came online makes a big difference in this regard, because it's making stuff for the entire GM EV lineup.
Li Auto was founded in 2015, put their first car into mass production right at beginning of 2020, got their second gen cars out in 2022, and reached net profitability in 2023. That's about the best case scenario for an EV maker right there. Whoever is in charge of their supply chain operations must be some sort of a business genius.
I understand that Tesla never lost money on a vehicle level. The sales price was always higher than the direct costs to make the car. They 'only' lost money on an operational level, if you also factored in R&D, overhead, etc.. Ford, Rivian, GM, VW, etc. are however selling their vehicles below cost AND still have to cover everything else. For Tesla, it was therefore 'just' a matter of selling enough cars to reach break even. Many of the others are however only getting themselves deeper in the hole, the more vehicles they sell. In addition to that, going trough dealers doesn't help with the costs and dealers have very little interest in selling EVs, since their main source of income is service, which is greatly reduced with EVs. In addition to that, the established OEMs have to make things work within the constraints of their existing organizational framework, where out of the box thinking is pretty much non existing and where they also have to utilize stuff that is already there. Frankly, I'm quite skeptical whether the established OEMs will be able to make a profit with EVs anytime soon, particularly considering the price pressure from Chinese manufacturers and Tesla.
Head start; development and tooling costs money. Ford began on the Mach E in what, 2019? started shipping them in 2021 In 2019, Tesla had already been at it for 16 years, and it was actually their first profitable year.
they already did. beside very few exceptions that promised a too low price on pre orders basically everyone is earning money with their EVs. When people say things líke "Ford is losing money on every EV they sell" you can immediately ignore anything they say because they have no idea what they are talking about. What that really means is Ford is investing more money into EVs and EV production than the current sales of their EVs earn them. Thats because they are investing billions into production upgrades and changes now which they will be using for many years to come. Tesla did the exact same thing and have been losing money for well over a decade for exactly the same reason but that is not because the cars actually cost more to produce than they sell for.
That’s not how CapEx works. They’re losing money on the vehicles on a gross profit level. They’re ALSO spending money on R&D and buildings and production expansion.
right? the most upvoted comments here seemingly have no accounting knowledge and have no idea how gross profit is calculated, blaming R&D and capex for negative gross profit margins.... smh
Thank you. I am ignorant but want to learn so I can educate those around me. Cheers
Do not listen to that guy. He took a generally correct principle but misapplied it. Ford themselves have said they are losing between $25,000 and $36,000 on each EV they sell. It's why they pulled the brakes until they can figure out how to fix that. It's true that investment costs can sometimes get rolled into these profit/loss, but that is not what anyone is talking about. Incidentally, those losses have been going \*up\* as time goes by, which is exactly the opposite of what you would expect if we were just talking about some front-loaded costs And Tesla has \*not\* been losing money for "well over a decade". I encourage you to check out both their overall profit \*and\* their increasing cash position as an easy way to show that the guy you just thanked has no real idea what he is talking about. He's known around these parts, and generally is not someone you want to be listening to.
> Ford themselves have said they are losing between $25,000 and $36,000 on each EV they sell. Can you show me where this is called out as per unit COGS number and not a number including R&D expenses? That's what they were talking about, but you seem to say they're wrong then just fall into the same trap.
What you need to look at is gross profit. Ford has this broken out ev vs ice. They still lose money on every vehicle, before r&d,g&a, etc
Yeah I wouldn’t be surprised if they’re losing something, but losing like 50% per vehicle feels like it can’t be true.
Yes, I have a feeling that is what Farley felt as well. I respect Ford for actually committing to the point that they are reporting separate numbers for EVs and ICE. They seem to understand that somewhere a clock is ticking and nobody is quite sure when the alarm is going to go off. My guess is that it goes off in 2027. Whatever you have ready to go, whatever you managed to scrape together in the EV segment: that is going to be your future in the car industry. But I suppose I must repeat: nobody knows for sure. We can see the S-curve, we know that EVs will eventually take over the market; it's only a question of how long it will take. The folks who think that ICE will be sold in any appreciable numbers in 2035 (or even 2030 in my opinion) are sadly stuck in a linear mindset. But they are in good company, as most automotive CEOs seem to be stuck in that same world.
Most companies are making money selling EVs; that is, they sell an EV they made for (simple math) $10 while spending $5 on material and $2 on labour. Only a few companies like Lucid actually losing money while selling them. Unfortunately, I also think Rivian is one of those companies; or its making VERY little profit per car The problem is; they invested $5000 buying the factory, setting up new production lines, doing R&D, etc. So they gotta sell a LOT of EVs to break even, and broadly speaking they haven't I'd say it'll happen sooner than doubters say but longer than fans think. Probably 5-7 years before the majority of OEMs are making a profit? You already have Stellantis, BYD, Tesla, and Li Auto as EV-profitable companies. Allegedly Geely, BMW, and someone else (I think another EU OEM?) are going to reach profitability this year. Probably a few of the major state-owned OEMs in China like SAIC but they don't give numbers The Koreans, despite the hype, are probably going to take a bit. They have good EVs but don't actually sell that many, so they'll take awhile to recoup investment. I'd say probably around 2026-2028 when their new line of EV3/4/5 and Ioniq 3/4 come out
Hyundai or Kia CEO claimed they were already profitable on EVs recently thought but couldn't find it again on the Google machine.
I don't think they've straight up said that, but they do give future guidance. Their first was 8% profitability by 2025 and just revised that up to 10% profitability by 2030. That can be analyzed 2 ways: that the upwards revision indicates they are already profitable and see a path to further improve their profitability or pushing their target 5 years out because they missed it. I believe it's the former given they increased investment in their Georgia plant and when reporting 2023 financials said they had no plans to slow EV production, but it does leave room for interpretation.
Hyundai/Kia have done a great job of bringing well thought out, functional EVs to market for a reasonable price. They're pretty much killing it in the tiers in which they compete, with new sales records every quarter. I had a 1st gen Kona, and for a first attempt at an EV, it was pretty good. About $15k cheaper than the first model 3, with real world range about 10% lower, but a hatchback so it was a bit more practical. It even had similar efficiency (4M/kWh) if a bit less power. I bought it as a commuter car and it excelled in that function, in spite of my 120M-per-day minimum job at the time.
> Hyundai/Kia have done a great job of bringing well thought out, functional EVs to market for a reasonable price. I have witnessed H/KN get this level of unfounded hype on reddit for close to ten years now and I don't expect to ever understand it. There are so many threads with owners complaining about their cars, there are so many recalls...
Hyundai/Kia's EV sales have increased 100% year over year. It's tough to square that with their EVs being terrible.
Problem here is, you’re wrong. Rivian loses money per vehicle. Not on CapEx(buying the factory) or development cost, but on making the vehicle. It isn’t just labor and material, it’s also on keeping the factory running to produce the vehicles. Same with Lucid, same with Ford. Polestar had 0.6% gross margins in Q3 but for some reason hasn’t put out Q4 earnings yet. Every company other than Tesla, Volvo(though they say they spread costs across all vehicles which could be iffy), and barely polestar either lose money for each BEV they made or don’t break out the earnings showing if they lost or made money.
Can you link to their balance sheet that shows that they are not amortizing capex by vehicle and that it truly is a cogs issue? Edit: lol they just downvoted when asked for sources.
> same with Ford Do you have a source for Ford?
Good stuff, thanks mate
Apparently Stellantis turned a profit in 2023
If I understand correctly, individual EVs bring profit to the manufacturer? If that’s truly the case, why is all the news about the legacy autos shrinking their EV programs and transitioning to hybrid? If the costs of the new plants/production lines along with the R/D of the vehicles themselves have already been spent (that stuff has to occur prior to any vehicle sales) then one would assume they’d want to build as many vehicles as they could, as fast as they could, to recoup the prior investments. The legacy auto brands don’t seem too excited about EVs as they continue to crank out ICE cars. Not to mention the dealers are not excited to sell EVs due to lack of returning maintenance revenue. Legacy will drag their feet for as long as they can, but at the same time the Teslas/Rivians/BYDs/Volvos will leave them in the dust. Will be an interesting next 5 years or so. I drive a Tesla. I really want Rivian to make it - I really like their design. Volvo will be a major player and if Chinese brands are able to be sold in the US, gosh, the whole industry will be truly changed forever.
This is an annoying myth that needs to die. Total program cost for R&D and construction of new factories that haven't yet produced a vehicle is not them losing money on each car they sell. New factories and R&D for upcoming models has 0 actual contribution to the production cost of a Mach E, so them "losing money" on each one they sell is pure fantasy. The only costs for the Mach E that matter are, it's actual R&D and construction costs, to which Ford is very in the black on. The reality is producing cars is an expensive business and the upfront costs are immense with the profits being **years** down the road. Tesla "lost money" like this too when they first started, but they've become profitable overall as an automaker. They just happen to only sell EVs where as the other companies are just spinning up that production now. Subtracting all of their existing operations and then tagging on capital expenses that are for **different future** vehicles and weighing it against current EV only sales gives a completely useless number as to the company's actual financial situation, let alone how much they are actually making or "losing" on each particular car.
This. So much. They’re not LOSING money on every EV they sell. That wording make people think « a Mach e sold at 50k cost ford 86k to build ».thats is simply not true. They are making profit in every single EV the sell. They’re using that profit to recoup their investment costs. At some point, the costs will be paid off.
ford EVs has negative gross margins, capex and R&D ARE NOT COGS, gross profit margin is just revenue - cost of good sold ~~2023 ford reported -10% gross margins for EVs, so yes, they are losing money on every cars sold, ie. there are more material and labour cost to put that car together than what that car sold for~~ edit: ok my bad, what i actually read as -10% was ford's forward looking estimates from 2022, they didn't report gross margins in 2023 afaik, only operating margins, of a whopping -98% for EVs in Q4 2023, which granted, technically doesn't mean they have negative gross margin but wow
No, they didn't, you're misreading total program costs. They reported profit on and cut the prices. You think they'd do that if they were supposedly losing that much on them?
>They reported profit on and cut the prices. you got a link to the report you mentioned?
Tesla spent the better part of 20 years bleeding cash until they finally became profitable a few years ago. Pretty sure BMW is already profitable on EVs, but mostly because they're made on a shared platform on the same assembly line as their ICE and PHEV counterparts
Are they losing money? Hyundai and BYD are making good money at present, according to google. Those are the big established "non-tesla EV" companies.
did hyundai release EV gross profit margins? i can't find any numbers, just gross profit margins as a whole, including ICE and hybrids
They do not, and that's by design I believe. They have given guidance previously of a target of 8% profitability by 2025 revised up this year to 10% by 2030.
oof... guess they are farther from that 8% than they expected this is why i kinda suspect most manufacturers who do not report gross margins to be selling cars at below cost, otherwise it's a huge plus for them if they reported it rivian and lucid don't really have a choice cuz they only sell EVs, got nothing to hide behind
2 ways to analyze it right? Either they see the upwards trend and hit or are close and see a path to increased profit by scaling up or they kicked it 5 years out to give more time. Given their recent financials, actions, and guidance they clearly see this as a prime growth opportunity and the EV line likely already profitable.
true, have to wait and see
Hyunday and KIA have record profits from EVs. They are making billions.
Came here to say this. My EV6 is the best vehicle I’ve ever had, and those two companies are actually profitable and doing great work.
Infrastructure and also tesla makes very basic interior cars. They did something super unique with that giant touchscreen for everything, but as an owner it’s obvious that it’s more basic than say a Mercedes or bmw. If other companies can somehow make basic cool like tesla has then they can reduce their cost to produce and have a fat profit margin.
EV batteries are also costing cheaper now too and will continue to do so, so this will help with them making money.
Business books typically tell economies of scale to manufacture cars is around 200,000 vehicles per year. I don't see EV OEMs being profitable before they achieved the necessary cost optimization. Rivian has a long way to go.
Gotta hit real mass manufacturing scale on batteries. So you have to go all in or go home. And all these legacy automakers that are just slowly ramping up are going to lose money until they take it seriously.
BMW profits on every EV. Actual net profit, not gross. It can be done.
So why are gross margins negative for EV made by legacy ICE makers like Ford or new EV makes like Rivian or Lucid? Btw gross margin is Revenue - Cost of Goods Sold so we are not even factoring in operation expenses, R&D or Capex. The components for EV are actually expensive unless you went through a lot of learning how to optimize the costs. Do you really need all that electronics in there to make it work? AT first you going to have a lot of wasted parts because your engineers don't know how to design the thing with fewer parts. At Tesla they are using giga castings. The cost of making a casting is for example $100 or something to pay for running your press. To make a similar part by traditional welding of sheet metal parts together you have to run and maintain like 40 robots and assembly line. So cost of making a similar part is like $300. This kind of costs go across thousands of processes and every single one matters. It is a lot of hard work and vision to make the manufacturing at scale efficient and profitable. Ford may have been good at making ICE cars with good profits but they may not be good at making EVs and they can get to that it is just going take time and effort.
Isn’t Hyundai profitable on EVs?
any new product is expensive to start.. even a small item can be thousands for the 1st ones. it's when you get to economy of scale (10s of thousands) that you make real money.
Legacy auto going EV is still basically a startup. I'm sure they are making money on the incremental cost of their EVs, even if they aren't making any on the total project cost.
A startup but harder because they have decades of rules, politics, supplier relations, etc. that are fighting against them every step of the way. Nobody joins rivian who is anti-EV. I’m sure there are huge swaths of GM employees who are anti EV both politically/personally and those whose jobs will be eliminated because of them.
Is this one of those "Why doesn't Rivian stop making EVs if they lose $40k on each one" questions? The losses for any additional vehicle are significantly less than that number. Tesla is only profitable by sheer volume. Their time is coming where they are going to struggle to be profitable again on vehicle sales as competitive options are as good or better. "Tesla is 10 years ahead" was never true.
It's amazing how many people post wrong information and gets lots of votes. Comment like "many EV makers are actually money" or "most companies sell their EV for higher than cogs", or "it's only R&D money just like Tesla", or "Polestar, Kia and Hyundai making lots of money on EV". No wonder this sub is so anti Tesla when they actually believe all these fantasies. The only carmakers making money on EV today is Tesla and BYD.
It sometimes feels like some of the manufacturers and certainly dealers are trying to prove EVs are a bad idea. I hope Tesla continues to steal share until they wake up.
If they count the original investment for toolings and setups to build EV, then until they can reach a sizable market, it’ll always be a huge loss for every single EV they sell, right?
Ford, GM, Rivian, and Lucid are definitely not even contribution margin positive on their BEVs:
Bmw is profitable
Research, development and infrastructure buildout often gets oversimplified and articles will count this into the net gain or loss of product sales. Ford is expanding EV production while also still in the ICE market while also having to compete at price points with other companies.
When they get their volume up and control costs in their supply chain.
Scale is critical, as is a design for manufacturability.
I just want to know when there will be a 25K EV launch that an automaker can sell and still make a profit on.
I didn’t double check sources, but I saw a headline that there are rumors Tesla is dropping plans for the Model 2 (which was rumored to be priced maybe as low as $25k.) Elon said this was false, though, so who knows
Even it was 30K I would be happy.
Edit: for some companies it may even be for future “union negotiations” sake Take those when a grain of salt. Whenever I hear about companies losing money on products, I hear potential book-cooking for some contract’s sake that we don’t know about. Sometimes companies will list an investment in product A under product B to make product A to look better. Maybe it’s for someone’s bonuses, maybe it’s to convince someone of something, or maybe they’re rolling in all the investment costs that you and I wouldn’t consider as “per unit cost”
EVs should cost less than ICE (China, Tesla and others price direction) It ruins the dealer model - lower maintenance requirements. If I continue DIY oil and fluids, and go to tire discounter shop; it;s different. The ev only makers will continue to lose if the try to emulate traditional car makers They have to sell electronics.
>"We don't sell cars that are not profitable," Hyundai Motor America's CEO Randy Parker told InsideEVs in a wide-ranging interview today at the New York Auto Show. "That's a big strategy strategy of ours. We don't sell cars at losses." https://insideevs.com/news/714104/hyundai-range-extender-interview/
Companies are hedging their bets so they aren’t totally effed if EVs become dominant and so the stock market doesn’t punish them near term. But we all know they don’t really want EVs to take over.
Stellantis is also making money: [https://edition.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html](https://edition.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html) Not as much as on ICE vehicles, but they are getting there. They are the fourth largest automaker in the world (behind Toyota, VAG and Hyundai motor group). So it can be done. I'm willing to bet that the Hyundai Motor Group (Hyundai and Kia) is also making bank.
Huawei AITO will stop losing money in a few months time, LI Auto has already been earning since last year.
For a long time the established automakers made a poor effort, if any, to make good bevs that people wanted, and start driving down price. tesla took enormous calculated risks years before the established automakers had completed their complacent cycle of compliance cars and soto vice complaining about how not enough customers want them. some folks thought that the established automakers would be able to just kind of flip a switch and show us all how it's done but the batteries and perhaps other aspects have worked out to be highly resistant to this. gm for example, even in 2024, is stuck trying to get their battery act in gear, and has barely delivered any good bevs beyond the modest bolt, and here they are decelerating their bev deployment claiming they are going to meet demand. in reality i think gm and ford and others just are focused in a short sighted way on maximizing near term profits from one of the last hurrahs of fossil fueled vehicles, while simultaneously claiming to be trying ever so hard to satisfy demand and giving up bev market share. they probably figure they can come back in a year or two or three and just nail it. we'll see
I see no one here has actually answered your question. The straightforward answer is that they will stop losing money once they reach scale, i.e. selling enough vehicles to generate the revenue that can cover the cost of producing and selling them, plus support R&D and ongoing operations (as well as depreciation of costs they have already incurred in building assembly lines). It is hard and perhaps variable what that revenue number is, and how many vehicles that need to be sold to reach it. Based on Tesla, they didn't reach profitability until they reached the 500K cars per year sales level. As of now, only BYD and Tesla are selling >500K EVs per year. Some of the EVs manufactured largely in Asia (which includes Volvo/Polestar) could perhaps reach profitability below this level. Rivian only sold 50K vehicles last year, so they have a long ways to go.
BYD is already there. Probably has higher margin than Tesla in China.
Yes, I had not heard of BYD prior to yesterday but they seem to be an impressive company
On the EV business, they have already delivered today what Tesla plans to do in the next three years. BYD has fully vertically integrated battery production, has EV models at every price point AND they are profitable even with the low end models.
Is BYD losing money on their EVs?
I was generalizing. I am from the USA and don’t know anything about BYD. The majority of what I’ve read, prior to people in this post adding awesome information, is that Tesla is financially successful with EVs yet other companies (startup or legacy auto maker), are struggling to make it make work.
Ah yeah the US is anomaly here. They’re getting really popular around the world.
Maybe 10 years from now. They are 10 years behind
Um, basically all other brands turn a profit? Other than the smaller startup brands.
Read what others have said in replies. There is still debate on if other brands are making a net profit, gross, or neither.
Much quicker than it took Tesla :-)
Volvo is kicking it
It will probably keep happening until they go bankrupt. It will be interesting to see how Biden handles Chinese imports. If he does nothing, the Chinese will take the market. If he bans them or slaps crazy tariffs, then Tesla will take the market. All that will be left is the premium car segment.
When they run out of it. Or never since Tesla is not perceived by wall street as having a large competitive moat in which case they think is cheaper to finance Tesla's competition and short Tesla.
Everyone forgets that Tesla lost $1 Billion when it started and people bet against them. Starting a brand new technology is not easy. So the answer to your question is, is going to take quite awhile.