Most EVs Are Being Sold at a Loss Right Now — Here’s Why That’s a Bigger Problem Than It Sounds

A Reuters investigation into the actual economics of EV manufacturing has confirmed what industry insiders have been saying quietly for a while: most automakers are currently selling electric vehicles at a loss, and the trajectory of battery material costs has made that situation worse rather than better in the near term.

The fundamental driver is battery materials. Lithium carbonate prices rose dramatically through 2021 and 2022 as EV demand accelerated faster than mining and processing capacity could respond. The same pattern played out with nickel and cobalt, though with some different dynamics. Battery pack costs — which had been on a consistent downward trend for a decade — reversed course as a result, and that reversal has directly impacted the per-vehicle economics of EV production.

For automakers with large EV commitments, the math is uncomfortable. Ford’s Model e division is losing several billion dollars annually. GM’s EV operations are in similar territory. The established automakers were already operating on the assumption that EV profitability would be achieved through scale — higher volumes spreading fixed costs over more units, combined with ongoing battery cost reduction. The cost increase has disrupted both sides of that equation simultaneously.

The companies most vulnerable are the EV-only startups with no profitable combustion business to subsidize their operations. Rivian, Lucid, and others have significant cash reserves from their IPOs and fundraising rounds, but burn rates are substantial. If the path to profitability requires battery costs to fall and volumes to rise, and both of those are taking longer than projected, the runway question becomes critical.

The longer-term prognosis for battery costs is still reasonably positive — additional mining capacity is being developed, new battery chemistries that use less expensive materials are in production and scaling — but the transition from the current high-cost environment to something more favorable is likely to take several years. In the meantime, the economics of EV manufacturing are harder than the industry’s marketing would suggest.