Electric Vehicle Manufacturing Costs Are Soaring

Is this the beginning of the EV automaker culling?

For now, electric vehicles are giant money sucks, despite plenty of media praise which makes them sound like a wonderful investment for automakers in the present. However, a recent article from Reuters got pretty real on the topic as it focused squarely on how most if not all EVs are sold at a loss. One of the main reasons is the raw materials required to make an electric car are anything but cheap.

One company thinks it has the solution to overlanding in a Rivian. See it here.

For example, as Reuters points out, each vehicle sold by Rivian or Lucid is actually a loss to the tune of hundreds of thousands of dollars. No, that’s not a typo, that’s how much each one loses on each vehicle rolling off the production line. That’s staggering when you consider these are models which start at $80,000 or more, putting them well into the luxury category and out of reach of many shoppers.

The Reuters article also focuses on the tremendous production costs. After all, they require more energy to make versus traditional automobiles. With energy costs on the rise, that alone is putting the squeeze on EV production. Still, thanks to generous backers with deep pockets, for now at least some of these companies feel they can ride out the storm for the next couple of years or so with the hope things will turn the corner.

Sure, as innovations are developed it’s possible the cost of EV production could go down. The operative word of the previous sentence is “could.” As Benjamin Franklin famously expressed, there are only two things you can count on in this life: death and taxes. Production costs decreasing for any emerging technology like electric propulsion systems can go either direction. If they don’t go down, the future of electrification will be short-lived.

When you stop to consider the financial situation of EVs at present and how automakers like Ford are betting the farm on their being the future, there are really only two obvious conclusions. First, these automakers have rock-solid data which shows they have the economies of scale to bring production costs by many multiples, making EVs more affordable and profitable. Or the second possibility: these automakers are so enthralled with being on the bleeding edge of technology they will be first to plunge off the cliff. It’s too early to tell which will be the reality but this definitely will be interesting to watch play out.

Check out Reuters’ analysis for yourself here.

Images via Lucid, Rivian