When I was a very young and very green copywriter, Dr. Carl Hahn, at the time CEO of Continental Tires and later CEO of Volkswagen, said in an agency brief: “We lose 10 Deutschmarks on every tire we sell.”
“Then we better stop advertising them,” said I.
Hahn gave me a pained look. The look was followed by real and massive pain in my left foot, because my Creative Director had kicked me viciously.
“Ouch!” I said.
“You’ve got that right,” said Hahn.
That little story crossed my mind when I read in The Nikkei [sub] that “Mitsubishi Motors Corp.’s electric vehicles and other eco-friendly offerings are expected to begin contributing to the firm’s bottom line in two years.” This according to Mitsu’s Executive Vice President Hiizu Ichikawa. With its i-MiEV, Mitsubishi had been one of the first to offer a (well…) mass-produced EV. The cars are not necessarily flying off dealers’ lots.
“During the period covered by the current business plan, we hope to reach the point where they will no longer drag down our earnings,” Ichikawa said. The break-even level is of 60,000 to 70,000 units sold annually, and Mitsubishi hopes to get there in the fiscal year ending in March 2014. For this year, the optimistic plan calls for selling 25,000 units – at a loss.
Mitsubishi hopes to ignite sales by cutting prices and using a cheaper battery. Nissan goes to opposite route and raises prices for its Leaf.
This situation may explain why manufacturers with salable EVs are expanding production o0nly VEEERY carefully, and why manufacturers with EVs on PowerPoint charts or in prototype form are reluctant to crank them out in high numbers. Although, as the kick under the table still reminds me to this day, if you don’t have the gumption for high numbers, you’ll never get your investment back.