By on June 6, 2019

2018 Chevrolet Bolt - Image: Chevrolet

There are a number of things holding up the electric revolution, but one of the biggest obstacles is the high sticker price of battery-powered vehicles compared to internal combustion rivals. General Motors recognizes this wants to reassure potential customers that this won’t be the case forever. On Wednesday, GM President Mark Reuss told the UBS Global Industrials and Transportation Conference that his company will deliver “very average transaction prices” for battery driven vehicles sooner than anticipated.

Many analysts fingered 2025 as the first year we could realistically expect electric cars to fall in line with their ICE counterparts in terms of price. But those earlier predictions are now under fire from world events — notably, uncertainty surrounding the world’s ability to mine the necessary materials at scale, plus a trade war involving one of the world’s largest battery producers.

Helping the prediction are an emerging crop of manufacturing facilities and falling prices that appear at odds with a spike in demand for specific compounds like cobalt.

All the typical consumer knows is that hybrids can be scooped up for a song compared to battery-only vehicles. For example, Chevrolet’s all-electric Bolt slips in just below $37,000 before federal EV tax credits are taken into account. Not terribly far from the average U.S. transaction price for a new car, but far more expensive than a typical compact, even with the  incentives.

That’s not just true for General Motors; most manufacturers selling BEVs do so at demonstrably higher prices because they have to. Battery-driven vehicles are not yet the great money makers their creators envision; automakers ultimately have to court the buyers with more to spend.

From Bloomberg:

GM announced in October 2017 that it plans to sell 20 electric-vehicle models globally by 2023. At the time, Reuss said the company’s EV technology is engineered to be low cost and make money. He went a step further today, saying GM’s program will make money without luxury-vehicle prices.

GM and most carmakers currently lose money selling electric cars. Tesla has put up a few profitable quarters, but even with its Model 3 selling for about $45,000 or more and the Models S and X often going out the door at more than $100,000, it struggles to make money. To boost revenue, it sells clean-air regulatory credits to companies that market far more gas guzzlers than EVs.

Part of that is due to EVs being lower-volume vehicles, the high price of materials, lofty development costs related to new technologies, and more. But it’s all being dealt with, according to Reuss. “We’ll reach parity a lot sooner than people think,” he said. “We’re driving down the cost of batteries and the whole EV in general.”

As Wards Auto reports, one thing working in GM’s favor is an upcoming electric platform capable of handling 10 bodystyles and appearing under a wide variety of vehicles, maximizing economies of scale.

While it would have been nice to get an official date for GM’s electric break-even point, we may be able to cobble together a loose timeline of our own. Bloomberg noted that battery packs for electric cars currently cost about $150 per kilowatt hour, according to consulting agency McKinsey & Co., adding that Reuss said GM required less than $100 per kilowatt hour to see any profit.

The more ambitious estimations, frequently promoted by energy consortiums and battery firms, suggest $100 per kWh is feasible by 2025. Lei Zhang, founder and CEO of China’s Envision Energy, has previously said prices could sink as low as $50 per kWh by 2025 and the $100 mark could be reached by 2020 under idyllic circumstances. He was not alone. Numerous “EV experts” and manufacturers claim lithium-ion batteries are on the verge of achieving a crucial milestone in terms of price and technology. As that’s been the narrative for  years now, we’re inclined to take a more conservative view. While 2025 looks like the first year EVs could reach price parity, that’s not the same as saying it will be.

[Image: General Motors]

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29 Comments on “General Motors Says Not To Worry, It’ll Make Money With Electric Cars...”

  • avatar

    Battery prices will start going up if demand for EVs ever starts to go up, because of raw material and manufacturing constraints. Battery prices may also go up if some new battery technology (solid state anyone?) looks promising, because it will require new manufacturing processes and facilities, and be at the start of the learning curve.

    Then you have problems on the demand side that no one is seriously talking about. Tens of millions of EVs are going to put demands on electricity infrastructure that nobody has costed out, especially if you consider the demands of the high capacity recharging systems that are needed to bring the promised high speed battery “refueling”. And of course all the lost revenue from gasoline taxes will be recovered by various EV fees and mileage taxes (see Illinois) that will reduce or eliminate the EV operating cost advantages. Struggling government budgets may are likely to also reduce various subsidies EVs current receive, further dampening demand.

    In short, I think EV demand and EV profits will be much smaller and take far longer to achieve than GM or Tesla or any other tree hugging car enthusiast is hoping for.

    • 0 avatar

      I’m know for a fact that in some areas there is more electricity supply than demand during the night when power plants continue to operate. Some plants are even asked to derate by grid operators to prevent excess generation from impacting reliability.

      There are entire industries whose sole purpose is to find ways to utilize excess energy at night….if only there were some network of mobile batteries that could efficiently store energy at night and discharge the energy when it is needed during the daytime…..

      And when are most of us charging our cars? Between 6pm and 6am….

      I’m far more concerned about the technological barriers and waste associated with batteries than energy shortages.

      • 0 avatar

        You get millions of EVs driven by all types of people (such as people who can’t charge at night because they live in apartments) you will get lots of recharging during daylight hours.

        • 0 avatar

          @stingray – storage batteries. Some charging networks are already installing them to avoid demand charges.

        • 0 avatar

          Also not a problem, honestly. California made so much solar energy yesterday that they had to turn off like two-thirds of the panels. Get enough panels in enough places and it’ll always be sunny somewhere. The real challenge is building a smart grid that can move the juice from areas of surplus to areas of deficit, but the utilities are doing a passable job of making the old system work.

    • 0 avatar

      @stingray: Some of the technologies closest to production involve new coatings on the electrodes. Not sure of the impact on manufacturing. One of the semi-solid technologies involves extruding the cells, so it’s much simpler than current technology. They are in pilot production now.

      again, it’s not about tree hugging. EVs are smoother, quieter, and more responsive than fossil cars. that’s why they’re taking over. Very little to do with treehuggers.

    • 0 avatar
      SCE to AUX

      There won’t be millions of EVs in the US market for many years. The grid will catch up.

      My EV draws about 20% above my baseline electricity consumption, which is like turning on my electric range for 2 hours. I’d argue the grid can already handle that extra demand, but just not all the time. The same is true for A/C load spikes, which are already baked into the generation capacity (for the most part).

      So even if 50% of the cars on the road suddenly became EVs, there might only be a 10% jump in electrical demand.

  • avatar

    “GM’s decades of electrification experience and strategic EV investments, alongside Honda’s commitment to advancing mobility, will result in better solutions for our customers and progress on our zero emissions vision.” USAToday

    • 0 avatar

      Thanks for that. How would we ever have known otherwise? And from an impeccable source, no less, so it must be true.

      Big Daddy GM’s Buick Division and its second cousin thrice-removed Honda have got our backs on this one. So profound, I’m almost weeping in gratitude. I await the Hondick EV with bated breath.

      • 0 avatar
        formula m

        I’m feel confident in the direction of the battery technology of GM and Honda. Two of the best drivetrain manufactures that I have seen in my life time V8, 4cyl and motorcycle. Honda and GM won’t screw around like ford/vw and FCA/Renault-Nissan&friends

  • avatar
    SCE to AUX

    The #1 objective is volume.

    The big mfrs have to be discouraged by looking at Tesla’s domination of the EV market, while they’re losing money or barely breaking even.

    If it was a simple matter of studying Tesla’s design and mfg techniques and finding easy ways to improve upon it, they would. The scoffers criticize Tesla for not knowing how to build cars, but the real issue is that they can’t build consistent quality.

    The Gigafactory is assembling about 50 cells *per second*, 24/7, to meet Tesla’s build schedule. They know how to build battery packs (1000 per day), and I’d like to see a genius at some other mfr declare that they can do better – but they can’t.

    So if you’re only producing 100 packs a day, it becomes very difficult to amortize the equipment cost and R&D – which happens to cost the same as at Tesla.

    This is why the late Sergio Marchionne begged people not to buy the Fiat 500e – it was simply a money loser, and he knew the company would never have the volume to make a profit on the thing. Marginal volumes only encourage companies to offset the EV losses against ICEs, but that’s not a fun game to play.

    I think you have commit to play big – really big, bigger than Tesla – to have a chance at being profitable with BEVs. So far, I’d give Volkswagen Group a fighting chance, but not GM.

    • 0 avatar

      What, are you trying to tell us that Tesla’s engineering is so rad that it’s a secret, like the ingredients of Coca Cola or the special herbs and spices on KFC? Get a grip. Nobody else is going to fart around with cylindrical cells for a start.

      Tesla didn’t design the lithium cells, Panasonic did, and they don’t want to partner further. If Tesla’s tech is how you grab a pile of cells and spot weld the tabs together while not letting even one bulge out of line, you have a funny idea of advanced tech.

      • 0 avatar
        SCE to AUX

        That’s what I’m saying.

        Tesla is so stupid, and their product is so elementary, that nobody else can match their system’s power, range, efficiency, or mfg volume. Maybe you can explain why.

        • 0 avatar

          because there’s no evidence yet that the market for EVs is much bigger than the Elon Musk Fan Club.

          and stop acting like the Gigafactory is a “must have” which everyone else has to copy or they’ll fail. Tesla opened the Gigafactory because they HAD TO. No battery manufacturer was going to agree to stick their neck out and tool up that kind of production based on Tesla’s promises. If the market for EVs is truly there, battery manufacturers will gear up for it.

  • avatar

    The bolt is GM’s slowest selling passenger vehicle. The Lacrosse outsells all GM electric vehicles by better than a two to one margin. GM should concentrate on making the Lacrosse, Impala, and Malibu more competitive.

    Electric vehicles and autonomous cars are going to be Barra’s waterloo.

    There is no way GM electric vehicles are going to make money.

  • avatar

    When GM makes this kind of statement it always reminds me the breakthrough with X-bodies in 1980s. Americans still had a trust in GM back then and bought millions of them. Not anymore – I suspect shortcuts and under-engineered and hastily pushed into production cars.

  • avatar

    from the brilliant folks at the company who brought us the Corvair, Chevette, Citation, the Caddy that Zigs, the SSR, 350 V8 converted Diesel the ’86 Riviera, Oldsmobiles with no bench seat, Envoy XUV, GM EV-1, Aztek, Saturn, Hummer, Saab, and other revolutionary vehicles.

    surely there’s nothing to worry about… the industry’s worst marketing guarantees no matter how good a product, it will fail. remember at General Motors, the results never change, only the excuses.

  • avatar

    This is an IQ test that is being failed by many. We’re talking about GM. This is the once-dominant company that couldn’t make money on compacts while Toyota built a market on them. This is the GM that couldn’t make money on subcompacts while Honda grew through them to become the number one retail car company in the US that GM once needed anti-trust action to prevent them from achieving a monopoly in. Now they’re going to make money on EVs while everyone else in the EV field is a rent-seeker. Do the world a favor and swim to the bottom of the sea if you believe this BS.

  • avatar

    I can’t wait for the environmental whining that will pale in comparison to today’s tailpipe emissions once people start realizing how environmentally terrible mining the metals required for batteries is, and then the toxic waste that results when the batteries have to be disposed of.

    I’m not terribly concerned about the electrical grid, it will catch up if needed. But then I fully expect to hear incessant whining about windmills killing endangered birds, or birds getting instantly KFC’d when they fly through the concentrated ray of sun at a solar power facility, or dams killing salmon, and air pollution from natural gas or coal, or the 10,000 year waste issue from nuclear power.

    I don’t think BEVs are nearly as “clean” as people think they are. I’m actually of the belief that ICE is dominant not only because it is most cost effective, it is also one of the overall least-polluting ways to run a vehicle. 120+ years invested in improving efficiency has gotten us really far.

    Not to say it can’t happen with batteries, but I wouldn’t be shocked to later find out some time down the road that over the total production and use cycle of an automobile (mining for steel, oil for rubber, fuel burning, end-of-life disposal) that an ICE automobile is overall less polluting than a BEV.

    OH, and because the obligatory GM bash has to be inserted (I don’t hate GM, I wish them great success….but at some point you get really sick of seeing defeat snatched from the jaws of victory): Part of GM’s plan seems to include forcing a fleet of BEVs to be mandated onto the public by the barrel of the government’s gun. It was just a few months ago they were out hunting for regulatory capture on electric vehicles, posted at TTAC. GM can suck it if that is part of the plan.

    But then I also feel the federal tax credit is trash too. Know how much a Bolt would cost without a tax credit? $30,000. Know how much it costs with a $7000 tax credit? $37,000. “your” tax credit goes straight to General Motors courtesy of the US taxpayer.

    Only benefit from all this? CAFE might finally die if most vehicles don’t burn gas anymore. Of course they’ll have to replace it with something like CAKWH (corporate average kilowatt hours). Chevrolet Bolt! Look for the ENERGY STAR!

    • 0 avatar

      “OH, and because the obligatory GM bash has to be inserted (I don’t hate GM, I wish them great success….but at some point you get really sick of seeing defeat snatched from the jaws of victory): Part of GM’s plan seems to include forcing a fleet of BEVs to be mandated onto the public by the barrel of the government’s gun. It was just a few months ago they were out hunting for regulatory capture on electric vehicles, posted at TTAC. GM can suck it if that is part of the plan.”

      Too right. Government subsidies and mandates to transfer wealth are nearly the entire EV game. This is also true of most energy sources that are promoted as “green” or “carbon friendly.” It is just another con.

    • 0 avatar

      Mining for battery materials is terrible? What materials? Lithium? It’s a salt and much of it is produced in a similar way to artisanal sea salt, pretty much the most eco-friendly “mining” I can imagine. Cobalt? I’m with you there — most of it comes from the Congo, with Chinese middlemen exercising their usual disregard for human rights — though some products don’t require it. But bottom line, there is literally no conceivable way that battery production could be worse for the environment and human rights than fossil fuel production already is.

      Disposal? Valuable materials tend to get recycled. What works for scrap metal works for stuff worth a lot more than scrap metal. Another alternative is reuse; with volume still quite small, at this point most old EV batteries are just getting repackaged into stationary energy storage packs instead — the power to weight ratio being less important for that — and that’s fine too.

      Someone’s always going to complain about any source of power. I really don’t care, do u? A sensible electric car running on hydropower may as well be pollution-free. A big-ass luxury performance electric car running on coal power from an old coal plant is as clean as a Hyundai Accent. I’m okay with either of those or anything in between.

      • 0 avatar

        Most of the lifetime pollution estimates that show internal combustion cars coming out ahead of E.V.s ignore the pollution caused by the refining and transport of petroleum products, including generating the massive amounts of electricity needed for refining.

        In a sense, internal combustion engines run on electricity too.

        I’m with you about the shitshow that is the DRC, which has deep historical roots. Thanks, King Leopold!

  • avatar

    BEVs will remain a small niche proposition until their charging defects (i.e. charging taking way longer than filling a fuel tank) are fixed, so there won’t be BEV volumes worth speaking of.

  • avatar

    Yeah Yeah Yeah, more tired EV propaganda. Not even those with a government gun to their head want EVs.

  • avatar

    US? probably not for a while. China or Europe? Somewhat likely. There’re lots of room to cut taxes on cars to make EV competitive. Why cut taxes on cars? They probably don’t get the cheap oil we get and they don’t want to constantly deal with the chaos in the oil businesses (middle east, africa, latin america, russia, etc). They probably factor those into the cost of oil.

  • avatar

    GM has never been able to sell more than 20,000 electric vehicles a year. Tesla produces ten times as many electric vehicle than GM does annually. Why does GM even bother. I have heard stories of Bolts being on dealers lots for more than six months.

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