Sixteen years ago, Tesla CEO Elon Musk announced his goal of building the first truly low-cost electric family car. With its new Bolt hatchback, General Motors has beaten him to it
Making electric vehicles cheaper is vital as rising greenhouse emissions spur heatwaves, drought and increasingly intense storms. That’s because petroleum-powered cars and trucks are the top source of U.S. carbon emissions, accounting for. To dramatically cut them, EVs have to go mainstream—and making them affordable to the average American is a first necessary step. There are also potential bragging rights for companies that do.
“We've raised our prices … quite a few times. They're frankly at embarrassing levels,” Musk said during Tesla’s second-quarter earnings call. “But we've also had a lot of supply chain and production challenges and we've got crazy inflation. I'm hopeful, this is not a promise or anything, but I'm hopeful that at some point, we can reduce the prices a little bit.
In the first half of the year, Tesla reported a gross margin on its automotive business of 30.6%. By comparison, GM’s EBIT-adjusted margin for its overall operations was 8.9%. And because the company continues to see high demand globally, especially for its $66,000 Model Y crossover, it’s using most of its current factory capacity to meet it; there’s little pressure to add cheaper models.
But luxury prices won’t lead to the kind of mass adoption of EVs Musk has always cited as Tesla’s goal. And according to Fisker Inc. CEO Henrik Fisker, a veteran designer who styled premium cars for BMW, Aston Martin and, briefly, Tesla, Musk’s company may now be a victim of its success. “It would have worked better in Europe than it did here because the marketplace in North America is always looking for an SUV,” said Michael Simcoe, a GM design executive who oversaw the styling of the Bolt EUV.
“Recent advances in lithium-ion battery technology and development work help make high-mileage, affordable EVs with great design and performance a reality,” says Reuss. “When more customers are able to experience the benefits of EVs—from home-charging to instantaneous acceleration, excellent ride and handling and zero emissions—they won’t go back.”
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