Are Electric Vehicles Too Expensive to Make or Too Expensive Not to Make?

The automotive industry is at a crossroads, grappling with the economic realities of transitioning to electric vehicles (EVs) while facing the existential threat of climate change. The question arises: are EVs too expensive to make, or are they too expensive not to make given the looming ecological catastrophe?

The Cost Challenge: Ford, Honda, GM, and Mercedes-Benz

1. Ford's Dilemma: Ford recently reported a decline in its Q3 earnings, attributing it to the high costs associated with EV production. The company has postponed $12 billion in EV factory building, including a planned battery factory in Kentucky. Ford's EV business lost around $1.3 billion this past quarter, and the company expects to lose a total of $4 billion for the year (The Verge).
2. Honda and GM's Partnership: Honda and General Motors had initially planned to collaborate on the development of inexpensive EVs. However, they recently canceled these plans. GM warned that it is now impossible to estimate whether it will make the $14 billion in profit it had projected for this year due to rising labor costs (Suv Electric Cars).
3. Mercedes-Benz's Brutal Reality: Mercedes-Benz reported a decline in profit and revenue, describing the EV market as a "pretty brutal space." The company faces intense price competition in the EV sector and higher production costs compared to combustion-engine cars (CNBC).

The Profitable Path: Hyundai's Success

Contrary to the above narratives, Hyundai Motor Group, which includes the Hyundai, Kia, and Genesis brands, posted a record Q3 operating profit of $2.8 billion, up 146% from last year. The company credited electric cars as one of the reasons behind its expansion. Hyundai sold almost 169,000 electrified vehicles, a 33% increase from last year. The company plans to offer as many as 31 EVs by 2030 (Inside EVs).

The Imperative of Sustainable Mobility

The contrasting fortunes of these automotive giants underscore that while the transition to EVs is fraught with financial risks, it is not an insurmountable challenge. Hyundai's success suggests that with the right strategy, it is possible to make EVs and make money. More importantly, the shift to electric vehicles is not just about short-term bottom-line results for individual OEMs; it's about transforming a major industry segment into a future-facing, sustainable practice that mitigates the ecological crisis. The cost of not making this transition could be far greater than any financial loss incurred in the process.

For a more detailed analysis checkout: "The Multifaceted Economics of Electric Vehicles."