More than a decade and a half after Tesla made history by unveiling the first mass-market battery electric vehicle (BEV), carmakers are still struggling to reach mass EV production. Tesla remains the only Western carmaker that can produce BEVs at scale and make a profit doing so, while the majority of established carmakers in the West are still saddled with extremely high development costs and making losses for every electric car they sell.
Mass production typically reduces manufacturing costs over time by allowing manufacturers to spread their development costs across their expanding product lines. In the auto industry, manufacturers will spread their expenses across more cars and vehicle components, allowing them to cut their production costs as their product line expands over time.
But with the auto industry transitioning from internal combustion engine (ICE) vehicles to zero-emission battery electric vehicles, the sector essentially has been forced to ramp up electric vehicle production from zero to 100% in very little time. Tesla, on the other hand, has had well over a decade to work out the kinks involved in EV manufacture and build up its output to where it can mass manufacture EVs without breaking the bank.
Established carmakers have borne most of the brunt of the mass production challenges. Ford Motor Co. has been quite successful with the F-150 Lightning electric pickup but is reportedly set to pause the electric pickup truck’s production. The carmaker is also reportedly losing tens of thousands of dollars for every electric car it is selling, a testament to the EV production challenges plaguing most established carmakers.
Cox Automotive director of industry insights Stephanie Valdez Streaty notes that established automakers have to focus their time and money on both ICE cars and EVs; Tesla focuses on battery electric cars all the time and draws all its profits from electric vehicle sales. Established carmakers, on the other hand, are relying on the profits they make from selling fossil fuel-powered cars until their electric vehicle divisions become profitable.
Streaty said the shift to electric cars ‘may be bumpy’ as it represents a massive change to an industry that’s over a century old. It will undoubtedly take time for Ford, General Motors, and the ilk to build up their EV production capacity until they reach mass production, especially if they have little financial aid. And with President-elect Donald Trump pledging to dismantle many of the supports deployed by the Biden administration, only time will tell how long it will take carmakers to achieve mass electric vehicle production.
The hurdles that legacy automakers are facing in ramping up EV production may be different from those that electric vehicle startups like Life Electric Vehicles Holdings Inc. (OTC: LFEV) since the latter don’t have to switch from ICE vehicle production lines to EV production equipment.
NOTE TO INVESTORS: The latest news and updates relating to Life Electric Vehicles Holdings Inc. (OTC: LFEV) are available in the company’s newsroom at https://ibn.fm/LFEV
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