The ongoing discussions about profit margins on the “first” [mass scale] generation of EVs from the Big Three supposedly being razor thin or even leading to loses has left me wondering if anyone be it the US DOT or a NGO has attempted to estimate how much the total cost for retooling the US automotive industry towards BEVs might look like in the end.
Obviously, I understand a lot of factors -from funding streams at every level of government, to international relations, to even just timing- can play an immense role in the calculation of such an estimate but I’m curious if there’s even a ballpark estimate. Have any analysts attempted to come up with with a “realistic” estimate of, say, when GM will have fully absorbed the setup cost for Ultium and vehicle unit cost will just be determined by the opex overhead of a given production line rather than having to also account for the upfront capex of the whole platform and production chain buildup?
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Forget retooling costs, the big 3 are paying billions a year in CAFE fines for not meeting fuel economy regulations set by the federal govt. Ford is “only” at 1 Billion why chrysler is at 3 bil and GM is estimated over 5 bil. Thats each year! Ford CEO has outright stated he would rather spend on infrastructure to build and sell EVs than to keep paying Billion dollar fines (that go in the pocket of tesla and rivian as subsidies). So really what they spend on “retooling” they save in fines. I dont know if chrysler and GM have made formal statements about CAFE fines and EV plans but there is give and take to help automakers transition and Im certain GMs $5 billion dollar fine for a year would cover a lot if not all the retooling costs.
The question is more about volume than about time, IMHO. What I mean is. . . Bringing any new automotive platform to production, electric or otherwise, costs several billion dollars. Then you need to sell about 50,000 units per year of that platform. So how long will it take to ramp up to that level of production-and-sales?
This is where GM (and several other companies) are having it rough. With Tesla already holding a big chunk of the EV market, and the remaining portion sliced really thinly between different car makers and multiple models and platforms, it’s proving hard for any new automotive platform to reach the scale where it becomes economically viable.
And when I hear about car makers delaying their plans, I have to just shake my head. That means extending their pain.
I don’t have an easy answer for them, though. They can either tough it out for even longer while the electric car market grows, or else they can make a Tesla-like leap of faith: Throw intense effort into designing an amazing vehicle, set up the production lines to produce it on massive scale, and trust that the masses of people will be eager to buy your amazing vehicle. And then die by the sword if you got the product wrong, Edsel style. But I don’t see GM or most other “legacy” auto makers attempting that. It’s too far outside the modern auto industry corporate culture (to include officers, board and shareholders too).