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In the US, most auto manufacturers have a big dilemma. Battery electric vehicles (BEVs) remain less profitable than internal combustion engine (ICE) vehicles, even though a BEV model starts at a price point around 35% higher than an equivalent ICE vehicle.
Core powertrain component costs are nearly 2.5 times higher in a BEV than in an ICE vehicle. That problem is exacerbated by a lack of sales volume for most current BEV models. What’s more, the rate of future BEV adoption is uncertain—and potentially even slowing. Now, automakers face a tough call on the magnitude and timing of their electric vehicle investments.
Winning legacy manufacturers will maintain a flexible product portfolio strategy. They will design, develop, and produce competitive, scalable, technology-enabled products across ICE, BEV, plug-in hybrid electric, and hybrid vehicles. They will take decisive actions to optimize their cost structures. Future industry leaders will also consider joint ventures or partnerships to expand their platform and purchasing scale across various powertrains.
China Is Now Driving the Global Electric Vehicle Transition
The market has leapt ahead of the US and Europe, thanks to competitive pricing in the mass market segment.
Published in October 2024