Recently, GM CEO Mary Barra made a rather bold statement at a Sanford Bernstein conference, stating that she does not anticipate profitable electric vehicles in the $30,000 to $40,000 range until the end of the decade, or perhaps even later. She also acknowledged Tesla's current lead in EV technology, profitability, and scale, yet she hinted at a belief that GM could potentially catch up.
She justified her statement by explaining that EV battery costs are still too high to create profitable mass-market vehicles within this price range. However, her comments seem to contradict GM's current EV offerings, with the Chevy Bolt EV starting at $26,500 and the upcoming Equinox EV promising a starting price of around $30,000.
Though the Bolt EV is ending production this year, it was never clarified whether GM was making any profit from it. The Equinox EV, slated for release this year, is expected to offer a base version priced around $30,000, which is expected to be available much sooner than the end of the decade.
However, Barra's comments suggest that this EV may not be profitable at that price. This raises some interesting questions, especially considering Tesla's Model 3 is already on the market starting at $37,000 before incentives.
The point to consider here is not necessarily the profitability of individual EVs but their competitiveness within the broader auto market. With inflation driving up prices across the board, the average new car sale price in the US has reached a staggering $48,000. Against this backdrop, EVs are not just competing on upfront cost but also on the overall cost of ownership.
When factoring in gas savings, electric vehicles have arguably already won the competition in terms of total cost of ownership. So, when an automaker claims that "electric vehicles are not profitable," it might be an indication that they're struggling to create an appealing, profitable EV that consumers want at this moment.
However, this doesn't mean that others can't or aren't already doing so. As the market continues to evolve, we can expect to see a variety of profitable EV options within the $30,000 to $40,000 range in the coming years, well ahead of Barra's predicted timeline. And that's the story that really matters.
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