Comment Then why all the Doom & Gloom? (Score 1) 169
So, here's the conundrum. . . Electric car sales are still growing. They've been growing year-over-year, and the end is not in sight. So why is there so much Doom & Gloom coming out of the auto industry? Why are they cancelling models, walking back EV plans, lobbying for relief from EV requirements? Why are they now trying to hype up PHEVs? Why are they not eagerly jumping with both feet into the EV market and profiting from a growing automotive segment?
There are multiple reasons, but a big one is economies of scale. Scale is critically important in the auto business. If you're making a car, any mainstream category of car (not exotics), and only selling a few thousand of that model per year, then you are probably losing money. Going to the parts bin, building multiple models on a platform, badge engineering, these tactics can help somewhat, but one way or another you need to get scale. Now here in the USA the total share of the market for EVs is around 8%, and the Tesla Model 3 and Y are holding a pretty hefty chunk of that. That means only scraps are left to slice up between the roughly 70 other EV models that are sold here! Even the biggest selling models (again, outside of 3 & Y) are not getting the scale they need.
The situation in Europe is not as dire. I think they're at closer to 18% EVs, and Tesla is not as dominant within that fraction. The same principle is still at work, though. Economies of scale are still tipped in favor of combustion cars.
The hype for PHEVs, or "EREV" as the marketdroids are now trying to re-brand them, is particularly amusing. The Chevy Volt was introduced in 2010, and PHEVs have not exactly set the world on fire since then—for sure not the way Tesla did. Yet now the industry is talking up "EREV" as if it's a new invention that's going to come in and make everything better.
As for China, well They seem to be the EV juggernaut that will roll over everybody, but it's not that simple. Yes, the cars are a great value, but they've got something like 60 car makers locked into a bitter price war with maybe 2 of those companies eking out some profit. Their technology has advanced rapidly, thanks to enormous armies of engineers on the payroll and unsustainable spending on R&D. I love some R&D, but this is too much of a good thing. The shakeout is going to be ugly.