Electric Vehicles Drop in Price; Remain Mostly Unprofitable

While the prices of electric vehicles (EVs) have fallen, most remain unprofitable, according to a report by Lux Research.

Facing pressure to reduce emissions from consumers and government, the automotive industry is turning to solutions such as electrified powertrains to reduce or even eliminate vehicle emissions.

The Electric Vehicle Inflection Tracker: 2020 Edition, a recent report by Lux Research, argues that the attention of automotive manufacturers has been largely focused on producing profitable battery electric vehicles (BEVs) that address issues of charging speed and range. According to senior Lux research analyst Christopher Robinson, “Consumers want to know, how far can this electric car go and what will it cost?"

Today, the average BEV can travel 230 miles between charges, demonstrating a steadily increasing range at a CAGR of 13.7% since 2011.

In recent years, the prices of BEVs have decreased as well - the average base MSRP is a little under $34k, down from $42k in 2016. Both of these developments are working to make it easier for consumers to own and use electric vehicles.


Robinson added that because “Nearly all automakers now sell some form of BEV," automakers' "...focus has shifted to making them profitable." Luxury vehicle brands are beginning to electrify their offerings, absorbing the costs of BEV battery packs by selling vehicles at higher price points. Efforts made by luxury brands to produce BEVs can also be attributed to a need to offset the higher emissions of the often larger combustion engines possessed by luxury vehicles.


Lux Research points to the battery supply chain as a key area of focus for automotive manufacturers, noting that battery shortages have already complicated BEV production plans for some automakers. To remedy this, Lux reccommends that automakers secure raw materials, such as lithium and cobalt. Battery supply chain issues are expected to increase in the next several years as more and more EVs arrive on the market.


Lux also suggests that automakers weigh commitment against platform flexibility. While large manufacturers may be able to develop platforms dedicated to BEVs to save money, smaller OEMS may struggle financially if they do not remain flexible.

Over time, Robinson says, technological improvements will close the gap between BEVs and conventional nonelectric vehicles. Until then, Lux Research notes that efficiency will be "...front and center as the next major focus of BEV design, with automakers either downsizing packs to increase profitability or offering more range.”

Lux Research predicts that EVs will make up more than half of automobile sales sometimes between 2035-2040.

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