Will Chinese Automakers Produce Cheap Electric Vehicles Before US Automakers Do?
This week, there was some positive news regarding electric vehicles. According to Carlos Tavares, CEO of Stellantis, his company turned a profit on electric vehicles last year. Following the most recent earnings call, Tavares stated to the media, “Stellatis’ strategy is very different… from the other competitors from Detroit.” We’re continuing to electrify at full speed. Since the firm was founded in 2021 by the merging of Fiat Chrysler and PSA Group, the corporation has reported record earnings for three years running.
The European market was the only source of such gains from the sale of electric vehicles. In 2024, Stellantis plans to launch its next-generation Fiat 500e in the US market. Additionally, various electric vehicles from its Jeep, Dodge, and Ram divisions are in the works.
As the company moves more toward electric vehicles (EVs) and away from internal combustion engines, Taveras acknowledged that the company’s run of record profits may come to an end. However, he expressed confidence that 2024 will be better than 2023, when the company had to deal with a six-week-long strike at its US operations. Nonetheless, he claimed that even while EVs are viable, they are still not as profitable as conventional gas-powered cars. “Our goal is to equalize the profit margins of electric vehicles with those of internal combustion engines,” he declared. “We haven’t arrived yet. However, we are drawing nearer.
Reducing the Price of Electric Vehicles
It’s difficult to profitably sell electric vehicles, mostly due to the high cost of batteries. Manufacturers are looking for innovative ways to reduce manufacturing costs in order to make up for this. Tesla is working on high pressure casting technology, which would eliminate the need for hundreds of stamped metal parts that need to be fastened together with adhesive, welding, or bolting by replacing them with one or more cast parts. Castings also have the advantage of requiring less factory area for their manufacturing machinery than typical stamping equipment does.
It’s thought that Tesla is working hard on a less priced vehicle that will cost about $25,000. However, it’s unclear when or if this vehicle will go into production. It is anticipated that casting technology will enable more affordable electric vehicles. The above-average readers of CleanTechnica are aware that promises are frequently broken. For example, the starting price of the new Chevy Equinox EV is $5,000 more than what the manufacturer had anticipated. Additionally, the Ford F-150 Lightning costs $10,000 more than expected.
It is rumored that GM is developing a new Chevy Bolt, albeit it is unclear how much it would cost. A few weeks ago, Chevrolet ceased production of the original model, which was the most affordable long-range electric vehicle available in the United States, years ahead of its replacement’s release.
Ford’s Electric Vehicle Skunk Works
According to TechCrunch, Ford has assembled a highly skilled group of cost-cutters who are collaborating with Alan Clarke, the former head of development for Tesla and Ford Advanced EV, at a purportedly semi-secret “skunk works” in Irvine, California. They are reportedly trying to figure out how to produce more affordable electric vehicles that Ford can yet market profitably.
Jim Farley, the CEO of Ford, made a passing mention During the company’s fourth quarter results call on Tuesday, it was revealed that a team known as “skunk works” is developing a “low cost” electric vehicle platform. Engineers from Auto Motive Power, an electric vehicle startup that Ford purchased in November 2023, are part of that team. Anil Paryani, the founder of AMP, and Clarke collaborated at Tesla for around five years. Anil Paryani is currently working on a third-generation platform for electric automobiles as part of the Skunk Works project.
During the company’s results call, Farley stated, “We’re also adjusting our capital, switching, and more focused onto smaller EV products.” This is significant because, two years ago, we placed a bet in quiet and assembled a highly skilled skunk works team to design an affordable electric vehicle platform. Some of the top EV engineers in the world worked in a small team that was isolated from the Ford headquarters. It was a startup, and they created a versatile platform that will not only be deployed to many vehicle types, but also have a sizable install base for services and software that we can currently see at Pro”—the business’s commercial vehicles division.Farley even went so far as to suggest that Ford would collaborate with GM or another OEM to jointly develop cylindrical battery cells at a lower cost than those that are currently on the market.
China’s Electric Vehicles
US automakers needed to move quickly. It’s widely accepted that Chinese automakers can produce electric vehicles at roughly one-third of the cost of traditional automakers. This implies that they might potentially turn a profit even after paying the US import charge of 27.5% on cars built in China. The business that is raising the most eyebrows is BYD, which sold 1.4 million plug-in hybrid vehicles and 1.6 million electric cars last year, more than Tesla.
The business is building its own fleet of cargo ships to transport electric vehicles to markets in Europe and beyond. There have been rumors this week that BYD is actively looking for a suitable location in Mexico to manufacture automobiles. Zhou Zou, BYD’s manager in Mexico, reportedly stated that a feasibility study for a Mexican plant is in progress and that plans are being discussed with local authorities, according to Electrive, citing a number of sources.
And the best part is this. If the batteries in Mexican-built electric cars adhere to US sourcing regulations for materials and components, they qualify for the US tax credit or refund. Could you picture a Chinese corporation obtaining its batteries from sources outside of China? That would definitely make Joe Manchin’s head spin.
For the time being, BYD is still focusing its production on the home market. On the other hand, an increasing number of production facilities are being planned or built outside of China. For instance, BYD is constructing a plant in Brazil that will produce electric and hybrid vehicles in South America. In the Brazilian state of Bahia, it is being built on a former Ford factory.
In December 2022, BYD manager Stella Li declared that the Chinese automaker intended to build at least one, if not two, auto plants in Europe. It now looks that the corporation is building a factory in Hungary, where it already has an electric bus assembly operation.
