The rising cost of the valuable minerals that go into battery packs for electric cars is driving up prices and creating another speed bump on the road to price parity with petrol vehicles.
Rising production costs continue to act as a barrier to price parity between petrol and electric vehicles – and now an auto giant has quantified the gap.
Carlos Tavares – the world leader of the giant Stellantis car group, which also includes jeep, R.A.M., Alfa Romeochrysler citroenOpel u peugeot – says the technology in electric vehicles is “40 percent more expensive”.
The warning on the cost of producing electric cars, reported by the British magazine car carcame as he warned about the potential threat to automakers and their existing factories producing petrol or diesel cars.
Stellantis has already announced a decision to “shut down” its Belvedere plant in Illinois, USA, where it builds the Jeep Cherokee, starting next month (February 2023) — auto industry acronym for halting production, but not closing .
Mr Tavares said manufacturers need to find a way to absorb the additional costs to make electric cars more affordable.
“Anywhere you introduce a technology that is 40 percent more expensive than the previous one, you have to work hard to improve your business model through fixed and variable costs,” Mr. Tavares said car car Magazine.
“Today there is no other option but to bear the additional costs of electrification.”
He also said the post-pandemic recovery would increase competition among automakers, which is already “very visible” in Europe, and put more pressure on the price of electric vehicles.
“You lose pricing power because you rebalance supply and demand. Then you have to work faster on reducing costs in order to protect (profit) margins.
“If the average transaction price increases due to the (electric vehicle) sales mix, there is a risk that the overall market will shrink.
“That means some unpopular decisions have to be made. In this industry, if you stop working on costs, you will go from hero to zero in three years,” Mr Tavares said car car.
The post electric cars cost 40 percent more to produce than petrol vehicles – report first appeared on Drive.
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