"Making cars is hard. Making good electric cars is even harder. Making good electric cars that are actually profitable? Well, very few automakers have pulled that off. Tesla only achieved consistent, long-term profitability once it got its China operations up and running. Most so-called "traditional" carmakers are still working toward that goal, and the startups have just as many headaches doing the same."
"Broadly speaking, there are two reasons it's hard to be profitable making EVs: batteries and scale. The first one is easier to unpack. Even as costs decline over time, making a giant EV battery is an expensive endeavor right now. It's the most expensive part of any electric car. Raw materials like lithium, nickel, cobalt, manganese and graphite can be volatile in price, and building battery plants is extremely capital-intensive."
Electric-vehicle profitability remains difficult because batteries are expensive and global scale is lacking. Battery costs stem from costly raw materials and highly capital-intensive battery plants. Existing automotive supply chains were built for internal combustion engines, so transitioning to batteries, software, and electric motors requires new supplier networks and scale to lower costs. Tesla only became consistently profitable after expanding its China operations. Many traditional automakers and startups still struggle to reach sustainable margins. Xiaomi reached profitability in EVs quickly, representing a surprising competitive development that could accelerate pressure on established and new automakers alike.
Read at insideevs.com
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