The notion that building electric cars would be too expensive has been a very popular sentiment to put out over the past few years when it came to discussing how long it would take for the electric car transition to happen. However, over the past week both the heads of Volkswagen and Ford have come out to say that the Ford Mustang Mach E and VW ID.3 are not as costly as most people would think.
Many predictions have been predicting that electric cars would start to become profitable or comparable to gasoline cars somewhere in the 2022-2025 range. However, it seems like that prediction might start to inch closer to present-day as both Ford and Volkswagen made statements today about the profitability of their electric cars.
This week Ford finally unveiled its entry into the electric car world with the Ford Mustang Mach E electric crossover with distinct Mustang styling. In an interview with Bloomberg Ford CEO Jim Hackett was asked if the Mustang Mach E will turn a profit. Hackett responded:
“This will make a contribution margin, which is your revenue minus your cost, on vehicle number one. So that’s surprising a lot of people because electrics have not had a history of making money.”
Of course, the car will not be considered totally profitable until the actual research and development cost of the car are covered, but that is true of basically any car. The fact of the matter is that Ford’s material and production costs will be less than what the Mustang Mach E costs which is a great achievement when most automakers have been hung up about the increased production costs, especially when considering the price of the battery pack.
Moving on to Volkswagen, CEO Herbert Diess also made a statement about the cost of their ID.3 electric hatchback which is planned to start deliveries in summer 2020, ahead of the Mustang Mach E. Diess stated this week that the ID.3 would be 40% cheaper to build than their e-Golf.
“If you focus on an electric platform, all in all it accounts for a 40% reduction against the predecessor electric Golf. Most of it from cells and the battery system. Around 5-10% comes from dedicating an entire plant to electric vehicles.”
Whether this is truly due to increased efficiency in the ID.3 production or a testament to just how expensive the e-Golf was to build is left to be seen. But the sentiment still stands that electric cars do not seem to be as disastrously expensive to produce as once thought.
Clearly Tesla has been making money on each one of their cars for a while now, but that was dismissed due to them being built from the ground up as an electric car company. Now we have two existing automakers talking about the cost of electric cars not being too bad. As time moves forward, the “it’s too expensive” excuse will not hold up for companies that choose to drag their feet in making electric cars.