General Motors knows that the prices of lithium-ion batteries are not currently low enough for electric vehicles to be as cheap as gas or diesel powered ones, but the automaker has a multi-pronged approach for bringing EV prices down significantly.
Speaking to CNBC in an email interview, GM’s vice president of autonomous and electric vehicle programs Doug Parks explained how it plans on making sure its upcoming onslaught of EVs are priced competitively.
“There are multiple elements that go into the price of an EV, including battery cost, leveraging the China market to achieve global scale on a common architecture and gaining manufacturing efficiency with less complexity, ” Parks explained. “We are focused on all these items to drive profitability.”
China is an important part of the EV business case for virtually every automaker. The country buys 1 out of every 2 electrified vehicles sold globally and is incentivizing EV sales and development as part of its desire to become a clean energy leader. The country’s EV incentive is set to run out by next year, however, which gives a clearer picture of real-world EV demand.
The United States’ $7,500 government incentive on new EVs ran out this year for GM after the automaker sold 200,000 EVs. It’s currently lobbying in Washington to extend the tax credit, along with American electric vehicle maker Tesla. In January, GM CEO Mary Barra said extending the government incentive on EVs “helps extend and support U.S. innovation.”
GM will face steep competition in the EV segment in the coming years. While the Bolt EV has really only had the Nissan Leaf and Tesla Model to contend with in recent years, VW is expected to offer a slew of EVs in the U.S. the in coming years as well. The German brand has also vowed to be extremely aggressive with its pricing on EVs, vowing to put a 20,000 euro ($23,000 USD) EV on sale by 2023 or 2024.
GM and Tesla will also be at a further disadvantage if the tax credits are not extended, as brands like VW, Ford and Nissan have yet to use up all of their credits, making customers still eligible to receive $7,500 cash back. GM’s EV prices may, therefore, be more than the competition’s, no matter how much cost it is able to pull out of its vehicles with global scale and efficient manufacturing methods.