As the budding electric vehicle market continues its gradual but exponential growth, profitability remains on the minds of automakers, as EVs need to be relatively affordable if the masses are to make the transition to an electrified future. Now, General Motors CEO and Chair Mary Barra has gone on record as saying that lower-priced electric vehicles are not profitable yet.
During the recent 39th Annual Bernstein Strategic Decisions Conference, Barra was questioned about EV profitability and cost parity between EVs and ICE vehicles. In response, she stated that, “battery costs are still not at a point where you can get to the mass market, which is this $30,000 to $40,000 vehicle, that’s what the bulk of new car sales are, frankly, around the globe, that C segment kind of crossover SUV.”
Essentially, Barra is claiming that turning a profit on an EV that costs $30,000 is difficult at best. For reference, the upcoming 2024 Chevy Equinox EV – which is currently scheduled to go into production later this year – will boast a starting price somewhere in the $30,000 ballpark.
With that in mind, the starting MSRP is subject to change any point in time. However, we expect that the average transaction price (ATP) of the Equinox EV will cross the $40,000 mark, as ATP figures are always much higher than any given vehicle’s base price.
Notably, Barra pointed to GM’s efforts on bringing battery costs down as a reason to hope for affordable EVs. In fact, despite the average price of automotive batteries rising, General Motors is expected to reduce battery costs down to roughly $87 per kWh by calendar year 2025.
“…you look at a lot of the teardown information,” General Motors CEO and Chair Mary Barra as quoted as saying. “We know we can get better. We’re already seeing it, and we’re dedicating the resources to take the cost out. So I do think that, that line crosses some part in the latter part of the decade maybe a little bit longer, but we have teams working on it and taking all the knowledge we had from internal combustion engine because there’s a lot of commonality to get those costs down.”
Barra also mentioned that the cost parity between EV and ICE vehicles likely won’t equalize until later this decade, or potentially even later.