Editorial: Automakers must be flexible, work together to survive EV transition

EV alliances, such as the one announced by Honda and Nissan, will be crucial for automakers' balance sheets and longevity.

For success with electric vehicles, automakers can't afford to run business as usual. Their survival hinges on a business shift.

Most automakers lose about $6,000 on every $50,000 EV they sell, even after accounting for customer tax credits, according to Boston Consulting Group. Suggested steps to close that profit hole: higher-density batteries, better battery management software and efficiencies in EV manufacturing. Economies of scale as EV production ramps up will also help, the group said. But those efforts only go so far.

EV alliances, such as the one announced this month by Honda and Nissan, may be crucial for automakers' balance sheets and longevity.

Consumers who are already open to EVs have a set of standards they want vehicles to meet, including a 20-minute fast-charging time, a 350-mile driving range and a price of $50,000, according to a report from Boston Consulting Group.

The only EV that meets those demands today is the Hyundai Ioniq 6.

Most automakers have the expertise, with support from their suppliers, to meet consumers' EV standards. But making money on such cars is the real challenge.

Automakers have felt the brunt of slowing EV sales growth. After seeing EV sales nearly double from 2020 to 2022, Boston Consulting Group said many automakers projected 70 percent growth for 2023. The reality — a 50 percent sales gain — was a disappointment that left them scrambling. They've altered product plans and cut EV production.

Shared resources could give automakers some cushion as the pace of EV growth ebbs and flows. Most components needed for EVs are consistent across automakers. Using common parts and joint procurement while maintaining their own branding and styles makes financial sense.

To be sure, partnerships are complicated. Cultural clashes and divergent approaches — especially regarding supplier relations — could create tension between these iconic companies.

Top executives at Honda and Nissan questioned their companies' ability to weather industry churn alone and cautioned against complacency. They seem committed to making their tie-up work against an existential challenge.

Compared with losing $6,000 per vehicle, collaboration is worth a try.

Sourced from Automotive News ‍