One of the core questions that OEMs are asking themselves is how to make as much money from an electric vehicle as they do make from a conventional car with combustion engine?
Whilst there is no silver bullet that solves all problems in one go, there are some clear recommendations how to achieve a sustainable margin and profit. At the heart of these ideas are design simplifications, adjustments of the product design and functionalities to suit urban mobility concepts and opening up the whole value chain for partnerships as well as exploring new business models.
This McKinsey Study goes into much more detail but in the end also shares some good news for the traditional OEMs. If this transition is tackled boldly and in a structure way, they could expect to break even in cost with EVs compared to ICE vehicles, and thus even achieve a profit margin of 2 to 3 percent per vehicle, in 2025.
Most OEMs don’t profit on selling electric vehicles. But addressing elements of the product and business model can put them on a better path.