According to a new study, plug-in prices are starting to irritate EV buyers, but automakers can struggle without them.
The reason is simple. Electric vehicles are not very profitable for car manufacturers and certainly not anywhere near the profit of gasoline cars. A Ford executive recently told the Detroit Free Press that its EVs won’t be profitable until 2026. GM said it won’t make money from them until 2025. And Tesla won’t turn an annual profit until it has. around for more than a decade.
But automakers say they’re all set to go electric, so they’ll have to look elsewhere for that. That might mean selling your customers everything after the sale, like subscriptions and extra features or upgrades.
Nevertheless, automakers introduced more profitable brands, although consumers did not always respond well. BMW, for example, has received criticism for its signature heated seats. As for the electrics, Mercedes offers an additional “acceleration boost”. Polestar also offers a power upgrade, albeit for a one-time payment of $1,195.
“For automakers, because EVs are not profitable before, the biggest gain is in … generating revenue from customers on a month-to-month basis,” said Alex Oyler, director of North America for SBD Automotive.
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Subscriptions and add-ons after initial transactions are some of the reasons automakers are most interested in leasing electric vehicles.
If buyers can afford to lease an EV for a reasonable monthly fee, they can use that to sell them more functionality, which can be done through an online software-based rental agreement.
Although consumers may be used to the idea, the industry may not have much of a choice, according to a recent Deloitte report on the future of automotive mobility to 2035. The consultancy estimates that between 50 and 60 percent of future profits could be at stake if business continues as usual.
So there are big changes in consumer behavior, going forward in the country and, above all, more and more favorable competition.
“To be clear, the price of laziness by industry players could be fatal, especially in an industry that is moving so multifariously,” the report said. The changes, like the film industry, are expected to “unlock a variety of new revenue streams.”
The difference in profitability can also mean changes in the purchase of cars
So far, only EV startups and Tesla have cut out the dealer as a mediator and strictly use direct-to-consumer models. But even traditional automakers are catching on, spurred by a lack of profit margins and a “long-term trend toward narrow margins in vehicle sales,” according to a Deloitte report, largely due to the transition away from electric vehicles.
“This looming threat adds pressure to the traditional dealership model and threatens to affect the bottom line,” the report states. Automakers are “moving to direct marketing channels to build relationships with the end customer.”
For they insinuate some opinion. Ford CEO Jim Farley, for example, is introducing improvements to the company’s EV marketing strategy, including more Internet sales, and has pointed to Tesla’s example as a leader in driving more profits among EVs.