[opinion] - hmmm…VW/Audi/Porsche may be in trouble…

[Vim Schrotnock]

Here's the Big Big problem that Porsche and ALL of the legacy car manufacturers have - they have an incredibly well developed and resourced infrastructure - for combustion engined, water cooled, oil lubricated, gas guzzling, turbocharged, multi-gear transmissioning, power trained, sport exhausting cars. Does anybody here think that it's strange that the top 4 EV manufacturers in the world had NO experience manufacturing cars? Interesting, and I believe it explains the problem that Porsche and every other major car manufacturer has - the incredible infrastructure, (most of which is unecessary for EV's), including the hundreds of thousands of people who have NO IDEA how to deal with an Electric Car. The companies (Tesla, BYD, others) that started from scratch could hire exactly what they needed - battery, motor, robotic and software engineers. All the other stuff has pretty much become a commodity, and they can hire some very good chassis and suspension engineers along with some great interior and exterior designers.

It's somewhat similar to the classic 'innovators dilemma'. ICE cars, suv's and trucks provide all the profit required to fund the development of EV's. But every EV cannibalizes an ICE car, and therefore the funding to develop EV's. Big problem.

I really don't know how the current crop of major car manufacturers are going to adopt to this new world. Certainly for the next decade or so, they will be building a ton of hybrid cars, and this could work out ok for them. After that - watch out...

Sponsored

 

[whitex]

It's somewhat similar to the classic 'innovators dilemma'. ICE cars, suv's and trucks provide all the profit required to fund the development of EV's. But every EV cannibalizes an ICE car, and therefore the funding to develop EV's. Big problem.

It's not somewhat similar, it is the classic "innovator's dilemma". In a decade or so, the estate of Clayton Christensen will pay for a rewrite of his original "The Innovator's Dilemma" book using the car industry as the example instead of the hard drive industry.

I really don't know how the current crop of major car manufacturers are going to adopt to this new world. Certainly for the next decade or so, they will be building a ton of hybrid cars, and this could work out ok for them. After that - watch out...

Perhaps they should read Christenson's book. It seems to me this far down the road they just need to acquire an EV-only company, create a sub brand (think something like @daveo4EV suggested - "RimacEV by Porsche") and slowly sunset the ICE/hybrid business while making increasingly more money off off the EV cars.

 

[69Mach390]

It's not somewhat similar, it is the classic "innovator's dilemma". In a decade or so, the estate of Clayton Christensen will pay for a rewrite of his original "The Innovator's Dilemma" book using the car industry as the example instead of the hard drive industry.


Perhaps they should read Christenson's book. It seems to me this far down the road they just need to acquire an EV-only company, create a sub brand (think something like @daveo4EV suggested - "RimacEV by Porsche") and slowly sunset the ICE/hybrid business while making increasingly more money off off the EV cars.

The companies that have separated out their EV business seem to be doing it for the opposite reasons: so they can let the EV portion go bankrupt without taking the ICE/hybrid business with it.

“Increasingly more money” in EVs is the hope, but it’s a pipe dream currently for most legacy auto manufacturers. They seem to be losing increasingly more money in the EV side of the business.

At the current rate, many of the EV models will fail, and maybe the few that remain will be able to find a path to profitability.

Currently in the US, the only EV manufacturer making a profit is Tesla….. and they needed about a 50% market share to achieve profitability. Obviously that isn’t something everyone can repeat (only room for 1 company with that market share).

A lot will have to change in order for most manufacturers to show a profit in the EV sector.
https://www.autoweek.com/news/a70360927/carmakers-50-billion-loss-on-evs/

 

[whitex]

The companies that have separated out their EV business seem to be doing it for the opposite reasons: so they can let the EV portion go bankrupt without taking the ICE/hybrid business with it.

Sure, that can be one reason - mitigate the risk. New market development/investment are expected to be losing money at the beginning, and publicly traded companies don't want to see those loses on balance sheets - bad for the stock price. If however they wait to acquire a massively profitable new tech business, it would be prohibitively expensive (imagine Ford wanted to buy Tesla, or BYD). This is the classic innovator's dilemma - large companies unable to sacrifice resources of their legacy product cash cows on new technology.

Currently in the US, the only EV manufacturer making a profit is Tesla….. and they needed about a 50% market share to achieve profitability. Obviously that isn’t something everyone can repeat (only room for 1 company with that market share).

A little bit misleading calculation. A company doesn't need 50% market share to be profitable, they need some minimum scale. BEV market is ~6% of all cars sold in the US, so Tesla sells 3% of all cars then (assuming your 50% number), which means as the BEV market grows, there can be room for as many as 16 companies selling as many EV cars as Tesla does today (which is sufficient to make them profitable). When the first Model T came out in 1908, you could have made the same argument - "Ford owns majority of car market, there is no room for any more manufacturers".

A lot will have to change in order for most manufacturers to show a profit in the EV sector.
https://www.autoweek.com/news/a70360927/carmakers-50-billion-loss-on-evs/

Yea, it's not just drivetrain issues - incumbents got used to slow innovation speed, which worked for them as they all were moving at glacial speeds and had a good enough mote to keep new competitors at bay. Once the mote was breached, even more competitors entered, now the incumbents need to step up their fight or die.

 

[gnr3312]

A lot will have to change in order for most manufacturers to show a profit in the EV sector.
https://www.autoweek.com/news/a70360927/carmakers-50-billion-loss-on-evs/

Taycan winning in the eyes of reporters though.
“We recommend the Taycan or Spectre, but feel free to choose.”

 

[69Mach390]

Sure, that can be one reason - mitigate the risk. New market development/investment are expected to be losing money at the beginning, and publicly traded companies don't want to see those loses on balance sheets - bad for the stock price. If however they wait to acquire a massively profitable new tech business, it would be prohibitively expensive (imagine Ford wanted to buy Tesla, or BYD). This is the classic innovator's dilemma - large companies unable to sacrifice resources of their legacy product cash cows on new technology.


A little bit misleading calculation. A company doesn't need 50% market share to be profitable, they need some minimum scale. BEV market is ~6% of all cars sold in the US, so Tesla sells 3% of all cars then (assuming your 50% number), which means as the BEV market grows, there can be room for as many as 16 companies selling as many EV cars as Tesla does today (which is sufficient to make them profitable). When the first Model T came out in 1908, you could have made the same argument - "Ford owns majority of car market, there is no room for any more manufacturers".


Yea, it's not just drivetrain issues - incumbents got used to slow innovation speed, which worked for them as they all were moving at glacial speeds and had a good enough mote to keep new competitors at bay. Once the mote was breached, even more competitors entered, now the incumbents need to step up their fight or die.

Yes, the “pie” can grow so that even a small slice is larger.

However, the EV market has been growing at a significantly slower pace than the growing number of competitors.

So now there are even smaller slices of pie for each model.

So the VAST majority will never make it to the volume needed for profitability.

Just look at the top 10 best selling EVs of 2025……. The numbers for everything but the top 2 are sad. And if you notice the year over year numbers for these models is even sadder:

https://www.caranddriver.com/news/g64540955/bestselling-evs-2025/

Maybe most important is that I’m almost positive that #3 through #10 on that list are ALL losing millions/billions for their companies.

And keep in mind there were over 73 models for sale in the US last year. If a top 10 model is a money loser, imagine how ugly it is at the bottom of the list.

The sales and profits are very different for an ICE/hybrid list.

 

[snstevens]

There is a difference between a "sunk cost" and a COGS cost for the car itself. When you read about write-offs, they are talking primarily about "sunk costs", and they do this to get as much loss (aka "tax write-offs") at one time as possible. This is the exact opposite of how they look at the startup cost when first investing, when they amortize the R&D and manufacturing startup costs over 5-10 years (a common practice for new product development).

The way I see it, there is all kinds of new manufacturing capability and design innovation that has already been paid for, and at some point, the ICE manufacturers that invested in EVs will be able to re-deploy that investment quickly (sort of like recommissioning jets you had to park on a runway in Arizona for a few years during the Covid pandemic).

Of course the startup will not be smooth or painless, but in my mind it is 100% certain that EVs are the future, and a smart auto manufacturer will know that too, and try to keep from falling behind once the tide has turned. They will find a way to leverage these initial design and manufacturing investments.

 

[daveo4EV]

There is a difference between a "sunk cost" and a COGS cost for the car itself. When you read about write-offs, they are talking primarily about "sunk costs", and they do this to get as much loss (aka "tax write-offs") at one time as possible. This is the exact opposite of how they look at the startup cost when first investing, when they amortize the R&D and manufacturing startup costs over 5-10 years (a common practice for new product development).

The way I see it, there is all kinds of new manufacturing capability and design innovation that has already been paid for, and at some point, the ICE manufacturers that invested in EVs will be able to re-deploy that investment quickly (sort of like recommissioning jets you had to park on a runway in Arizona for a few years during the Covid pandemic).

Of course the startup will not be smooth or painless, but in my mind it is 100% certain that EVs are the future, and a smart auto manufacturer will know that too, and try to keep from falling behind once the tide has turned. They will find a way to leverage these initial design and manufacturing investments.

well at least successful companies will do that…it remains to be seen who is going to be successful

 

[whitex]

Yes, the “pie” can grow so that even a small slice is larger.

However, the EV market has been growing at a significantly slower pace than the growing number of competitors.

So now there are even smaller slices of pie for each model.

So the VAST majority will never make it to the volume needed for profitability.

Just look at the top 10 best selling EVs of 2025……. The numbers for everything but the top 2 are sad. And if you notice the year over year numbers for these models is even sadder:

https://www.caranddriver.com/news/g64540955/bestselling-evs-2025/

Maybe most important is that I’m almost positive that #3 through #10 on that list are ALL losing millions/billions for their companies.

And keep in mind there were over 73 models for sale in the US last year. If a top 10 model is a money loser, imagine how ugly it is at the bottom of the list.

The sales and profits are very different for an ICE/hybrid list.

By this logic, Tesla will be the only car company left in North America in a couple of decades (or whenever ICE cars go the way of a horse powered carriages), purely because your theory says they will be the only North American company able to make EVs and not go bankrupt by then. I don't don't think that is likely to happen.

 

[69Mach390]

There is a difference between a "sunk cost" and a COGS cost for the car itself. When you read about write-offs, they are talking primarily about "sunk costs", and they do this to get as much loss (aka "tax write-offs") at one time as possible. This is the exact opposite of how they look at the startup cost when first investing, when they amortize the R&D and manufacturing startup costs over 5-10 years (a common practice for new product development).

The way I see it, there is all kinds of new manufacturing capability and design innovation that has already been paid for, and at some point, the ICE manufacturers that invested in EVs will be able to re-deploy that investment quickly (sort of like recommissioning jets you had to park on a runway in Arizona for a few years during the Covid pandemic).

Of course the startup will not be smooth or painless, but in my mind it is 100% certain that EVs are the future, and a smart auto manufacturer will know that too, and try to keep from falling behind once the tide has turned. They will find a way to leverage these initial design and manufacturing investments.

I understand the economics of sunk cost (was a business major after all).

But when car companies are deciding which models to continue, which to kill and which to sink more cost into…… it all matters.

I get it that EV supporters keep clinging to the hope that this is the car of the future for many reasons. But at the end of the day they’re being built by for profit corporations with shareholders. They HAVE to make money.

And things aren’t looking good for most companies at the moment. Right now they HAVE to keep selling ICE to stay in business to offset all the losses from the EV divisions.

Will that change in upcoming years? We shall see, but things definitely aren’t turning out the way we had hoped/expected 5-10 years ago.

I’ll pick on my last car (2021 Ford Mustang Mach E). It’s one of the top selling non-Tesla EVs in the US over the last 5 years.

Since 2021 sales have been flat or down.

Price has dropped significantly and that hasn’t increased sales numbers. Just price adjusted for inflation it should have gone UP almost $20k since 2021 and instead it’s DOWN about $15k. Losses for Ford are in the billions of dollars.

During that time period Ford has delayed any model refreshes, delayed then killed multiple Lincoln versions and EVs, shifted from a pure EV F150 (sales flop) to future series hybrid versions……. And that’s after building multiple EV factories (sunk cost).

Not looking great. And pretty much every major manufacturer in the US is in the same situation making similar decisions.

 

[69Mach390]

By this logic, Tesla will be the only car company left in North America in a couple of decades (or whenever ICE cars go the way of a horse powered carriages), purely because your theory says they will be the only North American company able to make EVs and not go bankrupt by then. I don't don't think that is likely to happen.

Not saying that, but car companies will pivot away from EVs if they can’t sell them at a profit.

Much like they did over 100 years ago when they’re competing with horse powered carriages and gas powered cars.

If they can sell them at a profit……. Problem solved. Companies will invest and lose money for a while if they see profitability on the horizon. The current problem is that for many EV models….. they don’t. There is a path for some though, not just Tesla.

 

[Zcd1]

If you're a legacy auto manufacturer, you have an enormous amount of assets dedicated to building ICEVs, so OF COURSE you'd much rather continue to do that than to gear up to make EVs.

The problem is that no technology that's at best 30% efficient in converting energy to work has any long-term future. The manufacturers currently walking back their EV plans are destined to fail.

 

[Vim Schrotnock]

20+ years from now, the ICE car will be as common as a manual transmission is now. I think the legacy car companies could very well go the way of Kodak. The Chinese make better cars than we (or anybody else) can, at 1/2 the price. I believe any car company that isn't vertically integrated (make their own batteries etc.) will not be in business. In the meantime, I think PHEV vehicles will dominate, slowly giving way to EV's when the technology just becomes irresistible.

 

[daveo4EV]

https://www.macanevowners.com/forum/threads/wall-street-journal-article.26370/

 

[69Mach390]

If you're a legacy auto manufacturer, you have an enormous amount of assets dedicated to building ICEVs, so OF COURSE you'd much rather continue to do that than to gear up to make EVs.

The problem is that no technology that's at best 30% efficient in converting energy to work has any long-term future. The manufacturers currently walking back their EV plans are destined to fail.

Since when has energy efficiency been a requirement for a car to succeed or fail?

Profit, it’s almost everything that matters to succeed.

EVs and the issues with EVs are OLDER than gas powered cars. The things that had them lose 100+ years ago are unfortunately still similar issues today:

Cost, weight, energy density, charging speeds, and infrastructure.

Even if they solve the rest of that list with new technology, the cost will still determine if companies can sell these things at a profit.

The legacy manufacturers HAVE geared up to build EVs. They’ve built entirely new manufacturing plants to build them.

But due to low sales, they’re running those brand new state of the art EV facilities at like 10% of capacity….. and losing money with every vehicle built.

Ford? Hugely failed so far. Chrysler? Ouch waaaay worse. That poor Dodge Charger they’ve been selling for up to $40,000 off MSRP and people still aren’t buying them.

GM has been doing it longer but also not seeing profits.

Don’t get me wrong, I LOVE my EVs (this is my 2nd) and I want them to succeed. But things just don’t look good from a business side of things at the moment.

Sponsored