Diesel may be running out of road but in the rush to hit emissions targets, the automotive giants fear their finances will crash. Part of the problem is volume. Sales of electric vehicles are rising fast, but from a very low base. The Society of Motor Manufacturers and Traders said they accounted for 1.5% of sales in the UK this year, up from 0.6% a year ago. In total, sales of “alternatively fuelled vehicles” — everything from hybrid Fords to pure electric Teslas — account for about 10% of the UK market. This means manufacturers aim for underlying profit margins of 4%-5% on electric cars, said Deloitte, but this typically tips into a loss of between €500 and €1,000 on every vehicle allowing for factors such as weak volumes and customers buying fewer add-ons. Combustion cars, by contrast, earn margins of 8%-10%. Hybrids, which combine batteries and combustion engines, are the least profitable, Deloitte added, with target margins of just 2%-4%. Nor is there any guarantee that the cost of batteries will fall significantly as sales of electric cars go up. The minerals, such as lithium and cobalt, used to make them are in scarce supply. Should demand for batteries soar, it is likely to send prices rocketing.
Times 15th Dec 2019 read more »