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Automakers must build cheaper, smaller EVs to spur adoption, report says
(arstechnica.com)
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this post was submitted on 01 Dec 2023
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Sorry, best we can do is massive, expensive pseudo-luxury SUVs
I wouldn't call Kia nor Hyundai nor Toyota nor Honda anything close to pseudo luxury. Has the bar been lowered because of all the plasticated electronics and DUAL ZONE AC?
The fit and finish of interiors in general has really fallen... literally plastic everywhere. Uphostery, leather, wood/wood-effect etc are all mostly gone
There's quite a wide range within those brands. Is it safe to say that you would consider Lexus or Acura to be at least pseudo luxury? What about their entry models that are just a rebranded version of the Honda/Toyota model?
Hell, how do we even define luxury? You can get heated leather seats in just about anything these days, and a few decades ago those were both ultra premium options.
Luxury often gets confused with high-cost. Which is confusing for people and kind of boils down to your definition of luxury.
Personally a new top of the range 35k Kia with heated seats, HUD, electric tailgate and radar cruise control is luxury but others will only consider a Porsche or above luxury? Donno it's just never going to be globally agreed
That kia is a piece of shit (quality wise) that will fall apart easily, has literal cardboard in the seats and panels, has no sound insulation for road noise, handles like garbage, and has poor performance. Heated seats and cheap electronics do not make it luxury.
It is all opinion, but I think every person that's driven a wide array of cars would not consider kia luxury. Ever.
Interesting opinion.
I worked for Audi for two years which most would consider luxury but almost every part on an Audi was shared with SKODA and SEAT which others wouldn't consider luxury. It's all the same shit with a different badge.
I know plenty of luxury cars with recycled seats, poor handling, bad sound insulation and underpowered engine. Honestly if you feel so strongly that Kia and Hyundai are not luxury and Lexus is you're way behind in modern vehicle standards
Lexus & Acura, yes, entry level luxury. I've never seen one that clearly competes with higher end brands. The similar lower models I think are faux luxury. The cheapness is not hard to find.
American BMW & Mercedes to me are clear moderate / mid level luxury. Most models anyway. I say American because I've seen some very low trim models in Europe. Also, those brands are just my example. I know there are others.
I define luxury as long lasting comfort, high level quality control, sound insulation, responsiveness, economics, durability, etc.
Luxury certainly has changed over time. Just my opinion.
I wouldn't even call Tesla expensive (to make) or luxury. Every Tesla I've been in has seemed empty, plain, and feels cheap. The only expensive part about it is the batteries and the labor to make it. I'm sure the price is just inflated due to all of the attention and hype that company has received over the years.
Small cars, small profits.
Lots of small cars sold, lots of small profit.
For a lot of producers, that's not even true for ICE cars anymore. More safety features and emission regulations make them more expensive to produce relative to larger cars.
The large profit margin SUVs are necessary for a company to achieve scale to then be able to produce the smaller cheaper stuff. Fixed costs like the factory, tooling, training, designing, that all takes a lot of money up front before even selling a single vehicle, and the smaller and cheaper the vehicle coming out of that production pipeline is, the longer the payback period will be. And when we’re talking about billions of dollars in cost, it’s hard to remain solvent when interest payments on the debt grow exponentially over time.
It’s why before tesla there had not been an American auto company startup for like 70 years, Tesla almost went bankrupt, and Rivian is just starting to head in the right direction. Lucid is probably fucked and they’re mostly Saudi owned these days anyways, and the rest of the US EV startup space ranges from a joke to a scam.
What legacy automakers already have in staff and part of the production line established is actually kind of useless when they have to wait to establish their electric motor, battery, and chassis production, which probably just means a new factory anyways. Give it a few years and the cheaper smaller stuff will come, because right now AFAIK only tesla actually has the free cash flow to fund an EV economy car at scale. Everyone else is still sinking billions establishing any EV production at all, and interest rates aren’t helping the speed of their progress either.
There's more than one way to skin a cat. The Chinese EV companies that have come up in the last few years use a diversity of business strategies, not all involving high margin SUVs. BYD's cars, for example, are spinoffs of its battery manufacturing business.
BYD was selling ICE vehicles up until March of 2022, and their current split is somewhere around 50/50 BEV/hybrid so they’re still not a full EV company. Their lineup is still being supported by their existing infrastructure, subsidized by the already established supply chains for ICE that they can incrementally cannibalize while building up the EV part of the company. It’s a good blueprint for legacy auto, but not for an EV startup. That is even before mentioning the very generous subsidies and incentives for electrification provided by the national, provincial, and city governments to producers and consumers. Not to say there is anything wrong with that, because I believe the US also needs that level of investment into electrification, but my point is that it’s not the same business model.
BYD also put lots of resources into electric buses. Anyway the point is that there's multiple game plans EV makers can follow, not only Tesla's.
I'm not sure you understand economies of scale and profit margin.
"Car companies needs SUVs to survive financially!" is not a thoughtful response. It can easily be disproven by looking at the first 60 or so years of the automobile industry before SUVs were even a thing. The SUV takeover is a pretty recent phenomenon which has taken shape over the last twenty years.
But it was based on light truck exemptions from CAFE standards, so they can be cheaper to build and sell at a higher margin. But now average buyers don’t want anything smaller for fear of being run down by all the trucks and suvs.