The $25,000 electric vehicle is coming, with big implications for the auto market and car buyers
Sales of the sub-$30,000 Chevy Bolt, being assembled here in Orion Township, Michigan, allowed GM to recently pass Ford as a distant No. 2 behind Tesla in EVs.
Joe White | Reuters
From the headlines, car buyers might think the most important force driving down the cost of electric vehicles is the $7,500 tax credit that was expanded last summer, followed by Tesla’s recent aggressive cost-cutting to gain more market share.
Look closer, and the work auto companies are doing themselves to refine EV technology — and, crucially, new manufacturing processes — loom as an even bigger deal. And that’s resulting in a series of newly-announced and coming-soon models that will make EVs much cheaper, and more mainstream, highlighted by Tesla‘s first detailed public explanation of how its next-generation car due next year will come at a lower price tag, expected to start between $25,000 and $30,000.
The rise of the mass-market EV will be a milestone — environmentally, economically, financially and even politically. And as the Biden administration pushes changes that seek to aggressively remake the car market in favor of EVs more quickly than previously anticipated.
Hitting price points well below the $48,763 U.S. average new-vehicle price, which Kelley Blue Book says has risen 30% in the last three years, will make obsolete the shibboleth that EVs are an elite affectation of rich people. If the new models catch on, they will cement electric transportation as a mainstream consumer good, while also making Tesla, a refocused Ford and General Motors — and a still-to-be-winnowed out collection of EV startups — fully mainstream carmakers.
“For Tesla to go mass-market, they have to have a cheaper car,” said Wedbush analyst Dan Ives, who thinks Tesla’s version will be a compact luxury vehicle akin to an Audi A3 gas-powered car, whose base model starts at $35,400. “And mass market is the holy grail.”
Tesla’s lowest-priced model today is the Model 3 base MSRP of $41,990. There are currently three EV models with base MSRPs under $30,000, the Chevy Bolt, Bolt EUV, and Nissan Leaf, but average sales prices in March for both were still above $30,000, according to Edmunds, and above $34,000 in the case of the Leaf.
Lower-priced EVs are among a flood of new electric models that have begun to hit the market, with more than 60 new EVs expected in the next few years. Volkswagen on March 15 announced the sub-25,000 euro ID.2 model for the European market. Startup Fisker plans to launch the $29,900 PEAR crossover next year in the U.S., and GM is set to ship a sub-$30,000 Chevrolet Equinox electric sport-utility vehicle by fall. Most will compete in a market for compact sedans that could hit 10 million units over five years globally, even as automakers otherwise deemphasize smaller cars to focus on SUVs, Ives said.
All of these prices are before the tax breaks extended in last year’s Inflation Reduction Act, which let U.S. buyers take credits as large as $7,500 for most EVs made in North America, but are getting more complicated, with rules including eligibility based on where batteries are produced. There are also more financing options available in the auto loan market designed specifically for environmentally friendly cars.
The big questions for automakers in budget EVs
The rise of the budget EV raises a host of questions for car makers, including where they achieve the near-term cost savings needed from production lines, how fast they need to move to gain an edge over rivals entering the low end of the market, and whether the cost-saving techniques that EV-only companies Tesla and Fisker are claiming spread to more expensive vehicles, ultimately either lowering or containing their prices to consumers.
But the biggest question of all right now: what kind of EV will consumers be likely to find at these prices, and will they buy it?
“Think [Toyota’s gasoline-powered mainstay] Corolla and other entry-level vehicles,” said Stephanie Brinley, associate director of research at S&PGlobal Mobility. “There’s nothing wrong with having a basic car as a first car. It’s a reasonable expectation to have a lower feature point.”
Analysts don’t expect a vehicle like Fisker’s PEAR – an acronym for Personal Electric Automotive Revolution – to compete with a bigger SUV like Ford’s gas-powered Explorer. Instead, the PEAR may look more like a smaller version of Honda’s CRV or Toyota’s RAV4, the two best-selling SUVs in the U.S. last year, according to Goodcarbadcar.net. They sell for as low as $27,500 for the RAV4, which is four inches longer than the PEAR’s expected 177-inch length, and just under $30,000 for the larger CRV.
Tesla’s initial low-cost car, known colloquially as a Model 2, is expected to be a hatchback, most likely made at the company’s coming factory in Monterrey, Mexico, with some production possible at Tesla’s Austin, Texas facility, Ives said. Likely comparable models for the next-generation Tesla and other cheap EVs include the Honda Civic or Toyota’s Corolla, which retail for base prices of $25,050 and $21,550, respectively, according to Brinley. Their U.S. unit sales rank 9th and 13th among all models, and tops among compact sedans, according to Goodcarbadcar. Other similar cars include Hyundai’s Kona and Honda’s Fit.
The lowest-cost EVs may have as little as 250 miles of range between charges, similar to the existing $28,000 Nissan Leaf and cars like Hyundai’s Kona that sell in the mid-$30,000-range now, letting consumers save by going for a smaller, cheaper battery, CFRA Research analyst Garrett Nelson said.
Brinley says consumers are unlikely to accept less than that, and will likely insist that even less-pricey EVs keep popular safety features like lane-departure warnings. Consumers may accept a shorter range in exchange for lower cost because they use a PEAR as a second car or use it in cities, where short trips with time to recharge in between are common, Fisker CEO Henrik Fisker said on the company’s Feb. 27 earnings call.
“They may not need to carry around a giant expensive battery, if they’re only using [it] as a city car,” Fisker said. “So we’ll offer some different variations there.”
For market leader Tesla, the key to pulling costs down from the $41,990 list price of the Model 3 standard range begins with new or reimagined factories, vastly greater scale and advances in battery technology, Nelson and Ives said. Ives said battery costs have another 30 to 50 percent to fall after years of decline.
At the No. 2 U.S. EV maker, Ford expects simple scale economies to improve EVs’ operating profit margins by 20 percentage points by 2026, according to a presentation to analysts on the company webcast on March 23. Another 25 points of margin will come from falling battery costs, and from redesigning vehicles so they can use smaller batteries, said Ford CFO John Lawler. Fisker has moved to save by outsourcing production of the PEAR to Foxconn.
How Tesla plans to lower costs
Tesla devoted the biggest chunk of its March 1 investor day to explaining its next-generation strategy, which it said will drive down unit production costs that are already low by another 50%. While Elon Musk has been dogged by a history of over-promising and under-delivering — at least by the original deadline — this is a trick the company says it has already accomplished once, when moving from the premium-priced Model S and Model X vehicles to a lineup dominated now by the Model 3 and Model Y.
The keys include new, bigger factories and a design that makes vehicles’ large, flat battery do double duty as the floor of the car. Those moves let Tesla assemble cars in a different order, skipping steps like removing doors after painting to let workers install seats and other interior components, resulting in less downtime during production, Lars Moravy, Tesla’s vice president of vehicle engineering, said at the investor day. The company’s new power train factories have 65% lower costs than what they replace, he added.
Tesla argues that its vertical integration, in which it designs its own batteries and much of its manufacturing equipment and software, will drive costs down further. Tesla said its overall efforts have driven the cost of drive units, which include the car’s electric motor, as low as $1,000.
“We don’t think any other automaker is even close to that number,” vice president of drivetrain engineering Colin Campbell said, a contention backed by engineering firm Munro & Associates, which says suppliers to other automakers charge $2,500 or more for similar systems.
“That’s big news,” Cory Steuben, Munro president, said.
While Tesla hopes the entry-level car will cement its role as a carmaker that can serve all segments of the market, automakers have spent years reducing their footprint in the less-profitable low end of the market, preferring to concentrate on larger vehicles with wider profit margins. Indeed, a spokesman for Hyundai’s U.S. operation said in an e-mail that the company has no plans to introduce a lower-end EV. No low-end Fords have been announced either. GM will add the Equinox to its existing Bolt sedan, which starts at $26,500 – itself down almost $6,000 for the 2023 model year. A majority of the EV sales that allowed GM to surpass Ford as No. 2 behind Tesla, though still far behind, have been the Bolt.
“At this moment a $25,000 [battery electric vehicle] is difficult without compromising driving range,” Hyundai said in the statement. “Eventually, Hyundai expects ICE and BEV models to reach price parity, but the exact timing is still unclear.”
The solution to low profits in lower-end electric cars, the companies hope, will be to load them with options, just as mid-priced cars and trucks do, Nelson said. In Tesla’s case, this might mean battery upgrades and subscriptions to services, or even a version that lets drivers deploy the vehicle for autonomous rideshare driving while the owner stays home, Nelson added. Or automakers can simply try to sell buyers of smaller EVs on leather seats, more powerful batteries and premium stereos, counting on the same forces that make some Civic buyers pay $43,000-plus for the sportier Type R version or push some Model 3s as high as $79,000.
Or the automakers might simply not make the new vehicles as inexpensive as they are promising now, Brinley said.
“Tesla hasn’t hit a price point yet,” she said.
The real answer depends on exactly how far costs come down, and how aggressively Tesla lowers prices, if at all, as healing supply chains and its own falling costs empower it to squeeze some of the recent inflation in car prices out of the market.
“Everybody is watching to see where Tesla heads,” Ives said. “That’s going to dictate pricing and competition in the market.”
Owner-operators are a huge part of the heavy truck market, and they’ve been among the most hesitant groups to transition from diesel to electric semi trucks. That may be changing, however, as Saldivar’s Trucking becomes first independent owner-operator in the US to deploy a Volvo VNR Electric Class 8 truck.
The higher up-front cost of electric semi trucks has been a huge obstacle for smaller fleets. That’s there are incentives from governments, utilities, and even non-profits to help overcome that initial obstacle. And the smart dealers are the ones who are putting in the hours to learn about those incentives, educate their customers, and ultimately sell more vehicles.
TEC Equipment is a smart dealer, and they worked closely with South Coast Air Quality Management District to secure the CARB funding and ensure Saldivar’s was able to ssecure $410,000 in funding from CARB’s On-Road Heavy-Duty Voucher Incentive Program (HVIP), which provides funding to replace older, heavy-duty trucks with zero-emission vehicles. The program is directed exclusively to small fleets with 10 vehicles or less that operate in California and aims to bridge the gap between the regulatory push for clean transportation and the financial realities faced by small business owners.
“TEC Equipment has been instrumental in supporting owner-operators like Saldivar’s Trucking through the transition to battery-electric vehicles,” explains Peter Voorhoeve, president of Volvo Trucks North America. “Their dedication to providing comprehensive support and securing necessary funding demonstrates how crucial dealer partners are in turning the vision of owning a battery-electric vehicle into a reality for fleets of all sizes.”
Saldivar’s Volvo VNR Electric features a six-battery configuration, with 565 kWh of storage capacity and a 250 kW charging capability. The zero-tailpipe emission truck can charge to 80% in 90 minutes to provide a range of up to 275 miles.
Those specs mean the Volvo electric semi is more than capable of meeting Saldivar’s operational needs, which include night shifts at California ports covering 175-200 miles per night, five nights a week. And, as he adds his VNR Electric miles to Volvo’s ever-growing tally, other owner-operators will see that it works for them, too.
“While large fleets often make headlines for their ambitious investments in battery-electric vehicles, nearly half of the 3.5 million professional truck drivers in the U.S. are owner-operators running their businesses with just one truck,” adds Voorhoeve. “These small operations face unique challenges, from the initial capital investment to securing adequate charging infrastructure … this collaboration is a perfect example of the important role to be played by truck dealers and why stakeholders need to work together to succeed in this new era of sustainable transportation.” We need solutions that work for different fleets of all sizes in the marketplace,” added Voorhoeve.”
Electrek’s Take
Electrifying America’s commercial trucking fleet can’t happen soon enough – for the health of the people who live and work near these vehicles, the health of the planet they drive on, and (thanks to their substantially lower operating costs) the health of the businesses that deploy them. TEC is doing a great job advancing the cause, and acting as true expert partners for their customers.
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SOURCE | IMAGES: Volvo Trucks, via ACT News.
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Mercedes released a look at the powertrain technology of its upcoming electric CLA, and it includes tons of neat EV tech and some interesting options for battery technology and what looks to be the most flexible charging system we’ve seen yet.
We’ve already learned a fair amount about the CLA after first seeing the concept last year, and Mercedes released a few new specifics today regarding its powertrain.
In keeping with previous information we knew, the CLA is targeting extremely high efficiency of 12kWh/100km, which translates to just 193Wh/mi or 5.2mi/kWh. That’s more efficient than anything else on the road today – with Lucid’s Air Pure reaching 200Wh/mi, or 5mi/kWh. And just less than what Tesla is claiming the Cybercab will be capable of, at 5.5kWh/mi.
This is thanks to Mercedes’ new compact EDU 2.0 electric motor, which is part of its new Mercedes Modular Architecture (MMA) which will underpin its upcoming electric vehicles. The drive motor will be 200kW on the rear axle, though all-wheel drive models will be available with an additional 80kW unit on the front axle. A two-speed transmission will ensure efficiency at high speeds and low.
For more efficiency in cold weather, the CLA will use an air-to-air heat pump which is able to capture heat from the motor, battery, and ambient air to heat the cabin. While batteries and motors don’t make nearly as much waste heat as inefficient ICE engines, it’s still good to be able to channel heat to wherever you need it.
Mercedes says that the CLA will come equipped with a choice of two different batteries, each with different chemistries.
The larger 85kWh model will be capable of an unnecessarily-high 750km (466mi) of WLTP range – though WLTP numbers are always higher than EPA numbers, so expect something in the high-300s in EPA parlance. This battery will add silicon oxide to the anode for higher energy density, a technology that has been pioneered by Sila Nanotechnologies, a company which Mercedes is a lead investor in.
The smaller battery will be 58kWh, and will use lithium iron phosphate (LFP) chemistry. LFP is a cheaper but lower energy density technology, with higher long-term durability and simpler sourcing of minerals (it uses no cobalt, whereas Mercedes says cobalt has been “reduced” in the larger batteries). However, LFP generally has slower fast charging and cold weather performance.
On charging: the “premium” battery will have an 800V configuration capable of up to 320kW charging speeds. Mercedes says this can add 300km (186mi) of range in 10 minutes, and also says that the car will have a broad charging curve, which means you’ll get high charge rates even if the battery isn’t close to empty. It didn’t specify if the smaller LFP battery will have the same charge rate.
This high charging rate allowed Mercedes to set a record traveling 3,717km (2,309mi) in 24 hours at the Nardo test track in Italy in a pre-production CLA. That’s an average travel rate of 96mph – including time spent charging.
We also learned something about Mercedes’ NACS adoption plans. While just about everyone has committed to transitioning cars to NACS, it has taken longer than expected (largely due to Tesla’s chaotic CEO firing the whole supercharger team for little reason), and few cars have native NACS inlets yet. Some brands can already charge at Superchargers with adapters, but Mercedes is still on Tesla’s “coming soon” page.
As a result of delays in onbaording automakers, some seem to have pulled back on their plans, pushing NACS ports to later model years. But Mercedes has a new and unique solution – it will just put both CCS and NACS ports on the CLA, right on top of each other.
Mercedes says “in the future, new entry-level models will be capable of bidirectional charging,” but isn’t clear whether this model will be capable of that.
Electrek’s Take
While this is short of a full release of specs, we’re excited by what we see here. Mercedes seems to confirm that they’re meeting the efficiency goals they set out, and we like that they’re offering a variety of options and taking advantage of some newer EV tech like 800V charging infrastructure.
The inclusion of both NACS and CCS is very interesting, again offering options to owners during the transition. That seems to be the big message from Mercedes here – we’re not going to just pick one tool, we’re going to use all of them.
But pricing and availability are obviously big questions, as is design.
The concept looks fantastic, but concepts always change on their way into production. The shape of the camouflaged test vehicle is very different – but looks to have some shrouding on the front and back to hide its shape, so we’ll have to wait until we see this thing unveiled for more.
And as for pricing – Mercedes says the CLA will be an “entry-level” car, but who knows what that means anymore these days. The base ICE CLA starts at around $44k currently, so lets see if they can hit that number.
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Daimler Truck North America has helped alcohol distributor Reyes Beverage Group deploy fully 29 zero-emission Freightliner eCascadia Class 8 electric semi trucks in its California delivery fleet.
Reyes Beverage Group (RGB) plans to deploy the first twenty Freightliner electric semi trucks at its Golden Brands – East Bay and Harbor Distributing – Huntington Beach warehouses, marking the first phase in the company’s transition to a fully zero emission truck fleet by 2039. An additional nine eCascadia Class 8 HDEVs are scheduled for delivery to RBG’s Gate City Beverage – San Bernardino warehouse before the end of 2024.
RBG’s decision to adopt the Freightliner eCascadia builds on its recent transition to renewable diesel and its ongoing idle-time reduction program. These electric vehicles (EVs) “go electric” will contribute significantly toward the company’s stated goal of reducing its carbon emissions 60 percent by 2030. These 2 trucks will save some 98,000 gallons of diesel fuel annually, and avoid putting nearly 700 metric tons of carbon dioxide and other harmful emissions into California’s air each year.
“We are excited to be among the first in our industry to adopt these electric vehicles,” explains Tom Reyes, President of RBG West. “This is a significant step toward our sustainability goals and ensuring compliance with state regulation as we transition our fleet to EV.”
Freightliner’s eCascadia electric semi trucks offer a number of battery and drive axle configurations with ranges between 155 and 230 miles, depending on the truck specification, to perfectly match customers’ needs without compromising on performance and load capacity. RBG’s Freightliner eCascadia tractors will rely on electric charging stations installed at each facility, allowing them to recharge to 80% capacity in as little as 90 minutes for RGB’s trucks, which feature a typical driving range of 220 miles as equipped.
Electrek’s Take
Food and beverage trucks operate everywhere – not just at the ports but in urban population centers, too. That means they’re pumping out harmful emissions right where a lot of people live and work, and that’s no bueno, making the electrification of these vehicles a no brainer for anyone who cares about the quality of life of the people who live and work near them.
SOURCE | IMAGES: Daimler Trucks.
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