In the conference calls that accompanied their recent earnings results, executives from several major car manufacturers discussed the need for affordable electric vehicles. Many industry leaders acknowledged that they had overestimated demand for electric vehicles and now view a slower transition to large-scale adoption than they had previously predicted. As a result, many companies are making affordability central to their strategy.
Here are some of the key takeaways from recent conference calls with executives from GM (GM), Ford (F), Toyota (TM), Tesla (TSLA), Rivian (RIVN) and Mercedes-Benz (MBGAF).
Key Takeaways
Across these earnings calls, several consistent themes emerged regarding EV affordability and consumer demand:
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The $35,000-$50,000 price point is critical: Multiple automakers identified this range as essential for mass-market EV adoption, with Rivian and Ford specifically targeting this segment.
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Market has fewer affordable EV options than anticipated: Despite years of EV development, executives acknowledged a surprising lack of compelling choices at accessible price points compared to ICE (internal combustion engine) alternatives.
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Consumer demand softened but remains present: While near-term demand has moderated, particularly following policy changes like the elimination of tax credits, automakers remain confident in long-term EV adoption.
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Cost reduction is paramount: All companies emphasized ongoing efforts to reduce battery costs, manufacturing expenses, and overall vehicle costs to achieve profitability at lower price points.
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Regional variation in adoption: Consumer preferences for EVs differ significantly across markets, requiring flexible powertrain strategies rather than an all-EV approach.
Direct Quotes from Industry Leaders
Below are some specific quotes from executives at the automakers:
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“Five years ago, we definitely, totally overestimated the speed with which customers would be willing to switch over to electric mobility. And we also overestimated their desire for having a completely differentiated design for their electric vehicle.”— Harald Wilhelm, Mercedes-Benz Head of Finance & Controlling
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“Adoption towards electrification in the 150-plus markets that we serve around the world is not the same everywhere. And it is clear to us that for the foreseeable future, minimum the next 10 years, probably a little bit longer; it will be in all of the above scenario.”— Ola Kallenius, Mercedes-Benz CEO
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“We continue to believe in EVs and our portfolio brought almost 100,000 new customers to GM last year. We know EV drivers don’t often go back to ICE, so we’ll continue executing our plan to dramatically reduce costs and to be well positioned for the future.”— Mary Barra, GM CEO
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“During the third and fourth quarters, we reassessed our EV capacity and manufacturing footprint to better align with softer-than-expected consumer demand, particularly in light of recent U.S. government policy changes, including the termination of certain consumer tax incentives.”— Paul Jacobson, GM Executive VP & CFO
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“One of the things that’s often overlooked around EVs is that there is a surprising lack of high-quality choices at prices around or below $50,000 for a new vehicle in the United States, there are only a few compelling EV choices as compared to hundreds of internal combustion or hybrid options that have a wide range of form factors and design aesthetics.”— Robert Scaringe, Rivian CEO
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“From the lens of the customer, if you want to buy a midsized SUV with robust technology, autonomous capabilities and a reasonable price point, you’ve really only got one choice, and it’s been that way for a long time. This is a reflection of a market that’s being underserved. We believe R2 is going to change that.”— Robert Scaringe, Rivian CEO
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“We dealt decisively with the reality of the market and shifted our focus of our EV business to a high-volume, affordable end of the market.”— James Farley, Ford CEO
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“We believe this platform localized in LAP will hit the majority of profitable EVs sold in the U.S., which are $35,000 EVs, high volume. Tesla has shown that they could – we can make money in that market even without subsidy from the government at the right cost level.”— James Farley, Ford CEO