Automakers plan electric car blitz even as Tesla burns billions

SOUTHFIELD: Here are two facts that defy logic: By the end of the year, electric-car maker Tesla Inc will have burned through more than US$10bil without ever having made 10 US cents. Yet companies around the world are lining up to compete with it.

Almost 50 new pure electric-car models will come to market globally between now and 2022, including vehicles from Daimler AG and Volkswagen AG. Even British inventor James Dyson is getting into the game, announcing last week that he’s investing £2bil (US$2.7 billion) to develop an electric car and the batteries to power it.

The reasons for chasing Tesla are part city hall, part show business. Regulators in Beijing have laid out a plan to mandate electric vehicle production in China, while California requires carmakers to build more EVs or be forced to buy credits from rivals. At the same time, Tesla chief executive Elon Musk and his sleek cars have captured the imagination of Americans to the point where consumers and investors are throwing money at his Silicon Valley company.

In North America alone, the number of electric vehicles will soar to 47 by the first quarter of 2022 from 24 in the third quarter of this year, according to data from Bloomberg New Energy Finance. China’s EV market will go to 80 from 61, and European buyers will have 58 electric choices, up from 31. Globally, there will be 136 EVs on the market by the end of that year, and that doesn’t even include the hybrid models or fuel cells.

At this point, expensive battery technology still makes them money drains. General Motors Co loses about US$9,000 on every Chevrolet Bolt electric car it sells. Tesla had record sales of its EVs last year – and still lost US$675mil on US$7bil in sales.

Here are some of the significant new models coming to market:

VW’s Audi brand will start building the e-tron Quattro, a luxury SUV, in 2018, followed by the Sportback coupe in 2019 and a third, unnamed vehicle by 2020.Porsche AG will sell a production version of its Mission E sports sedan concept car starting in 2019. In addition to BMW’s current electric i3 compact and i8 sports car, the German automaker will have an electric Mini in 2019, an X3 compact SUV in 2020 and 10 others by 2025, chairman Harald Krueger said in a speech in September. Daimler’s Mercedes-Benz brand plans 10 battery-powered vehicles in its EQ sub-brand through 2022, while Volvo Car Group, which is owned by China’s Geely Automobile Holdings Ltd., has said any new models launched in 2019 or later will be offered only as hybrid, plug-in hybrid or all-electric versions. Tesla plans to build the Model Y small SUV in 2019 or 2020.

The good news for carmakers is that the cost of batteries is coming down. GM said on its first-quarter earnings call that its lithium-ion batteries cost about US$145 per kilowatt hour to produce. The goal is to get that below US$100 in the next few years.

BNEF forecasts that battery costs will get down to US$109 per kwh in 2025 and US$73 by 2030.