It’s no secret that the costs associated with developing new alternative energy propulsion systems for vehicles are quite extensive. As a result, federal and state governments have been subsidizing the purchase of said vehicles for years, but as that begins to wind down some automakers may be facing a tough sell if they intend to turn a profit when selling their hybrid or electric vehicles.
For example, Nissan has said that its recently released Leaf electric vehicle will need approximately 500,000 global sales each year in order to turn a profit without government subsidies. By contrast, exotic electric automaker Tesla’s CTO, J.B. Straubel, recently revealed during an interview with Bloomberg that turning a profit with the 2012 Model S sedan will require just 20,000 annual sales.
Why the major discrepancy?
The main difference is that Tesla has opted to use thousands of small lithium-ion batteries, like those used to power laptop computers. These smaller batteries are far more cost effective than the larger lithium-ion batteries utilized in the Nissan Leaf and Chevrolet Volt. In fact, one of Tesla’s co-founders and former chief executive, Martin Eberhand, said that the larger lithium-ion batteries can cost from three to four times as much per kilowatt hour of storage capacity.
If Tesla is to survive long-term, the automaker will need such a favorable economies of scale working in its favor. To date, Tesla has not turned a profit by selling just its Roadster models.
References
1.’Tesla says electric car…’ view
