Chevrolet stands to lose $9,000 for every Bolt it sells, and the automaker is not alone—competitive car companies already lose thousands of dollars for every electric vehicle sold, according to a recent report by Bloomberg.
Eric Noble, president of the CarLab, a consulting company in California, believes most automakers lose at least $10,000 per EV sale. Adding credibility to that estimate, Fiat CEO Sergio Marchionne said in 2014 that Fiat-Chrysler was losing $14,000 per sale of its 500e.
How can a car company remain in business, losing roughly $10,000 on every EV it sells?
For now, it boils down to economies of scale—EVs constitute a very small percentage of total vehicle sales, thus the losses car companies are subjected to for every EV sold can be offset by the profits made on sales of conventional cars. Furthermore, governments in the U.S. and Canada have established tax incentive programs to facilitate sales of EVs.
In other words, the cost of selling EVs at a loss is passed on to the consumer of conventional vehicles, and the taxpayer at large.
Given the current sales numbers of EVs, the cost passed on to the consumer and taxpayer for the subsidization of EVs is subtle on the wallet—but as the required percentage of EV sales grows in the coming years, passing on the financial loss to non-EV buyers will become untenable.
In Canada and the U.S., EVs make up less than one percent of all vehicles sold, but aggressive goals are in place, aiming to dramatically increase the percentage sales of EVs. For instance, the province of Ontario has set a target for 12 percent of all new vehicle sales to be electric by 2025, while Quebec tabled a bill earlier this year to set a quota for 15.5 percent of all new vehicle sales to be electric by 2025.
The Alliance of Automobile Manufacturers recently asked U.S. president-elect Trump to reconsider and alter the average fuel economy standards targeted for 2025. According to the alliance, $40-billion in losses will be passed on to the non-EV consumer and taxpayer if nothing is done to reign-in aggressive regulatory changes aimed at the promotion of EVs.