InsideEVs: 2026 is when the real EV war begins

[kenyee]

https://www.msn.com/en-us/autos/aut...the-real-ev-war-begins-here-s-why/ar-AA1Sap7h

Interesting commentary about the "next gen" architectures from BMW/MB/KiaHyundai.

Nothing too surprising but a good summary.

Sponsored

 

[DuoRivian]

Thanks for sharing, was interesting to read.

 

[mikehmb]

https://www.msn.com/en-us/autos/aut...the-real-ev-war-begins-here-s-why/ar-AA1Sap7h

Interesting commentary about the "next gen" architectures from BMW/MB/KiaHyundai.

Nothing too surprising but a good summary.

Thanks for sharing, I'm excited for the new generation of EVs.

<rant at author of MSN article> But I take serious issue with calling the Gen1 cars "compliance vehicles" since they were absolutely not that.

A compliance car is Aston Martin OEM'ing the Smart FourTwo and slapping their logo on it so they can meet fleet emission requirements without penalties.

Nissan - despite the total f***up they became under Ghosn - deserves a lot of credit for really cracking open the market with the original Leaf, they didn't need a BEV to meet US emission standards. They built a low cost family car that ran on electricity, and that should be applauded.

BMW went bananas with the i-series projects. No company designs a carbon-fiber chassis for a compliance car.

<rant off>

 

[Redmond Chad]

I've found over the years that many people (like the author of the article) seem confused by the "compliance" term. Here's how I explain it: almost all automaker profits come from high-volume vehicles. If there is a law saying they have to produce a small quantity of a special type of vehicle, some may try to make it an appealing high-volume vehicle, but others will minimally comply with the law (which is fine, really) by trying to lose as little as possible. A compliance vehicle is then typically a quick, cheap conversion of an existing car. In addition to mikehmb's great Aston Martin example, think of the old Chevy Spark EV or Ford's early EVs with batteries stuffed in the trunk.

Of course there are other approaches to designing cars than simply high-volume or compliance. (And of course these categories are not limited to EVs; they can apply to any vehicle). For example:

Halo. Meant to show off the brand's capabilities in a good light, and draw customers in to the showroom. But both of those are largely to sell other high-volume cars in that showroom, because few people will actually buy a halo car as they are typically high-priced, and low utility - often having only two seats, limited storage and visibility, etc. The BMW i8 is a good example of this. Low-volume cars, even with high prices often don't make money, but the "lost" money is counted as marketing and customer acquisition. (And of course sunk development costs may reduce development costs of future vehicles, etc).

Conquest. High-volume cars bring in most of the money, but to get to volume in a saturated market you need to steal share from other automakers. Conquest cars typically are more low-to-mid volume, and may not make money themselves - but the "lost" money is counted as marketing to expand brand appeal and/or customer acquisition costs (counting on loyalty for future vehicles) since they are more likely to buy a high-volume vehicle from the brand in the future. A conquest car typically has some highly-marketed feature in spades that the brand is not typically known for - say, a fun-to-drive Toyota, or a low-cost Mercedes. That new feature cost money to develop and means that even if the car makes money, it is going to make less than other volume cars. Which leads us to the next category...

Non-cannibalizing conquest. A conquest car doesn't have to be non-cannibalizing, but many are. Brands worry that if they develop a new car with some attractive new feature, that they may find many of their current customers switching from their high-volume car to the new conquest car - which almost certainly has a smaller profit margin. So they cut back on some feature that their current customers value. It could be less fun to drive, have less cargo space or less offroad capacity, etc. In practice one of the cheapest things to do it to make it less attractive than their existing cars. The BMW i3 is a good example of this. When asked about the design, BMW was very upfront that they were not designing it for their current customers. At dealer events they touted the conquest rate. (And to mikehmb's good point here, BMW fully intended to apply some of their sunk design costs to future, higher-volume vehicles...although that has not worked out as BMW had hoped - partly due to much of their design team defecting to another automaker).

Defensive. If a competitor makes a good conquest car, and you see your market share eroding, you may slap something together to try to keep your customer in your brand. It may not be as good as the competitor's conquest car, but it's close enough to keep brand-loyal customers. This category can sometimes look like a compliance car, but should go further to make sure it's appealing to the brand-loyal. It can also sometimes look like a conquest car (which is what it is competing with!) but it often doesn't go that far since it's only trying to keep current customers, rather than draw new ones in.

There are other categories, and more importantly these categories are guidelines for design choices - they are not cars. Any given car can be a deliberate combination of more than one category, or could be a poor implementation of a category. It's very hard to tell which category an automaker is shooting for based solely on mass-market press releases, but often executives talking to investors or dealers will be more open about the goals for a particular vehicle.

Finally - why is volume so important? Things can vary widely (especially when re-using parts or design or even most of a whole vehicle), but a typical estimate for developing a new vehicle is a billion dollars. That's before making a single car - it is just for design, setting up the line and suppliers, adhering to emissions and crash test laws, creating owner and repair documents, etc. If you sell a million copies of that car over its run (say, 6 years) that's $1,000 in overhead per car, which is quite manageable. But if you only sell 100,000 copies of the car, it's now $10,000 per car. That's going to make it not competitive with another automaker's high-volume car. Volume is hugely important to automakers...and most automakers are not yet at sufficiently high volumes with their EVs. It's at least as important as battery costs.

 

[BigSkies]

That was a decent article. I agree with the premise, but quibble with the details. I also think this is a ~2026 to ~2030 story and not just a 2026 phenomenon.

The things I believe are true about the EV market over the next few years:

1. The market will separate out the quality EV's from the half-ass attempts. This isn't just high-end vs. low end. The new Leaf looks like a legitimately good EV at a good price. The new Jeep Recon is comically bad in terms of value for money.

2. The days of living off a luxury-priced launch are over. The new winners will be determined by sales-volume, sales-volume, and sales-volume. Value for money is key. Companies with high volumes will drive down costs that low volume manufactures can't match.

3. Global sales matter more than ever, and are harder than ever. The US market for EV's is ~1.3M vehicles, while it's ~3M in the EU, and ~10M in China (last I checked). A company looking to sell 500k+ units a year has to be succeeding in more than one market.

4. EV sales growth in the US will have more to do with gas prices than government policies. They will struggle when gas prices are low, and surge if gas prices go up again. I have no idea what gas prices will do for the rest of the decade.

 

[Time2Roll]

1. The market will separate out the quality EV's from the half-ass attempts. This isn't just high-end vs. low end. The new Leaf looks like a legitimately good EV at a good price.

Had one of the first LEAFs. Great car, small battery that only lasted three years. The drivetrain was TIGHT with an absolutely dead silent gearbox. RAV4 (Tesla), Jaguar, Rivian don't come close on the transmission.

Besides all that, the real battle will be the release of the solid state batteries assuming they live up to the hype.
I don't think these will be out in 2026.

 

[manitou202]

Here is my biggest quibble with the article:

"This means the mechanical side of things fades in importance behind the software that runs it."

Yes, software is important in a modern car, and yes many of the legacy OEMs have lot of catching up to do which seems to be happening with this GEN 3 EV. But on the flip side, the mechanical side of things is where the new auto companies (Tesla, Rivian, Lucid, and many Chinese companies) are behind some of the best legacy OEMs. Terrible ride, suspension, clunky chassis, poorly design door handles, etc. As someone who loves to drive cars (and is a mechanical engineer) I think this is an underrated part of the design. Flashy software doesn't make up for a terrible mechanical design.

Sponsored