EVs have lower assembly (€1,500) and powertrain/drivetrain (€700) costs. They get even when it relates to interior (€2,700) expenses, and are more costly in chassis (€1,300), BiW/exterior (€2,100), and E/E (€2,000). The E-drive adds €2,000 to the production expenses, and the battery pack – at €8,000 – is the main responsible for the total cost of €20,300 just to get the car ready. That’s 45 percent more than the €14,000 for ICE cars.
This gives us a fascinating insight into why Tesla, Inc. is pursuing new ways to manufacture BEVs other than battery efficiency improvements, like the Model Y mega castings. In addition, in 2019, Tesla, Inc. revealed a new revolutionary modular wiring harness architecture to enable further automation in the manufacturing process and use fewer materials. Since If production can be more automated, assembly costs can massively be brought down. Tesla’s CEO, Elon Musk, said that Model S has about 3 kilometres of wiring harnesses, and Tesla brought it down to 1.5 kilometres in length for the Model 3. Tesla’s new wiring architecture for future vehicle platforms aims to bring it down to just 100 metres ideally. According to reverse engineering analyses and teardowns of the Tesla Model 3, it is estimated that the cost of producing this model is around $28,000 ) for both materials and labour (roughly $2700 for E/E). However, this number can be tremendously reduced if the total length of the wiring harness is brought down close to 100 metres and the assembly becomes automated(reduced E-drive, E/E costs). Reduced manufacturing costs would lead to higher gross margins, and ultimately more affordable EVs,.
It is widely believed that a $100/kWh for batteries will make EVs competitive with combustion-engine cars, but Oliver Wyman argues that it is not quite like that. By 2030, the consultancy believes battery prices will be around $85/kWh. Even then, electric cars would be 9 percent more expensive to produce.
According to the Oliver Wyman numbers, that happens even with the price for ICE vehicles increasing to €14,600 by 2030. That’s a 5 percent enhancement, but electric car production costs will then be at a total of €16,000, or precisely 9.58 percent (€1,400) more than the 2030 combustion-engine cars.
When you check the numbers, the difference still lies in the powertrain, E-drive, E/E, battery cluster, which amounts to €6,700. In combustion-engine vehicles, adding the powertrain costs to engine and auxiliary ends up in €5,200, or €1,500 less.
If these numbers are precise, Oliver Wyman gave automakers an amazing tip on how to make a profit out of these vehicles since working on battery and motor costs is not enough. Dinosaur stuff also needs to evolve and cost a lot less.