Lately, the Detroit big three (GM, Ford and Stellantis), have all made big announcements on hybrids (source and source). The main motive is to improve carmakers profits as hybrids are seen as easier to make. Looking at past hybrid programs (GM’s Volts and the Toyota Prius), Hybrids are complex machines that are very tricky to manufacture at scale. Toyota took almost a decade until the Prius become profitable, the Volt, in its 8 years of production, never made money for GM. A sensible alternative strategy might be to instead invest in existing EV models.
Auto-manufacturing is not for the faint of heart. It costs billions of dollars to develop a new model, to a point where production can begin. Then its an even larger sum that is spent on years of early units, which are almost always made at a loss, until finally, after perhaps 5 or even 10 years, you hit profitability. The chart below shows the unit cost for a Tesla Model 3, which hit profitability in 2020, after 3 years of losses in production, and perhaps 3 Billion or so of development costs (source).
Seems Toyota had a similar journey with the Prius (source), taking about 5 years to reach profitability, and costing about $1B to develop (in 1995 dollars, source). The Chevy Volt never made money for GM (source), perhaps owning to its relatively low volumes, but certainly not helped by the complexities of a plug-in-hybrid. Squeezing two power-trains into a small engine compartment, and getting them to work together, is no small feat.
What will the world look like in 5 years, when the promised profitability will likely arrive? This is a harder question, from an economics standpoint, EVs offer lower operating costs (“fuel” and maintenance), but with a higher sticker price. This is a much better deal when interest rates are low, which most economists predict might happen in the next few years (source). Plus GM has a flood of new EV models about to hit showrooms (source), and new models always drive more sales.
A recent survey (source), suggested that one in five charging sessions wind up having some sort of a problem, thankfully the trend seems to be flattening, and hopefully going forward, this statistic will start to trend downwards, as the technology matures (source), Flo for example, a charging network operating mostly in Ontario and Quebec, reported 98% up-time statistics (source). This might be at the crux of the EV adoption slowdown, worries about charging rate highly these days, (source). The Tesla supercharging network is often mentioned as a key reason for people choosing Tesla (source), its up-time statistics are on par with Flo.
Thus as charging improves, and interest rates lower, it seems that EV adoption might start to take off again, this might all happen in a few years, far faster than it will take for a new hybrid to become profitable.
Electric car adventures 