Mckinsey and Company
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What part of McKinsey’s analysis did you find most surprising? Why was this surprising, and why does this seem to go against what you thought you knew about electric vehicles?
Electric vehicles are expensive. I find it surprising that Mckinsey and Company state that to accelerate the industry and boost profits, they should reduce costs by contending and optimizing a range for urban movements through partnerships with automobile sellers and owners to reduce R&D and expenses. From my knowledge, electric cars have better incentives for customers and are sold via automobile industries. The sales, however, are low with 2000 units sold out of four million. They are generating fewer profits than presumed during production. Mckinsey and Company suggest that they can boost profits by reducing production costs, hence the selling price of an EV. Surprisingly, their method borrows from the non EV world. For example, they state that the cockpit electronics and body simplifications reduced over 600dollars without subtracting important feature content integrated to value generation. They suggest tearing the display, button switches, wiring, modules, and any additional features to save on costs and complexity.
Consumers are most likely to buy an EV car than an ICE due to the automobile industry’s changing dynamics. However, these cars are more expensive and complex to operate hence the fewer sales. Mckinsey and Company state that the sales are low than expected. From my knowledge, electric cars cost more and target above-average earners, which indicates that reducing the cost will lead to losses, both in manufacturing and production. Automobile industries will greatly be affected by 2025 from the reduced costs, hence convincing a customer to buy an EV rather than an ICE càr will remain challenging with the current economy. However, the automobile section will keep producing these cars as the car battery’s decline and because it lacks an alternative in the fuel economy and emissions policies being instilled by the government hence continued losses. As Mckinsey and Company state, it is better than automobile companies to form aliases with their competitors, educate consumers on Evs, make the cars available, and optimize new designs and mobility.
References
https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/making-electric-vehicles-profitable
https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/expanding-electric-vehicle-adoption-despite-early-growing-pains