You’re absolutely correct. All automakers have abandoned small cheap cars because they don’t actually cost that much less to manufacture than massive tank-cars.
Imaginary example to illustrate this:
Car A: small hatchback with basic cloth seats, 50KWh battery, standard satnav/stereo system. With $2000 of materials, $10,000 of manufacturing and labour, and a sale price of $20,000, for a profit of $8000.
Car B: SUV shaped faux-luxury car with leather seats, 80KWh battery, the same stereo, and fake wood and chrome covered plastic all over it. $3000 raw materials, $15,000 of manufacturing and labour, but it sells for $65,000, this automaker gets a profit of $47,000!
It’s easy to see why they’re doing this. By making their cars enormous and expensive but with long financing terms they can create “mandatory luxury”.
With the state of the supply chain it doesn’t make sense to use all available resources on cheaper models and limit the amount of high profit models being built.
Automakers chase profits, being green is just a side product of the current trends.
I am positive that automakers know this but they are chasing higher profit margin models. Unfortunate short term thinking.
You’re absolutely correct. All automakers have abandoned small cheap cars because they don’t actually cost that much less to manufacture than massive tank-cars.
Imaginary example to illustrate this:
Car A: small hatchback with basic cloth seats, 50KWh battery, standard satnav/stereo system. With $2000 of materials, $10,000 of manufacturing and labour, and a sale price of $20,000, for a profit of $8000.
Car B: SUV shaped faux-luxury car with leather seats, 80KWh battery, the same stereo, and fake wood and chrome covered plastic all over it. $3000 raw materials, $15,000 of manufacturing and labour, but it sells for $65,000, this automaker gets a profit of $47,000!
It’s easy to see why they’re doing this. By making their cars enormous and expensive but with long financing terms they can create “mandatory luxury”.
With the state of the supply chain it doesn’t make sense to use all available resources on cheaper models and limit the amount of high profit models being built.
Automakers chase profits, being green is just a side product of the current trends.