[Bloomberg] Automakers Plan Electric Car Blitz as Tesla Burns Billions

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From Automakers Plan Electric Car Blitz as Tesla Burns Billions in Bloomberg Technology

Here are two facts that defy logic: By the end of the year, electric-car maker Tesla Inc. will have burned through more than $10 billion without ever having made 10 cents. Yet companies around the world are lining up to compete with it.

In the U.S., electric car sales were less than 1 percent of the market last year, according to the International Energy Agency. They were 1.4 percent in China and in the U.K.

“Companies are committed to electric cars, but there is little evidence that there is a lot of consumer demand for it,” said Kevin Tynan, senior analyst with Bloomberg Intelligence.

At this point, expensive battery technology still makes them money drains. GM, which generates most of its profit with large sport utility vehicles and pickup trucks, loses about $9,000 on every Chevrolet Bolt electric car it sells. Tesla had record sales of its EVs last year -- and still lost $675 million on $7 billion in sales. Fiat Chrysler Automobiles NV loses $20,000 on every electric version of its 500-model subcompact sold in the U.S., Chief Executive Officer Sergio Marchionne said in a speech in Italy on Monday. Battery-powered models should be marketed based on consumer demand and not depend on incentives, he said.

So why bother? China is a big reason. Electric cars got a regulatory boost when the world’s most populous nation released a set of regulations meant to cut carbon emissions and pollution by 2030. Carmakers must produce a certain share of so-called new-energy vehicles -- which include electric cars -- to obtain credits so they can keep selling gasoline-powered ones.