My point is, and I am able to evaluate this having had a fairly close vantage point, no car can be made profitable without sufficient volume. And it is very easy to make a car that has almost no profit associated with it - ask GM.
This is a compliance car - that means it is not going to carry its weight. You can call that stuff sunk cost, but it has its encumbrance on profits; the accounting facts are time shifted is all, it is foolish to discount them. If you want to look at past R&D as sunk cost fine - then the 500e has to carry the current R&D for the next models in the pipeline. I doubt that it will, if they don't make the effort to crank up the volume. I ask you then - where does the money for current R&D come from. I have no interest in enticing you to defend what was probably a throwaway comment. Sorry, I brought up an contrary view. On Sat, May 24, 2014 at 10:35 PM, Ben Apollonio via EV <[email protected]>wrote: > I think you're missing my point. I understand it's not free. But if you > were to apply Fiat's accounting to other situations, nobody should ever > launch a new product or start a company because it's guaranteed to "sell at > a loss" for the first few months/years after it hits production, regardless > of how good the margins are otherwise. Now, you may say Fiat will never > sell enough 500e's to recoup their investment, which may very well be true, > but grousing by the CEO about how he hopes people won't buy the car isn't > going to help. > > Said another way: once you've already sunk the R&D cost, you don't factor > that past expense it into whether or not it's profitable to continue making > and selling the product you've already designed/tooled/etc. > > -Ben > > On May 24, 2014, at 6:35 PM, Michael Ross <[email protected]> > wrote: > > > So where does the money for NRE and R&D come from? > > > > > > On Sat, May 24, 2014 at 11:41 AM, Ben Apollonio via EV < > [email protected]> wrote: > > On May 23, 2014, at 9:06 PM, Michael Ross <[email protected]> > wrote: > > > > > No, there is no economy of scale with the low numbers they are > building. That is a fact. > > > > Not on the electric drivetrain, no. But on the wheels, body panels, > dash board, seats, and everything else it has in common with the regular > Fiat 500, you bet there is! > > > > > > > > I developed cam and crank sensors for a while. The tooling for a cam > sensor with 10 small components in it (I am even counting tiny neo magnets > and some discreet electronic components and an IC) will easily exceed $300K > - 10 years ago. I am fairly sure the cost is higher for an OEM (I was > doing cost conscious aftermarket). > > > > > > Or if that doesn't help - what would it take for you to build an > entire car that meets all the homologation, safety, blah, blah, blah? It > is incredible how much capital expense there is to bring out a car. You > have to make a lot of cars to break even - whole lot, and you have to be > pretty good at it or you will fold. > > > > R&D and NRE are not the same as production cost. When budgeting for new > product development, you do want to amortize it over expected sales, but to > come out & grouse that you lose money on each car you sell because you > previously spent a lot on NRE is disingenuous. By that measure, Tesla is > still losing money on every car it sells because they spent so much > investor money on development, so they should just close up shop because > there's no money to be made. By the same measure, Apple lost gobs of money > on the first 1000 iPads they sold -- they should have come out and whined > and asked people to stop buying them because they were losing 1000's of > dollars on every one. > > > > I get that EV's are still a niche market and it's hard to recoup > development costs. Hence why I'm wondering if the compliance car mandate > is obsolete -- let the companies like Nissan and Tesla who want to invest > have an easier time recouping THEIR investments with less competition from > unwilling and whiny rich people. > > > > -Ben > > _______________________________________________ > > UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub > > http://lists.evdl.org/listinfo.cgi/ev-evdl.org > > For EV drag racing discussion, please use NEDRA ( > http://groups.yahoo.com/group/NEDRA) > > > > > > > > > > -- > > Put this question to yourself: should I use everyone else to attain > happiness, or should I help others gain happiness? > > Dalai Lama > > > > Tell me what it is you plan to do > > With your one wild and precious life? > > Mary Oliver, "The summer day." > > > > To invent, you need a good imagination and a pile of junk. > > Thomas A. Edison > > > > A public-opinion poll is no substitute for thought. > > Warren Buffet > > > > Michael E. Ross > > (919) 550-2430 Land > > (919) 576-0824 Google Phone > > (919) 631-1451 Cell > > (919) 513-0418 Desk > > > > [email protected] > > > > > > > > _______________________________________________ > UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub > http://lists.evdl.org/listinfo.cgi/ev-evdl.org > For EV drag racing discussion, please use NEDRA ( > http://groups.yahoo.com/group/NEDRA) > > -- Put this question to yourself: should I use everyone else to attain happiness, or should I help others gain happiness? *Dalai Lama * Tell me what it is you plan to do With your one wild and precious life? Mary Oliver, "The summer day." To invent, you need a good imagination and a pile of junk. Thomas A. Edison<http://www.brainyquote.com/quotes/quotes/t/thomasaed125362.html> A public-opinion poll is no substitute for thought. *Warren Buffet* Michael E. Ross (919) 550-2430 Land (919) 576-0824 <https://www.google.com/voice/b/0?pli=1#phones> Google Phone (919) 631-1451 Cell (919) 513-0418 Desk [email protected] <[email protected]> -------------- next part -------------- An HTML attachment was scrubbed... URL: <http://lists.evdl.org/private.cgi/ev-evdl.org/attachments/20140524/4586b3f2/attachment.htm> _______________________________________________ UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub http://lists.evdl.org/listinfo.cgi/ev-evdl.org For EV drag racing discussion, please use NEDRA (http://groups.yahoo.com/group/NEDRA)
