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Ford explained why soon all cars will be electric purely economic calculations


Virtually all of the world's major automakers are moving towards an all-electric future - both in terms of bottom line and the environment, with profits many times greater.

Ford explained why soon all cars will be electric purely economic calculations

Volkswagen (VW) plans to produce around 70 pure electric models by 2030 and has already overtaken the American Tesla in electric vehicle sales in many European markets. General Motors (GM) said last week that it hopes to sell only zero-emission vehicles by 2035. There is not a single major automaker that is not developing zero-emission vehicles.

There is a good reason for this radical change: electric vehicles are not only the key to meeting tighter environmental regulations, but they are much cheaper to manufacture.

Electric vehicles have a number of cost advantages: without an internal combustion engine, they have far fewer moving parts and require much less labor to assemble.

Ford estimates that it will take 30% less labor hours to assemble an electric vehicle than assembling a traditional gasoline-powered car. And electric vehicle propulsion systems are much easier to use across different models than engines and transmissions used in gasoline vehicles, further increasing efficiency and reducing costs.

"EVs are easier to manufacture, more profitable, and deliver higher profit growth," said Adam Jonas, an automotive analyst at Morgan Stanley, in a note to clients last year.

According to Daniel Ives, technology analyst at Wedbush Securities, the low cost of assembling electric vehicles leaves major automakers no choice but to make the transition.

The only thing that keeps EVs from being cheaper is the cost of various components, especially batteries. Although their prices have dropped by 85% over the past 20 years, batteries for electric vehicles are still too expensive.

Costs are expected to continue to decline as battery manufacturing efficiency improves and demand rises. Tesla said last fall that it expects a 56% reduction in battery costs per kilowatt-hour over the next few years.

Late last year battery prices for electric vehicles for the first time have officially dropped below the critical level of $ 100 per kilowatt-hour. In the automotive industry, it is generally accepted that $ 100 per kilowatt-hour for battery packs is the threshold price for the competitiveness of electric vehicles versus gasoline vehicles.

“Battery technology is becoming much more cost effective. It will continue to improve, "said Brett Smith, director of technology at the Automotive Research Center, a Michigan think tank.

“Companies have virtually stopped investing in new research on internal combustion engines,” Smith said.

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