AUTONEWS

Law of the jungle: Automakers ignore popular demand for more affordable cars and would rather lose customers than sell cheap cars

While consumers clamor for affordable vehicles, the automotive industry seems to be doing everything it can to ignore this demand.

The logic that dominates the major automakers has been clear and unchanging for years: you can make money selling pickup trucks and large SUVs, make ends meet with mid-size SUVs, and lose big with small cars.

This is what an automotive columnist heard directly during a dinner with a Ford executive, and this philosophy is more alive than ever.

The problem is that technology seems to be moving in another direction. A promising innovation in China is generating buzz in the sector: sodium batteries developed by the Chinese giant CATL.

They are being mass-produced and, according to experts, deliver impressive results, especially in terms of cost.

While the lithium-iron-phosphate battery, currently the cheapest in the industry, costs around $75 per kilowatt-hour, the sodium version could cost as little as $10/kWh.

The price difference is so huge that it could theoretically make it possible to produce extremely affordable EVs.

If this type of battery migrates from commercial vehicles, where it is already being used, to passenger cars, the dream of a cheap electric car could become a reality.

A model priced under $20,000 would not be a pipe dream, but a real possibility.

But there is a problem: no one in the industry wants that.

The reason is simple and disheartening. Most automakers, with the exception of Tesla, are losing money on EVs.

Even if new technology makes it possible to make models cheaper, sales volumes are still too low for the business to be sustainable.

Manufacturing a US$25,000 EV, or around R$130,000 to R$140,000(Brazil currency), is already difficult. Making one worth R$100,000(Brazil currency) with a positive margin? Practically impossible, at least in the view of traditional automakers.

The consequence of this is visible in the current market: increasingly expensive vehicles, accessible only to consumers with greater purchasing power.

This is made worse by high interest rates, which further distance the average consumer from the possibility of purchasing a new car, whether electric or combustion.

Meanwhile, manufacturers like Toyota still manage to sell Corollas and RAV4s in good volume, but this is far from being the rule.

Most automakers prefer to invest in more expensive models, where there is room to profit.

The focus is on premium SUVs, pickup trucks with luxury packages and EVs above US$40,000. All of this reinforces a clear disconnect: what the population needs is far removed from what the industry is willing to deliver.

As promising technologies emerge from China, such as this ultra-cheap sodium battery, the response from Detroit and the rest of Western industry remains the same: ignore, delay, reject.

After all, selling cheap is something that no one seems willing to try — even though the market is screaming for it.

Mundoquatrorodas