Despite the carmaker industry has poured enormous amount of money into the development and production of electric cars to take the lead in the green car market, Developing and investing in eco-friendly cars is essential to respond to environmental regulations and take the lead in the future market, but it is not easy to inject aggressive funds because of the increase in losses.

According to the industry on December 17, it is believed that few of the global automakers, including domestic automakers, make profit from selling green cars. Even companies that have not released eco-friendly cars are anticipating a deficit, and are inevitably releasing eco-friendly cars in order to keep up with government regulations and survive in the market.

Hyundai and Kia Motors, which are showing good performance both at home and abroad, are saying that the profit of the green car division is negative. The reason for the high cost of production, such as expensive battery prices, is that the volume of eco-friendly cars is still small and sales volume is low and mass production is not possible. A Hyundai Motor representative said, "The eco-friendly car is selling for strategic reasons," he said, "electric cars are more harmful than hybrid cars, and hydrogen cars are more damaging than electric cars."

The situation of Korea GM is not so different. Earlier, local media reported that General Motors Corp. (GM), which sold Chevrolet Volt, reported damages of about USD 9,000 per unit. Losses were reportedly due to discounts on California`s duty-free sales and expensive battery prices. The Malibu Hybrid, which Korea GM sells to the domestic market, is sold in about 30 cars a month, and the profit is not so good.

Ssangyong Motor, which is scheduled to launch its first electric car in 2019, is not expected to generate profits. Compared to the development cost of hundreds of billions of won, the sales volume of electric cars is expected to be low, but it is inevitable to produce electric cars to meet government regulations. Renault Samsung Motors said that the combined production of Renault, Nissan, and other automobiles would produce 500,000 units, resulting in economies of scale. However, the proportion of electric vehicles in Renault`s overall sales is less than one-twentieth, making no big money.

The poor sales of eco-friendly cars such as electric cars are due to the fact that economies of scale are not achieved due to high manufacturing costs and low sales volume. The high cost of electric cars is due to the high price of batteries, the structure of inverters, electric motors, lightweight car bodies and other existing internal combustion engines. In particular, batteries account for 30-50% of the price of electric cars.

Besides, while enormous amounts of money are invested in research and development and production of electric vehicles, the current market size is so small that it is inevitable to see deficits. When mass production is possible due to increased sales, it is possible to make profits by economies of scale. According to industry sources, there are no models making money out of eco-friendly cars, except for the world`s best-selling Toyota Prius Hybrid. Toyota Chairman Takeshi Uchiyama recently pointed out, "If you introduce an electric car too soon, most manufacturers will not be able to make a profit."

Professor Kim Pil-soo of Daelim University said, "Electric vehicles are not perfect in terms of profit model." "Batteries and vehicles are expensive, not mass production systems.


By Choi Yong Soon cys@


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