Title: Improving electric vehicle economics | McKinsey
Headings: 
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An industry in a jam
Consumer preferences on electric vehicles
Product availability
Electric-vehicle economics
Regulatory tailwind
Accelerating toward profitability
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Optimize electric-vehicle designs for the market
Exhibit 2
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Design simplifications and value-neutral decontenting
Optimizing for urban mobility
Final assembly optimization
Partnership during the transition
Boosting margins beyond cost cutting
Communicating electric-vehicle economics to customers
What a teardown of the latest electric vehicles reveals about the future of mass-market EVs
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Exploring new business models
Operating in an increasingly complex environment
Product design
Capital allocation
Changing mobility dynamics in cities: Micromobility’s role
Fast forward to 2025: Electric-vehicle cost parity
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Content: Looking ahead, each 20 to 25 percent improvement in battery cost reduces payback by one year, but OEMs will need to take other actions to accelerate profitability. Regulatory tailwind
The role of the regulator in today’s EV landscape cannot be overstated. Ever-tightening government emissions regulations act as direct stimuli for OEM EV investments, and current subsidies and tax exemptions help bridge gaps between OEM pricing and consumer willingness to pay. In China, for example, the 2018 regulatory-incentive system, including supply and demand incentives and restrictions, pushed global EV sales above one million units. 4
4. Total EV sales in China from January to November 2018 was approximately 730,000. However, China is not the only major market increasing regulatory pressure. In December 2018, the European Union’s 28 member states agreed to new carbon-dioxide regulations that would set a target of 37.5 percent reduction in car emissions by 2030 when compared with 2021. This was significantly more aggressive than the European Commission’s original proposal of a 30 percent reduction. Accelerating toward profitability
At the beginning of this article, we highlighted the fact that today’s EVs are costlier to produce, and consumers have a rather limited willingness to pay a premium for EVs.