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
About the author (s)

Content: Battery costs represent the largest single factor in this price differential. As industry battery prices decline, perhaps five to seven years from now, the economics of EVs should shift from red to green. Current thinking holds that the industry will continue to produce EVs—largely because it has little alternative in the face of stringent fuel-economy and emissions policies—and that the industry will, in the meantime, absorb the losses. Our analyses show that better options exist, even today, to accelerate the industry toward profitability from both product and business-model perspectives. Some of these options include aggressively reducing cost through “decontenting,” optimizing range for urban mobility, partnering with other automakers to reduce R&D and capital expenditures, targeting specific customer segments, and exploring battery leasing. An industry in a jam
Understanding the challenges and opportunities for OEMs requires examination of the changing landscape of consumer attitudes, product availability, EV economics, and regulatory tailwinds. Consumer preferences on electric vehicles
Consumers’ EV preferences are shifting. The share of global consumers that would consider purchasing an EV is on the rise. In the United States, between 10 and 30 percent of consumers indicated their preference to consider an EV as their next purchase on national surveys. 1
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