Peter VanDerWal wrote: >GM has already paid the R&D costs, so stopping now certainly won't >recover them. At any rate, economically speaking, the R&D costs are >now irrelevant. All that counts is whether or not they can build >them for less than they can sell them.
That assumes that R&D on a product ceases just as soon as the production line gets rolling. To the best of my knowledge, that rarely happens, if ever. It seems particularly unlikely with a product that has a couple of glaring disadvantages in comparison to the established product line. Actually reducing the disadvantages is just as important as good marketing to minimize the customer perception of those limitations. If the product line is going to endure, R&D efforts are bound to continue. Moreover, those already-invested costs are not "economically irrelevant." R&D costs get taken into account when pricing a product, since the company needs to recoup the investment. And R&D not only acts to build the technological foundation, but it also serves as a predictor of future expenses. As the R&D begins to reveal that the product price is likely to rise past the projected sustainable range, the company will cut their losses by terminating the project. It is cheaper at some point to just eat the cost outright than to continue to fund a project with only a relatively small hope of long-term success. >Hand built it's questionable, build in proper production lines with >economy of scale working for them they could almost certainly turn a >proffit. And on what, exactly, do you base this claim? Economies of scale require sufficient demand to sustain them, and a significant up-front investment. Just why do you think you know better than a major auto manufacturer what is and is not likely to be profitable in their market space? If it were "almost certainly" profitable, don't you think someone with money (whether or not they were already an auto maker) would jump at this lucrative opportunity? Or do you just not believe that capitalism really works? Why look for demons? Why not just admit that, much as we think the world would be better off with more of them, EVs are currently very difficult to produce and sell at a profit? The benefits of EVs are manifest, and I hope some company can put together enough venture capital to turn out a decent mass production run. But I don't think it is reasonable to assume that this is a simple undertaking and a dead sure way to make money. -- -Adam Kuehn
