I think you're missing my point. I understand it's not free. But if you were to apply Fiat's accounting to other situations, nobody should ever launch a new product or start a company because it's guaranteed to "sell at a loss" for the first few months/years after it hits production, regardless of how good the margins are otherwise. Now, you may say Fiat will never sell enough 500e's to recoup their investment, which may very well be true, but grousing by the CEO about how he hopes people won't buy the car isn't going to help.
Said another way: once you've already sunk the R&D cost, you don't factor that past expense it into whether or not it's profitable to continue making and selling the product you've already designed/tooled/etc. -Ben On May 24, 2014, at 6:35 PM, Michael Ross <[email protected]> wrote: > So where does the money for NRE and R&D come from? > > > On Sat, May 24, 2014 at 11:41 AM, Ben Apollonio via EV <[email protected]> > wrote: > On May 23, 2014, at 9:06 PM, Michael Ross <[email protected]> wrote: > > > No, there is no economy of scale with the low numbers they are building. > > That is a fact. > > Not on the electric drivetrain, no. But on the wheels, body panels, dash > board, seats, and everything else it has in common with the regular Fiat 500, > you bet there is! > > > > > I developed cam and crank sensors for a while. The tooling for a cam > > sensor with 10 small components in it (I am even counting tiny neo magnets > > and some discreet electronic components and an IC) will easily exceed $300K > > - 10 years ago. I am fairly sure the cost is higher for an OEM (I was > > doing cost conscious aftermarket). > > > > Or if that doesn't help - what would it take for you to build an entire car > > that meets all the homologation, safety, blah, blah, blah? It is > > incredible how much capital expense there is to bring out a car. You have > > to make a lot of cars to break even - whole lot, and you have to be pretty > > good at it or you will fold. > > R&D and NRE are not the same as production cost. When budgeting for new > product development, you do want to amortize it over expected sales, but to > come out & grouse that you lose money on each car you sell because you > previously spent a lot on NRE is disingenuous. By that measure, Tesla is > still losing money on every car it sells because they spent so much investor > money on development, so they should just close up shop because there's no > money to be made. By the same measure, Apple lost gobs of money on the first > 1000 iPads they sold -- they should have come out and whined and asked people > to stop buying them because they were losing 1000's of dollars on every one. > > I get that EV's are still a niche market and it's hard to recoup development > costs. Hence why I'm wondering if the compliance car mandate is obsolete -- > let the companies like Nissan and Tesla who want to invest have an easier > time recouping THEIR investments with less competition from unwilling and > whiny rich people. > > -Ben > _______________________________________________ > UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub > http://lists.evdl.org/listinfo.cgi/ev-evdl.org > For EV drag racing discussion, please use NEDRA > (http://groups.yahoo.com/group/NEDRA) > > > > > -- > Put this question to yourself: should I use everyone else to attain > happiness, or should I help others gain happiness? > Dalai Lama > > Tell me what it is you plan to do > With your one wild and precious life? > Mary Oliver, "The summer day." > > To invent, you need a good imagination and a pile of junk. > Thomas A. Edison > > A public-opinion poll is no substitute for thought. > Warren Buffet > > Michael E. Ross > (919) 550-2430 Land > (919) 576-0824 Google Phone > (919) 631-1451 Cell > (919) 513-0418 Desk > > [email protected] > > > _______________________________________________ UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub http://lists.evdl.org/listinfo.cgi/ev-evdl.org For EV drag racing discussion, please use NEDRA (http://groups.yahoo.com/group/NEDRA)
