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Discussion Starter #1
I came across a technical document created by the investment bank UBS, in which they do
--a teardown of the Chevy Bolt
--costing and cost projections of the different components
--a global EV market forecast using the Bolt costs as a proxy for a low-cost BEV.

here it is, all 95 pages of it:
http://www.advantagelithium.com/_resources/pdf/UBS-Article.pdf

I'm still recovering from the :nerd: nerdgasm. :D

If you are curious, you will find interesting stuff in there.

On the battery side,
--I learned that the Bolt60 pack costs in the $11,500-12,500 range.
--the chemistry is NMC111, i.e. it has nickel, manganese and cobalt in 1:1:1 mole ratio
--LG Chem's next gen chemistry (likely for longer range 2019 Bolt80 and 2019 LEAF60) is NMC 811, which increases the amount of (cheap) Nickel relative to (expensive) Cobalt.

On costs, UBS thinks:
--GM nets +$3k per vehicle at MSRP on a marginal cost basis, but
--loses $7k per vehicle on an EBIT basis.
--expects BEV-ICE cost parity on a TCO basis before 2025 everywhere, but in EU sooner due to higher gas taxes, and in the US last, due to lower gas taxes.

On sales, UBS thinks (p.12):
--expects current 30% CAGR for global EV sales to continue to about 2020, and then
--expects accelerated 46% CAGR for EVs from 2020 to 2025.
--expects 14% global penetration of car sales by 2025, 30% in EU.
--upside projection is 23% global sales in 2025, with more favorable policy or lower costs
--downside projection is 5.5% global EV sales in 2025 is all policy support is removed and gas is cheap.

Just grab a cup of coffee and go look at it....
 

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Pretty disappointing. They tore the entire car down to the smallest piece, and the only new image we get is the inside of the DC-DC converter. :-(
 

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Discussion Starter #3
Yes. This is the kind of 'teardown' that only a banker could love, not an engineer.

But it does seem to pertain to many issues that we discuss around here.
 

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Yes, It is an amazing report and one I had to read a couple times to comprehend all that was presented.

If the video link in the report now fails to play for you here is the original link.
https://goo.gl/5uFa8L

The report eludes to further / ongoing analysis that will be published but I have not seen anything published since the original report.
 

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Have a closer look at Bolt EV profitability !

Overall UBS did a nice job. However, looking specifically at the “analysis” of Bolt EV profitability. (copied out of the report and pictured below)

Assuming UBS has a good handle on the huge amount of LG Chem content in the Bolt. Which BTW likely generates a good profit for LG that’s not included in the Bolt EV profitability here.

There are at least 3 areas where Bolt profitability appears to be under-estimated:

1. UBS has included $2,400 against contribution margin, for “direct assembly staff cost”.

I believe they’re talking about the approx. 1100 hourly and 150 salaried employees who staff the Orion assembly plant. This cost is mis-classified, it needs to be part of EBIT but not contribution margin. Assembly plant workforce is essentially a fixed cost. One can’t make them disappear or reappear when production stops or starts. Like most big-company workforces the overall USA GM workforce can only be reduced through attrition (sometimes helped by incentive-retirements or buyouts). (on a going-concern basis that is..)

It could be argued at best, assembly plant staff cost is a medium term step-variable cost. Not a contribution/variable cost per unit produced. UBS has got it wrong.

Put that $2,400 per vehicle back and present day Contribution Margin becomes = Base model $ 5,565 per unit (17.5%), Equipped= $7,463 per unit (20.1%).

2. Destination Freight Charge (DFC)

It appears UBS has ignored DFC as a revenue item along with the related transport cost per unit. The DFC for destinations in the USA was $875 per 2017 Bolt EV. That’s got to be a few hundred dollars greater than the actual outbound transportation cost from Orion.

3. Dealer margin & incentive costs of 15%

UBS has used 15% which may be too high. In other words, GM’s average per unit revenue is really higher than what UBS is showing. I happened to see the GM-to-dealer invoice cost of my Bolt, it’s approximately a 10% discount from MSRP. In Canada at least, there are no other incentive costs because there’s no lease rate or residual support, no “employee discounts”, etc. Now there is likely some lease support from GM Financial in the States but I doubt whether that amounts to another 5% of MSRP.

EBIT ? Almost totally irrelevant. Take for example the “R & D” cost per unit of $7,143 per unit. Why bother trying to do that… Engineering staff is fixed, they’re going to be working on something or other all of the time. To attempt to allocate that cost to a product line, both for engineers working on current stuff and engineers working on future stuff, is a foolish exercise.

So does Bolt EV add to the profitability of the total enterprise, as part of the “basket” of GM products sold ? You betcha. If it wasn’t for Bolt EV they’d be producing more Sonics or some other car & dumping those into the market at slim contribution or loss. Either that or shut a plant down and don’t earn any contribution to profit at all.

No wonder Mary Barra can say EV’s are going to be profitable in a few years ! They already are ;)
 

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The destination freight charge is definitely a profitable source of revenue. Let's look at some very conservative numbers for my locale: the south end of the San Francisco Bay Area. Standard freight costs throughout the U.S. are 4 cents per ton-mile right now. Figure there is two tons in each car shipment. From the Orion, MI plant to the railhead in Fremont, California is about 2400 miles. That means the cost for this shipment is about $192.00 today. Trucking it from the railhead to the dealer is at most a couple of hundred bucks, but does the dealer pay for the last leg? Even if the train shipment cost is doubled to cover overhead (railcar maintenance, etc.), there is still about a couple of hundred dollars of profit in this charge.
 

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The destination freight charge is definitely a profitable source of revenue. Let's look at some very conservative numbers for my locale: the south end of the San Francisco Bay Area. Standard freight costs throughout the U.S. are 4 cents per ton-mile right now. Figure there is two tons in each car shipment. From the Orion, MI plant to the railhead in Fremont, California is about 2400 miles. That means the cost for this shipment is about $192.00 today. Trucking it from the railhead to the dealer is at most a couple of hundred bucks, but does the dealer pay for the last leg? Even if the train shipment cost is doubled to cover overhead (railcar maintenance, etc.), there is still about a couple of hundred dollars of profit in this charge.
Dealer doesn't pay anything for transport cost or insurance for vehicle delivered all the way to the dealership site.

In Canada the DFC for Bolt EV was $1,600/unit (CAD) for 2017 models and was bumped to $1,700/unit for 2018 models. Can u imagine. In GM's defence its a game across the entire auto selling industry in Canada to see who can bang up DFC the highest. A less visible way of boosting price-revenue when the Canadian dollar falls. But the DFC is not reduced when the Cdn dollar comes back up.

Another item worth mentioning: where in UBS's profitability sheet is the ZEV credits ? Maybe it's bookkept to a slush fund and not allocated to product line. But surely it should be a revenue, or a cost offset, assigned directly to Bolt.
 

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Discussion Starter #9
Another item worth mentioning: where in UBS's profitability sheet is the ZEV credits ? Maybe it's bookkept to a slush fund and not allocated to product line. But surely it should be a revenue, or a cost offset, assigned directly to Bolt.
Welp, I learned around here that the sales of the Bolt will generate far more credits than GM needs. So what are they god for?
 

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From my window sticker, the 'DC Fast Charging Provision' was a factory-installed option with a price tag of $750.00 USD. The sales guy said they get all of their Bolts with this option, installed by the factory. Perhaps the higher prices in Canada cited by Cehjun are for installation by the dealer.
 

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The destination freight charge is definitely a profitable source of revenue. Let's look at some very conservative numbers for my locale: the south end of the San Francisco Bay Area. Standard freight costs throughout the U.S. are 4 cents per ton-mile right now. Figure there is two tons in each car shipment. From the Orion, MI plant to the railhead in Fremont, California is about 2400 miles. That means the cost for this shipment is about $192.00 today. Trucking it from the railhead to the dealer is at most a couple of hundred bucks, but does the dealer pay for the last leg? Even if the train shipment cost is doubled to cover overhead (railcar maintenance, etc.), there is still about a couple of hundred dollars of profit in this charge.
Destination charges are not a significant source of revenue for the manufacturer or the dealer. They’re meant to cover the costs of transportation and preparation of the vehicle before handing it to the customer. The dealer has to spend at least a few hours preparing the vehicle before it can be drivenoff of the lot.

All vehicles sold have a separate delivery and preparation fee. The Bolt is hardly unique, and the cost for it is inline with other vehicles.
 

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Another item worth mentioning: where in UBS's profitability sheet is the ZEV credits ? Maybe it's bookkept to a slush fund and not allocated to product line. But surely it should be a revenue, or a cost offset, assigned directly to Bolt.
ZEV credits are not a source of revenue for the manufacturer. ZEV credits are something that a manufacturer has to generate from the sales of clean air vehicles in CARB states. If a manufacturer fails to generate enough credits, they are subject to fines. It’s only a cost offset in the sense of being able to avoid fines for not meeting credit goals. If a manufacturer has excess credits, they can opt to sell them to other manufacturers who are not meeting their goals, but there’s no set amount that each credit is worth.
 

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Destination charges are not a significant source of revenue for the manufacturer or the dealer. They’re meant to cover the costs of transportation and preparation of the vehicle before handing it to the customer. The dealer has to spend at least a few hours preparing the vehicle before it can be drivenoff of the lot.

All vehicles sold have a separate delivery and preparation fee. The Bolt is hardly unique, and the cost for it is inline with other vehicles.
Dealer preparation is a cost to GM, not a cost to the dealer. In the UBS sheet it should be buried in Bolt’s SG&A as a service expense, not contribution margin. Dealer is paid in the form of an allowance in hours per vehicle times the dealer’s warranty labor rate. Something like 1-1.5 hours depending on vehicle line.

It takes the dealer virtually no time to tear the plastic covering off the seats, tear off various stickers and shipping labels, wash the car, check the tire pressures. I do like the goop they spray all over the vehicle which acts like a long-lived wax job. Although they spray too much on the wheels & inside the wheel wells which acts as a magnet for dust and sheds oily black stuff on your sponge for the first few hand washes.

Actual transport cost from assembly plant to dealer site is paid by GM and charged to customer end user as an average $/unit booked as revenue to GM. Can be argued as to whether it over-captures and how much.

At $1,600 charged to me for my Bolt, booked straight into GM revenue via the dealer invoice and customer bill of sale, to go a few hours on a transport truck from Detroit to Toronto taking a week or two at GM’s convenience using ramp consolidations ensuring full truckloads to minimize GM’s expense. I don’t think I got much of a deal there. And I wasn’t given the option of picking up my vehicle at the plant.
 

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Discussion Starter #15
Do we have any way to know if GM is selling ZEV credits to anyone else? Would it be in their best interest to do so?
 

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Reading this report... great info, wish it was more technical and not so much financial, HOWEVER.... the money's got to work or its all a bust. and it is looking good.

One issue though is brought up on page 16... that of infrastructure. What's the demand on the electrical grid going to be? Let's say that everyone charges at off peak at the moment it begins (i.e. 9pm). There's going to be a heck of a spike at 9pm. Since I'm going to guess that most people won't need to charge but 3-4 hours, that demand will taper off by midnight. Wouldn't it be better to come up with some scheme to stagger the starting time? I know the DCFC's can communicate with the car and can be controlled by the power company, but that's not going to apply for most 30amp EVSE's at homes. Is there some scheme that would have people voluntarily starting their chargers later in the evening?
 

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Let's say that everyone charges at off peak at the moment it begins (i.e. 9pm). There's going to be a heck of a spike at 9pm. Since I'm going to guess that most people won't need to charge but 3-4 hours, that demand will taper off by midnight. Wouldn't it be better to come up with some scheme to stagger the starting time?
Most folks? charge using departure based charging. At least all the EV owners I know do. You would indeed have staggered charging start times finishing at departure time based on each vehicle level of discharge and the desired departure time. Even though my commute time varies I set my departure time to 7:00 Am to catch the valley of the curve.
Here is a link to NYS grid load updated real time showing the significant unused capacity available overnight...

http://www.nyiso.com/public/markets_operations/market_data/graphs/index.jsp
 

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From my window sticker, the 'DC Fast Charging Provision' was a factory-installed option with a price tag of $750.00 USD. The sales guy said they get all of their Bolts with this option, installed by the factory. Perhaps the higher prices in Canada cited by Cehjun are for installation by the dealer.
Pull existing HV distribution module, pull existing charge port, run additional HVDC line, install new charge port, install new HV module, get computer to recognize new equipment. Yeah. I don't see any Chevy dealer doing this for $750.
 

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Discussion Starter #20
One issue though is brought up on page 16... that of infrastructure. What's the demand on the electrical grid going to be? Let's say that everyone charges at off peak at the moment it begins (i.e. 9pm). There's going to be a heck of a spike at 9pm. Since I'm going to guess that most people won't need to charge but 3-4 hours, that demand will taper off by midnight. Wouldn't it be better to come up with some scheme to stagger the starting time? I know the DCFC's can communicate with the car and can be controlled by the power company, but that's not going to apply for most 30amp EVSE's at homes. Is there some scheme that would have people voluntarily starting their chargers later in the evening?
Your utility will offer you a special, cheaper rate, if they get to control your EVSE (or your EV). Many folks will happily set up this arrangement to save money.

This load management will also save the utility money, so everyone wins.

The reason this is not happening more is simple....not enough EVs out there to make a difference yet. But the utilities are watching.

My utility pays me $30 just for telling them that I have an EV. They can then add my smart meter data to a sample, and I am sure they can 'pick out' my EV charging from the stream, and use it for modeling future demand.
 
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