This product is the result of extensive research and our imagination. We invented our own EV model, Vantage, to make supply chains tangible and to put those choices in the hands of the user. It turns out that creating a fake EV takes a lot of real work—from determining what components and commodities mattered to triangulating costs and price differentials based on imperfect data.
Below we explain our approach to this product, the assumptions and selections we made, and how we determined cost estimates to the best of our ability. Nearly all sources we relied on are publicly available.
We used two basic criteria to determine the nine midstream components in the Vantage supply chain: 1) the components will most likely come standard in all EVs rolling off assembly lines by 2030; 2) the components are EV-specific to distinguish from general components found in most cars.
Our operating assumption is that the Vantage of 2030 will be much closer to a “computer on wheels” equipped with autonomous driving (AV) functions. When the EV can increasingly drive itself, the passengers will need to be entertained or be otherwise productive to make use of the additional available time.
That means the EV will need to have as much computing power as it does horse power, requiring much closer integration between hardware and software. That’s why beyond core EV components like batteries, electro-magnet motors, heat pumps, and power chips, we included AV hardware (e.g. chips, sensors, and cameras) and advanced infotainment systems.
Although AV software packages, such as Google’s Waymo and Baidu’s Apollo, will become pervasive, we could not determine a cost estimate so omitted them from our components list. A solar roof is included as an option because it is a niche feature and far from becoming standard for EVs.
The electrification of transport will lead to a dramatic shift in commodities demand from oil to metals. For this product, we used the list of “critical minerals” in the US Inflation Reduction Act because they are subject to sourcing requirements to qualify for the 30D clean vehicle credit.
The upstream commodities needed for batteries should be fairly obvious (e.g. cobalt, graphite, lithium, manganese, and nickel), while neodymium is the main rare-earth metal used in magnets that power electric motors.
A note on the exclusion of aluminum but the inclusion of copper. Although aluminum falls under the “critical minerals” list because it accounts for one-fifth of the average battery cell mass (used in battery cathode foils and casings), the metal has numerous end uses, including in the body of the car. Although China accounts for 57% of global aluminum output, its production is sufficiently geographically diverse that we decided to not include the metal.
Copper, too, has wide applications. But it is nearly ubiquitous throughout the EV architecture due to its excellent thermal conductivity, dissipating heat across components including the inverter, motor, and battery. On average, more than 115 pounds of copper can be found in an EV’s electric motor, power electronics, wiring harnesses, and charging infrastructure. Although not a typical “commodity,” we included silicon carbide (SiC) powder because the raw material is needed for manufacturing the SiC power chips, which we expect to dominate EVs by 2030.
Raw Materials vs. Processing
For upstream commodities, where they sit in the ground matters less than where they are refined, because only processed product can be used. For example, the Democratic Republic of Congo may sit on 75% of global cobalt resources, China constitutes 64% of global cobalt processing.
That’s why we opted to focus on showing the concentration and/or distribution of processing capacity for the eight commodities, not least because our previous “Supply Chain Jigsaw” already mapped the global distribution of raw materials integral to the li-ion battery.
Estimating Component Costs
Battery: We relied on cost figures in BloombergNEF’s 2022 battery price survey to estimate the nickel-cobalt-manganese (NCM) and lithium-iron-phosphate (LFP) battery pack costs for both China and the United States. For China, we used the average battery pack cost of $127/kWh, the average cell-to-pack cost ratio of 83:17, and the 20% price differential between LFP and NCM cells to determine our estimate.
We used the same figures to arrive at an estimate for the United States, accounting for a 24% higher manufacturing cost than China for producing the same battery pack. One caveat is that the LFP battery cost estimate is rather hypothetical because the United States currently does not have any production capacity for LFP batteries.
Supplier market shares were based on SNE Research estimates as of the end of 2022.
Motor: We relied on figures from the 2020 Charged virtual conference “Comparing 10 Leading EV Motors” and market research by Mobility Foresights to determine our estimates. We assume that EV motors are and will be increasingly vertically integrated in-house, which is why the five leading motor suppliers are the same as the leading EV makers because they are likely to manufacture their own motors.
Supplier market shares are estimated based on 2022 global EV sales by automaker.
Heat Pump: Costs were estimated based on market reports on Hanon Systems and Sanhua. In our price estimate, we added the cost of user-selected heat pumps to the standard thermal management system cost.
Supplier market shares are for all vehicles as of 2020 and come from Hanon Systems’ research.
Infotainment Displays: We triangulated using the replacement (retail) price for the head-up display of Hyundai’s IONIQ 6 and a teardown estimate for the center touchscreen to determine our estimate.
Supplier market shares are for 10”+ automotive displays in 2021 based on market research from Omdia.
Power Chips: Base price for silicon carbide chips is from Mouser wholesale prices, which are roughly 3x more expensive than traditional silicon power chips in the form of integrated-gate biploar transistors. Gallium nitride (GaN) power chips are estimated to be 20% more expensive than SiC.
Supplier market shares are from Yole Group’s Power SiC 2022 report.
Supplier market shares are from Yole Group 2022 LiDAR Industry report and are based on units shipped for advanced driver-assistance system (ADAS) in 2022.
Supplier market shares are from ICV Tank and Zhongtai Securities.
AV Radars: Cost is based on estimates for the 77Ghz radar, which is expected to become the prevailing standard in automotive ADAS systems. Cost estimates for Bosch, Continental, and Senstech come from Weifu Hi-tech report.
We could not obtain reliable supplier market share data.
Optional Solar Roof: Cost estimates based on the retail prices offered for Toyota’s bZ4X and Hyundai’s IONIQ 5.
Supplier market shares are not included as this is an optional feature and currently a miniscule market.
Determining the Vantage price
We aimed to reflect realistic and current prices for our Vantage, which meant we estimated the price based on an EV of comparable specs.
The final price of the Vantage, which is equivalent to the manufacturer suggested retail price (MSRP), is determined by four factors:
1. cost of the nine components
2. + “everything else” (cost of other components and assembly + indirect costs*)
3. + Automaker and dealership margins
4. – potential tax credit of $3,750 or $7,500
*Indirect costs include depreciation and amortization (D&A), research and development (R&D), and selling, general, and administrative expenses (SG&A).
We did our best to estimate the business-to-business costs (i.e. the price automakers pay to their suppliers) for each of the nine components using publicly available sources. These costs have not been adjusted for inflation, as we assume economies of scale and improved efficiency will lower EV manufacturing costs over time.
For “everything else” and automaker and dealership margins, we used cost estimates in two papers by the International Council on Clean Transportation (Slowik, Isenstadt, Pierce, & Searle, 2022 and Lutsey, Cui, & Yu, 2021). The automaker margin is calculated as a fixed percentage over direct manufacturing costs, which are the sum of the costs of the nine components and those of other components and assembly.
Both the costs of “everything else” and margin rates change depending on the EV assembly location, irrespective of the EV’s component composition. As can be seen below, China’s costs are significantly lower compared to the United State across these metrics.
|Category||Sub-category||US Assembled||China Assembled|
|Everything else||Costs of other components and assembly||$14,570||$7,913|
|Indirect costs (D&A, R&D, and SG&A)||$6,450||$4,507|
|Margin||Automaker margin||6% of direct manufacturing cost||6% of total manufacturing cost (direct + indirect)|
|Dealership margin||16% of direct manufacturing cost||6% of total manufacturing cost + automaker margin|