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Legacy Carmakers Who Chase Tesla Will Face a 'Money Pit Phase'

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Legacy brands are going to have to make it through a “money-pit phase” before they are able to compete with Tesla on a more or less equal footing, says EV researcher.

"It's helpful to think of this as the money-pit phase, with automakers pouring investments into an electric foundation. The job appears endless and rife with disaster. But with enough time, money, and faith, they'll own a beautiful business with both stockholder curb appeal and the strength to withstand future economic storms," writes Lawrence Ulrich in Car and Driver,

Legacy automakers have been building EVs for a decade now, and sales have been...let’s just say, not up to Tesla standards. “Apart from Tesla, no other automaker has delivered a true EV hit, despite a decade of attempts,” Ulrich tells us. “Electric models were lauded as game-changers, but the game didn’t change.”

However, Charles Morris, from Evannex.com says "This picture is starting to change. A few of the automakers (notably VW) are gearing up for true mass-market sales, and ad campaigns for electric models are starting to appear. Even now, however, the TV ads shown in the US tend to be abstract, artsy productions that are obviously focused more on general brand-building than on actually selling EVs. (During the recent World Series, GM ran a series of ads for its Hummer EV, a halo car with a six-figure price tag that won’t be available for another year, and none for its only current electric offering, the Bolt EV.)"

Morris also notes that the carmakers, which are serious about electrification have all developed flexible platforms that they can use as the basis for many new models (for example GM’s Ultium, Volkswagen’s MEB, which Ford will also use to build an ESUV, and Rivian’s Skateboard). "If one model proves a poor seller, or becomes outdated, an automaker can cut its losses and try a new model, without having to reinvent the wheels, chassis and battery pack," he says. As AutoPacific President George Peterson told Car and Driver, “Once you’ve got the platform, it’s not that expensive to put new top hats on it.”

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.