Illustration: Aïda Amer/Axios

If carmakers have any hope of making money on electric vehicles, they'll need to re-think how they design and sell them, a new McKinsey study suggests.

Why it matters: Automakers will pour $255 billion into EVs by 2023 but are resigned to losing money on them for the foreseeable future — an expected outcome of a market dictated by regulators and lawmakers, rather than consumers. But because they're key to future self-driving cars, they'll keep investing in them.

The big picture: Right now, electric vehicles are an expensive black hole for carmakers.

By the numbers: The high cost of rechargeable, typically lithium, batteries is the root of the problem.

  • EVs cost $12,000 more to build than comparable gasoline-powered models, McKinsey says.
  • The "payback period" for a $30,000 EV — how long it takes to recoup the higher price through savings on fuel and maintenance — is 5 to 6 years for a typical owner who drives 13,000 miles per year.

Yes, but: Most consumers aren't willing to pay more for an EV, so carmakers need to either swallow the extra cost or make them simpler — and cheaper — to build.

  • Instead of designing cars that can accommodate either an electric or gasoline powertrain, carmakers could save money in the long run by investing in a new, simpler EV platform with fewer parts.
  • But it's a big bet: a dedicated EV platform costs about $1 billion to develop. (Both GM and VW are doing so.)
  • Another problem is that today's EVs have either too little range (100 miles or less) or too much (300 miles) based on actual driving patterns. McKinsey suggests a 40 kWh battery with a 160-mile range would suit most drivers and shave $2,000 in cost.
  • Using more basic materials for things like electronics, seats and interior trims is another cost-saving tactic to make EVs more affordable. However, it's one of the oldest tricks in the industry, and consumers know when they are getting a lesser product.

It's not all about cost-cutting. Targeting fleet customers with EVs or leasing batteries apart from the vehicles could stoke revenue and help carmakers crawl toward profitability, McKinsey says.

What to watch: Consumer attitudes are shifting, with more people indicating they would consider buying an electric vehicle. If so, that black hole might not be as deep as feared.

Go deeper: Debating the future of electric vehicles in oil country

Go deeper

Newsrooms abandoned as pandemic drags on

Illustration: Sarah Grillo/Axios

Facing enormous financial pressure and uncertainty around reopenings, media companies are giving up on their years-long building leases for more permanent work-from-home structures. Others are letting employees work remotely for the foreseeable future.

Why it matters: Real estate is often the most expensive asset that media companies own. And for companies that don't own their space, it's often the biggest expense.

2 hours ago - Technology

Dark clouds envelop feel-good Pinterest

Illustration: Eniola Odetunde/Axios

Pinterest set out to be a bright spot in cutthroat Silicon Valley, but now stands to see its reputation forever tarnished by allegations of mistreatment and a toxic culture by women who held senior roles at the company.

Why it matters: Even a company known for progressive policy decisions and successfully combatting hateful and otherwise problematic content isn't immune to the systemic problems that have plagued many tech companies.

Big Tech pushes voter initiatives to counter misinformation

Illustration: Rebecca Zisser/Axios

Tech giants are going all in on civic engagement efforts ahead of November's election to help protect themselves in case they're charged with letting their platforms be used to suppress the vote.

Why it matters: During the pandemic, there's more confusion about the voting process than ever before. Big tech firms, under scrutiny for failing to stem misinformation around voting, want to have concrete efforts they can point to so they don't get blamed for letting an election be manipulated.