Two and a half years ago, there were reports that Dyson was going to be working on an electric vehicle. I made a video and a blog on September 28th, 2017 where I covered the topic briefly and predicted that Dyson would have a concept on the road before a Tesla semi would be on the road. That was one terrible prediction on my part. Tesla 1, Brentton 0.
Autoweek ran an article recently that explained how the founder of Dyson spent $609 million of his own money on the electric car project, only to find out that in order to simply break even, the car would have to be sold for $180,000. If this isn’t proof that profitability in transportation and mobility services is almost near impossible, I don’t know what more you could ask for.
While I am sad that Dyson abandoned the project, and let me down on my prediction, I can also understand and respect the choice. I want to step out of the auto industry for just a moment to provide an example of high cost, low profit projects. Recently, my wife has been looking into creating a point and click video game for PC and mobile. When you add up the cost of software, talent (if you can’t do everything yourself), time, materials, a somewhat simple game can start off anywhere from 3 to 5 thousand dollars to make. People pay for quality games. In order to turn a profit, we would most likely have to sell the game for $10 which might price out our audience. If we sold it at a $1, we would need to sell over 10,000 copies to turn some small profit. We don’t know if we have an audience that large. So, after counting up all the associated costs, and estimating and understanding the industry a little more, it is not surprising that large game studios spend hundreds of thousands of dollars to produce a top tier game, like The Last of Us or Forza or Fifa. Then, in order to make any sort of profit, there is a reason those games are nearly $80 at launch, even with the quantities they sell them in. The cost to produce video games is an upfront, staggering cost.
Hopefully that will help shed light on just how hard it is for these EV automotive start-up companies to produce a product. The industry is cut throat and expensive. No one works for free. If you can’t turn a profit you won’t stay in business. And for what it is worth, Tesla is barely profitable. Elon can get an Eskimo to buy ice in the arctic and has had investors pour millions into Tesla. If everyone wanted their return on investment right now, the company would cease to exist.