How Much Subaru Electric Vehicles Are Costing the Company

Subaru has managed to expand electric vehicle sales in the US market, but this success is seriously damaging the automaker’s financial performance. According to ixbt.com, the company is being forced to offer discounts of thousands of dollars and incentive bonuses on each electric crossover to attract buyers and support demand. Ixbt.com reports .

From January through July this year, Subaru sold a total of 11,638 electric vehicles in the US. The brand’s electrified lineup currently includes three crossovers: the updated Solterra, the new Uncharted, and the larger Trailseeker. Although overall figures grew compared with the same period last year thanks to the new models, their performance in the market varies.

Sales Trends and Pricing Policy

According to statistics, Solterra sales fell 34 percent compared with the same period last year, reaching 5,275 units. However, the newly launched Uncharted (2,850 units) and Trailseeker (3,513 units) models offset this decline. Even so, maintaining this sales volume is proving extremely costly for the company.

The company’s average marketing and incentive spending in the US rose 40 percent to $2,698 per vehicle sold. By comparison, the increase across the entire US auto market was just 4.4 percent. Promoting electric vehicles costs several times more than this figure.

Financial Losses and Their Causes

Specifically, the average incentive spending amounts to $9,650 for each Solterra sold, $9,155 for the Uncharted, and $8,982 for the Trailseeker. By comparison, the costs associated with the conventional gasoline-powered Subaru Outback are approximately $3,036. In other words, delivering one electric vehicle to a customer costs the company three times more than delivering a gasoline-powered car.

These high costs were clearly reflected in Subaru Corporation’s financial results. During the first fiscal quarter, covering April through June, higher sales incentive expenses reduced the company’s operating profit by 24.9 billion yen (approximately $155 million).

As a result, Subaru’s quarterly operating profit fell 44 percent to 42.6 billion yen (approximately $270 million). Experts say that subsidizing and supporting electric vehicles has become one of the main factors behind the deterioration in financial performance.

It is also worth noting that Subaru is not the only company facing such challenges in the US market. Other major Japanese brands are struggling as well. Mazda, for example, is experiencing difficulties selling the CX-70 and CX-90 models, which serve as its hybrid flagships.