Why Legacy Automakers Keep Losing Billions on EVs: The Structural Problem | Taha Abbasi

Why Legacy Automakers Keep Losing Billions on EVs

Taha Abbasi examines the structural reasons why traditional automakers — Ford, GM, Volkswagen, Mercedes, and others — continue to report massive losses on their electric vehicle programs while Tesla generates healthy profits. The pattern is consistent and worsening: Ford’s Model e division lost 4.7 billion in 2024, GM’s EV investments remain deep in the red, and European automakers are scaling back EV ambitions. The question is not whether legacy automakers are losing money on EVs — they clearly are — but why, and whether the situation improves.

The core problem is structural, not temporary. Legacy automakers built their businesses, factories, supplier networks, workforces, and dealer systems around internal combustion engines over more than a century. Converting this infrastructure to electric is not an incremental change — it is a fundamental restructuring that requires writing off existing investments while simultaneously funding entirely new ones.

The Platform Problem

As Taha Abbasi analyzes, most legacy EV platforms are compromises. Early EVs from traditional automakers were built on modified ICE platforms (like the Chevy Bolt), which limited efficiency and packaging. Even purpose-built EV platforms (Ford’s, GM’s Ultium, VW’s MEB) were designed by organizations with ICE DNA, often resulting in vehicles that are heavier, less efficient, and more expensive to manufacture than Tesla’s vehicles.

Tesla designed its manufacturing processes around EV-specific requirements from the start. Structural battery packs, gigacastings, and centralized electronics architectures were all designed without the constraint of accommodating an engine, transmission, or exhaust system. This clean-sheet approach results in fewer parts, simpler assembly, and lower costs.

The Dealer Dilemma

Taha Abbasi highlights the franchise dealer network as an underappreciated obstacle. Tesla sells direct to consumers, controlling the purchase experience, pricing, and customer relationship. Legacy automakers must sell through independent dealers who may have little incentive to promote EVs (which require less service revenue), may lack EV expertise, and may actively steer customers toward more profitable ICE vehicles.

This dealer friction increases customer acquisition costs, reduces brand control, and creates inconsistent buying experiences. Multiple studies have shown that prospective EV buyers report negative experiences at franchise dealers, including being discouraged from purchasing EVs by salespeople.

The Labor Cost Challenge

Legacy automakers employ hundreds of thousands of workers in powertrain manufacturing — engine plants, transmission factories, and the vast supplier network that feeds them. As Taha Abbasi observes, EVs require significantly fewer workers to assemble (30-40 percent fewer, by most estimates). This creates a painful workforce transition that generates union resistance, political pressure, and massive restructuring costs.

Is There a Path to Profitability?

Yes, but it requires time, scale, and continued investment. Hyundai and Kia are approaching EV profitability faster than Western competitors, partly because they started with a more efficient manufacturing base. GM expects Ultium-based vehicles to reach profitability at scale. Ford is restructuring aggressively. But Taha Abbasi cautions that the window is narrowing — every quarter of EV losses tests investor patience and board commitment to the electric transition. The automakers that reach scale profitability first will survive. Those that do not may not get a second chance.

About the Author: Taha Abbasi is a technology executive, CTO, and applied frontier tech builder. Read more on Grokpedia | YouTube: The Brown Cowboy | tahaabbasi.com