Cost to build a car factory
The cost of building a car factory can vary greatly depending on the type of factory, size, location and number of assets. A typical car plant costs between $1.5 billion and $2 billion to build, according to an article written by the University of Michigan’s Ross School of Business.
Factors that affect the cost of building a factory include:
Location: The cost of building a factory can vary greatly depending on its location. For example, a factory in Europe may cost less than one built in China because labor and materials are cheaper in China than other parts of the world.
Size: The size of the factory also affects its cost. Larger factories require more equipment and staffing which increases their price tags.
Cost to build a car factory
How much does a new car really cost? The answer depends on the make and model, but most people don’t realize that only about half of the sticker price goes toward paying for the vehicle itself.
How much does a new car really cost? The answer depends on the make and model, but most people don’t realize that only about half of the sticker price goes toward paying for the vehicle itself.
The National Automobile Dealers Association says it takes about $1 billion to build an auto plant from scratch in North America. But here are some more specific numbers:
According to Edmunds, the average transaction price for new vehicles sold in June 2016 was $33,225. That represents a whopping $17,000 markup over what automakers pay for raw materials and components used to build those cars.
The cost breakdown:
$17,000: What automakers pay for raw materials and components used to build their cars
$8,000: What automakers spend on assembly labor and parts
$2,000: What automakers invest in marketing and advertising
how hard is it to start a car company
It’s really hard. But not impossible.
The average price of a new vehicle in the U.S. is around $35,000, according to Kelley Blue Book. The real cost of building a car is much higher — closer to $75,000 per vehicle.
That means that the average manufacturer loses about $40,000 on every car it sells — and that’s before marketing or research costs.
On top of that, there are so many moving parts when it comes to making cars that even well-established companies can have trouble getting them right every time. If you’re trying to start a new company from scratch, things get even harder.
All this adds up to one thing: It’s incredibly difficult for new car companies to get off the ground and succeed in today’s market.