DYSON’S ELECTRIC SHOCK
116
FORTUNE.COM // NOVEMBER 2019
Fiscally conservative, Dyson says he would
never consider putting his company in finan-
cial jeopardy for the sake of his car. At the
end of 2018, Dyson’s debt was a manageable
368 million pounds ($492 million), most of it
long term. He refused to overleverage Dyson
or take it public, which would dilute his
control. “We don’t have endless shareholders’
money or the potential to raise shareholders’
money,” he says. “We’re a family business.”
Dyson says he focused on “the BAM”—the
build and materials cost—of the car and
therefore where he’d have to price it to earn
an acceptable margin. What worried Dyson
wasn’t the billions competitors were investing
in EVs; it was their willingness to sell cars at a
loss. Sam Abuelsamid, an analyst who tracks
the EV sector for the consulting firm Navigant,
says the break-even price for a generic electric
car is about $80,000. Mercedes, BMW, and
Jaguar all have electric luxury SUVs enter-
ing the market this year with a starting price
of around $70,000. And Tesla and Nio are
selling mass-market electric cars at half that
price. (Tesla’s burn rate hit an annual pace of
$3.5 billion in 2018—more than Dyson had
pledged to its entire EV project.) Dyson feared
his EV would look even pricier in comparison.
Once before, Dyson had faced a similar
dilemma. In November 2000, the com-
pany unveiled a washing machine called the
Contrarotator. The ingenious design had two
drums that spun in opposite directions. But,
as with the car, Dyson says, the company’s
novel design and low volumes gave it little
leverage with suppliers. “I worked out it cost at
least two-and-half times more to make than a
European and Chinese regulatory moves to
ban gas engines in coming decades acted as
a catalyst for major automakers. Together,
they are expected to pump $300 billion into
electric car development in the next decade.
Suddenly, Dyson’s team faced a financial
reckoning just as it was time to begin install-
ing manufacturing equipment in Singapore.
“Doing everything from scratch probably put
up the cost,” Dyson reflects. He also says that
because the company could not guarantee
high volumes, it could not strike the best deals
with suppliers, as it had throughout decades
of building appliances. And, without reveal-
ing any details, he admits the battery that the
company wanted to use was more expensive
than industry standards.
Dyson always knew his car wouldn’t be
cheap. He had previously joked to report-
ers that it might be more appropriate to talk
about the size of the down payment required
to buy one rather than the sticker price. But
there’s expensive, and then there’s exorbitant.
If his EV were to turn a profit, it would have
to enter the market “right at the top end,” Dy-
son says. While he declines to reveal the price
the company was considering, the Tesla Model
X starts at about $104,000, and Faraday Fu-
ture, a Chinese-backed startup in California,
is planning to launch an ultraluxury SUV that
may cost as much as $180,000. “It’s a price
where we could sell some but not enough,”
Dyson says.
At the end of the day, Dyson didn’t blink at
the “sunk costs” of capital already invested in
the car project. “It wasn’t the investment at
all,” he says. “We’d already committed that.”
The compan y ’s
appliances share
an emphasis on
design and technical
innovation in long-
existing categories.
dyson’s hit parade VACUUM
Dyson changed the
industry with his
bagless cleaners,
like the iconic
DC07, that display
collected dirt.
Company marketers
hated the feature.
James Dyson kept it.
AIRBLADE
The hand dryer, Dy-
son’s first commer-
cial success after
vacuums, shook
things up by using
400-mph jets of air
to scrape away mois-
ture rather than rely-
ing on evaporation.
“We wanted
to change
e very thing
and not
use other
people ’s
archi-
tectural
l ayout. ”
ALL IMAGES COURTESY OF DYSON
