this post was submitted on 10 Dec 2023
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There‘s a word for that „Greedflation.“ This is what western car makers do. Luckily, the Cinese car makers grasp their chance and disrupt the market
Chinese manufacturers are being heavily subsidised and even making a loss on their cars.
They're trying to kill off our domestic car industries.
No reason why western countries also can't subsidize EV car companies to remain competitive.
Like...what are we supposed to do? Be content with ridiculously priced EVs and be willing to pay a small fortune for them? Fuck off with that noise.
Western corporations have had no problems fucking over the average consumer for decades or laying off thousands of employees at the first sign of trouble. Let them adapt or die I say. Competition is always good. Western corporations have the smarts and the resources to compete, they just need to be forced to.
Controversial take: the problem isn't car prices. They haven't increased that much when compared to inflation, and you're getting far more and far better cars for your money when adjusted for inflation.
The problem is wages haven't risen and housing prices have risen too much, meaning people have less to spend on a car.
E: I googled. In the US the cost of a median house was 18k in 1953. An average car cost 3.5k.
Now, the median house costs 400k.
400k/18k x 3.5k = If car prices had risen as much as house prices, the median car would cost 77k.
Not a controversial take at all IMHO. You're not wrong. Housing is absolutely ridiculous right now.
Better at getting me from A to B?
Yes… cars now are faster, safer, and more efficient than they were in the 50s.
Even if you discount all the “features” they’ve added the bare necessities of a car are tons better than mid-20th century cars or even late 20th century cars
Well, most of it are now needlessly oversized, diminishing the better efficiency.
A lot of western countries are subsidizing EV sales. Most western auto companies just waited a decade longer than they should have to start making EVs and are in the thick of developing technology when the early movers are hitting maturity.
On top of subsidies at the national level, most legacy automakers are selling their EVs at a significant loss, but that is because they haven’t reached economies of scale yet… not because they are trying to undercut competition. It’s hard to develop new products and even harder to get them to scale production. Ford has been making cars for 120 years, but that isn’t the same thing as making an EV. They effectively have to start over in a new field… a decade behind companies that invested early.
A lot of the press you hear about EV manufacturers cutting back because demand is low has to do with them cutting back because they are losing $50-70k per vehicle they are selling and can’t stomach the losses. The demand is there, they just can’t make an EV at a price that generates profit. They trim commissions at dealerships to try to help defray cost, but that minimizes incentive for sales teams to try to move them and exacerbates the problem. On top of that, their ICE sales are diminished due to high interest rates and an overall market slowdown in large purchases so every vehicle they sell at a loss hurts the bottom line that much more.
They’re trying to wait to push the cost involved in getting to scale until interest rates go down and it’s more affordable to invest in new technology. They are fucked. Tesla is currently the only American company that is profitable at scale and Elon can’t shut the fuck up on eX-Twitter long enough to stop pissing off the marketplace. The table is set for Chinese EVs to flood the US market, but I don’t think people will be as open to Chinese vehicles with the current data privacy issues and the tense geo-political position between the US and China.
I’m thinking that, if it gets bad enough, the federal government will disincentivize Chinese EVs with tariffs to offset the Chinese gov’t subsidies… if the current US EV tax incentives don’t do enough to spur legacy automakers to kick it into high gear… which it doesn’t seem to be doing. It’s going to be a rough decade for legacy automakers.
Or just let those who can't compete die, which is totally fine.
I don't have any loyalty to some specific car brand.
That‘s a terrible idea. Just because China throws irresponsible amounts of cash at cars doesn‘t mean we have to do the same mistake. We can simply say it‘s not OK to sell products under manufacturing costs to gain market share and that‘s that. Let‘s not inflate the already oversized car market even more.
I agree it's a bad first step. I'd keep trying idea on the table, but I'd start by working with the European car manufacturers to create huge tariffs on those cars. Make it impossible for them to be sold at those prices in Western markets
They can simply say they don’t subsidize their manufacturing and operate profitably at those prices.
Just saying something doesn’t make it work unless there are legal things that back up the position. And in foreign trade, that means tariffs… which economists have been screaming about (for decades) having negative ramifications that ripple through the economy.
Selling at a loss to enter a market or gain market share is a time honored tradition at this point.
It is, but as the article mentions some manufacturers are making a loss of 35k per car.
If those cars are then sold for 5k less than the US/EU/Japanese equivalent, despite lower wages and environmental standards, you have to ask yourself questions.
Yes you just described the business model. Everyone from Walmart to Amazon to Uber uses it. They take a loss in the short term, relying on new investor money or other products.
Or they could be building economies ot scale? You can't drive down costs making thousands, you need to make millions.
That's possible too. It's not like the US doesn't give businesses loans and grants for upscaling.
Sounds exactly like the rest of us
Everyone heavily subsidises their car industry
Yep. They‘re doing exactly what we usually call hostile underbidding to heavily inflate prices later when they‘re a top dog. A practice that is not quite legal in most parts of the west. And whoever wants to know when things still don‘t work out for the car maker because subsidies dry up: Search for Chinese manufacturer ‚Weltmeister‘. That will make you think thrice about ever coming near a Chinese EV.
It's also called dumping:
https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
The kind of thing usually results in a trade war, sanctions and tariffs.
The problem in Europe, is that our manufacturers are so reliant on Chinese parts and manufacturing, that they've asked our government NOT to intervene. China has them by the nuts, because they've outsourced too much. IRC they can't even make batteries without using Chinese parts.
Good