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A fascinating article, for some reason this reminds me of the USSR, but with actual competitive products and modern distribution and sales methods.
In May, Chinese authorities started to sound alarm bells about auto price wars, warning of unsustainable competition. This summer, President Xi Jinping rebuked provincial officials, questioning why every province was racing to invest in a handful of technologies such as EVs and artificial intelligence.
I actually laughed out loud when I read this. 😆
If only US leadership had that opinion on the AI bubble.
Shit is gonna hurt when it pops.
It’s beautiful. They’re using the capitalist incentive model to drive production capacity and drive cost down at an extraordinary pace, producing vehicles at non-profit prices. That means the vast majority of Chinese consumers and businesses end up with high quality, non-poluting vehicles at extremely low costs. Which leaves more money in their pockets for other economic activities. At the same time this speeds up the EV transition and keeps people working. The famed competitive markets that lower prices for consumers that we’ve all heard about but almoat never experienced? These guys engineer them where and when needed. And yeah, competition is terrible for business owners because their profit interest is opposed to the interest of their customers to pay less. But it’s beneficial for society as a whole because most people are consumers / workers.
If you ever wonder why it’s cheaper to produce in China even though manufacturing workers get USD $15-16K a year at present, which is similar to Eastern Europe, that’s a major reason. The costs are lower across the board. When PCBWay needs a transport van to haul product, it costs significantly less than it would in the EU, because the Chinese autos can’t tack on hefty profit margins. And that’s on top of all the components inside that van, whose manufacturers are likely also unable to make significant profits. In the US auto industry, the cost of labour is typically under 15% of the manufacturing cost. Everything else is costs of inputs with their embedded profits and auto manufacturer profits. And so PCBWay can afford to offer you lower prices for your PCB orders. An EU PCB manufacturer could not because they paid 50% more for their vans. Extrapolate for all other tools and materials they have to acquire to make a PCB, placement robots, soldering ovens, CNC, etc.
E: Meanwhile the price of the F-150, a staple vehicle used throughout the trades and industry in the US and Canada:
