The rise of inexpensive Chinese electric vehicles has upped the pressure on legacy automakers who have turned to suppliers, from battery materials makers to chipmakers, to squeeze out costs and develop affordable EVs quicker than previously planned.
China wasn’t “outcompeting us on undesirable, low productivity, jobs”. Corporations were shipping jobs to China to undercut highly productive factory jobs back then, too, so they could save on labor costs. It’s only now that China is undercutting corporate profits that these same corporations come crying and shitting their pants. That’s also why you see a ramping up of negative media pieces on China. It was never about charitably raising people out of poverty. It was always about corporations undercutting labor to gain greater profits. Fuck 'em, bring on the cheap cars.
I hate it when corpos use the “oh we can’t lower prices because our staff is getting paid too much”-narrative. What about the CEO who takes half the profits for himself?
It’s the workers who create value for a company, they don’t take it away by getting paid for their work.
The “good for people” argument (which has been misportrayed here as “charity”) was made by politicians to justify tearing down the trade barriers that allowed wealthiest countries such as the US to be a higher-income bubble.
Once those trade barriers were down, all those jobs which had no other price protections than said trade barriers (jobs like, for example, assembly workers, but not things like Legal professions specialized in a country’s Law and which require registering with a local Law Society to practice) were suddenly competing with similar people all over the World, and a lot of countries in the World are full of people who would sell their work in those areas much cheaper than equivalent workers in high-income nations.
The people it was good for were people in those “open to competition” occupations in Low Income but reasonably safe countries like China (whose income went up as manufacturing moved there) and the people who owned the means of production (who got higher dividends due to the higher profits being made by paying low-income country manpower costs and receiving high-income country prices for products and services) but nobody else as even the eventual fall in prices that occurred (over the years, as all those companies with China costs started competing on price because they could thanks to the bigger profit margins due to much lower manpower costs) was not enough to make up for the faster and deeper downwards pressure on salaries in high-income countries that happenned due to said manpower competition with workers in countries with much cheaper salaries (for example, in the mid-70s about 23% of corporate revenue in American went to salaries, whilst by 2012 it was down to 7%).
Don’t think labor costs is a big factor. Car production is the sector that is most automated. Just think of this endless bands of hanging cars with robot arms working on it. Tesla even topped this.
It’s mainly the unwillingness to design and sell cheap cars due to less profits. In Germany we had electric cars for 20k€ or even combustion cars under 15k€. But they stopped building it. Although it was sold out in weeks.
In my region there was a Startup by the Aachen University RWTH (which is an elite university in Germany) bulding small EVs for around 20k€. They simply bought all parts from suppliers and just assembled it. And engineered and designed it first. Unionized and still competitive. Unfortunately, they didn’t fly.
EV building is rather simple. The software is key. And this is the missing part at car makers capabilities.
I second your thoughts on trade war. However, I guess it will be much simpler with high taxes, high quality regulations, and may be less support by car workshops. We will see…
There is still a shit ton of people working in a car factory. Tesla had to scale back their amount of robot workers since humans could work much faster. Tesla expects to have 60,000 people working in their Gigafactory in Texas when the production of the Cybertruck ramps up.
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.
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
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.
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.
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
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.
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.
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.
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
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China wasn’t “outcompeting us on undesirable, low productivity, jobs”. Corporations were shipping jobs to China to undercut highly productive factory jobs back then, too, so they could save on labor costs. It’s only now that China is undercutting corporate profits that these same corporations come crying and shitting their pants. That’s also why you see a ramping up of negative media pieces on China. It was never about charitably raising people out of poverty. It was always about corporations undercutting labor to gain greater profits. Fuck 'em, bring on the cheap cars.
I hate it when corpos use the “oh we can’t lower prices because our staff is getting paid too much”-narrative. What about the CEO who takes half the profits for himself?
It’s the workers who create value for a company, they don’t take it away by getting paid for their work.
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Yeah I’m confused by the charity argument. When have American corporations ever done anything out of the kindness of their hearts?
The “good for people” argument (which has been misportrayed here as “charity”) was made by politicians to justify tearing down the trade barriers that allowed wealthiest countries such as the US to be a higher-income bubble.
Once those trade barriers were down, all those jobs which had no other price protections than said trade barriers (jobs like, for example, assembly workers, but not things like Legal professions specialized in a country’s Law and which require registering with a local Law Society to practice) were suddenly competing with similar people all over the World, and a lot of countries in the World are full of people who would sell their work in those areas much cheaper than equivalent workers in high-income nations.
The people it was good for were people in those “open to competition” occupations in Low Income but reasonably safe countries like China (whose income went up as manufacturing moved there) and the people who owned the means of production (who got higher dividends due to the higher profits being made by paying low-income country manpower costs and receiving high-income country prices for products and services) but nobody else as even the eventual fall in prices that occurred (over the years, as all those companies with China costs started competing on price because they could thanks to the bigger profit margins due to much lower manpower costs) was not enough to make up for the faster and deeper downwards pressure on salaries in high-income countries that happenned due to said manpower competition with workers in countries with much cheaper salaries (for example, in the mid-70s about 23% of corporate revenue in American went to salaries, whilst by 2012 it was down to 7%).
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Don’t think labor costs is a big factor. Car production is the sector that is most automated. Just think of this endless bands of hanging cars with robot arms working on it. Tesla even topped this.
It’s mainly the unwillingness to design and sell cheap cars due to less profits. In Germany we had electric cars for 20k€ or even combustion cars under 15k€. But they stopped building it. Although it was sold out in weeks.
In my region there was a Startup by the Aachen University RWTH (which is an elite university in Germany) bulding small EVs for around 20k€. They simply bought all parts from suppliers and just assembled it. And engineered and designed it first. Unionized and still competitive. Unfortunately, they didn’t fly.
EV building is rather simple. The software is key. And this is the missing part at car makers capabilities.
I second your thoughts on trade war. However, I guess it will be much simpler with high taxes, high quality regulations, and may be less support by car workshops. We will see…
There is still a shit ton of people working in a car factory. Tesla had to scale back their amount of robot workers since humans could work much faster. Tesla expects to have 60,000 people working in their Gigafactory in Texas when the production of the Cybertruck ramps up.
The cyber truck is a nightmare that won’t see mass market production.Since it doesn’t have a crumple zone, I doubt it even meets US safety standards.
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.
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.
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.
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
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.
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
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Sounds exactly like the rest of us
Greedflation is when you checks notes compete in a market by offering cheaper products?
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