The problem with Chinese EVs is that they show it’s possible to innovate, keep prices down, and mass produce.
Ford, GM, even Tesla, are spending all their time whining about how it’s just not possible to compete. They point the finger at worker wages, instead of improving engineering and design, materials, manufacturing processes, and not chasing stock-market gains.
Stop making $70K SUVs and start making $20K Taurus and Escort EVs. You did it once. You can do it again.
The problem is that they did not build battery factories quick enough, they sat on their hands waiting for massive hand outs to pay for the factories rather than investing. All while profiting off existing investment in ICE that is high return at this point in its life cycle. So they ended up making more profitable per unit halo models like the F150 that they do not need to sell in high volumes to get a return on.
Batteries are about half the raw cost of an EV, if you paying somebody else to make it for you its going to be more expensive as they will want to make a profit and you are stuck being able to buy ever how many they want to sell you. In practice they have ended up funding a competitor to develop battery tech as well.
Lowering battery cost is the secret to cheap prices, you cannot truly compete until you make your own batteries in high volumes.
The problem with Chinese EVs is that they show it’s possible to innovate, keep prices down, and mass produce.
It’s not only possible, it’s easy: you just need terrible labor and environmental standards, poor welfare, cheap access to raw materials, and tons of state subsidies :)
It’s interesting to note that “we” knew all along it would end like this but just couldn’t resist moving/outsourcing production to China nor investing in China’s fast-growing economy.
“We” were chasing short-term profits and China was playing the long game. Apparently, both parties won, each at their own game.
Stop making $70K SUVs and start making $20K Taurus and Escort EVs. You did it once. You can do it again.
The cost of batteries is (relatively) higher for cheap vehicles, so that’s the segment where it makes the most difference.
Western companies outsource much of their production to countries with cheaper labor, so the really important things here are cheap raw materials and state subsidies. Since the Chinese state owns many of the large companies there, they can reduce profits throughout the supply chain or move them to other companies in the form of these subsidies. As well as use that money to build transport and green energy infrastructure, further lowering manufacturing costs.
Investors always seek short-term profit, so playing the long game is something you need aggressive policies for.
AFAIK major contributor into low Chinese EV prices are subsidies and tax breaks for manufacturers. I know they have significant tax breaks in US. It would be interesting to see how they compare. Because if they are mostly on par this is pure corporate greed stopping them. Especially in case of Tesla. They are not overpaying workers and don’t use luxury materials
Subsidies are another way to say State planning, which is how you direct the “free market”. No capitalist, which includes China, will “innovate” without being baited with money.
There are massive subsidies in the US as well, but these go into the pockets of the CEOs and political/financial class. If this were to happen in China they’d go missing like Jack Ma of Alibaba until he got his head right.
This title totally made me laugh.
Whack ass cover image
Incredible title
Lol, what a great title
