Selling at a loss to enter a market or gain market share is a time honored tradition at this point.
Comment on Fear of cheap Chinese EVs spurs automaker dash for affordable cars
Hyperreality@kbin.social 11 months agoChinese manufacturers are being heavily subsidised and even making a loss on their cars.
They're trying to kill off our domestic car industries.
Maggoty@lemmy.world 11 months ago
Hyperreality@kbin.social 11 months ago
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, you have to ask yourself questions.
Maggoty@lemmy.world 11 months ago
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.
Corkyskog@sh.itjust.works 11 months ago
Or they could be building economies ot scale? You can’t drive down costs making thousands, you need to make millions.
AA5B@lemmy.world 11 months ago
Sounds exactly like the rest of us
doublejay1999@lemmy.world 11 months ago
Everyone heavily subsidises their car industry
CosmoNova@lemmy.world 11 months ago
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.
Hyperreality@kbin.social 11 months ago
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.
Reality_Suit@lemmy.one 11 months ago
Good
Molecular0079@lemmy.world 11 months ago
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.
Hyperreality@kbin.social 11 months ago
Real answer: 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.
Molecular0079@lemmy.world 11 months ago
Not a controversial take at all IMHO. You’re not wrong. Housing is absolutely ridiculous right now.
MonkderZweite@feddit.ch 11 months ago
Better at getting me from A to B?
JJROKCZ@lemmy.world 11 months ago
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
eltrain123@lemmy.world 11 months ago
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.
SCB@lemmy.world 11 months ago
Or just let those who can’t compete die, which is totally fine.
I don’t have any loyalty to some specific car brand.
CosmoNova@lemmy.world 11 months ago
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.
eltrain123@lemmy.world 11 months ago
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.
silentknyght@lemmy.world 11 months ago
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