Technology

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.

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.