People want a $25,000 automobile. If US car manufacturers can’t deliver one, they’ll buy one from China.
And if politicians prevent that with tariffs and other trade barriers, they’ll vote them out of office.
intercst
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At the same time there was a fair amount of support not so long ago for large wage increases for auto workers.
DB2
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That’s true – until the voters realize that propping up union labor is costing them access to inexpensive vehicles.
intercst
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According to a Google search only 5% to 10% of the cost of a US automobile is attributable to union labor.
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If you support Republicans paint everything is a labor cost issue, if you support democrats paint everything as a tax cuts to rich… this generalization is so boring. You are smart to check and know what is the true driver for the higher price.
As much as consumers complaint about higher prices, they are not willing to buy smaller cars, they want bigger SUV’s, Luxury vehicles, EV’s, etc.
Price is not driving the demand down… when consumer behavior is diverging from standard expectations, economic models fail. Someone has to tell US consumers, you are not entitled to massive self-driving electric SUV’s at $25K price tag. I think car makers are saying that, will consumers listen?
Those who complaint about affordability cannot have $1000 car payment.
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So US automakers fall to the globalization of vehicles.
China has lower cost of capital & labor. And their EVs are more technologically advanced. There is still a question as to China EV reliability and longevity though.
And then there is the question of individual vehicle ownership.
As Waymo & Tesla spread to all cities over 250,000 in population; the individual may eschew private ownership for reliable Autnomous RobotTaxis. That only happens if Waymo & Tesla & future competitors can drive down the cost per mile.
As I am an old codger; I travel 5,000 to 7,500 miles a year. Grocery, doctor, library & a rare trip to hardware type store. Owning an old beater vehicle with it’s maintenance, insurance, gasoline and the rare repair costs is still a bit cheaper than the human Lyft-Uber option. But it is close. So I will take that option once I am no longer able to drive so I can remain in my home.
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Bob Lutz, hardly a liberal car executive, wrote in his excellent book “Car Guys vs. Bean Counters” that the cost of labor is nowhere near the issue it is painted. He pointed directly to the cost of labor in Germany and how that didn’t seem to hinder their success.
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IIRC, labor is cheaper in China but the cost of capital is higher.
DB2
with Chinese EV makers in the US.
Several people familiar with the matter told Bloomberg that Farley recently brought up the idea with the Trump administration to allow US carmakers to partner with Chinese EV brands to build vehicles in the US.
Crosstown rival GM told the Trump administration that it does not support allowing Chinese brands into the US, one of the sources said.
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“China poses a clear and present threat to the auto industry in the U.S.,” wrote the Alliance for Automotive Innovation (AAI), a trade group that reps the Big Three, among other automakers, ahead of a House hearing on Chinese vehicles last December.
Rivian CEO RJ Scaringe noted that in the long term, two important factors need to be recognized.
“It’s not like there’s magic happening on the Chinese cost structure. It’s really two things you can follow very clearly,” Scaringe told Yahoo Finance last week. “One is their capital cost structure is much lower than us. In most cases, it’s near zero. It’s a highly subsidized industry where plants and manufacturing compacts are paid for by the local equivalent of the federal government.”
The second factor is labor, with Chinese automakers’ costs a quarter to a fifth of those faced by US companies.
Chinese automakers captured approximately 6.1% of the European auto market last year, a 99% jump from 2024. And this despite tariffs of 35.3% on Chinese EVs entering the EU; however, plug-in hybrids and full hybrids were excluded.
You should be kidding… Chinese car makers addresses these pseudo concerns by offering 10 year/ 1 million KM warranty.
We don’t have long term tests yet.
And I don’t have data on recalls by China EV manufacturers.
Software problems can be fixed easily but what about electrical & mechanical issues?
There isn’t an established dealership network outside of China.
That just means an unreliable car has limited financial impact to me. But it’s still a hassle if I have to keep bringing it in for service. This is why I tend to buy new Hondas. I hate dealing with unreliable cars. Scheduling service, getting loaners, sometimes getting stranded and need a tow truck.
So, no, it is NOT a pseudo concern. Chinese EV reliability and longevity is not yet proven.
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Yep
Hyundai have problems with their ICE engines, but offer a 10 year 1000,000 mile warranty.
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Unreliable is stated without any data. You can say unknown reliability, but unreliable characterization is a made without any data. For ex: BYD has 23 years of selling cars record in China and you have data.