this post was submitted on 13 May 2024
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[Dormant] Electric Vehicles
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It's very unlikely that Chinese cars are sold at a loss. There is no reason for that to happen when they can be sold at a profit, and quite easily.
But even if they are, that's not necessarily a bad thing. It means Americans can buy cars at far cheaper prices since the price is subsidised by the Chinese government. As the article states, that's equivalent to a wealth transfer from the Chinese taxpayer to the American taxpayer.
What it does do is change the dynamic of winners and losers. The American car buyer would be a winner while the American car maker would be a loser. Now, there are a lot more car buyers and the total boon to car buyers is higher than the total hurt to car makers, meaning the wealth overall in the American economy has increased; it's just that not everyone comes out ahead.
This essentially means protectionist lobbying is usually nothing more than rent-seeking and will usually reduce the amount of total surplus in the economy. Anyone who's taken an Economics 101 course in university can point to the black triangle and say "deadweight loss!"
Allowing China to sell their cars at a loss in the US is definitely a bad thing. It allows China to take over the US market by undercutting the competition. The reason for the teriffs, as far as I understand it, is that the Chinese government is subsidizing the EV manufacturers in an attempt to kill competition and corner the market. It is an anti competitive practice that, if it paid off, would allow China to artificially push other EV makers out of the market, then raise prices when their competition is gone.
It didn't occur in industries where China holds a strong presence, such as solar and other renewable energy equipment, or in lower-tech products available on platforms like AliExpress, Amazon, and eBay. So, why would it be different for electric vehicles (EVs)? Currently, the primary foreign competitor for EVs in China is Tesla, and prices for EVs are decreasing rapidly.
BYD electric vehicles are sold at a significantly higher profit margin in Europe compared to China.
https://finance.yahoo.com/news/eu-unwinnable-price-war-chinese-104847336.html
What? There's so much electronics products that you just can't find not made in China these days, it 100% happened! Just because the brand isn't Chinese doesn't mean they're not dependent on China!
Thats maybe only true for the US. In Europe, the solar panel industry ist dead, Like the following:
As is most of the Smartphone production, again, outside Design and probably the Premium/sustainable Brands.
Nearly every industry, where you can undercut competitors costs by leveraging economies of scale through pollution and the abolishment of labour laws and human rights
That's how you end up being fully dependent on China. They're using the same tactic as Amazon used to force bookstores to close down, sell at a loss long enough that the competition can't compete and needs to go out of business.
Have fun dealing with tens of thousands of jobless factory workers! That sure did improve conditions in Detroit when the same thing happened there!
I'm saying that just because there will be "thousands of jobless factory workers" doesn't mean the situation is, overall, bad.
Yes, that particular outcome is bad, but it's not the only thing that will happen. And I argue that the benefits gained by other sectors of the economy outweigh the negative effects suffered by them.
This argument is like saying that transitioning to renewable energy will put thousands of Appalachian coal miners out of work. That's true, it will, but that doesn't mean we shouldn't do it.
There will be winners and losers in every economic decision. The important thing is to consider whether there are more winners than losers, not whether there are any losers at all. Economics is cold, calculating, and unforgiving. If you want to argue, you'll need to come up with actual arguments and not just snappy two-liners that sound nice when typed into a Lemmy comment.
I provided an argument that wasn't a two liner, dependence on China.
Once local manufacturers start closing their factories and your start losing all the local expertise, what do you do when China is in a position where they can dictate the price because they're now in control of the market?
You've got a very short term view of things if you only think about the benefit for consumers as prices are low due to subsidies, once the subsidies are gone you're left with a market where cars are no cheaper but the money doesn't stay in your country anymore, that's a huge loss compared to the short term benefit.
Anyone who paid attention to the globalization debate back in the 90s knows that it's not beneficial in the long term to depend on other countries. The difference this time is that China is trying to force everyone's hand instead of having rich countries willingly sending manufactures overseas.
It's a completely valid concern that you've brought up regarding dependence on China.
I don't believe there will be a point where that happens. That's pretty much the reasoning behind why I don't agree with the tariffs. Automakers aren't stupid. I truly believe that they can compete, but just don't want to because it's more profitable to get the Government to levy tariffs against electric cars than to make them instead of gasoline cars. Americans can run their own subsidy regime to flip this maths. I'm pretty sure that automakers would rather make electric cars than no cars.
Yes, it might result in layoffs along the way. I regard that as the cost of progress.
People though it wouldn't happen for so many things and then COVID happened and we finally realized that we had shipped our manufacturing capacity for so much stuff to Asia that we're now playing catch-up to reverse the mistakes of the past.
Again, it's not just about layoffs, it's about making sure you can't get fucked by another country if they decide to make a move against you. It just requires one political incident and you're in for a round of inflation because China decides to increase its prices just enough that people still don't have a choice but to buy from them because the alternatives are still too expensive.
And if you think American manufacturers can't go bankrupt then you don't need to look too far to be proven wrong and once that happens then you're at the mercy of the goodwill of foreigners. Considering the political landscape in the USA that's not a position I would want to be in.
Even if we ignore for a moment that Chinese cars are produced at such low costs not in the least because of the use of forced labour and thus by ignoring even the most fundamental human rights, China will subsidize its EV industry at all costs, also offering dumping prices. China's 'industrial policy' isn't focused on financial health but on scale to destroy foreign competition to control the market for economic and political gains.
Believe it or not, the Chinese government does not have infinite money, so we'll see if this plan pans out for them.
Errm.. whos gonna tell them about the economics of being the largest coherent market there is and forcing Joint Ventures in every relevant industry..