this post was submitted on 20 Feb 2024
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These complaints about EVs being too expensive are way out of date, now that China is pumping out hordes of cheap EVs that consumers like.
Even if the US doesn't want to let in Chinese auto imports, the question remains: why are Chinese automakers able to bring down prices, but not US automakers? You can point to Chinese government subsidies, but the US also does industrial policy these days. One of Biden's favourite talking points is how much money his government is putting into supporting US green manufacturing through the IRA.
Because their economy is entering a deflationary spiral built off of 25%+ youth unemployment.
Yes, unemployment lowers labor costs severely. That's.... not a good thing or a strategy we'd want to replicate.
The other thing the Chinese do:
Take over swaths of Africa to obtain cheap rare-earth metals. Use even cheaper African labor to extract Cobalt and other metals.
Ignore environmental regulations. Lithium is obtained by pouring sulfuric acid into mountains, and then draining the acid out the bottom which now contains Lithium. Its simply a very destructive process full of possible issues where the acid will contaminate the natural environment. China doesn't give a care.
Have huge amounts of unemployment to drive down labor costs lower and lower.
Create an export-driven economy, artificially deflating the Yuan to lower your currency. Yes, this lowers costs. But it also makes it harder to import goods.
There's a few things we should learn from the Chinese. They have invented incredibly efficient electronic lines in Shenzhen for example. But the bulk of Chinese policies that cause a decline in prices are... horrific. We should never do what the Chinese do on a grand policy scale.
Import-driven vs Export-driven economies have naturally different tradeoffs. Export-driven economies have lower costs but difficulty buying foreign goods. Import-driven economies have higher costs but easier time buying whatever we want from around the world. The most important question: is there a market out there in the world where someone is willing to buy our stuff? I... don't think so. So the only manufacturing we need in the USA is what we can't buy from elsewhere... or what we chose to make here (like cars, weapons, and some semiconductors).