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Comment by jacquesm | Hacker News Reader

> With the current very low, out of whack exchange rate (1USD:6TRY) this will also become competitive in at least Southern European markets fairly fast as well.

That depends on how it will fare in the crash tests.

here is some more video:

https://www.youtube.com/watch?v=cLCJpE0OMfQ

https://www.youtube.com/watch?v=zv4bYn-JitA

One comment on that last video:

"The country owes $ 500 billion to the outside world. It is a bit of a dream to give 22 billion Turkish liras and establish the factory of such a car and put it into mass production. Not very convincing. Because such games are played by the government in our country for years. They issue a new domestic car before each election. Whenever we launch a new vehicle, we know that there is an early election in the near future."

Wikipedia:

https://en.wikipedia.org/wiki/TOGG

"The first two prototypes were produced in Italy by Pininfarina. The car manufacturing plant will be in Gemlik, Bursa."

View on HN

Turkey and Europe uses the same crash tests and those tests are done in Europe, not in Turkey. In other words, if a car is safe to be sold in Italy, it’s safe to be sold in Turkey. If not, it’s not sellable in either. Turkey does not have its own crash crash testing rating system and legislates based on European tests.

The comment you’ve copied from YouTube demonstrates a lack of basic understanding of economics. Turkey’s debt load is typical of a country its size and furthermore debt itself is not a bad thing, it is a financial tool like any other. I do agree with the political aspects mentioned, however, the fact that it is also a political tool doesn’t necessarily mean it’s actually not being built.

So far we have a couple of pre-production cars, I'll believe it when I see them rolling around here, Turkey has serious problems and the PR value of this is high enough that I can see this as a marketing piece rather than as a vehicle that is ready to be produced.

One tell tale here is that the factor apparently does not exist yet, if they were serious about production then you'd expect the factory to be ready to go at the moment of introduction, the way other car manufacturers - even small ones - do it.

I agree with you that I would not personally launch it at this stage, but again, Tesla does launches at a similar state as well. The launch date smells like Erdogan said ‘come hell or high water, we’re announcing this in 2019’. This feels the same as the very early and half built opening of the new Istanbul Airport. The guy has a fixation with dates and likely this was a compromise.

Turkey does have its problems, but this announcement is far too small to make any meaningful dent in them, so I would expect this is mostly domestic posturing for the 2023 election cycle. The earlier they can ship and sell at a reasonable price, the better it is for their election odds.

That said, the airport is getting better, and considering making a car is well within Turkey’s manufacturing capabilities, I don’t see a reason why it would be a stretch.

(I certainly wouldn’t buy one for the first 10 years though.)

Can you elaborate on how debt is a tool please

You borrow some money, buy a house, do it up, sell it for more, pay off the debt with some left over for your trouble.

That's using debt as a tool to make more money than you could have made if you didn't have access to credit to buy the house.

Or you borrow some money, build a car-factory, sell some cars, pay off the debt, and then have an income stream you couldn't have had without having access to credit to pay to build the car-factory.

That old adage: If you owe the bank a million, the bank owns you. If you owe the bank $2.5 billion, you own the bank.

You can only lend money to people (or States) you see as equals. Large scale lending essentially ties your economies together (like the US and China).

I highly recommend Debt: The First 5,000 Years by David Grabber. He does a great deep dive into the history of debt (both personal and with States). It's an amazing read.

> You can only lend money to people (or States) you see as equals. Large scale lending essentially ties your economies together (like the US and China).

Debt can also be a thinly disguised bribe if there’s no real expectation that it’s ever going to be paid back. That’s how most lending to extremely poor countries works. The US or other “donors” lend money to the local tyrant to support domestically unpopular policy; the local tyrant pockets a large amount, distributes some to their cronies and some goes on the titular reason for the aid and at some point in the future the debt gets written off. Then the cycle repeats. The US does not view any other states as equals. China has lent a lot of money to Sri Lanka and Cambodia among others. It does not view either as an equal.

> I highly recommend Debt: The First 5,000 Years by David Grabber. He does a great deep dive into the history of debt (both personal and with States). It's an amazing read.

It’s also riddled with factual errors, from saying Apple was founded by engineers working on their ok laptops or that the Fed isn’t part of the USG, among many, many others.

Long post on a small selection of the ways the book gets things wrong.

https://delong.typepad.com/sdj/2013/01/the-very-last-david-g...

When I bought my house 20 years ago, it cost me about 20% more than rent, and now about 30% less than market rents.

In ten years, I’ll own it free and clear, a feat that would have been impossible if I was just flushing money down the toilet in rent.

Ditto with national debt. If I borrow a billion dollars and provide health care, education or defend the state, what value am I allowing to be created?

Let’s say I have $1m in cash and I want to buy a house worth $1m. I could either buy the house with my cash, or take out a loan to buy the house and invest my cash into another asset.

Almost any investment will produce a greater yield than the interest cost of the mortgage because the mortgage is secured debt. A mortgage might cost 3% while stocks can return 7-10% or more.

In this scenario, taking on the debt even though you don’t need to is financially advantageous most of the time. In this sense debt is a tool.

Debt is also a tool that lets you afford a house that you can’t buy with cash on hand but where your income is easily enough for principal + interest. What’s better: a) saving for 30 years after you start working and buying a house in cash (maybe paying higher rent that whole time?) or b) taking on a mortgage, getting your house now (as soon as it’s responsible), and paying it off over 30 years. Most people will choose the latter.

Thus debt is a tool that also allows you to buy things far sooner (in life or business) than you could afford to with cash.

There are other things that can be done with debt like borrowing against existing assets (to avoid having to liquidate the entire asset just to get a little cash) or borrowing against expected revenue streams and so on. Most of these tools permit greater economic growth than is possible without.

Depending on where you live the situation may be on reverse. You may have a €100k mortgage at ~7% and be unable to get a better investment from your local banking system for the same amount of cash.

And surely they've factored in all the crash tests costs into the equation. I'd be surprised if didn't already have vehicles being shipped over and in the testing queue for the markets they want to be in. That's typically specked out in the design phase. The only manufactures who don't put much effort into that are the supercar designers.

They don't have a factory yet. There are exactly as many prototypes - prototypes, not pre-production runs - as you see in those videos from what I gather because they are super expensive to make, hence the lack of variation in the cars displayed.

>Turkey’s debt load is typical of a country its size and furthermore debt itself is not a bad thing, it is a financial tool like any other.

It's a tool for Turkey because they control their own currency, which gives them an advantage over potential European manufacturers who are tied to the Euro and have much less flexibility.

You know they are in the middle of a debt crisis, right? The issue with Turkey specifically is that they borrowed a ton of EUR, they borrowed a ton of USD, they don't earn much of either, and the currency has halved in three years or so...oh, and they can't raise rates because the President thinks that high rates are part of a Jewish-led conspiracy to bankrupt Turkey...you really can't make this stuff up.

Aside from the politics I agree raising rates would be good for foreign debt holders and bad to Turkey internally. Lower rates keeps exports high and jobs remain when employment is full start raising rates.

The lira is inflating out of control and you think high rates are bad for Turkey internally...

sigh

Wut? If you raise rates, then the price of bonds falls...if you hold debt, you want lower rates because you can then sell your bond at a higher price (theoretically, these are foreign-currency bonds so it isn't quite that simple).

And Turkey needs higher rates. The rate has been far below the natural rate for way too long. In capital markets, you saw Turkish companies make all these crazy acquisitions (in addition, to being forced by the govt into splashy infrastructure projects in areas that supported the govt)...the bust from this will be incredible (the only leverage Turkey has is that French/German banks are neck deep in this debt). Lowering rates is just prolonging the inevitable (the majority of Turkey's corporate sector is already functionally insolvent).

Your last comment about "the President thinks that high rates are part of a Jewish-led conspiracy to bankrupt Turkey" would benefit greatly from a reference or a quote, otherwise it is just as a good as propaganda. The apparent and most obvious reason for a president to not increase interests rates and to not decrease spending is the fear of recession. This is a controversial move but it has some interesting precedents: check the case of Malaysia after the Asian financial crisis of 1997.

Unfortunately he is correct, if poorly worded. I’m failing to find any sources in English right now on my phone, but he really did say this a couple years ago, pretty much word by word.

That does not always imply that the Turkish Central Bank is doing it because of his reasons, but Erdogan is remarkably like Netanyahu in that he knows well what is going to work on his audience, and at that time, this did.

First, 22 billion Turkish lira investment coming from local billionaires/companies according to newspapers, not from states pocket.

The biggest problem of Turkish economy is the lack of gasoline and imported cars. The country pay $20B for gasoline and 76% of the gasoline consumed for cars (remaining percentage for airline and sea vehicles). They import over 500M cars every year. Probably $30B to $40B goes to imported cars (it would be over $100B including taxes)

These issues, makes the negative trade gap in the balance sheet.

Overall, seems producing electric car will help a lot for Turkish economy, and Turkey might pay it's debt very short period by this step.

> They import over 500M cars every year.

Turkey has a population of 82M, so this seems unlikely.

Thanks for pointing out, should be "over 500k annually"

I can't edit this post anymore, please remove "000" for each number you see here related to imported car stats, gasoline numbers are correct.

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