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Comment by throw10920 | Hacker News Reader

This comment laments about the rising prices of cars, but it doesn't offer anything to explain why they're getting more expensive.

"Greed" isn't the answer - we have greedy companies in every area of the economy, yet somehow the prices of phones, computers, desks, large appliances, televisions, and many other types of goods hasn't skyrocketed in the same way as cars.

What makes cars different? I know that the cost of labor has significantly increased (which partially motivates the stratospheric increases in education and healthcare costs), but I thought that cars were mostly manufactured in an automated manner.

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Several things that aren't regularly talked about: to meet increasingly stringent emissions standards without massive losses in engine power (and resulting customer dissatisfaction), companies spend heavily on powertrain R&D to eke the remaining emissions improvements out (99.9% reduction to 99.99% reduction). To meet increasing safety standards, manufacturers have to have much more complicated base models than before, which drives up even the lowest car prices -- backup cameras, automatic emergency braking cameras and logic, immobilizer standards, etc. Then, for the products that everyone wants, some manufacturers aren't even making the new CAFE standards, so they buy "indulgences" (EV offset credits) from Tesla, which is literally a regulatory tax for the incorrect outcomes, but customers don't want GM and Ford EVs at the moment. Beyond that, some solutions to the above problems (hybrids) are simply insanely expensive (ballpark $20k extra manufacturing cost for a hybrid powertrain on some high end hybrid SUVs vs the identical engine without the electric components). All of that shifts parts of the curve to the right, some of it only shifts the high end, some of it shifts the entire curve.

Auto company profit margins provide further evidence supporting your hypothesis (modern car requirements are just inherently more expensive).

The auto companies whose profit margins I checked are in the single-digits, sometimes negative. If it was just greedy price gouging, we'd expect them to see much healthier profit margins.

I don't understand why people don't check these figures more often for these publicly traded companies when offering the 'companies are being greedy' narratives.

Thank you for detailed response!

100% Agree, We could have $10k electric cars in the US, specifically made in China. It's not going to happen anytime soon for enough reasons that could fill a HN comment section.

What are the basics? The "front end" (demand side) is that cars are effectively subsidized by cheap and widely available financing, but at a high level where is that money actually going on the "back end" (supply side) that makes cars expensive to manufacture?

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