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Comment by tonyedgecombe | Hacker News Reader

A more interesting question is why are EV's built in the West so expensive.

For one, they have spent years shedding all their talent and outsourcing all their components.

Now they are the mercy of their vendors, with limited knowledge of how to do things any other way than to keep depending on them.

Sometimes there are only 1 or 2 vendors they can pick from, with so little competition, it is no wonder the prices keep going up.

If Tesla actually focused on making a cheap car, I am sure it would cost far less, but instead they need the Model 3 to be a cash cow to make up for all the other dumb decisions being made.

Maybe, but base Nissan Leaf is $28k off the lot today with L2 self driving. Sure, air cooled battery, CHAdeMO, hatchback design... but it's not like those deficiencies would cost full $15k/car to fix; it's not like Big CHAdeMO is burning that much per each Leaf. So that kind of "Tesla would have this and that" arguments don't really hold water.

That said, my model 3 performance is faster than any car under $100k and costs less than half that. So it’s actually cheap for what it is. Comfier too.

I love my 2018 M3 but can't bring myself to buy the new one due to lacking USS and no blinker stalk - absolutely baffling.

The blinker stalk you just get over. Found myself pressing the nonexistent button on my ford truck the other day. The lack of USS was a concern for me too. I test drove a 2022 with USS and had heard a lot about how the ones without were “bad”. Compared to my wife’s car that has USS, my 2024 is vastly superior. The cameras do build a working 2D top-down view of obstacles when parking and of course the cameras let my brain do so too. In short, the 2024 has as good if not better parking than the 2022 I drove, and the performance is even better.

Cost of labor is much higher. Safety regulations are more strict. Environmental protections are more strict. It's more expensive across the board.

Look at profits of legacy auto. It’s not the labor, they’re prioritizing profits over investment to deliver on EVs (kicking the can and making it the future’s problem).

There is also the choice of whether or not they make affordable cars.

In the 1970s my dad had the worst time trying to buy compact cars from US dealerships, in the 2000s I thought US automakers were as bad but Japanese brands were better, by 2018 or so Japanese dealers were using the same toolbox (“You’re saying I can’t buy a Honda Fit because the factory washed out in a flood but you have 100 SUVs in a row that nobody wants to buy made in the same factory?”)

Then I got home and I am sure to read some article in the auto press which repeats, like the brainwash soldiers from The Manchurian Candidate that Americans only want to drive huge vehicles. Sure, an American might want a size L vehicle on average but from their point of view it is a disaster that somebody would could possibly buy a $50k vehicle walks out with a $25k vehicle (that Sales Manager won’t be able to work you over for another decade) so they will try to sell you an XXL vehicle.

Tesla, GM, Toyota and many others have refused to make affordable EVs, it’s that simple. Their hope is that a 100% tariff on BYD means they’ll never have to service the affordable vehicle market.

You're missing one of the principal actors here. It's not GM or Toyota selling you a car, it's a dealership. The dealership is only viable if they average $2-4k per sale. That margin simply doesn't exist on a $10k car, so they don't even want to offer it except to get you in the door.

Manufacturers in turn (except Tesla) have no one to sell these vehicles, and would have to take a risk that they could make up the lost margin on volume. They don't have the cultures to do that either.

I would be thrilled to pay 12-14k for a cheap electric car with moderate range, rather than 50-100k for an expensive one with 50-100% more range and all the bells and whistles.

Existing contracts aren't structured as a lump sum they can just tack on some margin for and dealers don't fully control their margins. There's half a dozen "incentives" that are given as percentages of sale price plus whatever additional fees they can throw on that need to equal that margin. It's not that these are impossible problems, but they require coordinated action in an industry that's full of mutually hostile parties.

>Tesla, GM, Toyota and many others have refused to make affordable EVs, it’s that simple.

I think GM is at least trying, with the sub-$35,000 Equinox EV. And the rumor is that the 2026 Bolt will be ~$30,000. Definitely going to be interesting to see what comes around in the next couple of years with battery prices falling.

https://www.chevrolet.com/electric/equinox-ev

CEO salaries for comparison:

Jim Farley (Ford CEO): $26.5 million

Mary Barra (GM CEO): $27.8 million

Koji Sato (Toyota CEO): $3.88 million

Atsushi Osaki (Subaru CEO): $1.05 million

Makoto Uchida (Nissan CEO): $4.5 million

No idea what the compensation for auto executives in China is, but probably even smaller than Japan's.

Sources:

https://www.bbc.com/worklife/article/20230925-uaw-auto-strik...

https://www.automotivedive.com/news/gm-ceo-compensation-fall...

https://www.detroitnews.com/story/business/autos/ford/2024/0...

Taking just Ford, they sold 1,995,912 vehicles in 2023 [1]; assuming it's divided evenly across vehicles, CEO compensation adds $13.25 to the price of a Ford. Probably CEO compensation is less substantial for a BYD vehicle, but it's just not a large component of the cost.

EDIT: Fixed the math, thanks mperham, I had $1.35 earlier.

[1] https://media.ford.com/content/dam/fordmedia/North%20America...

My math ($26.5m / 2m) says you're off by an order of magnitude: $13.25

What about the entire C suite?

Just FYI, they will choose a component that is 1 cent cheaper over the one that worked for years without any problems. They could give you an actual usable navigation but they don't want to spend 1 extra dollar for the controller.

$1.32 per car is a lot!

The OP said "Look at profits of legacy auto. It’s not the labor, they’re prioritizing profits over investment [...]". Are you arguing that this is incorrect by showing some examples of large labor expenses these US auto companies have? My understanding is that profits is what is left over to be paid to shareholders after they stop spending on employees/investment/opex/etc.

They are simply following the market.

Hybrids have become increasingly popular as the charging infrastructure is still lacklustre in many parts of the world. And that's not a problem that can be solved overnight.

Even if EV charging was ubiquitous, legacy auto would sell what nets them the highest profit, which is not EVs. China’s EV market is hypercompetitive, and does not suffer legacy auto type incumbents. It’s why US automakers will likely leave China.

At least we have BYD and Tesla, just gotta scale up faster. Global light vehicle TAM is 90M units/year. 20% of all vehicles sold globally last year were BEVs or PHEVs, onward and upward.

https://fortune.com/2024/06/19/elon-musk-tesla-china-carmake... (“Bank of America tells Detroit’s Big 3 they can’t make money in China and should just leave the hypercompetitive car market ‘as soon as they possibly can’”)

Sadly (for myself) the only compact-ish plug-in hybrid that exists in my part of the world (Australia) is the Cupra Leon. Neat car, we're genuinely considering it, but it's $80,000AUD, vs. the $50,000AUD that a top-end hybrid Corolla would cost. And they're still much more expensive than my partners VW Polo... worth it for us, as we have a one car shared between the two of us, but I wish there were more compact-ish hybrids available.

Honestly same goes for EVs, though the BYD stuff is starting to fill that niche quite nicely. And compact + decent range is sort of at odds with itself.

> They are simply following the market.

This is badly misinformed. They make the market. When you buy a car, do you have it custom made, or do you select one that actually exists?

That's exactly what happened with SUVs. SUVs didn't happen because people were begging car companies to make them something big, dangerous, and wasteful. They happened because car companies in the US found a legal loophole where they could cut costs by skirting safety and emissions regulations, while simultaneously marking up the product as a premium one. Then they ran ads to tell people SUVs were super safe [for the passengers]. So when people started buying SUVs en masse, that wasn't organic demand, it was the result of a successful national misinformation campaign (because modern SUVs and other "light trucks" are so large you're more likely to just drive over your own child without seeing them than even get in a crash).

Not sure how much it matters.

I am thinking about getting a third car for the farm if I could get an inexpensive low range EV. If I am only driving to work with it or to go shopping or see a sports game at my Uni I can just it when I get home. If I need to go see a game in a distant city, well, I’ll take one of the gas cars so my son will take the EV and not the Buick to work one morning.

> They are simply following the market.

So is global warming. This excuse rang hollow 30 years ago and it still rings hollow today.

Or maybe the rest of the world has way less population per area and therefore more gas stations, therefore filling up was less of a problem compared to the US...

Is paying more for a product that meets higher safety standards and more environmentally friendly a bad thing?

No, probably not.

That said, the lowest pricing point is a massive competitive advantage.

The Chinese made cars meet the same safety standards as US and EU made cars (at least the ones sold outside of China do).

I thought GP was talking more about the safety standards for workers in the factories - which do cost more to meet.

> Is paying more for a product that meets higher safety standards and more environmentally friendly a bad thing?

If end user does not care about these moral high grounds, then yes it is a bad thing for business.

I can't imagine the recent tariffs have helped much, either. Less competition and pricier parts is a bad combination for consumers.

They have cheap ICE cars

Lack of focus on EV which leads to lower production volume (Chinese carmakers focused on EVs long before Tesla got popular), trend of over-sizing which means it's big and heavy, dogged obsession in road tripping rather than playing to EV's advantage in city driving, and of course Chinese carmakers get/got a healthy dose of subsidies.

In USA, EVs are traditionally built as an aspirational rather than utilitarian article. Tesla will design whatever it wants, make it expensive, and you will buy it if you want to be cooler than your peers. Chinese sell cheap EVs because they're regular cars no one will envy.

Or in a crude analogy, USA sells EVs like iPhones, China sells them like Androids.

>Or in a crude analogy, USA sells EVs like iPhones, China sells them like Androids.

I don't think that's fair to Android phones. Android phones come in a huge range of prices and feature levels, from cheap-o $40 phones with crappy displays but that will do everything you need, albeit with crappy photos, to $1500 phones with much better specs than the top-end iPhone and camera lenses from Switzerland.

Perhaps you mean "utilitarian, budget model Androids".

High-end Chinese EVs are super luxury and beat western EVs on all sorts of specs, and come in all sorts of form factors, so the analogy holds, even if that's not what the original commenter intended.

Check out the Xiaomi car the CEO of Ford drives as just one example.

A nice stereotype, but it doesn't seem to really match reality. See for example: https://insideevs.com/features/719015/china-is-ahead-of-west... At least Chinese consumers (and increasingly more European consumers) just seem to prefer the Chinese EVs.

The analogy holds in more than one way. For example, iPhones will gain/lose features at the convenience of Apple (even the bigger screen had to wait until a new CEO was in charge). You buy it as it was designed, the same as you buy a Cybertruck. They behave like designer brands.

Chinese EVs are more focused on what people need, and brands have a wider range of offers, similar to how you can find budget or flagship Androids to suit your tastes. They behave similar to traditional auto makers.

Something not said, but China often lets others do the expensive R&D

Model 3 is like $5k more and you get completely different level of tech.

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