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Comment by mattmaroon | Hacker News Reader

It's too expensive for an affordable EV in half the world I am sure. The wealthier half of the world will never let Chinese auto makers in. China wants to do the same thing they've done with other manufacturing, use government subsidies, borderline slave labor, and artifically low currency to eat the market and kill everyone else's manufacturing capacity until they have the market entirely.

There's no way we let that happen to cars. China's average auto worker pay is $4.20 an hour. America's is 6x that. What you call fleecing customers we call paying workers a living wage.

We'd rather pay $25k for a cheap EV and have a thriving auto industry than pay $10k and have none. We'd happily choose paying more for cars over Latin America-style wealth inequality, though lately it seems as if we're going to manage both at the same time.

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Autoworker salaries have very little effect on the price of cars. The final assembly labor costs are a single digit percentage of the sale price. The corporate workers (myself included) are about the same again, despite being a much smaller percentage of the workforce.

The majority of costs are just the price of raw materials and manufacturing anything, whether in the US or abroad. What Chinese OEMs are doing isn't anything secret, it's just optimizing the other things to hit those price targets. Cutting out dealerships, better value engineering, lower executive/corporate salaries and benefits, cheaper electronics, limited features, vertical integration, and most importantly being willing to sell lower margin vehicles.

And much reduced dividend payments. It is the difference between prioritizing market share over profits. Where an American company sees profits as an end goal, a Chinese manufacturer sees profits as a tool to enable expansion and development. One is working for shareholders, the other to advance national goals.

Many American companies have reinvested their revenue into R&D; notable large examples include Google and Amazon. I rode a Waymo today!

Every single expense in your P&L is ultimately salaries.

If it's not salaries in your P&L, then it's salaries in your supplier's P&L, or salaries your supplier's supplier's P&L.

Once you get more than a couple layers down in the supply chain, it's the same workers being paid the same wages for both American and foreign OEMs. The "labor price" of the same grade steel isn't vastly different for BYD and GM.

Raw materials costs are mostly based on scarcity, not salaries. If it weren't, steel would cost more that gold because it goes through more processing.

Scarcity means that you require more work to mine the same amount of material.

There is also economies of scale. Steel is much more useful than gold. This means investments on improving mining and processing will lower the costs in the long run.

Is processing and manufacturing steel actually cheaper than gold at any scale?

Gold is a very easy metal to work with. While iron into steel especially on a large scale isn’t trivial.

I doubt the cost of labor has a meaningful impact on the price of gold.

I’m not sure that’s necessarily true (or at all relevant) for a lot of precious or rate materials like gold. I don’t really know but I’d bet that gold requires much, much less labor to process than steel.

It’s just much more scarce so the people who own the mines can charge more for it.

Even high grade gold deposits are only around 10g/tonne or 1 part per 100,000 so you have to process a huge amount of material to recover a tiny amount of gold. Total world gold production was just 3000 tonnes in 2023.

By contrast a tonne of steel requires about 2 tonnes of iron ore and 0.8 tonnes of coal and 0.1 tonnes of limestone, all bulk minerals dug out of the ground. Total world steel production was 1.9 billion tonnes in 2023.

Yes, I would assume that certainly correct by weight/per kg. I was thinking more about per $ i.e. a gram of gold costs $100 I’m too lazy to look for exact figures but I would bet that labor costs (maybe even combined with energy costs) make up a very small proportion of that.

Edit: well I’m kind of wrong: https://www.gold.org/goldhub/gold-focus/2024/05/higher-gold-...

Profit margins seem to be about 50-70% currently but historically it was closer to 30% (of course that’s still many times higher than for steel production)

The profitability will depend on the production costs for each mine. Those at the margin set the price. If it stays high long enough new mines will open or too low and unprofitable mines will close. The excess profits earned by those that have easily accessible high quality ore are known as 'resource rents' but eventually they will be fully exploited and have to close.

Apparently a great uncle of mine found gold on his family farm in Scotland, but it was never profitable to exploit so saw no benefit from it!

You forgot energy.

GM's health-care costs average $1500 per vehicle.

Those numbers are two decades old. Shortly after they were made public there was a union negotiation with UAW where new employees were permitted to have far fewer healthcare and retirement benefits. It's been 20 years and GM has maintained a regular cadence of layoffs and buyouts for tenured workers, so the modern workforce is almost entirely those much cheaper employees.

It's not just that, though I'm sure the American/European car makers are still in the $1,000+ range in extra labor costs.

China's subsidized their EV market with tens of billions directly. On top of that, they subsidize critical components and materials. They also keep their currency artifically devalued.

An American comnpany could do everything BYD does and still not come remotely close on price.

Your figures are way out of date. The average Chinese auto worker now earns 21900 CNY/month, or about $36000/year. Even the low end is ~$15k.

https://www.salaryexplorer.com/average-salary-wage-compariso...

Also, Chinese manufacturers will do the same as Japanese and Korean manufacturers before them: work around tariffs by building assembly plants in the US and Europe.

Those numbers seem like the average for an auto plant manager. Seems like most of the rank and file make around $11-15,000/yr.

Cost of living is an important consideration. I dont know why people are comparing absolute values here. Wages are relative to cost of living.

That's not too far off what people earn here, in an EU country with cars as our main export

> Also, Chinese manufacturers will do the same as Japanese and Korean manufacturers before them: work around tariffs by building assembly plants in the US and Europe.

That's literally the stated purpose of Trump's tariffs, though.

It's not about hurting the Chinese. That's a bonus in some cases, sure, but the stated purpose is to encourage US economic growth in the industrial sector.

If BYD starts building factories in the US to hire American workers and sell to American consumers, Trump would be bringing it up every time he saw a microphone.

Says you. Poorer people in the United Stares would LOVE to have the option for a 10K car. It would really help their standard of living.

I’m happy for you that you can afford to plop $25K down for a car.

I am very doubtful that one could manufacture a $10k (USD) car, have some tiny amount of profit margin on it, and still meet federal dual airbag, crash test safety standards. The extremely affordable cars sold in India for example would never meet US/Canadian road standards.

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

That’s a different conversation. The OP was arguing 2.5X the price solely to support union wages.

You don't think people deserve a livable wage?

$36K/yr is a livable wage in China.

Define "livable". A suburban detached home is far more expensive than a single-room-occupancy hotel room. And yet people lived in the latter for a large portion of US history, often with roommates. Some still do.

It would be great if everyone could be wealthy enough to buy all their necessities and never worry about money, but that's a pipe dream.

> It would be great if everyone could be wealthy enough to buy all their necessities and never worry about money, but that's a pipe dream.

Easily possible if we fix zoning laws, encourage building more homes, and reduce regulatory capture that prevents competition in industry.

Well, you are certainly living up to your handle here… do feel free to explain your plan for how nobody ever needs to worry about money ever again. And how everyone gets a studio apartment at least.

There are ICE cars in India for around 10k that scores 5 stars on global ncap, idk how that compares to US road safety standards tho.

We've decided we'd prefer to mandate tons of "lifesaving" technology in new cars. Nevermind that it pushes poorer people into old rust buckets, and due to risk homeostasis and the false sense of security that comes with driving a safe/quiet/competent car, people who _can_ afford new cars manage to find worse and worse ways to crash... that's without getting into the awful consequences of cars you can't see out of, "safety features" that numb people to the driving experience, and so on...

I thought the stats have shown driving becoming safer and safer?

It has! More impressively, it's done so while Vehicle Miles Travelled has gone up as well.

But it feels like we're reaching a point where we're trying to catch a falling knife, where every safety improvement is _obviously_ worth it, even as the easy gains have gone away. We've also (almost) completely ignored the safety of everyone outside of the vehicle in our arms race to protect occupants.

Driving has become _a lot_ safer in the recent decades. But the problem is not the technology that we require new cars to have, but the city planning that makes owning a car pretty much mandatory in large parts of the country.

I’ve hypothesized that more expensive cars resulting from safety and environmental mandates might make it harder for poor people to have reliable transportation to and from work. This leads to lower incomes, which are strongly correlated with worse health outcomes.

Someone would need to do a study to test if this were true. My guess is many of the safety feature are a net positive. It would be interesting to see the tradeoffs though.

They buy used.

It's a vicious circle.

Farming mfg out, puts those people out of a job, those out of a job can get lower pay or go on the dole -that comes out of all those "poorer people's" taxes. And, while we're at it, why not outsource poor people's labor overseas or even import cheap unskilled labor to undermine them?

No, you want to maintain a diversified, robust and self-sustaining economy that perpetuates wealth rather then siphon it overseas.

"We"? Do you think the average American would pay more so workers can earn a living wage? Which America do you live in?

Give “we” people the choice to buy a cheap car and see what they would rather choose to do.

They’ll buy the cheap cars then complain 20 years later that the politicians shipped the jobs to China, of course. It’s a tragedy of the commons.

All humans are hypocrites. We want manufacturing here, both for jobs and National security/economic resilience. But we also have our own budgets.

>The wealthier half of the world will never let Chinese auto makers in

Australia and the UK have modest barriers to entry - especially in Australia a large part of the market is Chinese.

In the EU they are allowing Chinese imports because otherwise the Chinese would restrict the sale of German cars in China. So they are coming in though still a small percentage of the market in the EU/UK.

I'd rather pay for a transition out of car-centricity instead of subsidising a dying industry that lobbied against every single move forward in the past few decades. Against air quality, against electric transition, for fossil fuel, against cycling infrastructure, against the safety of other road users. Right now they build only SUVs, mostly hybrids, when we actually need electric Twingos.

VW and Stellantis need to go bankrupt and their technical workers need help to transition to being part of industries that will strive in a low-carbon economy: public transports, bicycles, two-wheels EVs, etc. [0] As for the management of these companies, they can all bloody starve, frankly.

[0] https://ilnousfautunplan.fr/wp-content/uploads/2021/12/Indus..., Claude's summary in English: https://claude.ai/share/695d7c05-25e5-4295-aa09-2bdc8717f8ca

I would never pay $20k for a car. No matter who made it.

I have never paid less than $20k for a new car. Is this a US thing? Does Europe have much cheaper cars? It’s around $25k for sedan, and > $30k for SUV’s in US. And the most popular vehicles in US are pickup trucks that are > $50k

Europe has smaller cars, up until recently you'd see way more very small 3-doors hatchbacks than SUVs, including in rural areas. These would cost around 10-15k€ new, bellow 10k€ with a few thousands kms on the counter.

I have never paid less than $20k for a new car.

I have never bought a new car.

Does a thriving auto industry mean that its industrial workers can't afford eggs?

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