The American Car Industry Can't Go on Like This | Hacker News Reader

The American Car Industry Can't Go on Like This

theatlantic.com

16 pointsawad6 comments

The Innovators Dilemma, as many here are aware, is when a new entrant starts out at the very low end of a market with a new less capable system/technology. They get little resistance selling into the very low end of a market.

But their new system/technology follows a new learning curve that ends up surpassing the legacy technology and vendors.

It is hard to defend against, because it would require companies to abandon their focus on mid-to-high market range and start competing early at their own very low end - undercutting all their offerings profitability. Even while their current system still has some legs left in its learning cycle.

But if incumbents don't find a way to let go of quarter to quarter growth pressures, and disrupt themselves, the new companies/systems eventually obsolete them.

---

The Chinese manufacturing sector handed the Innovator's Dilemma to the whole US manufacturing sector. Famously starting at the very low end - with products that were considered very low quality.

But then intensely integrating all the dimensions of manufacturing - in a way never done in the US. Into a highly flexible, efficient and modular system, across companies, technologies, markets etc, until they didn't just kill it on price at the low end. But now on price and quality at even the highest end.

Throw in the historical US car giants' painfully predictable lack of speed on EVs, a disruptor on its own, and it's hard to see those companies regaining their footing.

The Chinese now excel at whole system design, which until recently was viewed as the US technological moat.

Q: Seems US companies have no more natural advantages? Anyone have a better prognosis?

I think it's more a case of incumbents (like Ford and Chrysler/Jeep) all getting outcompeted by new companies (Xiaomi is 15 years old), and for the American Car Industry, those incumbents are all we have! But I think there still is promise for new American car manufacturers (e.g. Slate, Telo) to be able to outcompete Chinese imports (e.g. Slate is planning on their EV being mid-20k, Xiaomi Su7 is ~30k)

https://www.slate.auto https://www.telotrucks.com/

https://archive.ph/VmEFy

We need to look for the structural reasons we can't make a cheaper car compared to China. I don't believe it's all "we pay people too much" either. Autoworkers aren't paid that much.

It’s not the car assembly that’s the primary bottle neck; it’s the manufacturing of the thousands of parts that make up the car. It takes decades to spin up a supply chain like that (which used to exist in the US but hasn’t for a long time).

Historically UAW auto workers made very good money for the type of work they do, probably $100-150k/yr in today's dollars adjusted for inflation. It's changed since 2009ish after the bankruptcies, but the auto industry is still heavily unionized in the North, and the UAW exerts a lot of pressure even on the foreign (non-union) southern automakers by virtue of the threat of unionization, and so auto jobs are still heavily sought after as one of the best jobs you can get for a certain skill level.

Reply on news.ycombinator.com