Tesla gets 14 times more labor productivity per dollar in China than the U.S.

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11 points·delichon··6 comments

There might be differences between the Shanghai and California factories that muddy the comparison:

- California factory was made in previous Toyota/GM factory, not sure how much of it is completely optimized compared to Shanghai factory

- Shanghai factory is built much more recently (2010 vs 2019)

- California factory also makes low-volume S and X vehicles in addition to 3 and Y

- California (especially the area around the Tesla factory) is not representative of most US auto manufacturing, most companies including Tesla have factories in other US states

Whatever the reason California averages $4000 in labor cost per Tesla vs less than $300 in Shanghai. That's quite a difference.

I actually wonder how much labor costs impacts profitability. I need to look at the financial reports. But if it (worker salary) is a small part, maybe improving the 1:2 production ratio could be more useful? Is there any reason Chinese workers are producing double the number of cars per worker? Does the Chinese super factories have better automation?

I suppose it would be way less if you only compared to U.S. prisons labor, but a race to the bottom is not to be admired.

I think if the labor cost is a small part of total cost, it might be more valuable to investigate the roughly 1:2 output per worker. Some possibilities, none confirmed:

- Chinese workers work 2 shifts instead of 3 shifts, so the factory simply hires less workers. This should also show a difference of total output of cars;

- Chinese factory has better processes or/and automation, which is more interesting.

Link to underlying research: https://research.gavekal.com/article/unraveling-chinas-produ...

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