The price difference between foreign and Chinese producers is because Chinese producers get more subsidies than foreign ones, even though both get support from the Chinese government. Also, Chinese companies are more vertically integrated, meaning they handle more parts of the production process themselves, which lets them buy things at lower prices than foreign companies.
For example, BYD not only makes cars but also owns lithium mines, builds its own batteries, develops its own e-motors, owns large ocean carriers for export, and even owns a vehicle insurance company.
This sounds like a model we should be emulating and adopting, but instead we are fighting to keep our existing model, that is less efficient and less effective at making affordable EVe available to the public, all because the Chinese model doesn’t align with our ideology. I say, fuck ideology. We should do what works, even if it doesn’t necessarily pass some ideological purity test.
Vertical integration has the potential to be more optimized for manufacturing, but you run into a few issues:
- vendor lock in. Imagine if only Tesla owned the available mines, no other company could get materials for batteries and they’d have a lock on the market
- having so many lines of business to manage, you can’t specialize in certain things unless you are a megacorp like Mitsubishi
- high barrier to entry. Rather than starting with wanting to make a good car and sourcing the best parts you have to make everything from scratch
Most of those reasons come down to the fact that it stifles competition. Look at what happened with movie companies owning the distribution and playback and how it’s happening again with Streaming services.
Look at what’s happening in Canada to a much more necessary service. Our grocery chains are heavily vertically integrated, and they gouge us all to hell.
Loblaws owns everything in the supply chain from production to logistics and then some. Not only are they hugely integrated through the food supply chain, but they are also able to leverage their assets to provide financial services, have bought out one of our biggest pharmacy chains, and are currently trying to expand out into the telecommunications business.
What happens when one company owns everything? Well, they get to do whatever they want, basically. When anybody comes around to regulate or otherwise try to reign in the bullshit, they’re simply told to fuck off, because they have nowhere else to turn.
Vertical integration sounds great from a business perspective, but it is truly awful for the consumer long-term.
I’m sure a more vertically integrated supply chain comes with its own problems. I don’t think there’s a perfect solution. Even if the current US model better promotes competition, that doesn’t seem to be making EVs more affordable.
Though entirely removed from the situation, one large thing tends to be more efficient than many small ones.
So back to our situation here, China’s better figured out how to integrate this, allowing them to do more with less. Over a large enough timeline, this is all but a death sentence to america unless we can all stop acting like children for 5 minutes and work together.
This is why a superrich class is not only dangerous to an individual (ie food security), but to the country as a whole.
So we essentially can’t be more efficient cause greed.
Yay.
What if it is Tesla/Elon running the whole vertical?
I don’t think Elon would be very good at managing a vertically integrated, domestic supply chain. I definitely think someone better qualified for the task should do it.
SpaceX is actually pretty vertically integrated as compared to Boeing for instance, who have always traditionally relied on outside firms for certain components.
SpaceX builds a huge majority of their components themselves, and it’s a massive part of why they have been successful over Boeing with fixed-cost contracts. For example, SpaceX builds all of their own engines, while Boeing contracted out to Aerojet Rocketdyne to produce theirs. In the context of the Starliner, this functionally ballooned costs because the back-and-forth between firms was incredibly inefficient, and it’s something SpaceX didn’t have to deal with.
That certainly is evidence in favor of Musk’s ability to manage a large scale, vertically integrated supply chain, assuming he is the one primarily responsible for managing and overseeing the VI supply chain at SpaceX. However, given his controversial public persona and some of the accusations that have been levied against him, I think someone else would be better suited for the job.
Generally he is “in charge” from a CEO perspective but does not really make day-to-day decisions, which is why everything isn’t up in flames. For an example of something managed by Musk day-to-day, look at Twitter, which is perpetually burning.
SpaceX is definitely managed by a good team all things considered, in spite of the fact that the ownership at the top is unhinged.
Yeah but then you can’t charge every step of the way, bypassing years of american ‘innovation’.
End of the day america is riddled full of inefficiencies in the form of the 0.1%, but they really don’t seem keen on giving anything up
Well that’s not a bad compromise!
Give those legacy automakers’ management and stockholders some heat for being lazy and stuffing billions into their pockets while we have a climate emergency. We must kept the limit to 1.5 degrees.
