101–110 of 780 posts
Money quote: “As automakers were profit maximizing during the supply chain crisis era, you are going to prioritize the bigger vehicles, the more expensive vehicles with their higher margins,” Tyson Jominy, vice president of data and analytics at J.D. Power, told me. “Now we just don’t have” these cheaper models.
We have a winner.
There's a bunch of free riders in the form of shareholders artificially driving up the price of goods.
Earlier quoted context omitted.
If even ICE cars are now super expensive, why isn’t this a screaming opportunity for some auto manufacturer to target the low end of the market? I’ve never spent more than 20k for a car. With prices like this, I’m just going to keep my old one as long as I can.
IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
Maybe you're thinking of the strict emission laws regarding NOx and SOx that prevent diesel cars.
Earlier quoted context omitted.
IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
I don’t think companies are penalized for producing small cars so much as larger vehicles like trucks and SUVs are incentivized to become larger to sit outside the rules as commercial vehicles even though everyone knows that only a small percentage are used for commercial purposes.
They are. CAFE target formulas have the footprint of the vehicle(s) in the denominator. Larger footprint = easier fuel economy targets
https://www.nhtsa.gov/sites/nhtsa.gov/files/cafe-ghg_my_2012...
People who can afford to buy brand new, does it matter if there is a 25k EV? People that buy used, can get a cheap electric car like a 2023 Tesla M3 with approx. 50k miles going for 20-24k on Hertz Rental Car sales site. If you want a better price, just wait until 2026, when the 250k leases come due. There will be a flood of used electric cars on the market.
If I was in the market for a second hand car I would go electric for sure.
Of course, that is not allowed, because it would benefit the American people and hurt the American car cartel.
Earlier quoted context omitted.
If even ICE cars are now super expensive, why isn’t this a screaming opportunity for some auto manufacturer to target the low end of the market? I’ve never spent more than 20k for a car. With prices like this, I’m just going to keep my old one as long as I can.
IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
> would you want to be making major investments in ICE car production right now?
I would if I were a car manufacturer, at least in addition to other projects that I may have investing in alternative fuels. I haven't dug deeply into all the issues VW is dealing with today, but it does seem at least in part due to an over investment in electric vehicles.
If I were really in that situation, though, I'd personally be investing heavily in designs more similar to the Chevy Volt with an electric drivetrain and onboard gas generator. Range anxiety goes away without having to pack a massive battery pack in the car, and the gas engine is much less stressed meaning easier maintenance and a longer life.
Earlier quoted context omitted.
IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
Its not fuel economy laws, its the highway safety laws. Light cars are usually more efficient. Maybe you're thinking of the strict emission laws regarding NOx and SOx that prevent diesel cars.
That's true, but US fuel economy standards don't actually require vehicles to be more fuel efficient in a direct way. They require vehicles to be a certain fuel efficiency for their footprint.
Unintuitively, while making a car larger doesn't make it more fuel efficient, it might make it better meet US fuel economy standards.
Earlier quoted context omitted.
If even ICE cars are now super expensive, why isn’t this a screaming opportunity for some auto manufacturer to target the low end of the market? I’ve never spent more than 20k for a car. With prices like this, I’m just going to keep my old one as long as I can.
IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
That's also what fuels some of the demand for high-margin cars, because of the perverse incentive that over-sized delivers higher margins. People will be too easily convinced to pay extra (generally at linear relationship) for size and there's not a linear relationship in size versus margins.
> “I think having a regular $25,000 model is pointless,” Musk said a few weeks ago. “It would be silly.” ROTFLMAO! Says the richest person in existence. What an entitled nasty person.
While he did say that, its worth pointing out that Tesla also said that more affordable options will be available in 2025H1 [1]. Given Musk's statement, what I think Tesla means by this is more affordable trims of existing models. I don't think its reasonable to read Musk's statement as "the Model 2 isn't happening". Its more accurate to read it as "it might cost more than $25,000". [1] https://fortune.com/2024/10/24…
Sure, but they've been saying full self driving is "next year" for a decade in a row. I take that with a large grain of salt. https://jalopnik.com/elon-musk-promises-full-self-driving-ne...
Earlier quoted context omitted.
There's only one reason why US cars are more expensive than CN cars: People will pay it. All that other stuff is window dressing. The US is way, way better at financial engineering than China; we can sell an $80,000 Tahoe to a single mom between jobs on zero down and 10% APR, somehow she'll take that deal, and somehow the system doesn't explode into a fiery deathball; so you get $80,000 Tahoes. That's it. Short-term…
> Short-term vs long-term focus means nothing. Manufacturing, generally? Solar? Batteries? Semiconductors? Cyber espionage/warfare? I think those are more than nothing that China has had a demonstrable long term strategy in which benefits them at our expense. Also, great point about financialization in the US. Do you think if that dam breaks, US auto makers come back to planet Earth instead of chasing what seems to b…
The other unrelated point I try to impress on people: You can assert that China's lead in manufacturing solar panels, batteries, etc is indicative that they're "ahead" of us, or whatever. You sure? I don't know what job you have right now, but the US was a destination for high tech manufacturing many decades ago. We largely moved past that. We make poorer countries do that for us now. How is it desirable that America become better at, I don't know, mining lithium? Are those jobs that we want our population to have? Versus what are clearly higher-margin email jobs? China manufacturing solar panels to sell us is our benefit, their expense; their economy is built on attaching a 2% margin on physical goods, ours is attaching a 200% margin on services, software, and financialization we build on top of those physical goods. Every economist on the planet would agree, you want to live in the second one. Lithium mines suck. Assembly lines suck.
But even looking beyond that: The US has an unemployment rate of like 3% right now. You can open the world's biggest solar factory out in Iowa; good luck finding workers to staff it. The US is not "behind" on manufacturing; we LEFT it behind, for good reason.
> Do you think if that dam breaks, US auto makers come back to planet Earth instead of chasing what seems to be exclusively high-margin cars only affordable by credit?
It doesn't seem to me like the problems that the automotive world are going to face over the next five years will be isolated to US manufacturers; its going to be global. Its going to get harder to financially-engineer your way to higher margins and revenue. That means prices need to come down. But, prices are higher because consumers want these nicer cars, nicer materials, there's a lot of cost in mandated safety features and safety engineering as well, not to mention all the export controls and tariffs Trump is threatening. So, how do they get cost down? That's the challenge.