Mexican government unveils a prototype for a new homegrown, ultra-affordable EV

I live in Uruguay and one of the best selling cars here is pretty similar, a friend has it and it's great for the daily commute:

https://bawauto.com/pony/

The best sellers are BYD models, which are a bit larger but still tiny by US standards.

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

EVs have displaced ICE cars in Uruguay, and we usually are ahead of the trends, so I expect that to be the case in Europe and other places in coming years.

The "didn't want to pay for American labour" idea is a false reality. Nobody makes decisions like that. This is preposterous.

Business decisions are made against the competitive landscape. In that chess game, if you can come up with a way to deliver the same goods for less --regardless of where they are made-- you could win greater market share, beat your competitors, etc. That's it. There is no "I don't want to pay for labor" in that decision.

Also, the mechanism I explained is one where once there's a first mover in an industry, it quickly becomes a chain reaction from there. There's no explicit plan or malice at all on the part of those who are facing a binary choice: do the same or shut down the business.

Here's an example that has nothing to do with China (at least now): Software manufacturing.

Companies are having to face competitors who, using AI, are able to manufacture software faster and with less people. We know this isn't smooth sailing yet, but it is happening and it is the way this is going to go.

If you run a software company and your competitors are using AI effectively with less people, all else being equal, you have a few options:

  1- Adopt AI and lower your head count
  2- Double (or more) your head count to be able to keep up
  3- Hire a large team at a region with lower costs
  4- Give up and shut down the company

Yeah, sure, you can add features, try to deliver a better product, etc. At the end of the day, a shop using AI well will be able to replicate everything you can throw at the market, do it quickly and at a lower cost.

So, that's it. It isn't that you are saying "I don't want to pay software engineer wages". It's a competitive environment that forces decisions on you.

Someone once told me: A business is a living organism that tells you what you are going to do every day. You don't have the control you think you have.

I was young and stupid and did not understand what he said so many decades ago. Over time I would learn he was 100% correct.

Someone without the experience of running a non-trivial business likely isn't equipped to understand the hundreds of variables that drive the beast as you try to ride it and stay on top. From the context of someone with this experience, the single variable "don't want to pay labor" idea is nothing less than, to be kind, completely inaccurate.

I manufacture products. I have been in manufacturing for decades. These are products with electronics, mechanical assemblies, software, etc.

I used to manufacture in the US. For a while, this worked out OK.

The competitors started to move production to China, one by one.

I continued to manufacture here, lowered my prices, which lowered my margins, but I accepted that against keeping people employed here.

At some point this was not sustainable and I had to layoff a few people. I bought subassemblies made in China for less and continued to assemble in the US.

That, too, became unsustainable.

Today, I have no choice but to manufacture in China. There is no way. None. No path. No way to manufacture in the US (or Europe). The supply chain is gone, it does not exist here. Our insistence in committing suicide by raising minimum wage instead of lowering our costs (lower taxes, investing in reindustrialization, etc.) has made it impossible to manufacture here. I can't pay someone $25/hour to put screws into holes or push cables into connectors. Not when everyone else is paying a very small fraction of that manufacturing in China and customers will not pay double or triple for the same product.

Do tariffs help?

I am sure that, in the mid term (a few years) they probably help a few industries. What they don't do and can't do is materially expand our industrial base. My opinion is that we have already gone too far and this is impossible to bring back.

What would we have to do to fix it?

In short, the impossible.

We would have to implement almost zero taxes, materially reduce or eliminate minimum wage, materially reduce or eliminate regulatory burden across the board, heavily subsidize a planned re-industrialization strategy and actually execute at scale and at speed.

Importantly, we would have to also create a large cultural change away from the crazy anti-business mentality that seems to prevail in certain circles and towards a maniacal entrepreneurial culture. We would have to put in systems, tools and funding to support entrepreneurship at levels that have never been seen in this country.

Again, the impossible.

And, if we actually did this we would have to sustain it for at least 25 years and, with luck, we could come out ahead.

My go-to example of just how bad things have gotten is the insanity of the California high speed train project. This is emblematic of just how badly this nation has degraded.