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Consumers are willing to go into huge debts to buy the car they want. Anecdotal, but my closest friend works for a car dealership and the stories he tells every

by kredd 2y ago

Consumers are willing to go into huge debts to buy the car they want. Anecdotal, but my closest friend works for a car dealership and the stories he tells every week are heartbreaking. From Ford/GM perspective, I’m assuming they’ve crunched the numbers, and realized trying to make a cheaper vehicle will not result in proper ROI. I’m not sure if they can ever compete with economies of scale as well, compared to Chinese hawks, as they just have so many more consumers even just internally. It’s going to be fun to watch the car-wars as we have allied countries like Australia that are buying up BYDs, so people can’t just call them “Chinese crap” forever. My bet is within 5 years US/Europe is going to rely on protectionism even more, as China puts more pressure on exports. It’s a huge industry with an enormous amount of jobs attached to it after all.

Rinzler89 2y ago
>My bet is within 5 years US/Europe is going to rely on protectionism even more That's a double edged sword as China will retaliate with tariffs on US and EU cars in China, and the Chinese market has been a huge moneymaker for the German companies, who now find themselves between a rock and a hard place. They can't outcompete Chinese EV makers on price in the EU market, but they also can't loose the Chinese market if retaliatory tarries would hit them. I'm focusing on Germany because the Germany economy is far more dependent on cars than the US economy where it's more of a vestigial tail compared to finance, services and tech. Also, tariffs are a poisoned chalice. Yes, they'll protect your industry locally on the short term, but long term, your industry will loose out on competitiveness on the global market where it lacks protectionism and will be decimated in the long run. My bet is that instead of a mutual assured destruction tarif wars, EU and Chinese companies will enter into partnerships where they share technology and factories, meaning of course the EU made Chinese EVs will be significantly more expensive than those sold abroad.
- kredd 2y ago
  Great points, that could happen as well! I'm curious what would Chinese companies get from partnerships with German companies at this point though, as my knowledge is pretty limited in that sphere.

by kredd 2y ago

Rinzler89 2y ago

>My bet is within 5 years US/Europe is going to rely on protectionism even more That's a double edged sword as China will retaliate with tariffs on US and EU cars in China, and the Chinese market has been a huge moneymaker for the German companies, who now find themselves between a rock and a hard place. They can't outcompete Chinese EV makers on price in the EU market, but they also can't loose the Chinese market if retaliatory tarries would hit them. I'm focusing on Germany because the Germany economy is far more dependent on cars than the US economy where it's more of a vestigial tail compared to finance, services and tech. Also, tariffs are a poisoned chalice. Yes, they'll protect your industry locally on the short term, but long term, your industry will loose out on competitiveness on the global market where it lacks protectionism and will be decimated in the long run. My bet is that instead of a mutual assured destruction tarif wars, EU and Chinese companies will enter into partnerships where they share technology and factories, meaning of course the EU made Chinese EVs will be significantly more expensive than those sold abroad.

kredd 2y ago
Great points, that could happen as well! I'm curious what would Chinese companies get from partnerships with German companies at this point though, as my knowledge is pretty limited in that sphere.