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>Which they are doing, and clobbering Detroit on price. Let's be real, their prices are lower because Chinese labor is cheaper. US companies have to pay US rat

>Which they are doing, and clobbering Detroit on price. Let's be real, their prices are lower because Chinese labor is cheaper. US companies have to pay US rates and import as much as they can rather than having it all made in the US.

bryanlarsen 2y ago
Labor is under 10% of the cost of an electric car.
- 0l 2y ago
  Is there a source on this? And is this the labor cost for the final product, or also that of all components?
  - bryanlarsen 2y ago
    The UAW puts it at 5-8%. Other sources put it higher, up to about 15%. But that's for combustion vehicles -- most sources put the labor component of EV's at 40-60% of that of combustion vehicles. It generally includes the labor for sub-assemblies, but not for components. Components are sourced globally, so manufacturers in different countries should not be paying substantially different prices for components. Certainly sometimes they do, but that's generally a tariff issue, not a labor issue. Not an expert, this is just based on most of an hour of random Googling.
    - criddell 2y ago
      Does labor include healthcare and pension costs? A high school teacher once told me that the most expensive part of a car is healthcare and pension costs. Road and Track reported on this a little while ago, no idea what the situation is today. https://www.roadandtrack.com/car-culture/a9590/pension-costs-drive-gms-discount-prices/ https://www.roadandtrack.com/car-culture/a9590/pension-costs...
- wakawaka28 2y ago
  Although this may be true (I haven't found much to the contrary in a few minutes of searching", "raw materials" also involve labor. Facilities in the US are bound to cost more as well because property is so much more expensive. US auto workers and engineers make easily 10x as much as Chinese counterparts.
- thescriptkiddie 2y ago
  labor is 100% of the cost of everything. not 100% of the price, as that includes things like profit margins and taxes, but 100% of the cost.
Cthulhu_ 2y ago
I'm sure that's a factor, but probably not for long - Chinese wages are on the rise along with China's economy, still a long way from US wages but they doubled in the past decade according to [0]. But one thing that's hard to deny is that US and European car manufacturers are still building on top of previous iterations of their vehicles, swapping out a ICE with an electric system but keeping the existing systems, frankensteining the two together. The article itself makes note of it: > More than five separate CAN buses, ten or more kilograms of low voltage wiring, probably over one hundred electronic modules (most with their own CPU and firmware), etc. I don't know cars, granted, nor legislation, but surely a car engineered from scratch would be much simpler and thus cheaper to build? How does Tesla do this? [0] https://tradingeconomics.com/china/wages https://tradingeconomics.com/china/wages
- majormajor 2y ago
  > But one thing that's hard to deny is that US and European car manufacturers are still building on top of previous iterations of their vehicles, swapping out a ICE with an electric system but keeping the existing systems, frankensteining the two together. The article itself makes note of it: Worth noting that the car in the article isn't from a US or European car manufacturer, though Hyundai is certainly fairly well-established at this point. But also, a lot of the stuff going on/wiring+subsystem count is not solely a factor of "making a motor assembly from scratch". For instance the steering wheel lock sensors in the article. Or all the safety-related sensors and subsystems, let alone all the infotainment stuff and related "features" in a modern car... Is BYD doing any better at reducing all that sprawl?
- wakawaka28 2y ago
  Bro, Chinese auto factory workers make like $300 per month: https://www.reuters.com/business/autos-transportation/chinas-auto-workers-bear-brunt-price-war-fallout-widens-2023-09-05/ https://www.reuters.com/business/autos-transportation/chinas... Compare that to US workers making about $30 per hour: https://www.bls.gov/iag/tgs/iagauto.htm https://www.bls.gov/iag/tgs/iagauto.htm As for the engineering costs: I think reusing existing designs is a way of cutting costs for US companies. Chinese companies and Tesla designed very different stuff from scratch because they had no choice I think. Remember, existing designs are proven over potentially decades, comply with various laws, etc.
ponector 2y ago
But do you know US car companies are not paying US salaries to people who make cars either? They pay mostly Mexican and Canadian rates
- wakawaka28 2y ago
  I read it's on average $30 per hour. I have heard of much higher. Anyway, the average Chinese auto worker at BYD makes about $300 per month. https://www.bls.gov/iag/tgs/iagauto.htm https://www.bls.gov/iag/tgs/iagauto.htm https://www.reuters.com/business/autos-transportation/chinas-auto-workers-bear-brunt-price-war-fallout-widens-2023-09-05/ https://www.reuters.com/business/autos-transportation/chinas...
  - ponector 2y ago
    I bet US companies are not paying anything near 30$ per hour to the workers of their Mexican factories. Actually they are paying even less than some Chinese companies there. And your link does say byd offered a base salary 300$, with much more as a total compensation.
    - wakawaka28 2y ago
      Yes I realized that $300 was the base. But "much more" is like $1000 per month so optimistically about $6 per hour. A while back I heard Boeing had aerospace engineers working abroad (I think in India) for $9/hr. That is probably a good salary for that part of the world. But in the US the same job might pay $100 per hour. Then we also have a different work culture than elsewhere. If you pay foreigners "good money" they might be working at all hours, but US workers demand a reasonable balance.
elihu 2y ago
Price of labor is part of it, but it's mostly the batteries. China is basically the only country that makes LFP batteries in high volume. That may be gradually changing (some big patents expired not long ago), but it'll take time for other countries to ramp up their production if they can even be bothered to.
- wakawaka28 2y ago
  We could make more batteries in the US too but higher wages and environmental regulations put us at a disadvantage. The same applies to practically anything you can think of.
  - Animats 2y ago
    One would think. But there's a track record of failure outside Asia. American Battery Factory seems to be good at press releases but not at shipping product.[1] Tesla had severe problems with in-house battery production. Mostly they packaged Panasonic and CATL cells. But the battery plant may be past that point, finally.[2] The only European company that makes LFE batteries in quantity is in Serbia, and they're still in the sample stage.[3] These new plants are starting to make a product Asian plants have been producing for years. All the big Asian makers are frantically trying to get the next generation, solid state battery production to work. Some of them have semi-solid state batteries working. Factorial in the US is trying to do that, too. [1] https://americanbatteryfactory.com/press https://americanbatteryfactory.com/press [2] https://insideevs.com/news/733985/tesla-4680-manufacturing-milestone-100m/ https://insideevs.com/news/733985/tesla-4680-manufacturing-m... [3] https://elevenes.com/en/contact https://elevenes.com/en/contact
    - wakawaka28 2y ago
      Chinese batteries are all over the place in terms of quality. Just because Tesla had problems does not mean those problems are insurmountable. They most likely would have been figured out all problems if they did not have the option to just buy batteries elsewhere. Chinese battery companies benefit from cheap labor, lax environmental regulations, and government subsidies. I think other countries aren't making many EV batteries for the same reason they aren't making much of anything else: because it isn't possible for them to compete with China on cost (yet).
7thpower 2y ago
They are genuinely more efficient as a result of ingenuity and intense competition. In addition to that, they have the entire supply chain on the continent and have become incredibly vertically integrated. I know someone will chime in and talk about subsidies and IP theft, and while that may be true, the Chinese manufacturers are also incredibly willing to take risks and innovate, and that seems to be a reality that we do not want to confront in the west.
- wakawaka28 2y ago
  They are fairly efficient but we used to be efficient too. We simply cannot compete on cost because wages are so low there. Even if we had 100% automation we could not do it. Let me put it another way. It is literally cheaper to ship basic materials like wood to China and have them send us back popsicle sticks. Does that sound like a cutting-edge efficiency problem, or is it a wage problem?? The same can be said about all kinds of things from food to pig iron. We're not talking about tech in any sense. The US mastered every single industry it sent to China with great efficiency, but the exchange rate situation and low wages there make it very difficult for a US company to compete. Also, China protects its markets much better than we do. In order to sell in China you have to set up a 51% Chinese-owned outfit just to do that. Meanwhile they dump all their products on the world market with very few reciprocal relationships. Imagine how different things would be if we required Chinese companies to do the 51% US-owned franchise thing here. We could even require them to build factories here. Of course, there is no point doing that. If they did it, the goods would be just as expensive as 100% American companies. That's why we don't bother. They on the other hand do it mainly to swipe whatever knowledge they can from foreign companies. I've seen many accounts of this from US companies. You can get the Chinese to make lots of things, but if you send your design there then you risk knockoffs putting you out of business in only a few years.
  - cdmckay 2y ago
    How do you explain the fact that car manufacturers can and do build plants in Mexico and use cheap labour there, but still can’t compete with Chinese manufacturers? Labour cost isn’t the problem, the problem is that US innovation has stagnated and now his to rely on protectionism to compete.
Qwertious 2y ago
Their prices are lower because China went all-in on EVs in 2010 (as a country, not just their car companies), whereas US companies are still flirting with ICE and hybrids in 2024, and woe betide any US politician who advocates making it harder to register an ICE vehicle. Labor prices matter, but 14 years of dithering matters more.
- deleted 2y ago
  [deleted]
- Animats 2y ago
  > woe betide any US politician who advocates making it harder to register an ICE vehicle. Right. Try to register an ICE car in Beijing.[1] [1] https://www.electrive.com/2024/07/25/beijing-increases-nev-quota-for-the-province/ https://www.electrive.com/2024/07/25/beijing-increases-nev-q...
- wakawaka28 2y ago
  ICE and hybrids are still essential. Toyota estimated that EVs were going to be unsuitable for 75% of the US market. They aren't idiots. The car companies are making what people actually need. We don't have charging or electric infrastructure to support everyone having an EV, and there are many fire safety issues yet to be resolved for that to work.
  - ThePowerOfFuet 2y ago
    They will be unsuitable because of that dithering resulting in, among many other things, poor charging infrastructure.
    - wakawaka28 2y ago
      We don't even produce enough electricity for EVs, and now we are trying to power AI data centers poised to take even more power. It's not just a distribution problem, or a charging facility problem. It is an electricity production problem. The problem of producing power and distributing it alone will likely take 10-20 years to solve. Charging infrastructure is a different beast because it generates huge loads on the power grid in short bursts. Many big charging stations run massive diesel generators and/or have HUGE batteries on site to handle this load. Then there is the fire hazards, toxic mining for batteries, chemical pollution from batteries, and the long charge times. A lot of people live in apartments where home charging will never be feasible. On top of all of this, smart chargers are being designed to "handle" grid issues by turning off charging or even sending your electricity back into the grid which will leave you wondering "Why can't I use my car? It's been on the charger a stupid amount of time now..." In summary, I won't be hopping on the EV bandwagon. The Toyota CEO is right. They have nothing against EVs and would make them if it made sense. Trying to ram EVs down people's throats will waste a lot of money and cause lots of problems. A hybrid is something that actually does work for many people. Hydrogen would also be superior, if they can get the kinks out. Toyota is a pioneer in hydrogen power too.

bryanlarsen 2y ago

Labor is under 10% of the cost of an electric car.

0l 2y ago
Is there a source on this? And is this the labor cost for the final product, or also that of all components?
- bryanlarsen 2y ago
  The UAW puts it at 5-8%. Other sources put it higher, up to about 15%. But that's for combustion vehicles -- most sources put the labor component of EV's at 40-60% of that of combustion vehicles. It generally includes the labor for sub-assemblies, but not for components. Components are sourced globally, so manufacturers in different countries should not be paying substantially different prices for components. Certainly sometimes they do, but that's generally a tariff issue, not a labor issue. Not an expert, this is just based on most of an hour of random Googling.
  - criddell 2y ago
    Does labor include healthcare and pension costs? A high school teacher once told me that the most expensive part of a car is healthcare and pension costs. Road and Track reported on this a little while ago, no idea what the situation is today. https://www.roadandtrack.com/car-culture/a9590/pension-costs-drive-gms-discount-prices/ https://www.roadandtrack.com/car-culture/a9590/pension-costs...
wakawaka28 2y ago
Although this may be true (I haven't found much to the contrary in a few minutes of searching", "raw materials" also involve labor. Facilities in the US are bound to cost more as well because property is so much more expensive. US auto workers and engineers make easily 10x as much as Chinese counterparts.
thescriptkiddie 2y ago
labor is 100% of the cost of everything. not 100% of the price, as that includes things like profit margins and taxes, but 100% of the cost.

Cthulhu_ 2y ago

I'm sure that's a factor, but probably not for long - Chinese wages are on the rise along with China's economy, still a long way from US wages but they doubled in the past decade according to [0]. But one thing that's hard to deny is that US and European car manufacturers are still building on top of previous iterations of their vehicles, swapping out a ICE with an electric system but keeping the existing systems, frankensteining the two together. The article itself makes note of it: > More than five separate CAN buses, ten or more kilograms of low voltage wiring, probably over one hundred electronic modules (most with their own CPU and firmware), etc. I don't know cars, granted, nor legislation, but surely a car engineered from scratch would be much simpler and thus cheaper to build? How does Tesla do this? [0] https://tradingeconomics.com/china/wages https://tradingeconomics.com/china/wages

majormajor 2y ago
> But one thing that's hard to deny is that US and European car manufacturers are still building on top of previous iterations of their vehicles, swapping out a ICE with an electric system but keeping the existing systems, frankensteining the two together. The article itself makes note of it: Worth noting that the car in the article isn't from a US or European car manufacturer, though Hyundai is certainly fairly well-established at this point. But also, a lot of the stuff going on/wiring+subsystem count is not solely a factor of "making a motor assembly from scratch". For instance the steering wheel lock sensors in the article. Or all the safety-related sensors and subsystems, let alone all the infotainment stuff and related "features" in a modern car... Is BYD doing any better at reducing all that sprawl?
wakawaka28 2y ago
Bro, Chinese auto factory workers make like $300 per month: https://www.reuters.com/business/autos-transportation/chinas-auto-workers-bear-brunt-price-war-fallout-widens-2023-09-05/ https://www.reuters.com/business/autos-transportation/chinas... Compare that to US workers making about $30 per hour: https://www.bls.gov/iag/tgs/iagauto.htm https://www.bls.gov/iag/tgs/iagauto.htm As for the engineering costs: I think reusing existing designs is a way of cutting costs for US companies. Chinese companies and Tesla designed very different stuff from scratch because they had no choice I think. Remember, existing designs are proven over potentially decades, comply with various laws, etc.

ponector 2y ago

But do you know US car companies are not paying US salaries to people who make cars either? They pay mostly Mexican and Canadian rates

wakawaka28 2y ago
I read it's on average $30 per hour. I have heard of much higher. Anyway, the average Chinese auto worker at BYD makes about $300 per month. https://www.bls.gov/iag/tgs/iagauto.htm https://www.bls.gov/iag/tgs/iagauto.htm https://www.reuters.com/business/autos-transportation/chinas-auto-workers-bear-brunt-price-war-fallout-widens-2023-09-05/ https://www.reuters.com/business/autos-transportation/chinas...
- ponector 2y ago
  I bet US companies are not paying anything near 30$ per hour to the workers of their Mexican factories. Actually they are paying even less than some Chinese companies there. And your link does say byd offered a base salary 300$, with much more as a total compensation.
  - wakawaka28 2y ago
    Yes I realized that $300 was the base. But "much more" is like $1000 per month so optimistically about $6 per hour. A while back I heard Boeing had aerospace engineers working abroad (I think in India) for $9/hr. That is probably a good salary for that part of the world. But in the US the same job might pay $100 per hour. Then we also have a different work culture than elsewhere. If you pay foreigners "good money" they might be working at all hours, but US workers demand a reasonable balance.

elihu 2y ago

Price of labor is part of it, but it's mostly the batteries. China is basically the only country that makes LFP batteries in high volume. That may be gradually changing (some big patents expired not long ago), but it'll take time for other countries to ramp up their production if they can even be bothered to.

wakawaka28 2y ago
We could make more batteries in the US too but higher wages and environmental regulations put us at a disadvantage. The same applies to practically anything you can think of.
- Animats 2y ago
  One would think. But there's a track record of failure outside Asia. American Battery Factory seems to be good at press releases but not at shipping product.[1] Tesla had severe problems with in-house battery production. Mostly they packaged Panasonic and CATL cells. But the battery plant may be past that point, finally.[2] The only European company that makes LFE batteries in quantity is in Serbia, and they're still in the sample stage.[3] These new plants are starting to make a product Asian plants have been producing for years. All the big Asian makers are frantically trying to get the next generation, solid state battery production to work. Some of them have semi-solid state batteries working. Factorial in the US is trying to do that, too. [1] https://americanbatteryfactory.com/press https://americanbatteryfactory.com/press [2] https://insideevs.com/news/733985/tesla-4680-manufacturing-milestone-100m/ https://insideevs.com/news/733985/tesla-4680-manufacturing-m... [3] https://elevenes.com/en/contact https://elevenes.com/en/contact
  - wakawaka28 2y ago
    Chinese batteries are all over the place in terms of quality. Just because Tesla had problems does not mean those problems are insurmountable. They most likely would have been figured out all problems if they did not have the option to just buy batteries elsewhere. Chinese battery companies benefit from cheap labor, lax environmental regulations, and government subsidies. I think other countries aren't making many EV batteries for the same reason they aren't making much of anything else: because it isn't possible for them to compete with China on cost (yet).

7thpower 2y ago

They are genuinely more efficient as a result of ingenuity and intense competition. In addition to that, they have the entire supply chain on the continent and have become incredibly vertically integrated. I know someone will chime in and talk about subsidies and IP theft, and while that may be true, the Chinese manufacturers are also incredibly willing to take risks and innovate, and that seems to be a reality that we do not want to confront in the west.

wakawaka28 2y ago
They are fairly efficient but we used to be efficient too. We simply cannot compete on cost because wages are so low there. Even if we had 100% automation we could not do it. Let me put it another way. It is literally cheaper to ship basic materials like wood to China and have them send us back popsicle sticks. Does that sound like a cutting-edge efficiency problem, or is it a wage problem?? The same can be said about all kinds of things from food to pig iron. We're not talking about tech in any sense. The US mastered every single industry it sent to China with great efficiency, but the exchange rate situation and low wages there make it very difficult for a US company to compete. Also, China protects its markets much better than we do. In order to sell in China you have to set up a 51% Chinese-owned outfit just to do that. Meanwhile they dump all their products on the world market with very few reciprocal relationships. Imagine how different things would be if we required Chinese companies to do the 51% US-owned franchise thing here. We could even require them to build factories here. Of course, there is no point doing that. If they did it, the goods would be just as expensive as 100% American companies. That's why we don't bother. They on the other hand do it mainly to swipe whatever knowledge they can from foreign companies. I've seen many accounts of this from US companies. You can get the Chinese to make lots of things, but if you send your design there then you risk knockoffs putting you out of business in only a few years.
- cdmckay 2y ago
  How do you explain the fact that car manufacturers can and do build plants in Mexico and use cheap labour there, but still can’t compete with Chinese manufacturers? Labour cost isn’t the problem, the problem is that US innovation has stagnated and now his to rely on protectionism to compete.

Qwertious 2y ago

Their prices are lower because China went all-in on EVs in 2010 (as a country, not just their car companies), whereas US companies are still flirting with ICE and hybrids in 2024, and woe betide any US politician who advocates making it harder to register an ICE vehicle. Labor prices matter, but 14 years of dithering matters more.

deleted 2y ago
[deleted]
Animats 2y ago
> woe betide any US politician who advocates making it harder to register an ICE vehicle. Right. Try to register an ICE car in Beijing.[1] [1] https://www.electrive.com/2024/07/25/beijing-increases-nev-quota-for-the-province/ https://www.electrive.com/2024/07/25/beijing-increases-nev-q...
wakawaka28 2y ago
ICE and hybrids are still essential. Toyota estimated that EVs were going to be unsuitable for 75% of the US market. They aren't idiots. The car companies are making what people actually need. We don't have charging or electric infrastructure to support everyone having an EV, and there are many fire safety issues yet to be resolved for that to work.
- ThePowerOfFuet 2y ago
  They will be unsuitable because of that dithering resulting in, among many other things, poor charging infrastructure.
  - wakawaka28 2y ago
    We don't even produce enough electricity for EVs, and now we are trying to power AI data centers poised to take even more power. It's not just a distribution problem, or a charging facility problem. It is an electricity production problem. The problem of producing power and distributing it alone will likely take 10-20 years to solve. Charging infrastructure is a different beast because it generates huge loads on the power grid in short bursts. Many big charging stations run massive diesel generators and/or have HUGE batteries on site to handle this load. Then there is the fire hazards, toxic mining for batteries, chemical pollution from batteries, and the long charge times. A lot of people live in apartments where home charging will never be feasible. On top of all of this, smart chargers are being designed to "handle" grid issues by turning off charging or even sending your electricity back into the grid which will leave you wondering "Why can't I use my car? It's been on the charger a stupid amount of time now..." In summary, I won't be hopping on the EV bandwagon. The Toyota CEO is right. They have nothing against EVs and would make them if it made sense. Trying to ram EVs down people's throats will waste a lot of money and cause lots of problems. A hybrid is something that actually does work for many people. Hydrogen would also be superior, if they can get the kinks out. Toyota is a pioneer in hydrogen power too.