Less of that seems to me to be a problem with over-regulation than a problem with current financing games and not competing with each other as much on price, because the average car buyer is expected to buy a car a third of the cost of their house mortgage for a third of the term because that it is what banks want and what banks give a generous cut back to dealerships and sometimes to manufacturers to help entrench it as the way to sell cars.

GM alone has spent most of its history waffling between whether it wants to be a large bank itself or not. (The "GMAC" division has threads back to 1911, was spun out in the '00s as "Ally Bank", has been mostly repurchased with others to reform a larger "GM Financial" starting in the 2010s.)

The other part of it is that marginal costs are weird in the modern software-defined world. Motorized windows are cheaper today than the plastics and mechanical parts of roll up windows. Similar for the mechanics of manual mirrors. An electric motor tuned precisely for that mirror is fewer parts than a manual mirror. A camera system is sometimes even cheaper than mirrors today, which is wild.

I'm not sure it's regulation; in the UK you can buy a brand new Dacia Sandero for just under £15k (~$20k), and we have pretty strict safety and emissions regulations. I think it's more about consumer demand, and auto manufacturers realising there's more profit in selling higher-end models.

For EV, the situation is even more dire.

Western countries simply don’t have the supply chain required to compete with China. China is often by far the best supplier for a lot of components and the sole supplier able to provide some raw materials in large quantities.

Honestly, we are not far from reaching a point where using the old Chinese strategy might be our best bet: mandatory JVs with local companies if the Chinese companies want to access our markets.

That’s the right way to make any economic change. Gently, by gradations, so as to give the market time to adjust.

Or you could buy Nissan leaf, renault Zoe and other cars.

That works until it doesn't. Moderation in all things.

Especially awkward for the current ruling class, since their VP choice recently dismissed the Chinese as “peasants,” and will likely to cause cognitive dissonance within their base.

> China has supported key industries (like EVs, batteries, solar, semiconductors) that it views as strategic.

https://en.wikipedia.org/wiki/2008%E2%80%932010_automotive_i...

We did too, but we didn't effectively hold any of the executives or financial planners liable for the terrible direction domestic auto companies had gone in, and as a result those companies are still failing to produce competitive vehicles.

I do not think that it is certain that China supports more its key industries than USA, even if that is frequently claimed, but without any supporting numbers.

During the last few decades, I have almost never heard about a big US company making any big investment, like a new factory, or even just a new HQ, except after receiving very substantial state aids in the form of various kinds of tax reductions.

In many parts of Europe this kind of aid that is received in USA by most big companies would be labelled as illegal state aid and forbidden.

"what you see is 'protectionism' is to a lawmaker a way to ensure that the local company survives and provides jobs for the local region/state, etc."

This is laughable given the history of the auto industry in America.

Foreign automakers (Toyota, BMW, etc.) build competitive factories in southern states and often paid better wages and delivered higher quality products. All this without decades of protection.

U.S. auto jobs still got wrecked despite the decades of "By American" policies anyway, since domestic auto companies decided to automate and offshore much of the work.

War with China.. ya'll are nuts. The American zeitgeist is completely poisoned and insane. Listening to this stuff from the outside is kind of horrifying. War with a nuclear armed country ends with a nuclear winter for the whole planet. There is no preparing for war with China unless you want everyone dead (which I'm starting to suspect a lot of people are okay with)

This seems so anachronistic.... When was the last war where tanks were important..?

Car are made using components from all around the world... How would you even make a tank in a Tesla factory?

Since there’s no good reason to do any of that, we should absolutely lose that capability since to use it is to abuse it

> If the playing field isn't level, then the USA government steps in to level it.

More recently though, it kind of seems like if the playing field isn't tipped strongly towards the US, then the US government will step in to tip it their way.

Government subsidies effectively provide protection for a local market and capital.

America has some of the lowest cost of capital and most effective financial markets in human history.

If the Chinese markets are blocked that doesn’t mean the rest of the world is inaccessible.

Another aspect of government subsidies is that they mask incompetence.

Not sure why this is downvoted. The Chinese government has been quite transparent in terms of globally dominating several industries including EV through heavy government support.

It would make no sense to destroy your own industry because it can’t compete with a heavily subsidized foreign industry.

Subsidies are part of the reason. Definitely not the whole reason, but part of it The Chinese provinces pump a bunch of money in to try to make their region's car manufacturers succeed. And every province is doing it. So you have a bunch of carmakers competing for market while being kept alive, so they do the most rational thing possible to gain share: lower prices.

Of course, they're also just good at building things since they do so much of it. And cheaper labor. Much better supply chain.

> China's EV subsidies are basically identical to US and EU subsidies.

Not really, not much similarities between China and EU subsidies past 15 years. China's NEV subsidies are illegal because they are either conditioned on illegal tech transfer, local content requirement, or restrict market access. To give a high level view of the problems:

1) forced technology transfer/IP theft -- all foreign automakers/EV battery producers forced to give up IP to access China's market (and subsidies). This was litigated before the WTO by the EU in 2018 (see WT/DS549):

  Hybrid in a Trade Squeeze, Keith Bradsher, Sept 5, 2011, NYT

  ... The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt’s three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said.

  Power Play, Trefor Moss, May 17, 2018, WSJ

  ... China requires auto makers to use batteries from one of its approved suppliers if they want to be cleared to mass-produce electric cars and plug-in hybrids and to qualify for subsidies. These suppliers are all Chinese, so such global leaders as South Korea’s LG Chem Ltd and Japan’s Panasonic Corp. are excluded.
  ... Foreign batteries aren’t officially banned in China, but auto executives say that since 2016 they have been warned by government officials that they must use Chinese batteries in their China-built cars, or face repercussions. That has forced them to spend millions of dollars to redesign cars to work with inferior Chinese batteries, they say.
  ... “We want to comply, and we have to comply,” said one executive with a foreign car maker. “There’s no other option.”

  Why a Chinese Company Dominates Electric Car Batteries. Keith Bradsher and Michael Forsythe, Dec 22, 2021, NYT

  The government soon said electric car buyers could get subsidies only if the battery was made by a Chinese company. G.M., which had not been notified of the rule, started shipping Buick Velite electric cars in 2016 with batteries made in China by LG, a South Korean company.
  Angry consumers and dealers complained that local officials were denying them subsidies, people familiar with the episode said. G.M. switched heavily to CATL for the huge Chinese market.

  Why a Chinese Company Dominates Electric Car Batteries.
  ... A rival had released a video suggesting that a technology used by the company, CATL, and other manufacturers could cause car fires. Imitating a Chinese government safety test, the rival had driven a nail through a battery cell, one of many in a typical electric car battery. The cell exploded in a fireball.
  Chinese officials took swift action — by dropping the nail test, according to documents reviewed by The New York Times. The new regulation, released two months later, listed who had drafted it: First on the list, ahead of the government’s own vehicle testing agency, was CATL.

As of this week, EU has over 100+ countervailing measures (anti-dumping/anti-subsidy) in force against Chinese imports, ranging from ceramic tiles (AD560), to decor paper (AD712), to polyester yarn (AD690); in addition to few more dozens of on-going investigations from candles (AD726) to hardwood plywood (AD717).

the international legal standard for subsidies is based on the WTO's Subsidies and Countervailing Measures (SCM) Agreement and related anti-dumping regulation under GATT 1994.

In the US, it's implemented thru 19 U.S.C § 3571. The EU's foreign subsidies are regulated by Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 based on the same WTO SCM Agreement.

While the WTO's regulations don't preclude local subsidy regulation, they must be consistent with the WTO's Agreement. In other word, any gov't subsidy favoring a "specific" company(ies) over domestic, foreign competitors, or distort market competition is an "actionable" offense and can be litigated before the WTO -- agriculture (quota based) and national security are however exempted. Others, such as export subsidies or local content requirement are prohibited under Article 3, "Prohibition" of the SCM.

Yeah, those evil corn subsidies. It's well to remember however that there is no international law against your gov't pissing away your tax payers hard-earned money -- so long as the product remains domestic and doesn't cause injuries to other trading partners.

That's your local political problem.