This doesn’t take more than about 30 seconds of review. The CCP is making long term bets and demanding the private sector do as they’re told. It’s been obvious for a decade that renewable energy is the future. It’s been obvious that electrification of cars is happening whether legacy manufacturers like it or not.
The west can’t see past their next quarterly earnings result, and doesn’t have the stomach to make the long term investments the CCP has demanded of their own manufacturers.
Even Ford, who by all accounts is fully invested in electrification and is all in, has started to pull back because investors aren’t ok with an investment that might take a decade to pay off.
Assuming "the west" includes the US, the biggest companies in the US have very long investment timelines, much farther than the next quarter. Tesla, whose business includes making cars, lost money for 10+ years as a publicly listed company.
“Wall street” (or “the west”) is getting far more on Tesla’s long term ability to grow net income than on Toyota’s.
> ... because investors aren’t ok with an investment that might take a decade to pay off.
Sure. Why not? I'm happy making investments that take decades to pay off, I want to have access to machines when I'm old. What happened to all the investors who intend to live comfortably in their old age?
They got bought out by investors with shorter-term ambitions, because our economy is set up to reward short-termism, so those people end up with more capital (= market power), and this compounds over time.
Saving $10k per annum and earning 10% on it will make you 1.6 million dollars after 30 years.
If you can get 20% instead, you'll have 11.2 million.
If you somehow managed to get 30%, you'd end up with over 87 million.
- karl marx, capital volume 1, chapter 25
you should read capital my guy
This is just the capital class mantra wanting to reduce labor protections, because of course they will.
they're still cheaper than US labour. And their supply chain has proxity benefits that the US no longer has.
And the workforce is reasonably skilled now after a few decades of these skilled labour jobs (watch some YT video of how electronics are assembled there, if you want to see skill).
In cheaper production countries, you'd see similar, but china still has the edge. That's why the higher cost (compared to yester-decade) is not a factor yet, and only some of the manufacturing is being pushed out to places like vietnam, but not all.
The advantage china has is a similar type of advantage that silicon valley has for tech.
We're in this really interesting era where it is hard to say whether the US or China has the bigger economy. There have to be enormous error bars around estimating how big an economy is since we're comparing incomparable.
Given that, hopefully there'll be some high profile discussion about what China is doing to achieve this level of success. The part I'm looking forward to will be the analysis of why very low interest rates failed to spur similar competition in the west. Where is the competition? We should have the advantage in this field, groups like YCombinator have a pretty strong track record showing that, if given the chance, private interests are great at building and navigating highly competitive environments.
Hindsight will give us a lot of information - if the automakers turn out to be uncompetitive then it will have been obvious to everyone in the field through the 2010s. Why weren't there competitors emerging in the west? I have a theory that easy credit encourages market centralisation but it isn't obvious where to go to find trustworthy commentary on the idea.