smart, but could hurt GM and the Mex built Equinox
think it will have to be USA corp, USMCA manufactured and then the percent content, as per your note
Tesla, GM, Ford would all work with this, but would block BYD
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Prediction, in Which Year Will New Electric Vehicle Sales Exceed 50% in the United States "Poll"
- Thread starter SDRick
- Start date
think it will have to be USA corp, USMCA manufactured and then the percent content, as per your note
Tesla, GM, Ford would all work with this, but would block BYD
Doesn't BYD just need to make contributions in the right places to tweak the rules just enough?
Or can they just partner with Stellantis or someone?
How does this effect VW?
I would have little expectation that potential profits can be reasonably stopped. They can buy the right people to influence the right people. Think of the average intelligence of members of congress. Add that in with their ethics/greed.
I would think that labor content is down significantly with EVs and a new factory. So who cares if the plant is in Arkansas, Mexico or China? It takes a really strong protectionist and ICE positive legislation to fight that - meaning that BYD will just put the factory in Arkansas. The labor cost isn't much more that Mexico or China when you don't need that much labor. I am thinking per car could be $500 in Mexico/China vs $1500 in Arkansas (and I supposed it could be half that). The manufacturers on both sides have to be loving the environment/jobs in swing states conflict.
It seems like Mexico and China's labor rates are pretty close if google can be trusted.
If the stakes weren't so high, it would be all an interesting to watch.
Or can they just partner with Stellantis or someone?
How does this effect VW?
I would have little expectation that potential profits can be reasonably stopped. They can buy the right people to influence the right people. Think of the average intelligence of members of congress. Add that in with their ethics/greed.
I would think that labor content is down significantly with EVs and a new factory. So who cares if the plant is in Arkansas, Mexico or China? It takes a really strong protectionist and ICE positive legislation to fight that - meaning that BYD will just put the factory in Arkansas. The labor cost isn't much more that Mexico or China when you don't need that much labor. I am thinking per car could be $500 in Mexico/China vs $1500 in Arkansas (and I supposed it could be half that). The manufacturers on both sides have to be loving the environment/jobs in swing states conflict.
It seems like Mexico and China's labor rates are pretty close if google can be trusted.
If the stakes weren't so high, it would be all an interesting to watch.
I think you're pretty far off on your comparison of Mexico vs. US wages. The below has some 2022 figures. Of course, there was the UAW strike recently that will make US figures higher than these.
https://www.freep.com/story/money/cars/general-motors/2022/02/04/gm-mexico-plant-union-silao-assembly-truck-costs/6648110001/
GM Factory Workers in Mexico Get a 25-Cent Raise to $3.25 an Hour
The labor union at Silao, where Chevy and GMC pickups are built, agreed on a contract that pays an average of $2 more per day.
jalopnik.com
So, figure probably ~8x the cost in the US vs. Mexico.
https://www.reuters.com/business/au...ar-brunt-price-war-fallout-widens-2023-09-05/ is from late 2023:
"A Reuters analysis of the estimated income included in recent job adverts from 30 auto firms showed hourly salaries of 14 yuan ($1.93) to 31 yuan ($4.27), with Tesla, SAIC-GM, Li Auto (2015.HK), opens new tab and Xpeng (9868.HK), opens new tab at the higher end."
If it's 18 to 35 hours to assemble, that's $18 to $35 per extra $1/hour for labor.
But, that's just final assembly. There's labor in the parts manufacturing as well.
I should add, there are also _other_ labor costs on top of wages.
These labor numbers are hard to truly pin down but using GM numbers isn't fair to a new factory in a rural south location without unions or legacy costs.
I think you are looking at about 1/2 the cost but I don't know for sure. Either way, I think everyone wants to claim that Chinese cars are less expensive because of labor costs but when you compare to Mexico, it isn't that much of a difference. And even comparing to south non-union US - the difference per EV (less labor/modern techniques), it isn't much - I would venture $1000 range per car in total labor - not just final assembly.
And if you want, you make high labor but small "content" in China or even lower wage places. Thinking screens or switches. None of this is hard.
So that becomes a well ranged EV for $13k. I am not saying that is going to happen but sub $20k should be easy.
I think you are looking at about 1/2 the cost but I don't know for sure. Either way, I think everyone wants to claim that Chinese cars are less expensive because of labor costs but when you compare to Mexico, it isn't that much of a difference. And even comparing to south non-union US - the difference per EV (less labor/modern techniques), it isn't much - I would venture $1000 range per car in total labor - not just final assembly.
And if you want, you make high labor but small "content" in China or even lower wage places. Thinking screens or switches. None of this is hard.
So that becomes a well ranged EV for $13k. I am not saying that is going to happen but sub $20k should be easy.
Study: EV interest waning amid concerns over cost, charging
The lack of affordable EVs is causing consideration to drop among Gen Z and Gen Y buyers.
Per Minimum Wage and Overtime » Arkansas Department of Labor and Licensing, min wage in Arkansas is $11/hr.
Factory Worker Salary in Arkansas: Hourly Rate (May, 2024) claims
"How much does a Factory Worker make in Arkansas?
As of May 14, 2024, the average hourly pay for a Factory Worker in Arkansas is $12.76 an hour.
While ZipRecruiter is seeing salaries as high as $17.89 and as low as $9.14, the majority of Factory Worker salaries currently range between $12.74 (25th percentile) to $14.90 (75th percentile) in Arkansas.
The average pay range for a Factory Worker varies greatly (as much as $2.16), which suggests there may be many opportunities for advancement and increased pay based on skill level, location and years of experience."
If you set up a new factory in AR, that isn't free. There are all sorts of costs like planning, land, permitting, construction, approvals, equipment, recruiting, hiring, training, building test vehicles before finally ramping up for real production. And, if the wages are too low, nobody will work there. There are plenty of non-union auto plants in the US and if their salaries are crap vs. UAW, what do you think will happen? The UAW will sweep in trying to unionize them, like they've been trying at numerous other plants.
And, you gotta provide health insurance (Employers required to offer health insurance - Bureau of Legislative Research). US healthcare costs are insane as is insurance.
See earlier figures on Mexican and Chinese auto workers. I bet you of the above will also cost much less in China and Mexico than Arkansas.
A new plant w/new workers will likely put out worse quality vehicles than experienced ones that have been pumping out vehicles for 10+ years. Those defects/worse quality will cost the automaker in warranty and recall costs + reputational damage.
These are examples of problems that can happen at new plants.
Nissan Quest 2004+: Problems & Solutions - Page 15 - search for wedding and also for crusade
Bloomberg - Are you a robot? - will probably hit paywall so visit https://archive.is/8mxR6. From there::
"Just ask managers at Nissan's 16-month-old, $1.4 billion assembly plant in Canton, Miss., where sloppy craftsmanship marred the launch of the 2004 Quest minivan, the Titan full-sized pickup, and the Armada sport-utility vehicle. Car enthusiast Web sites are full of rants about loose moldings, water leaks, and noisy cabins. This spring, Nissan dropped from 6th to 11th in an annual quality survey by J.D. Power & Associates Inc. that tracks complaints in the first 90 days of ownership. Consumers quickly got wind of the troubles, and Nissan will have a tough time meeting its sales target of 80,000 Quests this year. In the first half, fewer than 26,000 moved off dealer lots. In July the company mailed recall letters offering to fix any defects for free. "We've been surprised by the level of degradation," concedes Ghosn, whose own stress on speedy execution contributed to the quality woes. "We recognize it is a problem, and we will fix it."
Ghosn is fixing the Canton debacle in his characteristic fashion -- that is, with the subtlety of a chain saw. In May, he flew in 220 engineers from Japan and Nissan's older Smyrna (Tenn.) plant. The damage-control team searched every inch of the assembly line for flaws. Some were obvious: Factory hands, many of them newcomers to carmaking, wore rings and studded jeans that scratched freshly painted trucks. Other glitches were maddening: Power window switches and reading lights on the Quest often seemed possessed by gremlins, and its sliding doors didn't close quite right. So the team worked with suppliers to reengineer parts, while robots were reprogrammed to weld car bodies more tightly, and better insulation was added to the roof of the Armada. Then Ghosn shook up management, even raiding archrival Toyota to hire troubleshooter Douglas G. Betts as his new vice-president for assembly quality. As the 2005 Nissans enter dealerships this fall, buyers will learn firsthand whether Ghosn's personal intervention has paid off."
Per https://usa.nissannews.com/en-US/channels/facilities-smyrna?selectedTabId=facilities-smyrna-releases, "with U.S. manufacturing beginning in June of 1983 as a white Nissan pickup truck rolled off the assembly line at a brand new plant in Smyrna."
Last edited:
Cost's less in China - no debate. Costs less in Arkansas vs UAW-average - I would think no debate.
Newer factory, EV - less labor per car - I would also think no debate.
My only point is that painting labor costs as the primary reason BYD can sell an inexpensive EV is a gross oversimplification.
10% is a good ballpark on labor costs so BYD is in the $1200 range. If you want to use $4 an hour in China and $16 in the south US, that is an extra $3600. It still makes the car cheap enough to really hurt US manufacturers. And build it in Mexico for a net neutral cost.
Does any of this matter? BYD is 10% owned by Berkshire Hathaway (and 60% US owned overall). They have a very slick US website. They sell and build cars nearly everywhere except the US market. They plan to build a Mexico factory this year. Their sales trend line is better in the last few years than Tesla.
Assuming trends continue, EV competition will drive prices lower. Legacy gets hurt mostly but market share for EV improves. Tesla will probably prioritize deliveries over profits and BYD will do the same. BYD will claim they aren't entering the US until they are really ready to - and that would be with a Mexico factory.
Newer factory, EV - less labor per car - I would also think no debate.
My only point is that painting labor costs as the primary reason BYD can sell an inexpensive EV is a gross oversimplification.
10% is a good ballpark on labor costs so BYD is in the $1200 range. If you want to use $4 an hour in China and $16 in the south US, that is an extra $3600. It still makes the car cheap enough to really hurt US manufacturers. And build it in Mexico for a net neutral cost.
Does any of this matter? BYD is 10% owned by Berkshire Hathaway (and 60% US owned overall). They have a very slick US website. They sell and build cars nearly everywhere except the US market. They plan to build a Mexico factory this year. Their sales trend line is better in the last few years than Tesla.
Assuming trends continue, EV competition will drive prices lower. Legacy gets hurt mostly but market share for EV improves. Tesla will probably prioritize deliveries over profits and BYD will do the same. BYD will claim they aren't entering the US until they are really ready to - and that would be with a Mexico factory.
Similar threads
