this post was submitted on 18 May 2024
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[Dormant] Electric Vehicles
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Doesn't the USA subsidize electric vehicles a ton too with tax credits and other subsidies at both the consumer and producer levels?
First, yes, but there's some pretty big differences in the how which change the end result. With EVs there's three types of subsidies:
Subsidies on developing the technology/manufacturing techniques - This is where the government, in an attempt to bootstrap an industry, will pay for some of the up-front costs for developing specific parts of technologies that are too large or risky for a company to do on their own. So there is benefit to the nation and the manufacturer in that the resulting cars can be less expensive because that initial development cost doesn't have to be recovered from the sale of each unit. However, there is no incentive for the manufacturer to produce any more cars than will sell. Both the US and China have used this subsidy to pay to develop battery and EV drive train technologies domestically.
Subsidies on the consumer purchase - This is where a person buys something and gets a rebate on taxes. So a manufacturer/nation benefit on the domestic sale of the unit, and a tiny bit of benefit in helping their economies of scale for production. Remember though, this is a domestic consumption subsidy. The rebate can only be claimed by a citizen in that country under their taxation/monetary system rules. Nobody in Belgium is able to claim the US tax credit of $7500 for purchasing an EV in the USA. So the benefit is really only felt internally. No amount of $7500 rebates claimed in Chicago is going to help someone that wants a US EV in Antwerp. With this subsidy there is no incentive for the manufacturer to produce any more cars than there are people willing and able to claim the rebate domestically.
Subsidies on the production - This is where the manufacturer receives subsidies from the government just for making the car irrespective of which country it ever ends up in. This is where it goes off the rails. The manufacturer gets money from the government simply for building the car. Neither the government nor the manufacturer need a buyer for the car. The manufacturer gets the credit it wants immediately after the car exists. Again, both the USA and China use this too, but the USA policy has the capability to create tiny amounts of potentially unwanted cars ("compliance cars"). A good example of this is the BEV MX-30 EV. The total sales of this vehicle over the last 3 years was only 485 cars. The scale China is using can create huge fleets of unpurchased domestically cars. This ends up creating lots of cheap cars for export.
Its this last point that, if continued, allows for government of China to pay for a chunk of the cost of a buyer in Antwerp Belgium or the USA.
I'm failing to see the problem
Play it out. If China is eventually the only one making cars, your only choice for a car will be one from China, and they'll be able to make you whatever they want.
Well the way things are at the moment, a Chinese car is one of maybe three affordable options, even with a 100% tariff. Plus they're making the type of car that I want, so I'm still failing to see the problem.
It's also a good move in regards to reducing global CO2 emissions. (I know a world with less cars would be significantly better, but our societies aren't ready to accept that yet). Is the Chinese government thinking along these lines? It would be funny and amazing if they had the ability to force a worldwide green transition through overproduction of green tech like EVs and solar panels. I guess they are overproducing EVs and solar modules, but is preventing the worst of climate change their main motivation?
Thats understandable. Its not a obvious process to calculate out macroeconomic moves years and possibly decades into the future.
True.
Its not. Foreign manufacturers are fleeing China because of the crackdowns by the CCP and more importantly the rising cost of labor in China. Since there are thousands of factories dark and empty and millions of factory workers unemployed, China is trying to boost domestic consumption and exports via government investment in an effort to prop up their sagging economy. They're making and selling EVs in high quantities because they hope the rest of the world (outside China) will buy them.
I can't help but detect a bit of passive aggression here. Do you calculate out macroeconomic moves decades into the future when deciding to buy a product? I definitely do, seeing as I'm the economic minister of a mid sized country it's more or less my job. But you? Are you an economic minister too? If you're not, it seems a bit ridiculous to be thinking much beyond your own personal finances, yes?
Here's something you may find interesting: https://x.com/RnaudBertrand/status/1776486765463048674
That analysis contradicts the BS your spreading. Here's some more for you to read: https://thenextrecession.wordpress.com/2024/04/10/chinas-unfair-overcapacity/ China is outperforming the West in everything important for the future. Their economy fine. Their growth rates have been higher than the west's for awhile now.
Yeah, after repeatedly explaining the macroeconmic implications in multiple ways, you either aren't getting it or you don't care and could be one (in the future) to suffer the consequences. I'm trying giving you the benefit of the doubt but I think I'm running out of patience. Your post indicates you're in a similar position with me. My apologies, if we can both be civil, I'm happy to continue out discussion.
Not usually, because that would be a microeconomic action.
However, occasionally I do. I don't own a Sodastream because they were manufactured on seized Palestinian land. That one small action on my part has a tiny tiny tiny macroeconomic impact as with my I (and may others) actions the company later moved the factory out of the West Bank. I also chose to buy my solar panels and inverters from domestic manufacturers in the USA because I want to support domestic production of green energy technologies. I don't buy cotton products sourced from Xinjiang either because of the treatment of the Uighur people there by the CCP. I bought my cast iron pan from a Ukrainian manufacturer because I wanted to support their economy in the face of the Russian invasion.
Do you really not pay attention to where the things come from that you buy? Do you not think how your spending is funding things that are possibly against your personal interests?
Cool, then you should understand the difference between micro and macro economics.
You think you have to be an economic minister of a country to think about the impact of your personal spending power and how your dollars affect or don't affect change?
First, I wouldn't recommend using someone's twitter post as compelling research. It could lead you down an incorrect path as this one has.
The source he's citing about Tim Cook and Apple against China's sagging manufacturing is from 2017 (his source). Being seven years out-of-date means its contradicted by current events. Here's one thats more recent from January of this year:
"Apple's suppliers have so far spent $16 billion to move from China" source
I could post half a dozen more trusted news sources about Apple divesting from China to other areas of India and Southeast Asia.
A wordpress blog post as a secondary source? That source is quoting your first twitter source as its source. I'd be highly worried for the blog post facing a "garbage in garbage out" problem. I read through most of the blog post and see a couple tenuous links of source to conclusion that are worrying me about the objectivity of the author. Further, that blog post author seems to say that all the experts in economics and global banking are wrong and he himself is right. I don't immediately dismiss him for that, but its certainly a red flag.
Something occurs to me. You yourself are claiming to be an economic minister, which, while possible, would usually seam unlikely for a random internet poster. However, you were quick to post that same twitter post as a source here on Lemmy, just like the author of the blog post. Here's the "about" section of the blog you posted as your source:
"[NAME REMOVED BY ME] worked in the City of London as an economist for over 40 years." source
Are you possibly quoting yourself as source? I'm certainly not trying to dox you so I removed the actual name from my post here, if I came too close to guessing right, message me and I'll happily edit my post to remove this part.
Assuming I guessed correctly, I'd actually really like to hear your opinion on Brexit. It seems like it would have some parallels to our discussion here on the importance of support of domestic industries.