Of all the automakers out there whose executives might utter the words “crisis mode,” I really wouldn’t put Hyundai very high on that list. Or at all, really. But while the South Korean automaker is in the middle of a kind of product renaissance, it’s got more headaches than you might think, as we find out on today’s 2023 Detroit Auto Show edition of The Autopian’s morning news roundup. More from that event from us today.
I’m not in the Motor City (which is a shame, I love spending time there, barring the occasional press car theft) but the guys are and they’ll be bringing more dispatches today. For now, here’s what else is on tap for today’s roundup: Ford’s F-150 Hybrid push, the European Union may crack down on that onslaught of Chinese electric vehicles, and a look into the United Auto Workers’ tactics as a strike seems mere days away. Let’s dive in.
Hyundai Needs To Grow Even Faster In North America
It’s awfully hard to argue with the stuff Hyundai is putting out these days. Between design, EV range, technology and even performance, now, the South Korean automaker is firing on all cylinders (or anodes, I guess.) So why did Hyundai Motor North America CEO Jose Muñoz go to the Automotive News Congress event yesterday to say the company’s in “crisis mode?” Apparently, because it’s not moving fast enough in his eyes:
Hyundai ranked No. 8 in U.S. sales in 2020 with 622,269. But it jumped to No. 5 last year, moving 724,265 vehicles. It was surpassed by only Toyota, Ford, Chevrolet and Honda.
Muñoz half-joked that such breakneck expansion still isn’t good enough.
“I’m really disappointed with the evolution. I think we should have done more and faster,” said Munoz, who also is global COO of Hyundai Motor Co. “So we are in crisis mode.”
Especially with regard to local production, which makes things cheaper, easier and more flexible—particularly where EVs are concerned. Hyundai and corporate cousin Kia have a stellar EV lineup but none of them benefit (outside of leasing) from the revised tax credit scheme because they’re made in South Korea, which is certainly limiting their ability to compete at scale and price with Tesla and others. (I love the Ioniq 5, for example, but it’s a tough sell when prices cross $50,000:)
That ratio of locally made products will rapidly increase, Muñoz said earlier in the day. Hyundai Motor Group will soon derive half its U.S. sales from domestic plants, he said. And that mix could climb to as high as 70 percent locally made by 2030, he predicted.
As for full-electric vehicles, the Hyundai Group aims to derive 100 percent of U.S. sales from local plants by then, he said. The group’s EV-dedicated Metaplant in Georgia will spur the growth.
“We are becoming an American domestic brand almost,” Muñoz said.
This is a well-established playbook written by other “import” brands: Honda and Toyota are basically American car companies at this point, with their own unique offerings just for us that are largely built here. (That story even said 99.7% of Honda’s American sales are of cars built in America.)
Hyundai’s betting big on its new $5.5 billion Metaplant near Savannah, Georgia, due to open in the fall of 2024 and capable of cranking out some 300,000 EVs annually. It’s a start, but just a start; clearly for Muñoz and the rest of the company, whatever success it’s had lately isn’t enough.
Ford Goes Big On Hybrid Plans As It Gets More Realistic On EV Adoption
Anytime there’s a new Ford F-150, or even an update to it, it’s a huge, huge deal. (I’m glad to see that’s still happening at the Detroit Auto Show, too. Feels good, feels right.) And the hybrid F-150 is the big newsmaker this year: with this refresh, the 2024 Ford F-150 gets a V6 hybrid engine that’s as cheap as the higher end pure gasoline one. That’s great news for the gas budgets of truck owners everywhere, and I’d argue for the planet too; hybrids are a great tool for cutting down on emissions right now and a stellar option for people who can’t, or don’t want to, make the EV transition right away.
And Ford has big plans for the hybrid F-150, according to CNBC:
Ford expects to increase sales of the V-6 hybrid model during the 2024 model year to roughly 20% in the U.S. The automaker declined to release specific production figures, but it likely equates to tens of thousands more of the hybrid vehicles.
Achieving that production target may be more difficult than usual, as Ford and its crosstown rivals face a potential strike by the United Auto Workers later this week that could shutter some or all of their U.S. factories. Ford, General Motors and Stellantis must achieve separate deals with the UAW for 146,000 autoworkers by 11:59 p.m. Thursday to avoid potential work stoppages.
The hybrid plans follow Ford CEO Jim Farley saying in late July that the Detroit automaker would quadruple the company’s production of gas-electric hybrids as it continues to increase EV production but at a slower pace than previously announced.
[…] Kumar Galhotra, president of Ford’s traditional “Blue” business unit, said Tuesday he believes the F-150 could become the best-selling hybrid in North America, a crown historically owned by Toyota Motor’s RAV4 or Prius.
Good on Ford for this move. I wish more OEMs would take steps to hybridize their “normal” cars, especially where large trucks and SUVs are concerned. Looking at you, General Motors.
The EU May Stick Tariffs On Chinese EVs
The EU is on my good side this week because thanks to its stiff regulations, whatever iPhone I buy next will have a USB-C port and not one of Apple’s proprietary cables. That should make charging a lot easier for all involved (but as you make the switch, remember to donate your old cords to places like women’s shelters, because they always need more of those. Anyway!)
It may also soon be on the European automakers’ good sides too, because they’re freaked out by all of the Chinese cars—EVs in particular—about to flood their market and offer stiff competition on their home turfs. Here’s Reuters:
The European Commission launched an investigation on Wednesday into whether to impose punitive tariffs to protect European Union producers against cheaper Chinese electric vehicle (EV) imports it says are benefiting from state subsidies.
“Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies,” European Commission President Ursula von der Leyen said in her annual address to the bloc’s parliament, seen by many in Brussels as a pitch for her re-appointment for a second term.
The Commission will have up to 13 months to assess whether to impose tariffs above the standard 10% EU rate for cars […] its highest profile case against China since an EU probe into Chinese solar panels narrowly avoided a trade war a decade ago.
Europe’s automakers have a right to be freaked out. Not only are many of these Chinese EVs very good (I was extremely impressed with what I saw from BYD in Munich last week) they’re on average about 30%-40% cheaper than similar European cars in the UK and France. So far, Europe has avoided the stiff kinds of tariffs on Chinese cars that the U.S. has, but that story notes the Europeans aren’t happy with China’s cozying up to Russia amid the Ukraine war. Besides the attack on one of their own, that war has driven up their energy prices.
Anyway, this will be a move to watch—a restriction on Chinese cars in a market as huge as Europe would be a shockwave for the rest of the business and could set China’s ambitions back significantly.
UAW Could Do ‘Targeted’ Strikes Instead Of All-Out War
And now, time for your daily UAW strike update: it’s probably happening. Contracts expire at midnight tomorrow and a deal between the union and the Big Three automakers remains elusive. But The Detroit News says the union could opt for a “targeted strike” of specific plants, instead of a complete American auto industry work stoppage across the board.
That would obviously be less disruptive to the business and probably less impactful to car buyers, but it could be less effective and drag this process out even more—which I’m not sure anybody wants here. No one seems to have the stomach for some protracted Hollywood-style shutdown. But for a targeted strike to work, it has to really sting:
“The ultimate goal,” said Marick Masters, a management professor at Wayne State University, “is going to be, if they have to use a strike, is to strike in such a way that is going to get them the best deal from one of the companies in the shortest amount of time to take to the other companies as a template.”
Choosing to strike a single plant at each automaker at least initially could, as a result, save funds, but it has drawbacks, too.
“That’s a weaker form of the strike,” Masters said. “It takes longer to be felt. It depends on what rolls out in terms of affecting other production sites. It risks dividing the membership.”
Gonna be a really interesting couple of days.
Your Turn
Would the EU be right to stick hefty tariffs on Chinese cars? Every nation or region is highly protective of its car industry, to one degree or another. Look at our Chicken Tax. It’s not exactly “free market” competition, but them’s the breaks.
Hyundai and kia are dead to me and should be to everyone else too. So easy to steal a kindergartner can do it!
Exactly! That would be a crisis mode if I were the CEO.
This doesn’t seem to the popular opinion, but I so agree with this…
It’s the correct answer though. PHEVs should be what’s being pushed right now, not full EVs.
The EU should stick to their guns on the tariffs. I’m sure that’s exactly what the auto lobbyists want, but that doesn’t mean they’re wrong in this case.
Even if Chinese companies weren’t perennially guilty of coerced labor or digital surveillance of customers or IP theft, they’d still be guilty of predatory pricing. Just like Uber or Standard Oil, they’re selling at a loss to starve out the competition. Businesses like that should not be allowed to operate.
HE is in crisis mode to make his 100s of millions. Fuck this guy. This is him telling his employees work harder to make him more money while their wages suffer as inflation ticks on. Fuck that shit.
Good old capitalism. It’s not good enough to be a profitable company. It’s not good enough to be a profitable and growing company. You must be a profitable and EXPONENTIALLY growing company.
Or else it is a crisis and your stock may plummet at any moment. Despite you being a profitable and growing company.
100% it’s executive bullshit. “We are doing great, but not as great as my arbitrary expectations!” Fast-forward to bonus cuts, lay offs, and an increase in executive comp.
This man has never been in a real crisis in his life.
Is it wrong that I find the pictured HiPhiZ to be weirdly attractive?
It definitely looks good. Kind of looks like something in a movie set 20 years in the future. In a good way, not a shlocky cheap movie way.
I like it as well in that “overdone but fun” way that some cars just plain miss.
But I also don’t see that aging well.
I definitely lingered a bit on that photo, looks great actually.
Judging by this and the other responses, I don’t understand anything any longer. In my eyes, the HiPhiZ makes the BMW iX look good by comparison.
The good news is that if Hyundai can increase US production that much, it should really bring down the child unemployment numbers.
no kidding
The EU May Stick Tariffs On Chinese EVs…. should really say “additional” or “increase” since there is already 10%. Eventually they will just move production into EU, US, etc. Why do you think they are partnering on all the battery factories around the world. Chinese EV battery costs are $20 less than the average per Kw.
It would be cool to see a Mercedes Streeter take on the CFMoto 450SS, as it seems like it’s the most appealing Chinese-made vehicle in the US at the moment. Bikers could not be more deadset in their ideas about national stereotypes (for a lot of the same reasons people are skeptical of Chinese cars), but everyone I know has been at least mostly won over taking a look around the 450SS.
My local Hyundai dealer’s service department is so busy that I had to make an appointment a month in advance for the security software upgrade. I think they need to fix some problems before they grow more.
Same experience with my local Kia dealer’s service dept. First available appointment is about 5 weeks from now. What’s going on?
I’d say Hyundai/Kia service departments are in “crisis mode”.
They are swapping blown motors as fast as they can!
Yeah, I was disappointed to read the article and find out that the “crisis mode” was for increasing their market share, not improving reliability and reducing warranty expenditures.
Re: “improving reliability and reducing warranty expenditures.”
Sadly, in thinking about how company mgmt. is compensated, i.e. usually +95% via current stock price… leaves little to no incentive for a CEO to care about their reliability or serviceability (for us plebs) UNLESS there is a negative impact that can directly be correlated to the company’s stock price
Why Hyundai Says It’s In ‘Crisis Mode’
They are in crisis mode not because they need to grow more but because Hyundai/Kia made easy to steal cars for a decade. They have had major engine issues with catastrophic failures leading to recalls and ignore others with the same problem. Their dealer network is generally terrible, they sell loans and not cars. Journalists love Kia/Hyundai and their cars do look great lately, but their durability is terrible.
I own a Kia Soul and a Hyundai Santa Cruz (neither of which is affected by the theft issue since they’re “push button start” vehicles). But I agree. We’ll have them until they become problematic outside of warranty. Then onto whatever tickles our fancy next.
Can anyone read me in on Hyundais having terrible durability? My MIL’s 2012 Santa Fe that has had almost no problems and my sons’ girlfriends’ 100k mile Elantra GT that looks and acts brand new is telling me otherwise.
My ’23 Sonata N-Line with 4k miles is too early to tell, but so far, flawless.
1. Why has Hyundai recalled certain vehicles for an engine issue?
In close coordination with NHTSA, Hyundai has recalled more than one million vehicles to address a manufacturing issue that could lead to engine failure and in certain circumstances an engine fire. While the majority of incidents among affected vehicles are limited to engine knocking, there have been instances of stalling, meaning the engine may stop running while the vehicle is being driven. Importantly, drivers in this situation can maintain control of the vehicle as brakes, steering and safety devices like airbags remain operational. Typically, as an engine becomes inoperable, drivers will be alerted by warning lights and sounds, and while the engine may experience some hesitation, drivers should have time to safely move the vehicle off the road.
Spot on! I am looking at potentially replacing my shit ass hyundai with a VW Atlas. I saw the 24 Atlas had a recall due to engine issues – they fixed it after noticing the problem with the first 2000 on the line being affected. That is how you fix an engine problem, instead of ignoring the problem for a decade+ now and continuing to just swap engines out and screw over your customers.
Often, the cheapest option costs the most. Setting aside the moral conundrum, I wouldn’t trust the Chinese to build a car that lasts, especially one sold on the cheap. Then, when there is a quality issue, how well will they stand by their product? Brand names mean nothing, they’ll just reorganize and discharge their responsibility to sell the same crap under a different name using whatever weasel legality they need to. This is the country sending pet food over that continually has to be removed from the shelves over poisons and we should trust legions of their cars on our roads?
Well the EU isn’t saying they’re cheap cars, they’re saying they’re being sold at prices under the real cost to build them. i know nothing about chinese cars, or really mass manufacturing processes either, but i could absolutely see the Chinese government underwriting the battery materials and depressing wages.
40 years ago, from a capitalist democracy, Japan was selling cars here under cost, or so the newspapers of the time shrieked. i don’t think Toyota, Datsun or Honda were taking a bath on each unit. Exports had to be getting some reward from somebody.
I think that’s a semantic distinction. Cheap is offering roughly equivalent vehicles at retail prices that undercut the traditional competition. Even being subsidized by the Winnie the Pooh, there isn’t an infinite well to draw from, so that undercutting has to come from somewhere. Is it “only” slave labor and stolen IP that gets them to those prices or is it also quality and engineering? I would say it is all of those things and why wouldn’t it be? What is the incentive to build something great for the sake of doing so? These don’t appear to be companies driven by visionaries looking to build something great to be remembered, they appear to be government-backed enterprises intended to economically weaken the West and, with the established players happily (and short-sightedly, as usual) vacating the low end of the market, the Chinese makes can be just about the only game in town, so they don’t need to be better, just cheap.
That sounds like alarmist BS about the Japanese unless that was earlier on than I was old enough to be aware of, but by my time, the exchange rates were hugely in their favor and they used that advantage to reinvest much of the profits into higher quality and more advanced technology, beating the entrenched and complacent Western companies by building better, longer lasting vehicles.
It’s not semantics. Selling at a price lower than it costs to produce is called dumping. It’s bullshit, it’s amoral, and it’s illegal.
I don’t know what the laws in the EU are, but in the US predatory pricing to drive competitors out of business is illegal. It doesn’t matter where the money to underprice your product is coming from, if you’re deliberately selling at a loss to hurt the competition you will get slapped with an antitrust lawsuit. Of course, Chinese companies are going to laugh in the face of a US or EU lawsuit, so tariffs are probably the only viable recourse available.
It’s actually illegal in China to decrease wages, they’ve been cutting costs by doing less bonuses which are usually close to half of an autoworkers total earnings in China.
We need to stop carrying the prejudice that Chinese products are poorly made. Good stuff and crap can be made in every country by every peoples. The longer we dismiss that there is good stuff coming from China, the longer we put off truly recognizing our competition. That blindness will cost us. A good example might be how the Japanese were able to build cars in the US to a much higher standard than the big 3. Same labour force, same general regulatory environment. They did it because they designed better products and production processes. Those designs and processes can be parachuted into any country.
Outside of that, yes, they are taking advantage of lower labour costs and state subsidies, but let’s treat that as a separate issue.
There is nothing about the Chinese that is inherently causing them to make junk and if others mean it that way, I do not. However, companies don’t go to China to build quality, they go to build to as low a price as possible. As for the indigenous companies, they learned from the price busters and have little incentive to do better than they need to in order to make conquest sales through undercutting their competition. That the bottom of the market is being abandoned by the established makes is a perfect opportunity for the Chinese to move in and sell to people who haven’t the luxury to be political about their purchasing. The Japanese culture and the situation that saw them rise is completely different and I don’t think it is analogous to this situation. I expect it to be much more like the early Korean entries and, unlike made in Japan, I still wouldn’t buy KIA/Hyundai junk even now.
As I’ve written here before…
Legacy ICE manufacturers abandoning lower ends of the market are exactly following what Clayton Christensen laid out in the Innovators dilemma and EV (only) manufacturers are also exactly following the same pattern.
The ‘only solution’ Christensen suggests, (within hisbfollow up ‘The innovators solution’), for how a legacy business can respond is to create a brand new legal entity, which is the only way a budding new technology based product can have a chance of independent capital funding and of meeting expectations of the board and of investors.
The Only Lagacy ice auto maker that I know of employing this strategy is Ford.
For still USA legacy auto… Failure to follow this model I fully expect (new) GM (legally established in 2008/2009), to also fall in to bankruptcy yet again w/in approx. 10 years; Stallantis is effectively no different any more than any other foreign owned auto manufacturer with (some) local production w/in N.America.
Failure to establish a completely different legal entity requires the new EVs to constantly have to compete for capital, resources and people dedicated to them, directly against mature ice products that actually are the cash cows of the company and therefore every other legacy (in this case) auto maker faces the exact same business model opportunity when deciding where to invest capital, resources and their people’s efforts/attention
Chinese companies can be undisputed world leaders in quality and technology when circumstances require. See: DJI, Lenovo/Thinkpad, TikTok (ugh), high speed rail network, mobile payment, etc.
I was told by someone very in the know in the bike industry (I won’t say who, but his last name is a bike brand) that the thing with Chinese manufacturing is that they will build exactly what they are asked and paid to. The thing to keep in mind is that unless specifically told not to (and verified through a stringent QA process), they will cut every corner they can.
The flipside is that, if you are willing to stay on top of them, they can and will make quality products. Not every company does this and that is where the stigma comes from…
Lack of specificity in requirements leading to unintended results, much like stories of genie wishes gone wrong / monkey paw (wishes)
In technology, similarity requirements are frequently ‘lost in translation’when tech. is viewed as an unavoidable cost of business with multiple teams vertically siloed from each other & often development gets farmed out to a ‘near shore or offshore’team if not farmed out right to a 3rd party consulting company.
Different cultures make their own unspoken assumptions, leading to massive +100 pg. requirement artifacts that become effectively legal contracts. Multiply this by oh +40 teams ‘working on the same thing’ and even seemingly simple requirements are missed
This message has brought to you in part by Ford Motor Company, the leaders in automotive recall letters.
But they do recalls (eventually), which is my point. It’s not that quality isn’t lacking elsewhere, it’s that there is at least some recourse, if that is also not necessarily easy to get. Take all the weaseling the established makers do to get out of recalls, hide the extent of failures, and deny issues, then add in the lack of culpability that can come from legal wrestling with a company that is largely an agent of an at least semi-hostile country that operates on much different standards. I know my chances against someone like Ford (luck out with coverage or become part of a CA suit where—if the law firm wins—they get something like a $400m payout and I get a check for $5.13 for a car I haven’t owned in ten years), so I know I’m personally not going to roll my dice on a company from China. Funny you mention Ford, as that was my last car and it is part of a CA suit for closed deck Ecoboost 4 block cooling passage deterioration that the TSB calls for engine replacement as remedy. At least I got 180k out of it where a lot of people didn’t even hit 100k. I don’t have a Ford now.
My 2-year-old VAG has had 4 recalls.
(OK that didn’t come out right.)
Please tell us more about your trust of “the Chinese”
In this case, it’s shorthand for “government overseen manufacturing that can be subsidized to undercut competition in countries that are strategic frenemies without concern for profit until they have the market to themselves”, but if you want to play race warrior and see victims in everything, have at it, you brave soldier! Now that you’ve done that, you can go save the Uyghurs.
What’s worse? A Chinese subsidized electric car? or an American subsidized electric car? I guess the one using kids to build their cars while proving them with one (1) bowl of rice instead of a pension would be the worse one. But will those Germans also penalize Tesla selling non unionized, subsidized cars as well? But in reality…they have no more Russian gasoline and the costs of electric vehicles are too high…so people will pay the tax imposed and bring in the Chinese cars.
Pretty sure the US manufacturers aren’t getting incentives to sell their cars in China to kill local Chinese manufacturers. Also pretty sure that’s exactly what is happening between China and the EU. Subsidies are not all created equal, nor do they all have the same goal. Those differences are important.
Damn the torpedoes. Go full-on strike and slap ’em across the chops with the power of organized labor. The full stoppage can pull back to targeted stoppages if management comes back to the table and starts acting in good faith. In the current state of exploitative management practices, the muscle and publicity of full-on strike is the only thing that will stick in their heads.
Maybe the EU should buy a few Chinese EVs and ship them to Michigan. Then pay Munro & Associates to do a tear down and costing analysis to see what these vehicles really cost to build. Then add tariffs if they are really being sold below cost. Maybe negotiate in a discount if the YouTube videos generate good revenue!
Munro probably already have the latest Nio, BYD, etc. all dissected and analyzed.
Fain was on CNBC this morning. He didn’t exactly say that they wouldn’t do targeted strikes, but he certainly seemed to imply that it was gonna be an across-the-board situation for all 3 companies. Also, he said that he’s sticking with 36% and not budging on that one.
As far as the tariffs go, politicians are gonna do politician stuff. It only hurts the average citizen if they do. People need cheap cars regardless.
I’m expecting a full walkout for the first week. Followed by targeted strikes until the contract gets ratified.
Targeted strikes are more likely from the get-go. Why? Because they’ll probably target the parts plants, meaning the assembly plant workers get to go on unemployment when their plants are closed and they get laid off due to a lack of parts. That extends the strike fund by quite a bit.
Agreed. The UAW could strike plants that could cause multiple slowdowns of other plants, such as V-8 engine plants. Hits the Detroit 3 in pocketbook where it hurts the most – high profit pickup trucks.
The EU should absolutely impose tariffs on Chinese EVs. If the EU claims to stand for environmental regulation and fair treatment of workers it would be massively hypocritical to look over the Chinese record on these things. European manufacturers have no problem building small, efficient, relatively inexpensive EVs as it is and dumping artificially cheap Chinese cars on the market would do irreparable damage to European manufacturers as well as disincentivizing innovation in the EV field.
Labor costs are only a small fraction of the overall cost to build a car. Chinese slave labor maybe makes a triple-digit Euro difference in the cost of a car vs first world labor, when the car is built to conform to first world safety regulations. If the European and US manufacturers actually built inexpensive long-range EVs with narrow-thin margins to compete with offerings from China, the Chinese wouldn’t be a threat. Tariffs aren’t necessary on that front alone. The Chinese subsidies are an issue, but that is also a problem that can work itself out, given that the Chinese government does not have limitless funding to subsidize these things forever. The Chinese are certainly trying to play the long game regarding development of their industry, but China has its own set of problems which wasting its resources subsidizing its domestic auto industry will bite it in the butt in the longer term in other areas.
The real issue is that the legacy manufacturers are afraid their margins are going to be driven thinner by Chinese competition coupled with the actual producers that make the industry work demanding more of the pie, as they should. The legacy manufacturers worry that people are going to want smaller/more efficient cars again once they are available, which will cannibalize the sale of high-margined overpriced rolling codpieces. Adapt or die. The upper management and shareholders should reduce their expectations just like they expect their workers to, or they absolutely deserve to go under. NO BAILOUTS.
Au contraire. Labor is the still biggest part of the cost in building an automobile. Where it costs the most is final assembly where automation at its current state can’t be used. I spent over twenty years in the body shops where a company can cost-effectively reduce labor (I remember when GM went from a manual weld shop to a robotic weld shop in Silao, MX – then there were almost as many working body shop as trim and chassis) and still see that it’s hard to to reduce labor on trim and chassis where they connect all the parts together. That’s where the customer sees problems with parts and assembly (adds labor when a company does quality checks). And that’s also where the customer’s options go in. Where they had to deal with people like me who wanted a third pedal and a manual transmission in my pickup truck. As for the body shops, the companies still need to load and orient the parts manually (in batches now, used be individually) so the robots can fetch them correctly. There is a lot more automation, but there’s still labor to install parts, monitor quality and to maintain that automation. A point to note: trim and chassis take up half an assembly plants square footage while body shop and paint take up half the other, and the automation in body shop and paint still takes up the half plant’s square footage. When a uni-body comes out of paint, it’s considered half done and assigned to a buyer.
“Even the roar from Congressional critics about assembly line largesse seemed to miss the fact that (according to the UAW) labor costs account for about 10 percent of the cost of producing a vehicle; the remaining 90 percent includes research and development, parts, advertising, marketing and management overhead.”
https://www.cbsnews.com/news/the-true-price-of-auto-labor-costs/
Also see:
https://www.nytimes.com/2008/12/10/business/economy/10leonhardt.html?_r=0
Years ago I’ve seen a number of studies that had presented similar numbers to the above articles. I tried to find them again but they were locked behind paywalls. I remember overhead expenses by themselves being HALF of the cost of a car on a per-unit basis.
It would make sense that the tooling, testing, manufacturing facilities, parts manufacturing, ect. all account for more of the pie each, given how expensive they are and then when considering it takes a bit over $1 billion to develop a mass-market car model from the ground up.
If you’re hand-building a car, labor is definitely going to be the largest component for sure though. I helped a friend build a car from scratch:
https://i.imgur.com/vVuZKWt.jpg
https://i.imgur.com/qAJ4S92.jpg
https://i.imgur.com/82gCI0U.jpg
Awesome project, do you have somewhere others can follow the build?
I do not. It is my friend’s build. I merely helped him with bits and pieces of it and with the design. It is based off of my first “bicycle”/microcar prototype design.
He does have an instagram account:
https://www.instagram.com/idyllicpixel/
They don’t need slave labor to make the price come down substantially vs Europe or the US, Chinese autoworkers make around $300 a month on average.
$300/mo is basically slave labor. I know capitalists like to claim they are working there “voluntarily”, but everything one needs to live is being kept under lock and key behind a paywall(you’re not simply allowed to take what you need from nature in the modern day), and it’s not the laborers who determine the prevailing wages where they live nor the costs/permits/red tape required by their government to relocate.
$300/mo will go a lot further in China than $7.25/hr will go in the USA when it comes to affording the basic necessities of life, that being said(just consider the savings rate between the two countries; the Chinese slave actually has a tiny surplus to save and/or invest, unlike the American), but it’s not by any stretch of the imagination comfortable living… It’s not uncommon for these people to work 80 hours a week to get their $300/mo. In some Chinese factories, suicide nets are a thing…
Foxconn who make (all?) iPhones have been a pretty well known example of a company that liberally uses suicide nets at their factories
I don’t take any position on what the EU should do or not do regarding the Chinese.
I do want to preemptively call out those who will in the same breath advocate for UAW workers to get everything they’re demanding and more, while also wishing we could buy $10K death traps filled with spyware and built by slave labor “because our automakers won’t build entry level vehicles” without seeing the contradiction.
I personally don’t care what Europe does about China. Once they get flooded with cheap garbage EV’s, they won’t have to worry about it because everyone will stop buying that garbage. I love how everyone all of a sudden thinks China figured out quality control, when in fact they never will.
They have figured out quality control, but it’s hit or miss whether it is actually a consideration in the design of a Chinese product. I’ve gotten both crap tools and excellent tools from China for cheap. I’d have bought made in the USA if that were an option at the stores near where I live, but I could not find US made other than ordering online, and I needed the tools ASAP.
Personally, I wouldn’t buy a Chinese EV given all the spyware, but that also applies to almost any new car sold around the world at this point, as the spyware has infested virtually everything new. In the case of vehicles sold in the US, it’s mandated into law in the form of black boxes/GPS, starting MY2015. Teslas will even snitch on their drivers. No way in hell would I spend my money on that.
I’m a musician (mainly a guitarist) and I’ve played/owned some Chinese made guitars over the years. It’s more or less just accepted that you’re rolling the dice when buying one. Some are perfect, some need some tweaks, some are totally unplayable out of the box. I bought one on a whim in the spring (it was a limited edition artist signature that was on the edge of “fuck it” money) and it was a disaster right out of the box.
I can handle basic setup and maintenance on my instruments, but this one was so out of whack I had to throw my hands up and take it to a professional for a set up. My tech told me that she hadn’t seen a guitar that left the factory with a neck so out of whack in years.
Now it plays great, but I personally don’t like having to spend an extra couple hundred bucks making a $1,200 instrument playable. I accepted that it was a possibility, but still. It’s not a good feeling to have an instrument show up, take it out of the box, start noodling on it, and immediately realize something isn’t right.
I’m a bit of a Japanese guitar aficionado (lots of folks are) and I’ve never had the same problems with any of the Japanese guitars I’ve bought. They’re more expensive, but at least I know I can unbox one and plug it in right away. I literally didn’t have to do anything with the last Japanese guitar I bought, and I also haven’t had these issues with any of the several American made guitars I’ve owned over the years either…although I avoid Gibson who’s pretty notorious for their own problems.
Anyway, at least in my area of expertise, Chinese craftsmanship is cheap for a reason. They may give you products that offer a competitive feature set at a cheaper price, but there’s almost always a catch, and that catch is quality control.
I have accepted the fact that every electronic product is full of spyware from every major geopolitical entity.
If NSA wants to see my hairy behind, have at it.
They have to sift through terabytes of hairy butt pics before they find my thermite recipes
Not anymore. Tag your it.
So much the first part of your statement. My hobby, remote control stuff, is almost entirely made in China. There’s a noticeable difference between the cheap stuff and higher end stuff. The motor windings are noticeably different in consistency or the fit/finish is nicer on the more expensive stuff.
“Personally, I wouldn’t buy a Chinese EV given all the spyware, but that also applies to almost any new car sold around the world at this point, as the spyware has infested virtually everything new.”
Since you brought it up:
Something I don’t understand, what exactly are people concerned about regarding spyware in a car? That someone in China might see their MP3 playlist? Or figure out they actually DO shop at Wal-Mart even though they tell everyone they don’t? That they’re a chronic roadraging leadfoot, tailgating, red light and stop sign runner? At which seedy bedbug infested motels they meet a mistress (or whatever)?
Who are these people that anyone in China would give a crap what they do?
OK maybe those folks ARE are a big shot VIP or the next big thing. Then pray tell what secrets can a Chinese car divulge that their phone hasn’t already been blabbing about for years? Or their web browser. Or their email provider? Or Onstar?
I think if people actually did care about privacy they wouldn’t be constantly posting their lives on Meta and Nextdoor.
I don’t think it’s as much locations and things like that but more the information in your phone that is almost always connected to the car in some way. Phones are an absolute treasure trove of data…
So don’t connect it. Problem solved.
And we can file that away under “things that won’t happen”…
Since when? AFAIK nobody is forcing you to make that connection. Even if they did an empty burner phone is cheaper than a spare set of keys.
See, you’re thinking I’m referring to myself here. I literally just got done explaining to a coworker why it is a terrible idea to sign into any subscription service through a Chinese streaming box which reminded me of this exchange.
Those are the people who will be all too happy to plug a phone into a questionable Chinese infotainment system to let it mine every bit of contact and financial information they have…
Nobody is forcing those folks to connect either. And why focus your ire on just China? Unless you’re an activist and/or living in China why would China care what you think or do except to sell you more crap? Companies everywhere including in the US collect data to sell to whoever’s willing to pay or to target ads only to “lose” it due to poor security practices.
Then there’s the Utah Data center run by the NSA:
https://en.m.wikipedia.org/wiki/Utah_Data_Center
Maybe your inner conspiracist should chew on that one for a while.
Personally, I simply don’t like every aspect of my life being monetized and sold, having a court system that pretends that “giving” this data away is “voluntary” when there is generally no feasible or practical opt-out, having it available for perusal by law enforcement without 4th amendment protections to potentially be weaponized against me, or for that data to end up in the hands of databrokers which create profiles on people without their consent and package them up and sell them without any compensation or permission to those to whom the information pertains. Then there’s the intelligence agencies of various governments compiling all of this information(IMO, they should all be disbanded).
I don’t care who is doing the spying. US, China, private corporations, whatever. I never consented to any of it, no matter what the courts might say about it.
Then again, I don’t even own a smart phone. I’ll probably never own any mass produced car made after MY2015. The closest thing to social media I participate in at all is the Autopian discord, and even that is more than a bit data-grabby for my liking.
The other option of course it to provide as little real data as possible. Why anyone uses their real information on grocery store club accounts or car websites baffles me.
I don’t even subscribe to those sorts of programs. For a very long while, up until about 4 years ago, databrokers didn’t even have any of my addresses, because I never even so much as bought internet service.
It’s getting harder to avoid confiscation of your data, and the current legal system acts as if you gave it over voluntarily, even if you never consented to it.
I think public information about individual people such as property ownership, vehicle registration, voter registration, criminal history, ect. should be publicly accessible in a filing cabinet at the county courthouse where it belongs, and kept out of the hands of databrokers. Governments should not be compiling dossiers on their population either, and commercial databrokers should have explicit opt-in permission from a person to compile their information and sell it, or not sell it at all. As it stands, we literally have no privacy in the so-called land-of-the-free, to the point where even HIPPA-protected medical information is now up for grabs due to various loopholes.
Consider how difficult it would be for scam artists to steal identities, without identities readily available on the commercial data market to then steal!
Data brokers will always find a way. That’s their job after all.
Our job is to make their job as hard and as much of a PITA as possible while still enjoying whatever benefits providing that bogus data gets us.
“…wishing we could buy $10K death traps…”
I have no such wish. The most I’ve paid for a death trap is $4500.
The legacy US and EU automakers absolutely can build and sell good small cars. They just don’t want to because the margin isn’t much.
You said it much better than I.