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A glorious example of a basic truth

Tesla is cutting the price of its cars in China as Elon Musk’s electric car company faces fierce competition from local rivals in its second-biggest market.

This is why the whole free market capitalism thing actually works.

Sure, world’s richest man, Elon Musk, wants to gouge as much as he can out of the Chinee. That’s the capitalism bit. What constrains his ability to do so is the competition bit – that’s the free mart of the free market thing, that people are free to enter the market.

Monopoly capitalism (and no, that’s not actually what Marx was talking about, he meant, in modern language, monopsony capitalism) would be pretty dreadful, it’s that combination with markets that makes it the best system so far.

6 thoughts on “A glorious example of a basic truth”

  1. So the “local rivals” (I.e. communist party controlled) have stolen whatever snake oil the great panjandrum hypnotises his cult followers with and – given that they can use whatever means, out of sight in their Xerox factories – can churn milk floats out cheaper.

    Well duh!

    Free market? Der Fuhrer’s other nut!!

    I’d rather have a frigging Lada than ANY milk float (I’m absolutely serious)

  2. I imagine they’ll become the biggest market for electric cars as they have the leccy to run them and we don’t.

    What did Socialists use before horses and carts?

  3. Not entirely accurate.

    Tesla increased manufacturing capacity in China in July/August to the tune of around 25-30%. They utilise capacity to first make the most expensive models (with the highest margins) and work their way down, only building the cheapest ones when there is space on the line. More capacity means that they make proportionately more base-model vehicles because those are the marginal units. Different product mix = lower ASP, but they’re not actually reducing the prices of any individual SKU. Given healthy margins are still being made on even the base model vehicles, this is an entirely logical move.

    Crucially, this is completely independent of what the competition are or aren’t doing, so the entire premise of the original article is… off somewhat.

  4. China will be the only EV market: they are the only ones building hundreds of coal fired power stations and still building a grid system, so they will be the only Country able to produce enough electrical energy to replace energy from motor fuels and have the infrastructure to carry and distribute the load. Maybe India too.

  5. They are selling something called Polestar locally, it’s a Chinese made EV based on a Volvo concept design from a few years back that the manufacturer licensed

  6. Polestar is a Volvo brand (so ultimately Chinese). They’re a small scale, but growing, global vendor of EVs, made in China.

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