Rising Car Costs Explained, by Eric Peters

Government workers have no problem with inflating prices, of cars or anything else. Their salaries tend to rise faster, unlike salaries for those of us in the private sector. From Eric Peters at ericpetersautos.com:

It seems the only people worried about the cost of things are those who can’t force other people to pay for them.

This is the only explanation for the otherwise bizarre insouciance accompanying each almost weekly “reveal” of the latest electric vehicle – such as the $67,500 to start Rivian R1T electric truck.

But it’s not just electric trucks – or electric cars – that are unmoored from economic reality.

It is cars and trucks, generally. Their prices are booming – the average transaction price of a 2021 model year is close to an unprecedented $35,000 – even as the economy is collapsing.

It’s a strange juxtaposition.

Until you understand the non-market forces at work.

There is, of course, the price-padding effect of compliance costs – what you pay for all of the things directly mandated by the government, such as air bags and back-up cameras and tire pressure monitoring systems – as well as those things not specifically decreed, such as direct injection, partially electric drivetrains, small engines with heavy boost (turbos) but which are necessary to meet the emissions and fuel efficiency standards laid down by the government.

These have added thousands of dollars to the cost of every new car.

New cars would, in fact, be generally unaffordable on this account alone were it not for the compensatory effect of economies of scale, manufacturing efficiencies and the reduced cost of materials (e.g., the widespread use of cheap painted plastic for most of the front and rear ends of almost all new cars in lieu of metal and chrome).

We can get a sense of what new cars and trucks would cost, absent all of the baked-in costs of the mandates and the need to “comply” with all  of the government ukase by comparing the costs of cars made here with the cost of cars made elsewhere – in countries that have governments that are less involved in designing cars. This includes even China, where it is possible to buy compact pick-ups such as the Wuling Zhengtu – which is made by a subsidiary of General Motors, by the way – for just over $9k.

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