[vegetablepotpie]

1. There’s an assumption here that all manufacturers will simultaneously raise prices by $7,500 in response to a demand curve shift. If a single manufacturer steps out of line and lowers prices, they will carry more volume, and therefore more revenue.

2. Manufacturing costs do not increase when subsidies are introduced. EVs, as a result, have higher profit margins. Therefore, this will result in enticing more firms to enter a more lucrative market, resulting in more EV sales, which really, isn’t that the goal of subsidies in the first place?

[username332211]

I don't know if you realize it, but you are making the assumption every EV manufacturer has the capacity to produce vastly more EVs than they currently do. What makes you believe in that assumption?

[vegetablepotpie]

If you believe that firms don’t respond to incentives, then sure. If you believe that people do not innovate to optimize their utility, then sure. If you think America can’t build things, then sure; it’s an invalid assumption.

[labcomputer]

I don't know if you understand this, but factories have a maximum capacity they can produce. You can't just snap your fingers and double the capacity of a factory overnight if you realize that it is too small.

Look at how long it took Tesla to build the Shanghai gigafactory: About two years--and literally everyone who knew anything about auto manufacturing said it would be literally impossible to make that timeline when Tesla announced it in the beginning. People made jokes about it. Oh look at that! Elon Musk is lying again! Hurhurhur.

I mean, why do you think the Model S had zero competition for over 7 years? The first 2 years I understand--everyone thought EVs were a dead market. But why did Mercedes, BMW, Audi, et. al. wait the other 5 years (while Tesla was absolutely destroying their market share in the US) to bring out a competitive product?

Was it because they're a bunch of dumb-dumbs?

Or was it maybe because it takes many years to design a complex product like an EV and build a factory to build the car?

[labcomputer]

> If a single manufacturer steps out of line and lowers prices, they will carry more volume, and therefore more revenue.

How will they do that? Every one of them is production-constrained right now.

> Manufacturing costs do not increase when subsidies are introduced. EVs, as a result, have higher profit margins.

Now you're getting it!

> Therefore, this will result in enticing more firms to enter a more lucrative market, resulting in more EV sales, which really, isn’t that the goal of subsidies in the first place?

Sure, but it takes 5-10 years to design a new EV and spin up a plant. Will the subsidies still exist by then? (Probably not, because we are in the exponential phase of the EV adoption curve, so the subsidy will quickly become unsustainable).