为什么中国的电动车比美国的便宜？

Speaking of the current car market, there is a very interesting question.

Many people are asking this question.

Why are Chinese electric cars so cheap?

Especially when compared to American electric cars.

Let's look at two very famous companies.

One is China's BYD.

One is America's Tesla.

Both of these companies make electric cars.

Their cars are all very beautiful.

Their cars all run very fast.

However, the prices are different.

BYD's cars are much cheaper than Tesla's cars.

Why on earth is this?

Is it because Chinese cars are bad?

No, Chinese cars are also very good.

Then why is it?

Let's chat about it slowly.

First, many people have an idea.

They think it is because the government gives money.

Is this true?

Yes, this is true.

The Chinese government indeed gave companies some money.

The government hopes everyone makes electric cars.

The government hopes everyone buys electric cars.

So the government will give some help.

But, does this explain it all?

Is this the most important reason?

Actually, it is not.

This is just a tiny reason.

New research tells us we need to look at other things.

For example, if a car is cheaper by a few thousand yuan.

Only a few hundred yuan is because of the government.

The remaining money is because of other reasons.

Then what are the other reasons?

This is the thing we need to know.

The first big reason is making things themselves.

What does this mean?

Let's think about how to make a car.

There are many, many things inside a car.

There are wheels, there are seats, there is glass.

The most important thing is the battery.

Electric cars must have batteries.

Batteries are very expensive.

Many car companies do not make batteries themselves.

They go to buy other people's batteries.

They go to buy other people's parts.

When you buy other people's things, you have to give other people money.

Others also want to make money.

So things become expensive.

But BYD is different.

BYD makes many things themselves.

BYD makes batteries themselves.

BYD makes parts themselves.

They do not need to go outside to buy.

Because it is made by themselves, it is cheap.

This is just like cooking.

You go to a restaurant to buy food to eat, it is very expensive.

You buy groceries and cook at home yourself, it is very cheap.

This is BYD's method.

They make it themselves, so they save a lot of money.

This is a very important reason.

More important than the government giving money.

The second big reason is people.

Making cars needs many people.

Needs many smart engineers.

They have to design the car.

They have to draw plans.

They have to work using computers.

Making cars also needs many workers.

They work inside factories.

They build the cars.

These people all need money.

The company has to pay them wages.

In the United States, wages are very high.

American engineers want a lot of money.

American workers also want a lot of money.

So Tesla has to spend a lot of money on people.

But in China, the situation is different.

Chinese engineers are also very smart.

Chinese workers are also very hardworking.

But Chinese wages are lower than in the US.

The company doesn't need to give that much money.

Although wages are rising, they are still lower than in the US.

This makes the cost of making cars lower.

Especially the people doing research.

BYD has many people doing research.

But the money spent on each person is relatively less.

So, this is also a reason why the cars are cheap.

Because labor is cheap, the cars are cheap.

The third big reason is quantity.

Quantity means "how much".

How many cars do you make?

This is a math problem.

If you only make one car, this car is very expensive.

You have to prepare many machines.

You have to prepare many factories.

Making only one is too wasteful.

But what if you make one million cars?

The machines are working every day.

The factories are open every day.

The more cars you make, the cheaper each car becomes.

This is a very simple principle.

China's market is very big.

China has many people.

Many people want to buy cars.

So BYD makes a very large number of cars.

They also sell a very large number of cars.

Because they make a lot, they are cheap.

Tesla also makes many cars.

But now BYD makes even more.

This gives BYD more of an advantage.

So, let's summarize.

Why are Chinese cars cheaper than American cars?

It is not because the cars are bad.

Nor is it mainly because the government gives money.

Although the government gave money, that is only a little bit.

There are three main reasons.

First, they make parts themselves, and make batteries themselves.

This is called vertical integration.

Making it yourself is cheaper than buying from others.

Second, their labor is cheap.

The wages of engineers and workers are lower than in the US.

This helps the company save a lot of money.

Third, they make many cars.

Because they make a lot, the cost is low.

This is why BYD is cheaper than Tesla.

This is actually a competition between two companies.

One is a Chinese company.

One is an American company.

Now, the Chinese company has lower prices.

The American company feels it is very difficult.

Because if the American company does not change, it will be hard to sell.

But changing is also difficult.

They cannot immediately make wages lower.

Nor can they immediately make all parts themselves.

So, this is a very difficult competition.

What we just talked about is actually a story about "electric cars".

Especially the story of BYD and Tesla.

If you want to buy a car, you will discover the prices are really different.

This is the secret behind the price.

I hope you are clear now.

This is not just a problem of money.

This is also a problem about how to do business.

It is also a problem about how to make things.