The Inflation Reduction Act is now paying battery producers for US domestic production. Tesla aims to take advantage of this by moving its equipment from Germany to the US. This is a big move that is going to amount to a lot of profit for the company.
In this video I discuss how the average for each vehicle is around $2,0000. As the manufacturer of the batteries, this is going to add up to a lot of money the USG is going to hand Tesla.
▶️ 3Speak
Having components built domestically should also improve upon just-in-time production as they won't need long lead times to ship product from overseas. They may realize more profits from not having to tie up capital in transit.
Perhaps the products might cost more to produce domestically, at first. But, in time they could drive down cost. And, they would make up for lower margin by being able to produce faster.
The advantage to technology is that costs tend to get driven down. While there are no guarantees in this instance, it is still likely.
Plus the economies of scale do enter. So if Tesla is constantly ramping up their production, they will gain there.
For now, I guess the gov't handing out money makes it viable to shift production.
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While I like the domestic production piece of this, anything that has a subsidy is a way to fuck up and imbalance the market. Perfect for government as they love to mess shit up in a free market.
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You are presuming markets are balanced to begin with which is untrue. Markets are insane even when left alone. Then, you have players in many forms throwing the balance out of markets.
And the imbalance doesnt only come from government. Look at the diamond industry and the imbalance there due to one company.
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All companies always look for where they can get better profits, even if it is moving factories to different countries.
Its really a great way of making profits,thumbs up to the founder for the idea. Thank you greatly for this information.
The move would also allow Tesla to avoid the complications that come with shipping its cars to the US from Europe. Tesla has been facing production delays due to the pandemic, and this has led to a number of its cars being stranded in transit. By moving its equipment to the US, Tesla would be able to avoid these delays and get its cars to customers more quickly.
Tesla doesnt ship cars from the Europe to the US. All Europe produced cars stay there (only a small amount now). Most of Europe demand is filled from their China plant.
This applies to batteries only. Their vehicle distribution is remaining unchanged.
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I saw that earlier this week but I am just not that optimistic about the Inflation Reduction Act as it won't really solve any issues in the economy. It just seems like a bandaid and most of the money will fill the pockets of the larger companies.
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It wont solve anything.
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"Inflation Reduction Act" Any act the US Congress passes does exactly the opposite of what it is named. For proof see "No Child Left Behind", "Patriot Act", "Affordable Care Act", etc.
There does seem to be a trend.
Governments, even if we remove the corruption component, does excel at the law of unintended consequences. Of course, the only ones who see this are those outside government.
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The government people see it too. They even joke about it. It's just when they are in charge, they tell themselves thing like, "I'm going to be different." And then they aren't different at all.
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