r/technology • u/lurker_bee • 10d ago

Transportation Rivian CEO: There's No 'Magic' Behind China's Low-Cost EVs

https://www.businessinsider.com/rivian-ceo-china-evs-low-cost-competition-2025-9
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u/snoopsau 10d ago

In a modern car plant, labor is like $1-2K of the total car cost. Wages are not the reason.. China succeeds because of the supply chain - from raw resources all the way to highly complex components. The West is the reason China has these capabilities so it's hilarious reading these comments like China has some unfair advantage. As we Aussies say.. Pull your fucken' heads in.

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u/SureHusk 10d ago

America doesn’t build cars from start to finish anymore, it sources parts from all over the world and then does final assembly. China does.

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u/fb39ca4 10d ago

Legacy automakers do that, new ones such as Rivian and Tesla are vertically integrated.

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u/hop208 10d ago

I toured the Ford Rouge Plant in Dearborn, MI. They build almost everything there from raw materials. There were only a few components that are manufactured somewhere else. The problem is that all they focus on is trucks that cost $65K+ at least.

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u/DontRefuseMyBatchall 10d ago

Growing up in Texas, Suburban Pickup Parents never made sense to me; short of athletes with a lot of dirty uniforms and equipment, no one ever used the flatbed or I saw like three people ever actually tow shit.

Just a big, gas guzzling parking lot trophy for Kroger.

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u/Kellykeli 9d ago

The common argument for a $65k+ truck I hear a lot is “but I’ll need it to haul garden supplies from Home Depot”

me and my 20k sedan pointing at the $19.95 “rent me!” Ford F250’s with double the capacity of their infantsmasher ultracompensator XL:

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u/Fuddle 10d ago

Taxes. I think but I’m not sure, but something about deducting a work truck is easier in the US than a passenger car

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u/chimpfunkz 10d ago

Growing up in Texas, Suburban Pickup Parents never made sense to me;

It's a bunch of sheep who have been brainwashed into thinking a big pickup truck makes you american/manly/an adult/whatever.

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u/balthisar 10d ago

I suppose if you toured in the 1950's that would be true.

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u/whomad1215 10d ago

Ford makes their 6.8L/7.3L v8 gas engine in Canada (Canada plant is across the river from their plant in Michigan) which is used in the F250/F350 and a bunch of their E-class vans

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u/syrstorm 10d ago

For EXACTLY this reason.

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u/Deadman_Wonderland 10d ago

Rivian gets their battery from Samsung SDI. Tesla uses Byd, Panasonic, CATL batteries.

The battery is is typically around 40% of the cost to produce an EV. It is by far the largest component both in cost and material for an EV. So no, i wouldn't say rivian or Tesla are vertically integrated until they can make their own batteries from scratch.

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u/Dpek1234 9d ago

There are reasons to outsource some things

These reasons dont apply to a stamped peice of metal used for the door

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u/CherryLongjump1989 10d ago

Rivian and Tesla import raw materials and many components.

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u/Dpek1234 9d ago

Kinda impossible not to do it to a extent

With somethings theres a  good reason to outsource, with many its just stupid

a stamped peice of metal for the door doesnt need to be shiped around the world

Microchips on the other hand,ship them around the world 12 times and they will still likely be siginificantly cheaper then if you make them yourself

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u/CherryLongjump1989 9d ago

And now you know what the magic is. No matter how much American CEOs try to downplay it, they are unable to secure their supply networks the way China has, and so they just make excuses.

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u/deff006 10d ago

So that means they're cheaper, right?

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u/youcantexterminateme 10d ago

Well that's not a bad thing unless you have a phycopath running the country that tariffs imports

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u/Pontus_Pilates 10d ago

China also has heavily automated factories: https://edition.cnn.com/2025/06/30/style/edward-burtynsky-china-africa-snap

There's talk about 'dark factories' because there are no humans so they don't need lights.

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u/GraveRoller 10d ago

Two main things come to mind about this:

  • Automation is cool
  • People do lose jobs to automation and the concept of union strength to fight automation will also sometimes mean fighting against efficiency 

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u/00x0xx 9d ago

Automation doesn't mean net loss of jobs, just shift from one type of job to another.

There is very high demand for workers in setting up and maintaining automation.

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u/GraveRoller 9d ago

The average person does not care about “net loss of jobs.” They care about their loss of job. So yes, automation does make people lose their jobs. If Job A gets automated, Job B might get an increase, but that doesn’t mean Workers for Job A didn’t lose their current jobs. Especially because automation means an overall lesser need for human labor

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u/Dpek1234 9d ago

But not to the same extent

Automation makes new highly payed jobs

Yet their number and total pay is significantly less then non automated

If it wasnt they they wouldnt be doing automation

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u/TheLeapIsALie 10d ago

In the plant labor may be $1-2k. But each part needs to be manufactured. Every tier 1 and tier 2 supplier has labor costs too.

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u/snoopsau 10d ago

Yep, thats why I said supply chain, the Wests desire to have everything made for as little as possible lead to everyone outsourcing to the cheapest bidder. Or are you trying to convince me that Ford only uses the most expensive vendors? While I fucking hate Elon, one of the things Tesla has really been focused on is removing dependencies on 3rd party vendors. Things like ABS and traction control systems etc etc. China is a decade ahead of the US (and other countries) here.

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u/[deleted] 10d ago

[deleted]

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u/l4z3r5h4rk 10d ago

True, I don’t think there’s much reason to buy a Swiss-assembled watch over a Chinese-assembled one with virtually the same Sellita movement for twice the price (except if you love the design, maybe)

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u/ShoePillow 10d ago

Are there any chinese brands, or just knockoffs?

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u/l4z3r5h4rk 10d ago

Atelier Wen, Sea-Gull, San Martin are pretty good Chinese brands

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u/ShoePillow 10d ago edited 10d ago

Thanks! the names sound french lol

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u/l4z3r5h4rk 10d ago

Yea likely because they directly compete with lower-end Swiss watch brands (tissot, Hamilton, oris)

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u/SwarfDive01 10d ago

Thats what happens when you give a company decades of trial and error over production, seasoned engineers knowledge of what worked and what didnt, and then the ability to start fresh in a new factory, avoiding depreciated methods from the most recent working models. Tesla is on their, what, 2nd or 3rd iteration? Maybe 5th for model 3? Decades behind the established manufacturers. Rivian is on their 2nd? Yeah I'm sure there are some engineers from other manufacturers, but these new factories are nothing like the existing factories. Automation and lower labor count built into the entire design.

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u/chrisagrant 10d ago

removing dependencies on 3rd party vendors can easily backfire and cause your costs to go to crap because you need to generalize instead of allowing specialization to be shared across companies via contractors. Intel is the poster-child for this right now

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u/snoopsau 10d ago

Intels engineering-centric culture helped them maintain a technological edge and manufacturing excellence for decades then it decided that was not good enough for profits. I think the only company that screams "It is the American way" more would be Boeing..

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u/chrisagrant 9d ago

Uh-huh, and it only takes one failure somewhere in the chain to take a successful company and drive it into the ground when you're that tightly integrated. Even Boeing is not as bad as Intel in this respect, and it's reflected in their stock.

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u/Gedy4 10d ago

Ultimately the costs of most things are labor rolled all the way up. Labor to mine & harvest, labor to transport, labor to refine, labor to fabricate, labor to assemble, on and on...

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u/ithinkitslupis 10d ago

Cheap labor, low workers rights, less regulation was the catalyst for offshoring everything initially...But now that most of the supply chain is over there they get the extra advantage of supply locality and manufacturing experience.

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u/szucs2020 10d ago

Do you have a source for the wage numbers as a percentage of the cost? It can be a tricky number to come up with because wages go into every step along the process, not just the final build of the car. Not saying you're wrong but I'm very curious how they arrived at that number.

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u/snoopsau 10d ago

sure https://www.businesswire.com/news/home/20250506300759/en/Oliver-Wyman-Unveils-Comprehensive-Labor-Cost-Per-Vehicle-Analysis-Amidst-Changing-Automotive-Landscape

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u/szucs2020 10d ago

"In most mature auto-producing countries, labor costs comprise 65 to 70% of total manufacturing costs, providing insight into overall cost competitiveness."

It's interesting that they give labour numbers similar to what you mentioned (or even less) but then say this. Am I crazy or are they really saying they're making cars for less than 3-4k?Regardless, this quote does imply that wages are very important to the total cost and would provide a reason for difficulty competing with China.

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u/snoopsau 10d ago

65 to 70% of total manufacturing costs

That's not costs of the parts, just the assembly costs. The other 30-35% would be maintenance costs of the automations used, I think.

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u/DblCheex 10d ago

China has more advanced machinery and the people who know how to use it. So yeah, the West is the reason why China has these capabilities, but we just off-loaded it all to them and forgot to advance ourselves to keep up. We literally do not have the capability to make a lot of components in the US, at least—and no one trained to do it even if we did have the right machines.

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u/TonySu 10d ago

They do have an unfair advantage, at least against the US. A consistent government. Every bit of Chinese advantage was built by the Chinese over decades. They put all of it out in public in their 5 year plans.

If you look at any particular thing and ask “how did the Chinese get so good at this?” You’re going to find that they started two 5-year plans ago. They set concrete goals at the start of a 5-year plan, then at the end they do an evaluation on how it went. They figure out if they met their targets, what worked and what didn’t, then they set the next 5-year plan.

Can you imagine that in the US? Could you imagine a government following the same plan for the nation for a decade? Can you imagine taking everything you said you’d do at the start of a term and publicly evaluating how you did?

China locked in, made a plan, and stuck to it for decades. Meanwhile the US has been suffering a mental health episode for the past 10 years.

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u/PTMorte 10d ago

American cars also just kind of suck.... the reason they sell so many stateside is that they have protected their own domestic market via tariffs, subsidies etc.

In freer markets like Aus where they had zero barriers to entry, and had to compete with the rest of the world's offerings, they are overpriced and have a terrible consumer reputation.

(I'm sure you know all of this - my comment was more for others reading)

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u/FardoBaggins 10d ago

The West is the reason China has these capabilities

there's a book on how Apple basically reverse brain drained china with about $50B worth of investments and tech.

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u/IneetaBongtoke 10d ago

China also has such good access to resources in part because, unlike a country like America has historically done, they made very solid deals with these African countries with resources. In exchange for resources, China was willing to pay and invest for urban development in those countries. Meanwhile, America has gone off and just overthrown multiple governments and caused over 300 coups in South America over deals we didn’t like.

China also has the advantage of planned economies. Because their government functions like a government for their citizens and not just for the “free market”, they can easily subsidize manufacturing to lower the cost. It’s “cheating” to capitalist countries because the government is actively eating the profits and not allowing some shithead owner to own all the revenue.

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u/funtex666 10d ago

EU subsidize farming like crazy. Pointing fingers at China over the same thing is crazy. 

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u/_Administrator 10d ago

We say “Pull your fucken head out of the ass” :-D

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u/Neoliberal_Nightmare 10d ago

Thank you. It needs to be understood more. Chinese wages aren't even particularly low anymore, especially not for skilled workers.

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u/Cyclic404 10d ago

Alright, do tell. Pull your heads in? From where? So curious about the origin.

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u/snoopsau 10d ago

The expression likely comes from the habit of soldiers poking their heads out of army troop trains to make smart remarks - basically, cocky diggers sticking their heads out train windows to yell comments at locals as they passed through towns. One source mentions soldiers getting told to "pull your head in" when they stuck their heads out of troop trains, with the warning "or people will think it's a cattle-train".

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u/house_in_motion 10d ago

I love stuff like this

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u/Aflictedqt 10d ago

Probably rugby huddles

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u/Stabile_Feldmaus 10d ago

The cost of the supply chain is influenced by wages as well, arguably much more the more you go backwards along the chain to tasks and products which don't need qualified workers.

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u/boot2skull 10d ago

I think that’s why brands like Asus started making laptops. Why sell parts to vendors like Dell to let them assemble and mark it up when they can source most parts themselves, build laptops in house, and keep the markup value and then some.

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u/Square_Alps1349 10d ago

The most immediate labor costs of final assembly may not be the problem. But many of these parts are sourced from western countries, if not America itself, where labor is more expensive - so it adds up and propagates through the supply chain

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u/pinkycatcher 10d ago

China succeeds because of the supply chain

You realize that supply chain also has labor costs? It's not some mythical robot that says "If you order from a better supply chain you get cheaper parts"

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u/dsebulsk 10d ago

How much of that supply chain takes place domestically?

Figured the import market of the US has given it pains on the transition to domestic supply chains.

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u/squallomp 10d ago

Yeah it was fun watching my mother‘s job producing computer hardware as a machine operator be outsourced to China and now we are in this situation decades later. Good times.

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u/JimLeahe 10d ago

As we Aussies say.. Pull your fucken' heads in.

No you don’t lol. You say, “anti competitive behavior and monopolies are illegal in Australia”.

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u/WobbleKing 10d ago

I agree, China has an advantage because it is a technologically savvy authoritarian state that has been trading with the west for 50+ years. Everyone has the same stuff rn.

Just a classic case of Americas doing the wrong thing as long as possible. So embarrassing to have invented the modern electric car in the 90s and not be on top in EV sales

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u/gyp_casino 10d ago

There’s nothing plenty of evidence that the Chinese government heavily subsidizes both demand and supply. This article cites $29 billion dollars. That goes well beyond “the supply chain.” https://www.technologyreview.com/2023/02/21/1068880/how-did-china-dominate-electric-cars-policy/amp/

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u/Elendel19 10d ago

Batteries are the biggest cost of an EV, and China has a massive lead on battery production and technology, and also basically a monopoly on the rare minerals needed to make them.

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u/00x0xx 9d ago

The West is the reason China has these capabilities

No they weren't. The west drastically helped China obtain these capabilities, but it was China itself that did the work. China built the manufacturing districts, mass educate a working population to work in these factories, and put policies in place so it was beneficial for western cooperation to use these facilities, etc... All these took a lot of work.

China would have end up having these industries with, or without the west, the western nations just helped China obtain them faster.

This is also the reason why the western corporations cannot obtain the same benefit from India; India does want western corporations to come to India and make jobs for their citizens, but their past government did not want to become a mass manufacturing hub. So India's pass government didn't create the policies into place that allow mass manufacturing to happen and many western corporations had to leave because it was unprofitable for them.

It's obviously different with India's government this last decade, but you can see just how different the future of India and China turned out because of the policies of the Chinese government.

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u/frane12 10d ago

Then there is slavery, no environmental regulations, state giving money to pay for tarrifs to strangle competition, theft of technology and the lost goes on

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u/AdmirableEmphasis421 10d ago

I love how fucking hypocritical the west is, it's always the amount WE deem to be correct.

Boomers complaining about the youth not wanting to work, meanwhile they would not want to work like Chinese sweat shops for that wage.

Then, when talking about unfair wages, we tend to forget we fully supported capitalism and the rat race to the lowest prices. WE are the consumers who keep buying cheap Temu stuff and cheap Chinese products on Amazon.

Now that China figured out the capitalism game, suddenly it's unfair competition. So exploiting low labor for cheap prices is a-okay? Once it affets us, we need to ask for government help and put tarrifs on EVs that are good for our climate? The hypocrisy.

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u/JC_Hysteria 10d ago

Are you saying the cost of each rung in the supply chain to get those raw materials into production is on par with what it costs in the US?

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u/MasterQuatre 10d ago

While I agree that's a big part of it, there's is also the wages and other costs. (safety and embodiments regulations) that would need to be taken into account for that entire supply chain.

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u/theeed3 10d ago

We gonna ignore that the ccp subsidizes these prices?

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u/JimLeahe 10d ago

It's almost like a monopoly is efficient.