Opinion | Peter Navarro: What’s good for Elon Musk and Tesla is not good for America WashTimesOpEd
is one of the smartest humans on the planet, and it is critical to understand several key economic concepts underlying his price-cutting strategy.
The first is “economies of scale.” Industries like auto manufacturing that require massive capital investments can best lower unit costs of production by expanding factory scale. Whichever company achieves the greatest economies of scale will thereby have the firepower to drive out other competitors through lower, and yes, predatory prices.
With such “predatory pricing,” the largest companies can drive out the smaller ones by driving down prices to their cost of production, thereby earning zero profits but not operating at a loss. In contrast, smaller companies can’t match that predatory price without losing money and are thereby driven out of the market.
This is why historically, we never saw a proliferation of hundreds of auto manufacturers but rather simply the Big Three of General Motors, Ford and Chrysler and foreign giants like Toyota, Hyundai and BMW. And extinction is precisely the fate that awaits the U.S. automakers Ford and GM if Tesla succeeds in dominating the electric vehicle market.
You might think that lower Tesla prices at a time when inflation is raging would be good for America. Enter stage Marxist left,
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