Chip shortage leads carmaker Opel to shut German plant until 2022(reuters.com)
reuters.com
Chip shortage leads carmaker Opel to shut German plant until 2022
https://www.reuters.com/business/autos-transportation/chip-shortage-leads-carmaker-opel-shut-german-plant-until-2022-2021-09-30/
491 comments
Scalpers are not the problem as they seem, they are like market makers for stock exchanges. They buy low and sell high, always. The factory could tell you that they're currently out of stock for the next few months, but a scalper will never be out of stock, because their prices rises so high that only very few desperate companies would buy. The point is, it's better to have the option to buy something at a high price, than to have no option to buy at all.
The way I see it, this makes sense in a hypothetical world of perfect theoretical models (you may recognize this world as being the one inhabited by frictionless, perfectly spherical cows). In this world, scalpers cause the market to price in "stickiness" - the more critical an item is to the buyer, the more they'll be willing to pay - so the supply ultimately gets allocated to the most desperate of buyers, for the price of "your entire margin", or possibly "literally all you have", if the buyer's survival depends on it.
Maybe this makes sense in that theoretical world - where there's no inertia, no friction, no capital investment, no jobs and livelihoods tied to the outcome. But in reality, scalping seems to be the purest form of parasitism. In a crisis, scalpers' activities may kill perfectly fine companies (or people) who would've otherwise limped through the rough times and survived, upsetting an industry long-term, and it forces everyone to waste their money.
And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.
Maybe this makes sense in that theoretical world - where there's no inertia, no friction, no capital investment, no jobs and livelihoods tied to the outcome. But in reality, scalping seems to be the purest form of parasitism. In a crisis, scalpers' activities may kill perfectly fine companies (or people) who would've otherwise limped through the rough times and survived, upsetting an industry long-term, and it forces everyone to waste their money.
And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.
This actually is the idea with truly “free market” thinking, no? The money wasted in a crisis, and the companies killed who would’ve otherwise limped through, is all assumed to be less waste and a better outcome than the alternative we get if we prevent scalpers and/or cap the prices. In this theoretical world, we waste more money when supply runs out too fast, and we get companies that are not as good at competing because they limped through.
The big question economically is whether these assumptions are generally correct. We have evidence in both directions, enough that most people can comfortably stick to their opinions and learned assumptions and political tribes. But is there a way to demonstrate that the money wasted is greater with hoarding/scalping than without, and under what conditions?
The big question economically is whether these assumptions are generally correct. We have evidence in both directions, enough that most people can comfortably stick to their opinions and learned assumptions and political tribes. But is there a way to demonstrate that the money wasted is greater with hoarding/scalping than without, and under what conditions?
Actually the original ‘free’ in free markets meant free from economic rents
Sure, but that’s not what it means anymore, right? Today’s “free” means no regulation.
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Yeah now it means “free to capture economic rent” almost the exact opposite.
Ah, that makes a lot more sense than the generalised freedom I’d assumed.
I really should read Wealth of Nations…
I really should read Wealth of Nations…
Scalpers perform a social service by rationing demand and ensuring availability. They don't eat the whole consumer surplus, rather, they must compete amongst themselves and the price you pay is the amount that makes client N+1 walk away if total supply is N. Some of the buyers will find that close to their margin, but others, for which the product is essential in very valuable (thus socially useful) goods or services, will thank God they have found the supply.
Think about hospitals paying 10 times more for antiseptic and performing surgeries, instead of someone drenching their driveway with that 10$ antiseptic while someone else dies without a needed surgery. By raising the price and pocketing $90, the scalper has prevented resource waste and supplied to the patient and hospital a service worth hundreds of thousands.
If a scalper becomes a monopoly, they can extract a monopoly rent and really bleed everyone dry - but so can a producer in the same situation, so the problem is low competition not intermediaries.
Think about hospitals paying 10 times more for antiseptic and performing surgeries, instead of someone drenching their driveway with that 10$ antiseptic while someone else dies without a needed surgery. By raising the price and pocketing $90, the scalper has prevented resource waste and supplied to the patient and hospital a service worth hundreds of thousands.
If a scalper becomes a monopoly, they can extract a monopoly rent and really bleed everyone dry - but so can a producer in the same situation, so the problem is low competition not intermediaries.
Governments can do this without the inefficiency of the scalpers profits in cases where the need is great.
Also known as a command economy, a staple stalinist recipe.
> Also known as a command economy, a staple stalinist recipe
No. That’s an extreme, just like your idea of what you call a “social service” performed by scalpers.
There’s a middle ground, and it’s certainly possible to regulate a market to mitigate the most pathological consequences of capitalism without Stalinism. In fact, that happens all the time.
No. That’s an extreme, just like your idea of what you call a “social service” performed by scalpers.
There’s a middle ground, and it’s certainly possible to regulate a market to mitigate the most pathological consequences of capitalism without Stalinism. In fact, that happens all the time.
Such an idiotic statement. When every other country was suffering under scalpers buying up mask supplies at the beginning of the pandemic Taiwan, South Korea and some other countries actively took a hand in mask distribution. The result:
- cheaper access to masks for the general population
- no mask shortages in critical infrastructure such as hospitals or other health care institutions
- general better handling and health outcomes during the pandemic
Leave it to the Americans that would consider sound policy and good health outcomes stalinist or communist recipes.
- cheaper access to masks for the general population
- no mask shortages in critical infrastructure such as hospitals or other health care institutions
- general better handling and health outcomes during the pandemic
Leave it to the Americans that would consider sound policy and good health outcomes stalinist or communist recipes.
Exactly there’s a “guilty by association” fallacy here.
1. You want the government to control production of some resources.
2. Stalin controlled production of some resources
3. Stalin killed millions of people
4. Therefore, you want to kill millions of people
1. You want the government to control production of some resources.
2. Stalin controlled production of some resources
3. Stalin killed millions of people
4. Therefore, you want to kill millions of people
No, there is only "knowing that communist central planning always ends up in shortages".
See here https://news.ycombinator.com/item?id=19970544 for an example that illustrates the point nicely.
See here https://news.ycombinator.com/item?id=19970544 for an example that illustrates the point nicely.
"Some central planning" does not mean "communism".
On top of that the US and Germany had the same ability, it just that they were extremely slow in their decision making.
When they finally made that step it did help. Incompetence caused scalpers to rise and profit while the rest suffered until the Government finally got their heads out of their asses.
Nothing about stalinism or communism in here. Just general incompetence.
When they finally made that step it did help. Incompetence caused scalpers to rise and profit while the rest suffered until the Government finally got their heads out of their asses.
Nothing about stalinism or communism in here. Just general incompetence.
When did people start dousing their driveways in antiseptic?
People do all kind of weird shit especially under stress during pandemic. Tons of richer people who are not scalpers bought ventilators for instance. And this is very expensive medical equipment which is completely useless without team of specialists to operate.
So people bought ventilators completely useless for them make supply shortages on them much worse. And unlike scalpers these people who do something like that due to panic are unlikely to sell them back to market when they're most needed.
So people bought ventilators completely useless for them make supply shortages on them much worse. And unlike scalpers these people who do something like that due to panic are unlikely to sell them back to market when they're most needed.
> "Scalpers perform a social service"
Good luck finding anyone willing to recognize this absurd point.
> "the problem is low competition"
Tell that to the GPU market.
Good luck finding anyone willing to recognize this absurd point.
> "the problem is low competition"
Tell that to the GPU market.
You disagree but with no reasons. You should consider why you hold that belief.
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When did I say I disagree?
"[...] "Scalpers perform a social service" [...] absurd point".
Do you mean that you think it's absurd but you don't disagree that scalpers perform a social service?
Do you mean that you think it's absurd but you don't disagree that scalpers perform a social service?
> Good luck finding anyone willing to recognize this
Indeed, most people are pathologically incapable of performing utilitarian reasoning and have a very hard time with this point. Very unfortunate, because that's what informs most economic policy.
Indeed, most people are pathologically incapable of performing utilitarian reasoning and have a very hard time with this point. Very unfortunate, because that's what informs most economic policy.
Yes, this is exactly my point, thanks for putting it that way.
I recognize this "absurd" point.
Right, but most don't. Maybe try and understand what I'm saying.
I've noticed a new wave of neo-capitalists who seem to be actively sympathising with (if not encouraging) scalping. "It's just the way the free market works!" "That's how retailers always worked!" "It levels out demand!".
Such grubby people.
In basically all my hobbies, scalping has become the norm now. Computers, Japanese cars, tabletop games, hell even kids toys. It does feel like there's been a massive increase in the number of people with enough capital to see a trend and basically buy the market out with the intention of making a profit.
Such grubby people.
In basically all my hobbies, scalping has become the norm now. Computers, Japanese cars, tabletop games, hell even kids toys. It does feel like there's been a massive increase in the number of people with enough capital to see a trend and basically buy the market out with the intention of making a profit.
So what's your solution? If there is limited number of 3090 GPUs should they be allocated to those who order them first? By random? Auction?
Scalpers at least ensure you can get it of you really need it (that is willing to pay a lot).
Scalpers at least ensure you can get it of you really need it (that is willing to pay a lot).
I don't have a solution nor do I think I need to offer one, I just think that people who engage in (and sympathise with) scalping are grubby people.
In a civilized society it is the governments burden and obligation to ensure scarce resources are shared responsibly. When this process is disrupted and not quickly remedied you will inevitably discover that people take matters into their hands to get what they need. They might commit white collar crimes or engage in destructive or violent robberies and protests. They might also roll out the guillotines and collect some scalps to remind society at large that the most dangerous people are those who’ve had everything robbed of them. When entire regions and communities are allowed to reach this point war is almost inevitable.
Absolutely not. “Sharing resources” doesn’t work when there is not enough to share.
A civilized society works when supply and demand intersection determines the price of goods and services.
Governments should interfere for specific cases (life emergency, masks, etc) and there are laws prohibiting scalping for these commodities - rightfully so.
Your idea of government intervention would assume that government is a rational entity. The truth couldn’t be further from it. Bribes and political favors from large companies would leave everything worse than it was before.
Imagine you're a low volume medical instrument maker and you need a dozen STM32 chips for your life saving device. Scalpers make sure that these chips are available and ready to ship, albeit at a premium which the company is happy to pay for given the circumstances.
A civilized society works when supply and demand intersection determines the price of goods and services.
Governments should interfere for specific cases (life emergency, masks, etc) and there are laws prohibiting scalping for these commodities - rightfully so.
Your idea of government intervention would assume that government is a rational entity. The truth couldn’t be further from it. Bribes and political favors from large companies would leave everything worse than it was before.
Imagine you're a low volume medical instrument maker and you need a dozen STM32 chips for your life saving device. Scalpers make sure that these chips are available and ready to ship, albeit at a premium which the company is happy to pay for given the circumstances.
Laws prohibiting "scalping" or "price gouging" in emergencies often makes problems worse by incentivizing hoarding and disincentivizing more suppliers from entering the market.
Price gouging laws target the products with most serious risk of shortages and guarantee shortages. I think back to the gas pipeline shutdown earlier this year, and how simply that could have been a non-issue if stations had been allowed to raise prices.
The problem is one of optics - if life-essentials were allowed to be price-gouged, the local gov't officials get blamed for not instituting price control during the period of shortage. Even if the shortage would've been worse had there been price control!
The government is often the cause of scarcity.
If price sky rocket, investors will increases production until prices are lower.
Government can mess with this by limit prices causing investors to stay away, meaning fewer chips get built, thus ensuing a temporary problem gets worse.
If price sky rocket, investors will increases production until prices are lower.
Government can mess with this by limit prices causing investors to stay away, meaning fewer chips get built, thus ensuing a temporary problem gets worse.
You can't increase production of semiconductors within 3-4 years.
Those assembly lines are highly specialized and extremely efficient. After all this time, the best they can do is 1% extra efficiency per month.
Those assembly lines are highly specialized and extremely efficient. After all this time, the best they can do is 1% extra efficiency per month.
And factories were big and owned by the evil rich, so Russia socialized them. Thus leading to decades long shortages for all but the very rich.
A short term (1-5) year problem is no reason to takes steps to ensure a generational problem.
Free market is brutal about improving efficiency and growing with demand.
A short term (1-5) year problem is no reason to takes steps to ensure a generational problem.
Free market is brutal about improving efficiency and growing with demand.
I think that everyone I've met with this viewpoint has been an "intermediary" or one who profits from them.
Your thoughts on that?
Your thoughts on that?
You're probably doing a bad job of inviting people to share their actual opinions with you. The easy & practical choices here are:
1) People with more money to spend get first pick of stuff.
2) Lottery / people who get to the store-front first.
Both of those are legitimate, although #1 does have a lot of support and theoretical backing in practice. Most of the third ways that get tried devolve back into one of those 2.
1) People with more money to spend get first pick of stuff.
2) Lottery / people who get to the store-front first.
Both of those are legitimate, although #1 does have a lot of support and theoretical backing in practice. Most of the third ways that get tried devolve back into one of those 2.
Your describing a capitalist dystopia where people with capital can buy up commodities on the cheap and then resell it for 200~900% markup. No thanks I rather not want to life in such a dystopia.
> Scalpers perform a social service by rationing demand and ensuring availability.
While the fundamental issue is indeed price discovery, even in the most abstract market -- stocks/fx/derivatives there are numerous regulations in place to limit the predatory behavior of certain speculators.
It is astonishing we have no such regulation for real-life items.
Scalpers are compounding a problem, by reselling something at 5X the price they invite others to do the same, they create artificial demand and speculation.
> Think about hospitals paying 10 times more
No, think somali pirates in terms of transportation costs. If you only look at it throught the autistic-economical lens, they are entrepreneurs helping the market find the right price for transportation.
> the problem is low competition not intermediaries
The problem is inelastic markets and high moats. Think New York real estate market where mobsters around the world inflate property price and will destroy the local economy.
Think about drug cartels and drug prices.
Think about the USD and its status as a global currency and its relationship to the Military Industrial Complex.
While the fundamental issue is indeed price discovery, even in the most abstract market -- stocks/fx/derivatives there are numerous regulations in place to limit the predatory behavior of certain speculators.
It is astonishing we have no such regulation for real-life items.
Scalpers are compounding a problem, by reselling something at 5X the price they invite others to do the same, they create artificial demand and speculation.
> Think about hospitals paying 10 times more
No, think somali pirates in terms of transportation costs. If you only look at it throught the autistic-economical lens, they are entrepreneurs helping the market find the right price for transportation.
> the problem is low competition not intermediaries
The problem is inelastic markets and high moats. Think New York real estate market where mobsters around the world inflate property price and will destroy the local economy.
Think about drug cartels and drug prices.
Think about the USD and its status as a global currency and its relationship to the Military Industrial Complex.
> It is astonishing we have no such regulation for real-life items.
We have something close for emergency situations. It’s illegal to price gouge during something like the aftermath of a hurricane.
It’s a well intentioned law. But for some things, it really may be best to let market forces dictate. For example, generators are in high demand and short supply during a hurricane. Folks snap them up so they can play Nintendo. Because they’re inexpensive due to gouging laws, they sell out fast. Now, someone who actually needs that generator for important, possibly life-saving work is SOL. And there isn’t a price incentive to expedite bringing in more supply.
Edit: I still think the scalpers are scumbags. Just wanted to point out an argument I found compelling in the past.
We have something close for emergency situations. It’s illegal to price gouge during something like the aftermath of a hurricane.
It’s a well intentioned law. But for some things, it really may be best to let market forces dictate. For example, generators are in high demand and short supply during a hurricane. Folks snap them up so they can play Nintendo. Because they’re inexpensive due to gouging laws, they sell out fast. Now, someone who actually needs that generator for important, possibly life-saving work is SOL. And there isn’t a price incentive to expedite bringing in more supply.
Edit: I still think the scalpers are scumbags. Just wanted to point out an argument I found compelling in the past.
You don’t need to apologise! It is sad that people don’t get this simple mechanism. I believe that lots of misery could have been averted if market signals where not distorted when they are needed most. E.g. in your example higher prices for generatora would not only prevent people from buying them for less important things but also open up a location arbitrage opportunity and incentivise to bring generators to the place where they are needed most.
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It seems to me like most of the (alleged) benefits of scalpers would be equally well achieved by selling (some fraction of) the items in auctions, instead of just picking a price.
However, my impression is that consumers would view this in a negative light, and that the harms to the seller’s reputation would be enough to outweigh the initially increased income. This seems to be the source of the inefficiencies that scalpers exploit/address.
This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).
While on the one hand, I don’t see how I’d be able to tell if this was what was done, and therefore don’t see how to confirm that this isn’t what is being done in the cases where there are scalpers, I don’t think this is being done, and don’t know why.
However, my impression is that consumers would view this in a negative light, and that the harms to the seller’s reputation would be enough to outweigh the initially increased income. This seems to be the source of the inefficiencies that scalpers exploit/address.
This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).
While on the one hand, I don’t see how I’d be able to tell if this was what was done, and therefore don’t see how to confirm that this isn’t what is being done in the cases where there are scalpers, I don’t think this is being done, and don’t know why.
> This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).
That's often how a lot of today's "scalping" is done - AIUI a lot of "secondary market" tickets on StubHub etc. are sold by an entity that's owned by TicketHub or whoever, so that the artists can sell their tickets at the price the market will bear but put a low face price on them for the sake of their reputation.
That's often how a lot of today's "scalping" is done - AIUI a lot of "secondary market" tickets on StubHub etc. are sold by an entity that's owned by TicketHub or whoever, so that the artists can sell their tickets at the price the market will bear but put a low face price on them for the sake of their reputation.
This is exactly how concert ticket scalpers work. Bands/producers covertly but with full awareness sell most of the ticket to scalpers, which outsources the reputation hit.
My mother told me about some new anti-scalper scheme she encountered recently when she was looking at ordering concert tickets for herself and my father.
It went something like this:
- basket size limited to IIRC a maximum of five tickets for the same concert,
- name of the buyer is linked to (idk, maybe even printed on) the tickets AND
- the named buyer would have to be there with the group to enter the venue.
I think this would probably be pretty effective in countering that bottom-feeding scum called scalper.
- basket size limited to IIRC a maximum of five tickets for the same concert,
- name of the buyer is linked to (idk, maybe even printed on) the tickets AND
- the named buyer would have to be there with the group to enter the venue.
I think this would probably be pretty effective in countering that bottom-feeding scum called scalper.
You don’t seem to have caught my point: it is the bands themselves that work with the scalpers. They sell a chunk (often majority) of tickets directly to the scalpers for a price above what they publicly claim to charge. Then, they introduce measures like you describe, to reduce competition from grassroots scalpers, to ensure stable business situation for the anointed scalpers.
This arrangement works great: the reputation hit is very successfully outsourced to what you call “bottom feeding scum”. The band benefits from higher profit than they would otherwise be able to get if they tried to sell all their tickets at the publicly advertised price, which quite apparently is below the market clearing price. Ticket availability is increased: instead of having to fight to book the tickets in 8 seconds after the registration is opened, everyone can buy tickets at their leisure, simply paying more for convenience when they buy from scalpers.
Let me ask you this: for the band you are talking about, despite all the measures you describe, you still could buy tickets on StubHub, no?
This arrangement works great: the reputation hit is very successfully outsourced to what you call “bottom feeding scum”. The band benefits from higher profit than they would otherwise be able to get if they tried to sell all their tickets at the publicly advertised price, which quite apparently is below the market clearing price. Ticket availability is increased: instead of having to fight to book the tickets in 8 seconds after the registration is opened, everyone can buy tickets at their leisure, simply paying more for convenience when they buy from scalpers.
Let me ask you this: for the band you are talking about, despite all the measures you describe, you still could buy tickets on StubHub, no?
There was a minor controversy nearly a year ago where a MSI subsidiary that was only supposed to get old/refurb stock managed to get new stock of the nvidia 30 series and then proceeded to sell them with inflated pricing. Being charitable I'd say it's likely someone over-enthusiastic at that subsidiary and it blew up in their face, but it doesn't help with them being perceived as fair
Maybe producer can sell some part on auction and donate extra income to some charity?
At least this way parasitic scalpers would not benefit.
(this assumes that charity would be some actual charity, not just existing to transfer money to family of CEO or something similar)
At least this way parasitic scalpers would not benefit.
(this assumes that charity would be some actual charity, not just existing to transfer money to family of CEO or something similar)
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I and many other gamers have a negative view of Nvidia because of their inability to thwart scalpers and crypto miners. To quote a wise man, "so Nvidia, fuck you!"
It's not really NVidia's fault. The problem is that you can buy a GPU for $1000 and use it to print $2000 of money. That's annoying because most people just want to play a computer game, not print $2000 worth of money.
The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.
The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.
> The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.
Who says they are not already doing that in some capacity?
Who says they are not already doing that in some capacity?
That sounds like a lot of work, and a PR nightmare if the public ever found out.
Nvidia is already a money printing machine, and their margins are growing. I doubt it’s worth the time investment and risk exposure to the crypto markets for Nvidia. Better off using that time a money inventing better money printers.
Nvidia is already a money printing machine, and their margins are growing. I doubt it’s worth the time investment and risk exposure to the crypto markets for Nvidia. Better off using that time a money inventing better money printers.
Why would you start digging for gold if you are already becoming rich producing and selling the shovels?
I guess it's easier to make a shovel than it is to make a GPU, and it's easier to do industrial-scale crypto mining for a company that already owns a datacenter than it is to build an industrial earth processing operation. If NVidia wanted to mine a lot of coins, they no doubt have a few employees that could get that started. But it doesn't seem like they want to, perhaps because it's not a sustainable business or perhaps because their customers are already mad at them and they don't want to make it worse. (Though it's not really their fault that customers are mad at them; they're actually mad that someone invented cryptocurrency, which is not NVidia's fault.)
Ok, but like, would their overall reputation be higher if they were to directly put some proportion of their inventory up for auction (like, each item individually, not like one auction for a bundle of a very large number of GPUs) instead?
No, but at least they are being enriched to invest in research and development instead of some arbitraging trolls that will spend it on hookers and blow.
No, the prices will still be comparable to scalper prices, and the cost-conscious consumer market will remember the company's price gouging when they make their next-generation purchase
This response was initially confusing to me, but thinking about it, I think it led me to realize that complaints about things like this are, essentially, an attempt at coordination among consumers, in order to collectively get a better deal.
If there were only a single consumer, a monopsony, they would have a large degree of influence on the price.
Building a public consensus on what prices are reasonable and what prices are "too high" allows for exerting similar pressures on the price, as if there were an organization which represented a large portion of the consumers and which would make a single decision for all of that portion (like, a purchasing union thing).
I hadn't realized this.
If there were only a single consumer, a monopsony, they would have a large degree of influence on the price.
Building a public consensus on what prices are reasonable and what prices are "too high" allows for exerting similar pressures on the price, as if there were an organization which represented a large portion of the consumers and which would make a single decision for all of that portion (like, a purchasing union thing).
I hadn't realized this.
> And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.
Very well said, but I'd go even further -- scalpers know other scalpers will do the same and create artificial shortage so they are actually preying on legitimate customers, so there's an adversarial component to the behavior of scalpers as well.
We rationed toilet paper during the lockdowns and there was a legitimate reason people were hoarding it, but we do nothing about scalpers who have no legitimate reason for their behavior.
Very well said, but I'd go even further -- scalpers know other scalpers will do the same and create artificial shortage so they are actually preying on legitimate customers, so there's an adversarial component to the behavior of scalpers as well.
We rationed toilet paper during the lockdowns and there was a legitimate reason people were hoarding it, but we do nothing about scalpers who have no legitimate reason for their behavior.
If it is about “being the first” then obviously the pricing by the manufacturer is inefficient. In the end the scalpers you describe just fill in the void that is opened up by the manufacturers not adjusting their prices to the demand.
In reality the market isn't a zero sum game. And there isn't a fixed supply of resources. In a crisis scalpers ensure that the customers receive critical goods that may otherwise be unavailable at any price. Not having that option could kill a company just as well. All of the profit money doesn't go to the scalper either, the original manufacturer can sell for higher prices, reallocate resources to make what is most profitable and meet the demands of the market. And there are price gouging laws to limit this activity for essential goods in an emergency.
"No offense, but it sounds like some commie gobbledygook to me." ~Norm Macdonald
They can only do that by holding onto to supply which makes shortages worse. The same thing happens with ticket scalping at concerts, the difference is it’s more obvious that a sold out concert has empty seats vs supply sitting in a warehouse on the off chance it can be sold at 100x prices.
this is false. the supply would be gone at those low prices. Now they can be had for those who want it badly enough.
Your statement is false. Demand would be met with an increase in supply, satisfying all needs for the product and without the "help" of scalpers who sidestep supply-and-demand by artificially creating scarcity to drive up demand for their own profit. This is no help to anyone but themselves.
If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
At no point to scalpers make this system more efficient – they just serve to extract a greater profit from consumers and businesses for their own benefit by the aforementioned artificial scarcity that they make. This is also known as cornering the market, a well-known and despised practice that has been frequently used by morally corrupt individuals who sought only to benefit themselves. Nowhere can nor should the argument be made that scalpers help anyone but themselves.
If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
At no point to scalpers make this system more efficient – they just serve to extract a greater profit from consumers and businesses for their own benefit by the aforementioned artificial scarcity that they make. This is also known as cornering the market, a well-known and despised practice that has been frequently used by morally corrupt individuals who sought only to benefit themselves. Nowhere can nor should the argument be made that scalpers help anyone but themselves.
> Demand would be met with an increase in supply, satisfying all needs for the product and without the "help" of scalpers who sidestep supply-and-demand by artificially creating scarcity to drive up demand for their own profit. This is no help to anyone but themselves.
There's no "artificial" demand. Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way. (Maybe some of them make bad judgements - but they'll naturally go out of business in that case).
> If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
"Scalpers" improve the quality of that signal and make it easier to increase production with confidence.
> This is also known as cornering the market, a well-known and despised practice
Views on true corners are certainly mixed (there's an argument that it punishes dishonest market makers), but in any case it only applies to buying up the whole supply, which no individual "scalper" does or can.
There's no "artificial" demand. Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way. (Maybe some of them make bad judgements - but they'll naturally go out of business in that case).
> If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
"Scalpers" improve the quality of that signal and make it easier to increase production with confidence.
> This is also known as cornering the market, a well-known and despised practice
Views on true corners are certainly mixed (there's an argument that it punishes dishonest market makers), but in any case it only applies to buying up the whole supply, which no individual "scalper" does or can.
Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way.
The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.
The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.
> The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.
If that happens, then the price drops, and the "scalper" loses money - demand has some elasticity, and a healthy market has some slack in it. Momentum-trading speculation works sometimes, but anyone who uses it as their sole strategy will go bankrupt sooner or later.
If that happens, then the price drops, and the "scalper" loses money - demand has some elasticity, and a healthy market has some slack in it. Momentum-trading speculation works sometimes, but anyone who uses it as their sole strategy will go bankrupt sooner or later.
> The scalper isn’t going to buy something they can’t sell on
That assumes they have perfect information which they don’t they can only estimate demand. It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.
And of course that assumes they never run into logistical issues.
That assumes they have perfect information which they don’t they can only estimate demand. It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.
And of course that assumes they never run into logistical issues.
1. No one assumes that they have perfect information. No one says this is perfect just better than the other ways to handle these situations!
2. Who do you think will consistently have better information than someone whose sole goal is to sell these tickets?
3. If they are consistently losing money scalping and not selling tickets they won't be a scalper much longer.
4. This is a dynamic process which can account for changing variables regarding supply and demand quickly as opposed to rules and regulations which do not.
5. If they only sell half the tickets at 4x then they could sell the last half at an extreme discount and make even more than double their investment! Do you think they would rather make more money or less?
2. Who do you think will consistently have better information than someone whose sole goal is to sell these tickets?
3. If they are consistently losing money scalping and not selling tickets they won't be a scalper much longer.
4. This is a dynamic process which can account for changing variables regarding supply and demand quickly as opposed to rules and regulations which do not.
5. If they only sell half the tickets at 4x then they could sell the last half at an extreme discount and make even more than double their investment! Do you think they would rather make more money or less?
For 5. consider the diamond industry as a real world example of an industry well renowned for aggressively limiting supply.
Scarcity can drive price upwards in an exponential way that ends up making it optimal to not sell all inventory. Sure in an ideal world you would sell everything you can for the maximum price but in the real world the buyer is incentivized to wait until you offer your minimal price.
Scarcity can drive price upwards in an exponential way that ends up making it optimal to not sell all inventory. Sure in an ideal world you would sell everything you can for the maximum price but in the real world the buyer is incentivized to wait until you offer your minimal price.
> It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.
True, but in that case they've added more value than they've subtracted. That artists insist on pricing every concert to sell out is a big part of the problem here; you'd get a more functional market by accepting a few empty seats to give some slack.
True, but in that case they've added more value than they've subtracted. That artists insist on pricing every concert to sell out is a big part of the problem here; you'd get a more functional market by accepting a few empty seats to give some slack.
Bands want to present the appearance of a successful band, it helps their image. A filled stadium is part of that, so yes they can make more money today by raising prices but that’s making real trade offs.
Except increase in supply in chips takes 3-5 years
"This is false" isn't much of an argument. If there is an argument, you should probably provide that instead...
Empty seats mean someone screwed up but how can you tell that a group of empty seats is unused due to a scalper, versus some group of people who couldn’t make it?
When speculators don’t screw up, one fewer part being sold now means one more part that can be bought later. Delaying sales of some parts makes the shortage worse earlier and better later. Keeping inventory is a service to people who didn’t plan ahead.
Sometimes people do screw up, buying things that are never used, so they lose money due to the waste. But you can’t assume they’re all screwups.
When speculators don’t screw up, one fewer part being sold now means one more part that can be bought later. Delaying sales of some parts makes the shortage worse earlier and better later. Keeping inventory is a service to people who didn’t plan ahead.
Sometimes people do screw up, buying things that are never used, so they lose money due to the waste. But you can’t assume they’re all screwups.
Your right concerts make it hard to tell why seats are empty however unsold inventory is part of the basic business model of reserving a section of supply at higher prices not simply a mistake.
Airline seats are a better comparison. Airlines keep raising prices as inventory gets sold and flights near. However, that approach means they generally fly with significant unused excess capacity. The reverse approach where prices got cheaper as the flight neared would result in increased occupancy though significantly less total revenue.
The discrepancy shows up because buyers may be willing to pay radically different prices. A business traveler may be willing to book a last minute seat at 3x the price a holiday traveler who’s booking 6 months in advance. Hypothetically, making a 50/50 bet on a 3x sale is clearly a good idea but it means 50% of the time that seat sits unused.
Airline seats are a better comparison. Airlines keep raising prices as inventory gets sold and flights near. However, that approach means they generally fly with significant unused excess capacity. The reverse approach where prices got cheaper as the flight neared would result in increased occupancy though significantly less total revenue.
The discrepancy shows up because buyers may be willing to pay radically different prices. A business traveler may be willing to book a last minute seat at 3x the price a holiday traveler who’s booking 6 months in advance. Hypothetically, making a 50/50 bet on a 3x sale is clearly a good idea but it means 50% of the time that seat sits unused.
That needs to be sourced from somewhere; the classic understanding of airlines is they usually overbook [0] and rely on people not turning up.
In fact, the whole "lets not sell our inventory, we'll make higher profits!" idea here is suspect. The idea that having unsold inventory in the model is a good idea is just false; having inventory left over is always undesirable. If it was sold at the last minute then they would have more profits. The scalpers are incentivised to minimise leftover inventory to the point where it isn't going to be a big deal.
[0] https://www.travelperk.com/blog/overbooking-airlines-quick-g...
In fact, the whole "lets not sell our inventory, we'll make higher profits!" idea here is suspect. The idea that having unsold inventory in the model is a good idea is just false; having inventory left over is always undesirable. If it was sold at the last minute then they would have more profits. The scalpers are incentivised to minimise leftover inventory to the point where it isn't going to be a big deal.
[0] https://www.travelperk.com/blog/overbooking-airlines-quick-g...
It isn’t a question of what happens on specific flights, it’s a question of what happens generally. Global load factors are ~85% which is a long way from constantly overbooked.
Pre pandemic to get a normal picture: https://www.airlineratings.com/news/packed-planes-new-normal...
Low cost US carriers have a load factor of 90% that’s a trade off between fixed aircraft size and variable demand. However, US carriers only average a load factor of 86.5% meaning legacy carriers like American Airlines have a below 86.5% capacity factor and that difference between 90% and ~85% is exactly the optimization I am talking about.
Pre pandemic to get a normal picture: https://www.airlineratings.com/news/packed-planes-new-normal...
Low cost US carriers have a load factor of 90% that’s a trade off between fixed aircraft size and variable demand. However, US carriers only average a load factor of 86.5% meaning legacy carriers like American Airlines have a below 86.5% capacity factor and that difference between 90% and ~85% is exactly the optimization I am talking about.
I'm guessing that is a statistical artefact. They'd be running routes that are completely packed in one direction and not so full in the other due to seasonal effects or due to day/night cycles. So even if they were trying to overbook they'd still have quite empty planes much of the time.
85% capacity use of an asset is really quite high. If they managed to achieve mid-high 90s that would be startling given how good humans are at missing flights and changing plans.
To repeat myself, if the plan is to leave your capital unutilised for 15% of the time, on purpose, when there is an alternative, then the planner is a lousy capitalist and doomed to soon be a broke one.
85% capacity use of an asset is really quite high. If they managed to achieve mid-high 90s that would be startling given how good humans are at missing flights and changing plans.
To repeat myself, if the plan is to leave your capital unutilised for 15% of the time, on purpose, when there is an alternative, then the planner is a lousy capitalist and doomed to soon be a broke one.
> I'm guessing that is a statistical artifact.
No, it’s a difference in business models. Low cost carriers approach things very differently. https://youtu.be/1-uNMj57Y4c
It’s not that their wasting this 15% of their unused seats airlines are simply more profitable with this pricing model.
“While you might expect the airlines to lower their prices a few days before the departure day to occupy the last seats, the opposite is true: Selling 20% of the remaining seats for $1,500 is more profitable than selling half of them for the regular fare of $550.” https://flightfox.com/tradecraft/how-do-airlines-set-prices
Further that’s a statistical average, they might not have any last minute travelers on flight X or they might sell out flight Y 1 hour before departure. As airlines can’t both raise and lower prices at the last minute they A reserve seats for the possibility and B frequency lose the gamble.
No, it’s a difference in business models. Low cost carriers approach things very differently. https://youtu.be/1-uNMj57Y4c
It’s not that their wasting this 15% of their unused seats airlines are simply more profitable with this pricing model.
“While you might expect the airlines to lower their prices a few days before the departure day to occupy the last seats, the opposite is true: Selling 20% of the remaining seats for $1,500 is more profitable than selling half of them for the regular fare of $550.” https://flightfox.com/tradecraft/how-do-airlines-set-prices
Further that’s a statistical average, they might not have any last minute travelers on flight X or they might sell out flight Y 1 hour before departure. As airlines can’t both raise and lower prices at the last minute they A reserve seats for the possibility and B frequency lose the gamble.
Well, sure, but that is assuming that the market is exactly 85 people. If we hold the number of people fixed and it is impossible to sell all of the inventory then holding back inventory is much more effective - because we have assumed it is impossible to sell.
The hypothetical in that article would make more money if they sold 80 seats at $495, 15 seats at 900 and then 5 at $1500 (that makes $60,600). There are strong incentives here to fill the seats.
And they are doing the scalpers trick where someone desperate to get on the flight can. As opposed to when the good would be overbought and someone willing to pay $1,500 has to start paying off passengers for their booking instead of giving more money to the people who put planes in the sky.
Plus, if we're both running this strategy, I have huge incentives to offer $1,495 seats to steal your high paying customers off you. It just doesn't work as a strategy unless it is already impossible to fill the plane - which is quite likely the case.
The hypothetical in that article would make more money if they sold 80 seats at $495, 15 seats at 900 and then 5 at $1500 (that makes $60,600). There are strong incentives here to fill the seats.
And they are doing the scalpers trick where someone desperate to get on the flight can. As opposed to when the good would be overbought and someone willing to pay $1,500 has to start paying off passengers for their booking instead of giving more money to the people who put planes in the sky.
Plus, if we're both running this strategy, I have huge incentives to offer $1,495 seats to steal your high paying customers off you. It just doesn't work as a strategy unless it is already impossible to fill the plane - which is quite likely the case.
No, the math works fine. Ignoring baggage fees and first class vs catch etc. If you have a flight with 300 identical seats and you could sell everyone single one of them for say 100$ and that’s your maximum possible revenue from a single price point. Now the question becomes how do you capture value from people willing to pay more than 100$? You can play some games with round trip tickets and minimum stays, but again let’s ignore that and just focus on the ramp up.
If you designate say 75% of your ticks at a lower price of X then some people willing to pay more will just buy at that price. Essentially the trick is to minimize people who are willing to pay more who end up buying cheaper tickets. And it turns out people booking close to the flight are generally willing to pay more. Sure six months out they still sell off up to 75% of tickets at ~100$ raising or lowering prices based on demand so their losses are limited if nobody else buys the ticket the flight is still mostly full. But at that 75% they start the ramp up and they also ramp things up as the flight gets close.
2 weeks out they say all tickets are 200$ even if some of those 75% are unsold. At the last day bump it to 400$. If over 1 month we can ignore seats at 100$ because that’s unchanged. Sell 1,000 seats at 200$, and 500 seats at 400$ and fly with say 1500 empty seats that’s 400,000$ where you would only make 300,000$ if all 3,000 seats where sold for 100$. But what if they dropped prices at the last hour? Well most of the time they have empty seats so many would avoid the 400$ ticket and would tend to wait around for that window especially for flights from A to B leaving every hour. Peak prices are a game of chicken and they can’t blink or they lose billions in revenue.
This is of course heavily simplified but it does demonstrate the basic trick I am talking about where they extract value from unsold inventory.
If you designate say 75% of your ticks at a lower price of X then some people willing to pay more will just buy at that price. Essentially the trick is to minimize people who are willing to pay more who end up buying cheaper tickets. And it turns out people booking close to the flight are generally willing to pay more. Sure six months out they still sell off up to 75% of tickets at ~100$ raising or lowering prices based on demand so their losses are limited if nobody else buys the ticket the flight is still mostly full. But at that 75% they start the ramp up and they also ramp things up as the flight gets close.
2 weeks out they say all tickets are 200$ even if some of those 75% are unsold. At the last day bump it to 400$. If over 1 month we can ignore seats at 100$ because that’s unchanged. Sell 1,000 seats at 200$, and 500 seats at 400$ and fly with say 1500 empty seats that’s 400,000$ where you would only make 300,000$ if all 3,000 seats where sold for 100$. But what if they dropped prices at the last hour? Well most of the time they have empty seats so many would avoid the 400$ ticket and would tend to wait around for that window especially for flights from A to B leaving every hour. Peak prices are a game of chicken and they can’t blink or they lose billions in revenue.
This is of course heavily simplified but it does demonstrate the basic trick I am talking about where they extract value from unsold inventory.
You're running in to a pretty fundamental problem with the maths here - if we have Retric-Air and Roenxi-Air, Roenxi-Air is going to be making more money because my plan is to copy your plan then sell a couple of extra $100 cheap tickets to fill the plane up. Your strategy is completely dominated by a strategy that just does that and sells a few more tickets. You're segmenting the market, I'm segmenting the market and fully utilising my capital.
I can tell you why the airlines would be planning on having empty seats in practice - because there are sometimes literally not enough people interested in travelling to fill the aircraft, so they adopt a strategy of leaving empty seats because they have no other option. If you've ever flown some god-awful connecting flight at 2am you might have seen that in action yourself. But that isn't because the airline is choosing to reserve seats, they'd much rather have more passengers - that just isn't an option.
I can tell you why the airlines would be planning on having empty seats in practice - because there are sometimes literally not enough people interested in travelling to fill the aircraft, so they adopt a strategy of leaving empty seats because they have no other option. If you've ever flown some god-awful connecting flight at 2am you might have seen that in action yourself. But that isn't because the airline is choosing to reserve seats, they'd much rather have more passengers - that just isn't an option.
Fair enough, my explanation was simplified and yield management is complex. Planes are full so airlines seem to be be doing better at it, though.
What raises the difficulty is that tickets expire - not a problem with selling electronic parts, though they do eventually become obsolete.
What raises the difficulty is that tickets expire - not a problem with selling electronic parts, though they do eventually become obsolete.
It depends on what is causing the lack of supply. If the bottleneck lies in factors beyond the control of consumers, i.e. discontinued production, or shortage of raw material, then I see no inherent issue with scalping. But if it’s the scalpers themselves that cause an otherwise plentiful supply to become scarce, then they are the cause of the shortage, rather than the effect, and their behavior should be curbed. The problem is that the former situation can easily lead to the latter via a panic buying feedback loop, and it’s not entirely clear where the distinction should be drawn.
They could only do that by cornering the market, but if there are many competitive scalpers, then the price is right and that's just normal supply (at the source supplier, not the scalper) and demand.
Except that your markets are not perfect, your scalpers have overhead and now represent a middleman who wants their cut.
If the buyers could participate in a bidding market directly at the supplier, there would be no need for this overhead. The overhead you speak of is the cost of running a liquid market for a particular good where none existed.
Negative. Like scalping everywhere, they're middlemen who contribute nothing to society, and make it more difficult for people who do.
Some have argued that scalpers, like other risk arbitrageurs, accelerate market price discovery. If you buy the argument that markets are net positive for society by relaying information about economic trade offs, scalpers aren’t necessarily bad even if they are indeed annoying to market participants by lifting the ask. Of course there are extreme conditions where we also might decide that using money as the universal conveyance of value is a bad thing because it reveals how unequal outcomes in society have been… And the usual response is to shift to rationing rather than price to allocate scarce resources. But with rationing you get sidechannel markets and not necessarily efficient allocations.
This argument feels wrong to me.
If there is a market for the chip, it will find a market price. If there isn’t there isn’t.
If the market is in an equilibrium and the chip manufacturer makes some money on their chips, and the chip buyers make some money on their products, the a scalper coming in and sucking up all the profit isn’t doing anybody in the world any good except themselves.
The scalpers don't suck up profit, since if there is a functioning market, you can't really scalp.
Scalping exists when there is a discrepancy between a marked price and the market price of an item. If scalpers were not a thing, you would have shortages. With scalpers, you still have shortages, but you can acquire the good by paying a higher, market clearing price.
That higher price either makes it so that rich people can get the thing (most don't like this), or that people who really need it can get it (i.e. lifesaving medication etc). So your view of scalpers might be influenced by the distribution of (1) and (2) going on.
Scalping exists when there is a discrepancy between a marked price and the market price of an item. If scalpers were not a thing, you would have shortages. With scalpers, you still have shortages, but you can acquire the good by paying a higher, market clearing price.
That higher price either makes it so that rich people can get the thing (most don't like this), or that people who really need it can get it (i.e. lifesaving medication etc). So your view of scalpers might be influenced by the distribution of (1) and (2) going on.
Sure, I get all that but scalping is still in essences a leeching practice.
And yes they can suck up profits, that’s their whole thing. Are you saying that profits can’t exist in a functioning market?
And yes they can suck up profits, that’s their whole thing. Are you saying that profits can’t exist in a functioning market?
My observation is that you mostly get (1). And this is also why wealth inequality (both on a personal and a corporate level) is so bad.
Equilibriums don’t just happen by themselves. When there isn’t an equilibrium, delaying sales by keeping inventory helps the people who didn’t plan ahead.
The ant planned ahead for the winter, the grasshopper didn’t, and the scalper provides a service to the grasshopper, for a price.
The ant planned ahead for the winter, the grasshopper didn’t, and the scalper provides a service to the grasshopper, for a price.
So, you may be right about scalpers providing nothing to society. But you are absolutely wrong about middle men in general. At a super high level, they have to provide value else they would be short circuited. Very often this value is in knowledge, both product knowledge, customer knowledge, and market fit. A good middle man can tell you that the thing you think you want won't fit your needs as well as some other product (bonus points if the product isn't something they personally sell). You will also find a high correlation between the health of an economy, and the number of middlemen present. It's actually something that has concerned me in the US for several years, that too many companies have been squeezing out the middle. I think it's exacerbated the current supply chain issues.
Middlemen are good if they unbundled and directly charged for their services and did not act as arbitrageurs simultaneously. Middlemen who withhold information or resist competition are rent seeking, which is a strictly negative utility for society.
Well, they provide value. They make it possible for people/entities who needs things the most to actually get them instead of those who happen to be first in line or in lucky position to get access to supply.
> Well, they provide value. They make it possible for people/entities who needs things the most to actually get them instead of those who happen to be first in line or in lucky position to get access to supply.
True - they also take on some risk of being stuck with inventory that they can't resell at a profit (if prices drop between when they buy and sell).
Ethically scalping feels wrong, but I think ethics aside, scalping does provide a service to the market.
True - they also take on some risk of being stuck with inventory that they can't resell at a profit (if prices drop between when they buy and sell).
Ethically scalping feels wrong, but I think ethics aside, scalping does provide a service to the market.
> Ethically scalping feels wrong, but I think ethics aside, scalping does provide a service to the market.
Yeah fuck ethics, there's profit to be made.
/s
Yeah fuck ethics, there's profit to be made.
/s
Correction: they make it possible for people/entities who can afford to waste most money to get them instead of those first/lucky. But how is that a better outcome? And why should this involve people spending more money, and all the delta going to the person who was first in line or in lucky position to secure a loan and buy off all the supply?
> they make it possible for people/entities who can afford to waste most money to get them instead of those first/lucky. But how is that a better outcome?
It's not "waste", it's the people who are willing to spend the most money, which are presumably the people who want/need the thing most, so it's better than allocating the thing at random.
> And why should this involve people spending more money, and all the delta going to the person who was first in line or in lucky position to secure a loan and buy off all the supply?
The person who makes a good judgement about what things are underpriced is selling a service to the market and earning their cut. A seller who's paying attention should see the rush and raise their prices (and ideally increase production to match that).
It's not "waste", it's the people who are willing to spend the most money, which are presumably the people who want/need the thing most, so it's better than allocating the thing at random.
> And why should this involve people spending more money, and all the delta going to the person who was first in line or in lucky position to secure a loan and buy off all the supply?
The person who makes a good judgement about what things are underpriced is selling a service to the market and earning their cut. A seller who's paying attention should see the rush and raise their prices (and ideally increase production to match that).
> It's not "waste", it's the people who are willing to spend the most money, which are presumably the people who want/need the thing most, so it's better than allocating the thing at random.
It’s not a waste, but it’s not best allocation either. It seems like the chips will go to established players with large and cheap credit lines and ossify the market even more.
The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
https://www.investopedia.com/terms/m/marketmakerspread.asp
It’s not a waste, but it’s not best allocation either. It seems like the chips will go to established players with large and cheap credit lines and ossify the market even more.
The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
https://www.investopedia.com/terms/m/marketmakerspread.asp
> It’s not a waste, but it’s not best allocation either. It seems like the chips will go to established players with large and cheap credit lines and ossify the market even more.
Credit is cheap, and there's no particular barrier to entry (unless we're talking about things like backroom deals with concert promoters, which I'm sure does happen, but isn't an essential part of the business), so I'd expect this to be a fairly competitive market.
> The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
Market maker regulation is relatively recent, and market making is recognised as having served a beneficial function long before that. Many of these ticket sites do list bid prices for your tickets as well. The spread is pretty wide compared to listed equities that trade hundreds of times a second, sure, but if you compare a single concert's ticket with a stock or bond that trades at a similar rate (which would be, like, the bottom end of the pink sheets) it's not so bad.
Credit is cheap, and there's no particular barrier to entry (unless we're talking about things like backroom deals with concert promoters, which I'm sure does happen, but isn't an essential part of the business), so I'd expect this to be a fairly competitive market.
> The scalpers are not like market makers who are regulated, provide both bid and ask, and whose spread is usually quite small in comparison to scalpers.
Market maker regulation is relatively recent, and market making is recognised as having served a beneficial function long before that. Many of these ticket sites do list bid prices for your tickets as well. The spread is pretty wide compared to listed equities that trade hundreds of times a second, sure, but if you compare a single concert's ticket with a stock or bond that trades at a similar rate (which would be, like, the bottom end of the pink sheets) it's not so bad.
Scalpers allow people who are not price sensitive or have inelastic demand priority over people who are lucky / first.
The ethics depends on the exact case study provided. If it's a rich person buying an xbox (not price sensitive) - that's one thing, and most people would not support it. If it's someone needing an IC for a heart monitor to stay alive (inelastic demand), most would say that providing them an IC over someone who wants to play the latest video game is a good service.
Scalpers do both (1) and (2).
The ethics depends on the exact case study provided. If it's a rich person buying an xbox (not price sensitive) - that's one thing, and most people would not support it. If it's someone needing an IC for a heart monitor to stay alive (inelastic demand), most would say that providing them an IC over someone who wants to play the latest video game is a good service.
Scalpers do both (1) and (2).
Scalpers only do (2) for those who can afford it. If scalpers were willing to hand out goods on the merit of the application rather than profit then I’d have much more sympathy. But then they wouldn’t really be scalpers anymore.
I’m willing to bet that scalpers starve critical applications of goods far more than they provide them. Providers of critical services are usually poorly funded.
I’m willing to bet that scalpers starve critical applications of goods far more than they provide them. Providers of critical services are usually poorly funded.
Or maybe they are price sensitive but the goods are just worth more to them.
The scalper can't distinguish between a poorer person who really needs a thing, and a richer person who just kinda wants it. They will happily price out the former before the latter gives up.
There seems to be an assumption in the discussions about the market that people don't do stupid shit with money. That the same good cannot be both life-critical for one, and a source of cheap entertainment for another. That people only ever spend money to make more money. That they are perfectly consistent over time. That nothing is ever time-critical, it may be only time-discounted.
But the reality is, people are irrational, things take time, and markets have inertia. In a scalper-managed shortage of critical medication, it's perfectly possible for a rich person who watched one too many end-of-the-world movies to buy up the supply at high markup, to stock their fallout shelter, and have it rot there while people who need it die. It takes time for a chip scalper to insert themselves into the market, buy up the supply and advertise their existence - in that time, the factories might be wasting megadollars of money.
There seems to be an assumption in the discussions about the market that people don't do stupid shit with money. That the same good cannot be both life-critical for one, and a source of cheap entertainment for another. That people only ever spend money to make more money. That they are perfectly consistent over time. That nothing is ever time-critical, it may be only time-discounted.
But the reality is, people are irrational, things take time, and markets have inertia. In a scalper-managed shortage of critical medication, it's perfectly possible for a rich person who watched one too many end-of-the-world movies to buy up the supply at high markup, to stock their fallout shelter, and have it rot there while people who need it die. It takes time for a chip scalper to insert themselves into the market, buy up the supply and advertise their existence - in that time, the factories might be wasting megadollars of money.
They provide short-term, non-committal inventories and buffers to a supply chain that doesn't have them, since it runs on long-term contracts. In some ways, they're capitalizing on the failures of just-in-time inventory dogma
The chips would have been sold in any case!
They're taking advantage of some fluxuations to make money for themselves. That isn't helpful for the producer nor for the purchaser of the goods.
This isn't people setting up futures for 555 timers. This is people scooping up PS5s and immediately selling them for an extra $200.
Of course it's nobody's god-given right to own a PS5 but there's not value being produced here.
They're taking advantage of some fluxuations to make money for themselves. That isn't helpful for the producer nor for the purchaser of the goods.
This isn't people setting up futures for 555 timers. This is people scooping up PS5s and immediately selling them for an extra $200.
Of course it's nobody's god-given right to own a PS5 but there's not value being produced here.
> Scalpers are not the problem as they seem, they are like market makers for stock exchanges. They buy low and sell high, always.
How do you feel about scalpers who do not act in scarcity but instead create the scarcity themselves. Like those who buy up land in popular cities?
How do you feel about scalpers who do not act in scarcity but instead create the scarcity themselves. Like those who buy up land in popular cities?
Except this is not really what market makers do. The amount of liquidity they can provide by buying high and selling low is quite limited, not to mention it locks up a lot of capital in market price speculation with the significant risk of 'getting it wrong'.
Without going into motivation behind why ($$$), they will sell any share in demand at the prevailing market rate. As long as they later buy the same number of shares that they sold into the market, everything continues to work. By internalizing and batching orders, they can also exhert force on the price to ensure they don't lose on these 'market making shorts'.
For your example to be equiavlent, scalpers would need to sell parts that they don't have, which falls apart as an analogy as such games would fall apart quite quickly during a supply crunch.
Without going into motivation behind why ($$$), they will sell any share in demand at the prevailing market rate. As long as they later buy the same number of shares that they sold into the market, everything continues to work. By internalizing and batching orders, they can also exhert force on the price to ensure they don't lose on these 'market making shorts'.
For your example to be equiavlent, scalpers would need to sell parts that they don't have, which falls apart as an analogy as such games would fall apart quite quickly during a supply crunch.
They are similar to a market maker but it's not the same. They are like predatory HFT, benefiting from fast information propagation. Most of the time the market would function well without them, with much less volatility in the price. In that sense, scalpers en masse are destabilizing the economy.
> The point is, it's better to have the option to buy something at a high price
On a macro level this doesn't change anything (besides distribution in a limited way), as this doesn't increase production, or am I missing something?
On a macro level this doesn't change anything (besides distribution in a limited way), as this doesn't increase production, or am I missing something?
You ignore that a scalper can easily slip counterfeits into the mix. An authorized reseller would be ruined if they did that.
You are literally defending unnecessary middlemen. They add no value, all they do is create artificial scarcity. If they didn't exist someone would have made use of the chip. Instead they hoard it. I don't understand why you find this ok behavior
They make supply chain validation problematic and introduce room for fraud. Not saying market making is bad, just in this case loosing supply chain validation may be worse.
Scalpers hedge on the fragility of just-in-time - they milk the short-term thinkers for all they saved in the good times and are thus a healthy part of the market.
Why do we praise people betting on actors being hurt by bad decisions like (https://en.wikipedia.org/wiki/Michael_Burry) but condemn the same behavior on the smaller scale of physical products?
Why do we praise people betting on actors being hurt by bad decisions like (https://en.wikipedia.org/wiki/Michael_Burry) but condemn the same behavior on the smaller scale of physical products?
Would they not harm also reguar manufacturers who just want to make a stock of some part before starting a manufacturing run ?
Scalpers hurt anyone launching a hardware product who doesn't have the order quantity to buy direct-from-manufacturer.
I, for one, am happy that I can get enough parts for a prototype run even if at 5x the price.
Especially as otherwise, those parts would just get sold to the car manufacturers and would be used to make ethically questionable products.
Especially as otherwise, those parts would just get sold to the car manufacturers and would be used to make ethically questionable products.
I don't get how it hurts anyone to have to pay market rate. If your product doesn't work at market prices, then that's your problem - not scalpers.
This kind of perspective where any intervention-free (often equated with 'free market') outcome is ipso facto a socially good outcome is so frustrating because it transcends policy discussions into morality/dogma. Are you opposed to efforts to curtail rent seeking more broadly?
Making honest prices illegal is the most destructive intervention you can do. "Scalpers" aren't rent-seeking, quite the opposite.
I think you'll find most electronics products available to be unprofitable if they had to use these scalpers as suppliers.
Well, I guess it would be hard to scalp on of the closest managed inventory processes around. Thing is, only the last steps before FAL are real JIT, everything else is pretty much running on, more or less well amanged, inventory. Also, blaming the chip shortage exclusively on automotive and their mismanaged JIT is quite a theory, and an overly simplistic one.
Scalpers do hurt innocent consumers, which is why they are so widely hated. Someone trying to buy their spouse a GPU or a PlayStation for Christmas isn't the one responsible for a fragile just-in-time supply chain. Many times, the problem isn't even the supply chain, it's just the fact that demand exceeds the total possible supply, like with concert tickets.
In the consumer space, there are many ways for vendors and retailers to combat scalpers, but their motivation to do so is minimal. They make the same money off a GPU or PlayStation regardless of who buys it.
In the consumer space, there are many ways for vendors and retailers to combat scalpers, but their motivation to do so is minimal. They make the same money off a GPU or PlayStation regardless of who buys it.
Question is if that really provides benefits for the economy though. For scalpers and the stock market alike.
General electronics yes, but automotive ICs are not in free sales and can't be stocked by 3rd parties.
Also giants like apple, amazon,... buy directly from the manufacturers with orders being made often a year in advance.
This shortage is so big that the 3rd party scalpers are insignificant contributor to it.
This shortage is so big that the 3rd party scalpers are insignificant contributor to it.
> Having scalpers in the mix raising the price for all components worries me that the chip shortage might not end for many years, as they can self-fund by raising their prices to stock up on new supply.
How do the scalpers get the supply before someone else gets it? What do the scalpers do when IC manufacturers increase supply and electronics manufacturers decrease demand by switching to similar components? What if one of the scalpers panics, dumps its inventory, and causes a price drop?
The whole situation could just as quickly turn into the opposite when production returns to normal.
How do the scalpers get the supply before someone else gets it? What do the scalpers do when IC manufacturers increase supply and electronics manufacturers decrease demand by switching to similar components? What if one of the scalpers panics, dumps its inventory, and causes a price drop?
The whole situation could just as quickly turn into the opposite when production returns to normal.
> Having scalpers in the mix raising the price for all components worries me that the chip shortage might not end for many years, as they can self-fund by raising their prices to stock up on new supply.
Tough. Then run a fab or start carrying inventory.
Just-in-time and fabless had risks that everybody simply ignored over and over. I'm happy to see companies taking it in the shorts for that.
Everybody loves the "free market" when it works in their favor and whines when the same winds turn around and bite them in the ass, personally.
Tough. Then run a fab or start carrying inventory.
Just-in-time and fabless had risks that everybody simply ignored over and over. I'm happy to see companies taking it in the shorts for that.
Everybody loves the "free market" when it works in their favor and whines when the same winds turn around and bite them in the ass, personally.
Why do the scalpers get first dibs on the supply?
That's the right question. As Huang said a few years ago: the more you buy, the more you save
In concert ticket sales, scalpers get preferential treatment because:
1. nepotism: they know someone who works at or owns part of the venue, or the performer, or the performer's manager, etc
2. they reliably buy in bulk
3. corruption: they pay off someone on the inside.
so which is it here?
1. nepotism: they know someone who works at or owns part of the venue, or the performer, or the performer's manager, etc
2. they reliably buy in bulk
3. corruption: they pay off someone on the inside.
so which is it here?
4. The scalpers are the same company that sells the tickets.
> As Huang said a few years ago: the more you buy, the more you save
This is what wholesalers do: they buy large quantities at low prices and then sell small quantities at high prices.
This is what wholesalers do: they buy large quantities at low prices and then sell small quantities at high prices.
Wholesalers' key contribution is distribution though. They have actual infrastructure and do real work that is actually useful. They also do this continuously, providing a stable service, and not just sometimes to get in on some market swings.
I really enjoyed this comment and the thread it started. I wrote some thoughts as a little blog post, and would welcome any thoughts or contrary opinions (I'm no expert, just thinking out loud).
https://rabbitsbynight.notion.site/Scalping-vs-price-gouging...
https://rabbitsbynight.notion.site/Scalping-vs-price-gouging...
What's the difference between scalpers and Digikey hypothetically raising their prices sixfold?
It's better that the producer gets the correct price for their items. That way they can invest in their infrastructure or bid up source materials, getting closer to being able to meet demand. On the other hand profits going to the scalpers doesn't contribute towards fixing the problem.
Digikey isn’t a producer.
Scalpers - and others willing to pay a premium from the supplier - will in all likelihood (IANAEconomist etc) cause a whiplash / bullwhip effect; scalpers create high demand, manufacturers increase production and continue to do so until the market is saturated, then suddenly the scalpers have huge stocks of e.g. chips and can no longer sell them at a premium, making them drop prices to match the manufacturer's.
I think this would be against the law in the U.S. (although probably hard to prosecute). After looking through a few of these, however, it looks like most of them are in other countries, so different laws apply.
Against what law? Isn't speculation pretty normal in a lot of markets?
There are laws against price gouging. I believe those only apply during emergencies.
Personally, I believe it's manufacturers not asking for the price the market is willing to pay and scalpers taking advantage of that. Charging real prices also can prevent hording in certain emergencies.
Personally, I believe it's manufacturers not asking for the price the market is willing to pay and scalpers taking advantage of that. Charging real prices also can prevent hording in certain emergencies.
Manufacturers aren’t always able to charge real market prices in a flexible way. They rely of regular reliable order volumes and can’t charge different prices to different customers, and can’t vary prices easily day to day so can’t take advantage of the fact different customers are willing to pay different prices. They also often don’t have distribution and extensive dispersed inventory, so can’t offer different prices to different geographic markets, or different markets with particular volume requirements, or different order/delivery latency tolerances.
There is no better wat to encourage additional production/reuse/alternatives. Shortage just tells binary signal, prices lets you actually esimate how much this and that will cost.
> One important part of the chip shortage is the massive amount of price gouging going on.
There is no such thing as "price gouging".
It just so happens that at this moment the price of things is higher than it usually is due to increased demand and reduced supply.
There is no such thing as "price gouging".
It just so happens that at this moment the price of things is higher than it usually is due to increased demand and reduced supply.
Price gouging is a real thing and "the price of things is higher than it usually is due to increased demand and reduced supply" is actually part of it's definition. I.e. price gouging isn't a replacement for the supply/demand model rather a description in certain extreme cases of said model, often regulated cases depending on the jurisdiction.
Traditionally it referred to traditional survival items though, not just any item.
Traditionally it referred to traditional survival items though, not just any item.
Increased demand doesn’t increase prices on its own. The seller also has to Choose to sell at the higher price.
@kliment summarized the why pretty well:
https://news.ycombinator.com/item?id=26931498
Curious if this is true for all manufacturers.
https://news.ycombinator.com/item?id=26931498
Curious if this is true for all manufacturers.
The "religious reasons" he's talking about are "zero inventory" or "JIT inventory" pioneered by Japanese auto makers in the 80s and 90s. By optimizing inventory management and understanding demand for your product, you can ensure you don't have excess inventory on-site (meaning you don't have money invested in product parts you can't sell and have to pay taxes on). It's the system that virtually every manufacturer (auto or otherwise) uses now.
It's why major supply chain issues cause catastrophic manufacturing problems.
It's why major supply chain issues cause catastrophic manufacturing problems.
My understanding is that JIT, as performed by Toyota, takes into account the differences in difficulty of sourcing different inventories. If this is true, one would expect that Toyota faced shortages later than other manufacturers. Does anyone have a source proving or disproving this?
Toyota was among the last to be hit. Also, JIT is not having zero inventory. It is about having the right amount of inventory.
Pedantic comment: is that not what lean is about? Or is "lean" and jit essentially the same thing?
JIT, as Kanban, is part of the Toyota Production System. It is also called Lean nowadays, or simply TPS. The basic principles go back to the US defence industry in WW2, on one hand, and some ingenious ideas from the old Toyota company manufacturing looms.
I also see some of these ideas, tacted assembly lines for example, as far back the Venetian Arsenal cranking out Galleons and Galleasses in unprecedented numbers in the 16th (?) century.
I also see some of these ideas, tacted assembly lines for example, as far back the Venetian Arsenal cranking out Galleons and Galleasses in unprecedented numbers in the 16th (?) century.
It can take into account predicted difficulties. The pandemic was difficult to predict, basically everyone predicted incorrectly, and chip supply is functionally inelastic over the short term.
Toyota got a foreshock of the chip shortage during the 2011 earthquake/tsunami/nuclear disaster. So they started stockpiling chips then; from their standard 3-month supply to 6-month supply.
They figured that would've been enough to survive another incident of similar scale.
So they had no problem with car inventory for a half a year longer than every other automaker, until their additional buffer of chips also ran out.
They figured that would've been enough to survive another incident of similar scale.
So they had no problem with car inventory for a half a year longer than every other automaker, until their additional buffer of chips also ran out.
You don't need to know what the pandemic is specifically to plan for a global market shock. Knowing that you have a critical component with a long inelastic supply chain is enough.
And then what? Just stockpile a year of everything? At every company along the supply chain? It is the first time in my life, professional in SCM and otherwise, that something like Covid and a global trade disruption happened together with a global shortage of one class of products. No way you for see or prepare for something like that.
Hindsight in 20/20, just imagine the automotive OEMs would have gotten rid of the JIT for chips and Covid (and all the other things causing the shortages) wouldn't have affected chips but, say, certain raw materials like Aluminium.
Hindsight in 20/20, just imagine the automotive OEMs would have gotten rid of the JIT for chips and Covid (and all the other things causing the shortages) wouldn't have affected chips but, say, certain raw materials like Aluminium.
That's not the issue here. The issue is automotive are capricious, nasty customers. They know they're a big contract so they dictate disgusting terms, like 9 month payment terms and extremely strict delivery windows and changing deliveries on very short notice. Suppliers get fined at certain auto manufacturers for not delivering within a 15 minute window, forcing their truck drivers to circle around the facility for hours to ensure they can meet that. The carmakers require extreme delivery flexibility from their suppliers on short notice. In effect, they're still holding stock, but they're forcing their suppliers to hold it for them, and without said suppliers getting paid, or even having the ability to plan for how much they'll get paid.
Because of those extremely hostile contract terms, the carmakers could just turn around and go "oh yeah, all that stock we said we'd order this year, you can make it if you like but we're not going to take deliveries or pay for it" which is what set this whole pile of bullshit in motion. At that point, their suppliers were holding and/or producing lots of stock for them, but got informed they would not be getting paid for it, had to cut their losses, and this ended up disrupting manufacturing for months as lines had to be reconfigured mid-batch and a lot of product got scrapped. While this was happening, the automotive fuckers changed their minds and requested more, meaning the suppliers had to scramble to produce with now limited resources because the scrapped stuff was still clogging the pipeline, so resources got redirected away from every other part.
In short, religious JIT could only have this kind of impact here because the automotive companies are absolute shits to their suppliers and could force them to jump one way and then the other, causing disruption upstream which then spread downstream to everyone using electronics. This is a purely artificial crisis caused by the car manufacturers and is not an inevitable consequence of either the pandemic or the logistics disruption. Air cargo is barely affected and semiconductors and their precursors (except for water) are light and easily transportable by air, and certainly valuable enough that this does not impact their cost. This is a problem that would not have existed without the automotive industry, covid or no covid. They brought this upon themselves, and now everyone else is suffering (and auto execs go on TV and blame work-from-home and remote education for the shortage, which is just adding insult to injury). Screw them.
Because of those extremely hostile contract terms, the carmakers could just turn around and go "oh yeah, all that stock we said we'd order this year, you can make it if you like but we're not going to take deliveries or pay for it" which is what set this whole pile of bullshit in motion. At that point, their suppliers were holding and/or producing lots of stock for them, but got informed they would not be getting paid for it, had to cut their losses, and this ended up disrupting manufacturing for months as lines had to be reconfigured mid-batch and a lot of product got scrapped. While this was happening, the automotive fuckers changed their minds and requested more, meaning the suppliers had to scramble to produce with now limited resources because the scrapped stuff was still clogging the pipeline, so resources got redirected away from every other part.
In short, religious JIT could only have this kind of impact here because the automotive companies are absolute shits to their suppliers and could force them to jump one way and then the other, causing disruption upstream which then spread downstream to everyone using electronics. This is a purely artificial crisis caused by the car manufacturers and is not an inevitable consequence of either the pandemic or the logistics disruption. Air cargo is barely affected and semiconductors and their precursors (except for water) are light and easily transportable by air, and certainly valuable enough that this does not impact their cost. This is a problem that would not have existed without the automotive industry, covid or no covid. They brought this upon themselves, and now everyone else is suffering (and auto execs go on TV and blame work-from-home and remote education for the shortage, which is just adding insult to injury). Screw them.
Pretty sure 9 months payment terms are illegal in the EU, everything above 90 days is an issue already. Not defending the supplier squezzing that auto OEMs conduct. Also, trucks aren't circling around facilities, they are waiting at parking lots.
Seriously, I don't know what kind of axe you have to grind with automotive and JIT. It does seem to be a larger issue if it is affecting all industries, and all companies. Chip shortages are affecting Aerospace, Google reportedly has issues getting chips as well for things like the Pixel 4a.
Also I am not sure if you have hands on experience with SCM or procurement, automotive or otherwise.
Seriously, I don't know what kind of axe you have to grind with automotive and JIT. It does seem to be a larger issue if it is affecting all industries, and all companies. Chip shortages are affecting Aerospace, Google reportedly has issues getting chips as well for things like the Pixel 4a.
Also I am not sure if you have hands on experience with SCM or procurement, automotive or otherwise.
I've spoken to suppliers who had 9 month payment terms to automotive (and other transport, train manufacturers are just as bad) customers. The law change in the EU was triggered by exactly such excessive contract terms. They're still common in other areas where regulators have not yet stepped in. I know the area where the factory in TFA is based, and I can tell you they don't have nearly enough parking space for deliveries, which is one reason they insist on tight delivery windows. I happen to know truck drivers and they hate this arrangement as in practice this means they have to plan to get there way earlier and then either park on the side of the road or circle around. All nearby truck parking facilities are perennially full. These factories have a habit of externalizing this kind of additional costs to suppliers and simultaneously squeezing them for price, not to mention causing broader damage to society by clogging the roads and parking facilities, but that's beside the point.
And yes, I happen to have hands on experience with procurement and sourcing. I've been redesigning customer projects around missing parts all year. Every industry is affected, but it's automotive which started it, and caused suppliers so much damage. This is what suppliers tell me and I have no reason to distrust them. My axe to grind is that I'm now dealing with the fallout.
And yes, I happen to have hands on experience with procurement and sourcing. I've been redesigning customer projects around missing parts all year. Every industry is affected, but it's automotive which started it, and caused suppliers so much damage. This is what suppliers tell me and I have no reason to distrust them. My axe to grind is that I'm now dealing with the fallout.
Did automotive start it, or was automotive just hit first? I don't know, and I think might take a while until we know. I have to agree that 9 months payment terms are unacceptable. That truck yards at warehouses and factories are full has more to do with bad yard management, or non at all. That is less a problem with JIT or procurement, instead it is a purely operational issue.
That us in SCM and logistics, incl. procurement, have tendency to push issues down to lower tiers is true. it is also true that logistics and transportation is offloading a lot on public infrastructure. Does it have to be that way? On the one hand, yes. Roads are public, railway lines more often that not as well (to an extent that is). That's what taxes are there for, because indirectly everyone if profiting from a running economy. Again, that is less the case in developing countries and should change. I also agree, and that is maybe even more important when it come to the environment at large, SCM should prioritize environmental and climate protection more, along with social standards. That won't happen so until it is financially beneficial to do so. This is a general issue with capitalism running rampant so. Chemical plants giving a shit about worker health and safety or the environment is as old as chemical manufacturing., just as an example.
That us in SCM and logistics, incl. procurement, have tendency to push issues down to lower tiers is true. it is also true that logistics and transportation is offloading a lot on public infrastructure. Does it have to be that way? On the one hand, yes. Roads are public, railway lines more often that not as well (to an extent that is). That's what taxes are there for, because indirectly everyone if profiting from a running economy. Again, that is less the case in developing countries and should change. I also agree, and that is maybe even more important when it come to the environment at large, SCM should prioritize environmental and climate protection more, along with social standards. That won't happen so until it is financially beneficial to do so. This is a general issue with capitalism running rampant so. Chemical plants giving a shit about worker health and safety or the environment is as old as chemical manufacturing., just as an example.
> And then what? Just stockpile a year of everything?
Or run a fab. Fabless isn't a God-given right. Vertical integration is a thing.
Vertical integration got a bad reputation because financial engineering dipshits like Carl Icahn would come in and strip mine your company for the single super profitable division and destroy the rest (see: Mesta Machinery).
Or run a fab. Fabless isn't a God-given right. Vertical integration is a thing.
Vertical integration got a bad reputation because financial engineering dipshits like Carl Icahn would come in and strip mine your company for the single super profitable division and destroy the rest (see: Mesta Machinery).
Sure, that's a solution. Or own one as subsidiary. Not sure if would have really helped so, there were decisions to order less. Reasonable to assume that production at the own fans would have been ramped down as well.
Sure, but your own fab will prioritize your own chips in the order that they need to.
TI doesn't care about that 50 cent part that's holding up your ability to produce a car. They're going to run every chip first whose profit per chip is higher than yours.
On the other hand, your own managers will have lots of incentive to produce that 50 cent chip if it is in the way of several thousand dollars of profit from selling a new vehicle.
200/150mm wafer at 180/150nm node fabs are not that expensive to run and maintain. But they have annual capex and MBA types don't like that.
In addition, that fab probably won't compete well in the general market so it's effectively a captive fab. However, you'll have internal managers complaining that they have to use the internal chip which is more expensive than the one from TSMC because their bonus depends upon getting 5% cost savings next quarter and who the hell cares about keeping our fab filled so it's around when everything goes pear-shaped--that's somebody else's problem after I've been promoted and gone.
TI doesn't care about that 50 cent part that's holding up your ability to produce a car. They're going to run every chip first whose profit per chip is higher than yours.
On the other hand, your own managers will have lots of incentive to produce that 50 cent chip if it is in the way of several thousand dollars of profit from selling a new vehicle.
200/150mm wafer at 180/150nm node fabs are not that expensive to run and maintain. But they have annual capex and MBA types don't like that.
In addition, that fab probably won't compete well in the general market so it's effectively a captive fab. However, you'll have internal managers complaining that they have to use the internal chip which is more expensive than the one from TSMC because their bonus depends upon getting 5% cost savings next quarter and who the hell cares about keeping our fab filled so it's around when everything goes pear-shaped--that's somebody else's problem after I've been promoted and gone.
Automotive suppliers pretty much care about 50 cent parts holding up OEMs, penalties are prohibitively high for a reason. An in-house fab is, as you said, probably more expensive. Simply because it has to rely on a single customer. Show me one company that is not looking at costs, one way or the other, that stays in business in the long run. Not doing so has, yes, something to do with savings on the procurement side (errors were made there as much as everywhere else). It also has something to do with long-term survival, and that does include jobs (even if that turned into a trope by now, there is some truth to it). Not every company can use VC money to bolster competitiveness, most have to compete on cost, and there every cent counts. Especially when we talk about high-volume products.
> penalties are prohibitively high for a reason
Which works, until your supplier is simply willing to go bankrupt. And you still have no chips and can't ship anything.
> most have to compete on cost, and there every cent counts.
Until you can't ship and everything grinds to a halt. Risk reduction has a cost and nobody is willing to pay it because it doesn't enter the balance sheet.
Which works, until your supplier is simply willing to go bankrupt. And you still have no chips and can't ship anything.
> most have to compete on cost, and there every cent counts.
Until you can't ship and everything grinds to a halt. Risk reduction has a cost and nobody is willing to pay it because it doesn't enter the balance sheet.
I'm guessing the problem is to decide what is a reasonable difficulty. Even if you plan for a global market shock, how long do you plan for that to continue? How many companies failing in your supply chain do you plan for?
https://www.bloomberg.com/news/articles/2021-04-07/how-toyot...
It wasn't enough it seems.
It wasn't enough it seems.
What I don’t see discussed is how JIT has become the “securitization” of manufacturing.
Everyone had an incentive to do JIT, and it improved efficiency in each individual company, but it did so by inflating a systemic risk that could be easily triggered by a “black swan”.
Everyone had an incentive to do JIT, and it improved efficiency in each individual company, but it did so by inflating a systemic risk that could be easily triggered by a “black swan”.
The thing is that it also reduces the risk of certain systemic risks. Recessions (and even worse, deflation) happen when production is too high relative to demand, but no one has noticed. In the 80s if demand for cars dropped, everyone from the dealers to the manufacturers to the parts suppliers were left with a ton of excess production. In the best case, you merely transfer some production from the end of a boom to the beginning of the end of the bust, but in the worst case all that inventory just sits around and deflates.
And major manufacturing problems cause catastrophic supply issues some times. manufacturing is part of the supply chain, and it is simply impossible to protect against all eventualities. JIT is not to blame here.
> it is simply impossible to protect against all eventualities.
Of course. No amount of stockpiling will account for a moon-sized asteroid collision.
> JIT is not to blame here.
Kind of. JIT isn't to blame, but the pressures that reward making every level of industry maximize efficiency, such as by using JIT, is. That is the reason for the supply chain crisis.
The market and tax laws pressure companies to optimize for efficiency as much as possible with their supply chains. Another alternative would be to optimize for robustness, but that would naturally be inefficient and would still be unlikely to endure a 100-year catastrophe unless it were completely unable to survive in a competitive market.
That doesn't mean that we need to change anything, necessarily, but it does mean that we have structured our economy to be less resilient than it could be with potentially very little actual upside.
Even so, some supply chains, like food and clean water, really should be robust rather than efficient. Emergency medical supplies, too, should probably be robust rather than efficient. That's why the Obama pandemic plan included warehouses of medical supplies [0] and FEMA stockpiles food and water.
Utility systems, too, should probably favor robustness. Texas has had a horrific year for it's power industry, and it has revealed how a hypercompetitive marketplace doesn't really serve the public best interest.
Consider civil engineering. We could optimize that for efficiency. That would result in a lot more bridge collapses, structure failures, and so on. Instead, we generally try to overbuild when failure would cause injury or death. The same is true in most engineering contexts. In many cases, industry simply doesn't design for robustness until they are held liable for failures. Notice the rise in corporate insurance rates after computer security audits due to the risk of data loss, and the sudden panic of executives to suddenly have secure systems where before they were more than happy to have databases of plain text passwords and so on.
There are alternatives to profit-motivated business efficiency. We have simply chosen not to do that sort of by accident.
[0]: https://www.npr.org/sections/health-shots/2016/06/27/4830698...
Of course. No amount of stockpiling will account for a moon-sized asteroid collision.
> JIT is not to blame here.
Kind of. JIT isn't to blame, but the pressures that reward making every level of industry maximize efficiency, such as by using JIT, is. That is the reason for the supply chain crisis.
The market and tax laws pressure companies to optimize for efficiency as much as possible with their supply chains. Another alternative would be to optimize for robustness, but that would naturally be inefficient and would still be unlikely to endure a 100-year catastrophe unless it were completely unable to survive in a competitive market.
That doesn't mean that we need to change anything, necessarily, but it does mean that we have structured our economy to be less resilient than it could be with potentially very little actual upside.
Even so, some supply chains, like food and clean water, really should be robust rather than efficient. Emergency medical supplies, too, should probably be robust rather than efficient. That's why the Obama pandemic plan included warehouses of medical supplies [0] and FEMA stockpiles food and water.
Utility systems, too, should probably favor robustness. Texas has had a horrific year for it's power industry, and it has revealed how a hypercompetitive marketplace doesn't really serve the public best interest.
Consider civil engineering. We could optimize that for efficiency. That would result in a lot more bridge collapses, structure failures, and so on. Instead, we generally try to overbuild when failure would cause injury or death. The same is true in most engineering contexts. In many cases, industry simply doesn't design for robustness until they are held liable for failures. Notice the rise in corporate insurance rates after computer security audits due to the risk of data loss, and the sudden panic of executives to suddenly have secure systems where before they were more than happy to have databases of plain text passwords and so on.
There are alternatives to profit-motivated business efficiency. We have simply chosen not to do that sort of by accident.
[0]: https://www.npr.org/sections/health-shots/2016/06/27/4830698...
I haven't heard of food or water supply collapsing due to Covid, at least not in the developed world. Agree on medical and desaster plans and supplies, it seems everyone ramped those down after the cold war. besides masks, which became scarce early on due to China shutting down its economy in the early days of the pandemic, medical supply chains also continued to work, hospital resources being a bottleneck notwithstanding. And from experience, even masks were still avaialble as early as February 2020 in large quantities directly from Chinese suppliers.
What an amazing comment; penetrating insight clearly communicated. Thanks for sharing.
I know that even SMD transistors got hit hard by the automaker component switch-a-roo. It's not too easy to find RF transistors even for signal amp work like I do for a hobby. It's just a disaster right now.
This is not true at all. How many chips do you think the car industry needs for car parts? How many cars do you think they sell in a year? It’s not hard to figure it out. People parroting this narrative have no idea what’s happening behind the scene.
Most of us affected think it's very true. There are 60-70 million cars sold worldwide each year and many chips of different kinds in each.
If you have some deeper insight it'd be great to share it.
If you have some deeper insight it'd be great to share it.
What we are seeing is basically hoarding across the board and pandemic-induced manufacturing disruptions. And suppliers are going along with it because they make substantially more profit in this situation. This notion that car manufacturers are responsible for halting the entire world for chips is simply a narrative to hide what’s really happening. Even if car mfgs cut production due to pandemic miscalculations, that’s at best 5-10%. That alone is not enough to shut down factories. And we are more than one full cycle out of the pandemic. We are still talking about a supply chain that was state of the art. If you think they didn’t adjust (to some 10M unit miscalculation) by now, I don’t think you should be writing articles on this topic.
Nothing new here. We are all stockpiling components because we have no idea what the market will look like in the coming months, and that is causing further market distortions.
However, one of the largest triggers for this madness was the miscalculation by the car industry that had an effect on a large portion of chip factories.
Even the comment linked in the parent acknowledges that it's not all about car manufacturing, it's the ensuing madness (that they caused in large part) that is making it worse.
Your comment clashes directly with the reality of multiple car plants closing or slowing down considerably due to the shortage.
However, one of the largest triggers for this madness was the miscalculation by the car industry that had an effect on a large portion of chip factories.
Even the comment linked in the parent acknowledges that it's not all about car manufacturing, it's the ensuing madness (that they caused in large part) that is making it worse.
Your comment clashes directly with the reality of multiple car plants closing or slowing down considerably due to the shortage.
What would cause pretty much all STM32 microcontrollers to be not available and any amount that shows up disappears within minutes?
Then you can buy pretty much any part from China without issue?
STM32s from China increased 3 to 5 times in price in last 6 months, biggest jump happened in last 6 weeks. STM32L family is especially hard to buy.
Chinese people stopped hoarding luxury apartments, and started hoarding microchips — a popular explanation
> a popular explanation
When I was a kid, the urban legend question was: What if all of the Chinese jumped off a platform at the same time? Would it shake the other side of the world?
When I was a kid, the urban legend question was: What if all of the Chinese jumped off a platform at the same time? Would it shake the other side of the world?
One of my favourite what ifs
https://what-if.xkcd.com/8/
Great!... So Build Back Better?
What I'll never understand is why carmakers don't take advantage of this situation and address a market that's been literally BEGGING for decades for a new product:
A simple, basic car, with the ONLY electronic control being for:
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
But instead of addressing this market, these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
edit: I wasn't aware any of these luxury features were mandated by governments. Apologies, and disregard.
A simple, basic car, with the ONLY electronic control being for:
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
But instead of addressing this market, these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
edit: I wasn't aware any of these luxury features were mandated by governments. Apologies, and disregard.
First of all this "simple" car may end up being more expensive. Doing a lot of the things the old mechanical way requires a lot of labor and labor is expensive nowadays. Having to use turning wires and vacuum tubes for instrument clusters, and a bunch of pull wires for controls... Not only would that be expensive it would require skills and equipment long lost today. Oh and the wind shield wipers -- it is possible to power wind shield wipers mechanically but those were some very complex rube goldberg type mechanisms.
Furthermore, this "simple" car will not last very long. People have forgotten that nowadays, but in the old times of "simple" mechanical cars, cars used to break down much more often and require much more skilled maintenance.
Most people would not know how to use it. Do you think people will be able to handle an unassisted wheel? You know, actually use their muscles to turn the wheel when parking? How about unassisted brakes? You get into a dangerous situation, you slam on the brakes and then it turns out that you have to use your muscles to actually apply sufficient force. How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
But most importantly, it wouldn't sell. Cars nowadays sell based on electronic features. You can see that from the commercials. Even fairly advanced features like navigation and parking sensors are considered a must have now.
Furthermore, this "simple" car will not last very long. People have forgotten that nowadays, but in the old times of "simple" mechanical cars, cars used to break down much more often and require much more skilled maintenance.
Most people would not know how to use it. Do you think people will be able to handle an unassisted wheel? You know, actually use their muscles to turn the wheel when parking? How about unassisted brakes? You get into a dangerous situation, you slam on the brakes and then it turns out that you have to use your muscles to actually apply sufficient force. How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
But most importantly, it wouldn't sell. Cars nowadays sell based on electronic features. You can see that from the commercials. Even fairly advanced features like navigation and parking sensors are considered a must have now.
That maybe true, but my anecdotal evidence is the opposite.
> cars used to break down much more often and require much more skilled maintenance.
My '78 John Deere 4640 (not a car I give you that) if it breaks down, I can fix it. If I cannot I can order the part. If I cannot, I can have the part made within a week.
None of that is possible with a 2021 6145M. If it breaks, I have to sit and wait for JD to bless me with their part.
I have less problems with non-electronic equipment than with the electronics enhanced ones.
I venture it is very much the same with personal cars.
> cars used to break down much more often and require much more skilled maintenance.
My '78 John Deere 4640 (not a car I give you that) if it breaks down, I can fix it. If I cannot I can order the part. If I cannot, I can have the part made within a week.
None of that is possible with a 2021 6145M. If it breaks, I have to sit and wait for JD to bless me with their part.
I have less problems with non-electronic equipment than with the electronics enhanced ones.
I venture it is very much the same with personal cars.
Anecdotes are always a mistake in these situations. You might have better luck with your tractor, which isn’t a car, but the average age of cars on America’s roads has been rising for decades. Your experience is, frankly, an outlier.
Also, comparing tractors with cars is an extremely dubious proposition; these are different vehicles with different engineering constraints, uses, and consumer expectations. How many OEMs for cars still make parts for the 1978 vehicles? Hell, what percentage of Americans have the space, knowledge, and interest to build up a garage to service their own vehicles?
Also, comparing tractors with cars is an extremely dubious proposition; these are different vehicles with different engineering constraints, uses, and consumer expectations. How many OEMs for cars still make parts for the 1978 vehicles? Hell, what percentage of Americans have the space, knowledge, and interest to build up a garage to service their own vehicles?
Just wait until the new generation of cars with touchscreens everywhere instead of buttons and knobs for control are old.
Do you have any actual data to back up the idea that touch screen interfaces are inherently short lived?
So many smartphones with digitizers having dead zones after just four years....
Car screens are built to different tolerances than cell phones. In particular they must survive a much more harsh environment than most other consumer electronics. This is precisely why the first Tesla screens were so shocking in their size and so unreliable; when Elon Musk found out that he couldn’t get auto screens that large he demanded they use consumer screens, which yellowed and failed due to the heat cars are exposed to. Car screens and normal screens are not the same, at all.
This situation is exactly the same as the tractor example above. You’re taking a similar but different object built for different use cases and different financial and engineering constraints, and declaring that the outcome of one is predictive of another.
This situation is exactly the same as the tractor example above. You’re taking a similar but different object built for different use cases and different financial and engineering constraints, and declaring that the outcome of one is predictive of another.
I’m not referring to the big screens but the replacement of buttons and knobs with multiple small ones.
Like putting touch screens on the steering wheel!
Like putting touch screens on the steering wheel!
How many vehicles do that though? I can only think of Tesla, and they’re already pretty notoriously unreliable straight from the factory. All of the vehicles I’ve been in, including at trade shows, had physical buttons for most of the vehicle functions, and touch screens for secondary and tertiary operations.
Ferrari is the only one I can remember but it’s a trend car reviewers have negatively remarked upon
Why do you attribute this improvement to computers? There were many parallel improvements in manufacturing that are fairly well documented and taught about.
> My '78 John Deere 4640 (not a car I give you that) if it breaks down, I can fix it.
That's great, but I don't own a garage, and if my car breaks, it goes to the mechanic. The mechanic needs to eat, and pay the mortgage on her garage, so she will charge $XYZW for repairs.
For all the maintenance and repair work I and my father have had done on our cars, 'Some microchip somewhere crapped out' has never made the list. All the failures have been purely mechanical. Your 70s car proposal solves a problem that few people have, and introduces a lot of new ones.
That's great, but I don't own a garage, and if my car breaks, it goes to the mechanic. The mechanic needs to eat, and pay the mortgage on her garage, so she will charge $XYZW for repairs.
For all the maintenance and repair work I and my father have had done on our cars, 'Some microchip somewhere crapped out' has never made the list. All the failures have been purely mechanical. Your 70s car proposal solves a problem that few people have, and introduces a lot of new ones.
You don't own a garage, so nobody should get to own repairable vehicles?
The problem with fancy electronics is that only a few people chosen, trained and supplied by the manufacturer can work on them. This effectively gives them a monopoly on maintenance. Your mechanic will be cut out of that deal.
This also creates a risk for the second hand market, not just in first world countries, but wherever they inherit cars that don't pass inspection. Some garage in Georgia (the country) won't be kitted out to fix computer issues and keep the car running. They can't expect help from OEM, nor third party replacement parts. It's a great planned obsolescence strategy.
The problem with fancy electronics is that only a few people chosen, trained and supplied by the manufacturer can work on them. This effectively gives them a monopoly on maintenance. Your mechanic will be cut out of that deal.
This also creates a risk for the second hand market, not just in first world countries, but wherever they inherit cars that don't pass inspection. Some garage in Georgia (the country) won't be kitted out to fix computer issues and keep the car running. They can't expect help from OEM, nor third party replacement parts. It's a great planned obsolescence strategy.
Indeed. We have an aging Audi that has adaptive cruise control. Recently the radar unit failed. To get it replaced at a dealer will cost about half of what the car is worth.
what, on an aging audi, _doesn't_ cost half the value of the vehicle to fix?
i've heard the same complaint about basically every part of an audi except the tires.
i've heard the same complaint about basically every part of an audi except the tires.
Audi seems to be the brand for people who want a VW, but want to pay extra for it. It’s like the mirror image of Skoda or SEAT (VAG’s more ‘budget’ brands).
This is why it's foolish to purchase a German luxury car, either new or used. The electronics aren't designed to last any longer than the warranty. If you really want to drive one then lease, don't buy.
So true. Computing is very cheap nowadays. It is also very reliable.
If you watch Sandy Munro's videos, he mentions often how his visits with Chinese car manufacturers go, when they discuss architecture options. Customers hold up a cell phone and ask "How can we make it more like this?". The cell phone got rid of separate components a long time ago. Everything's on one PCB, plus the display. And many things that used to be on the PCB but consisted of many chips, are now integrated to a single chip. The car consisting of a lot of OEM boxes connected with wires seems so outdated.
And each box having a separate computer makes it in essence stranded. Instead, if the control is centralized, then it's possible to take the complexity to software and keep managing it much better, features are easier to develop and can be sent to existing cars over the air etc.
If you watch Sandy Munro's videos, he mentions often how his visits with Chinese car manufacturers go, when they discuss architecture options. Customers hold up a cell phone and ask "How can we make it more like this?". The cell phone got rid of separate components a long time ago. Everything's on one PCB, plus the display. And many things that used to be on the PCB but consisted of many chips, are now integrated to a single chip. The car consisting of a lot of OEM boxes connected with wires seems so outdated.
And each box having a separate computer makes it in essence stranded. Instead, if the control is centralized, then it's possible to take the complexity to software and keep managing it much better, features are easier to develop and can be sent to existing cars over the air etc.
Everything on the one PCB is great, just ask Tesla owners that get stranded with a hardware failure, or need to reboot their screen for a software failure by holding down steering wheel buttons to get their car operable again.
The reason cars have lots of computers is for price - its cheaper to use a power and CAN data bus rather than have individual wires going from a central computer to each device.
For example, a door module can control the locks, windows and mirrors with just a 2 power wires and 2 thin wires for CAN bus.
Contrast this to old cars which had thick bundles of wires to power the mirror, doorlock and window motors from outside the door.
The reason cars have lots of computers is for price - its cheaper to use a power and CAN data bus rather than have individual wires going from a central computer to each device.
For example, a door module can control the locks, windows and mirrors with just a 2 power wires and 2 thin wires for CAN bus.
Contrast this to old cars which had thick bundles of wires to power the mirror, doorlock and window motors from outside the door.
What if you don't want OTA features, but a simple car you can fix separately form the manufacturer's supply chain?
This might not be a huge concern for the HN demographic, but it is for developing countries operating whatever vehicles the EU deems too dangerous or polluting for their roads. There are no PCBs making their way to Central Asia.
The problem with black boxes is that they work until they don't. In some cases like fuel injection, they're a significant reliability improvement. In others they're a ticking time bomb that can make the entire vehicle unusable.
This a problem in the motorcycle world. You now have bikes that are dead because of computer issues. Small pebbles if you're near a dealership, possibly deadly if you use adventure bikes for their intended purpose.
This might not be a huge concern for the HN demographic, but it is for developing countries operating whatever vehicles the EU deems too dangerous or polluting for their roads. There are no PCBs making their way to Central Asia.
The problem with black boxes is that they work until they don't. In some cases like fuel injection, they're a significant reliability improvement. In others they're a ticking time bomb that can make the entire vehicle unusable.
This a problem in the motorcycle world. You now have bikes that are dead because of computer issues. Small pebbles if you're near a dealership, possibly deadly if you use adventure bikes for their intended purpose.
Yeah, there's some problems with the approach. But I guess if you had an old one, you could install some open source software, or replace the whole computer. I assume it would cost a few hundred bucks at most. It's peanuts compared to engine, or in electric car, battery work.
The main board on an iphone is taking a really small part of the whole nowadays. https://guide-images.cdn.ifixit.com/igi/JtBACGbyZcYSdBfL.hug... Besides maybe some machine vision things, the computing in a car seems to have very low performance requirements.
Sensors, actuators and controllers etc are another thing then, but they're different.
The main board on an iphone is taking a really small part of the whole nowadays. https://guide-images.cdn.ifixit.com/igi/JtBACGbyZcYSdBfL.hug... Besides maybe some machine vision things, the computing in a car seems to have very low performance requirements.
Sensors, actuators and controllers etc are another thing then, but they're different.
My point is that you won't be able to replace the whole computer if you're disconnected from the supply chain. A few hundred bucks is more than those cars are worth by the time they are exported to those countries.
> cars used to break down much more often and require much more skilled maintenance.
Yeah, but “skilled maintenance “ was an easy skill. There could only be a handful of things wrong if it didn’t start: e.g. no spark, no fuel. In the case of no spark, you check the plug, see if it’s dirty, change it if so; check the distributor, maybe the points are bad; check the coil or condenser… yeah there were things to check, but you could actually fix it once you learned about it. And yes, you could do this on the side of the road—there were “tool rolls” you could have for such purposes.
Now, you get a check engine light and the code reader says, in so many words: “bring to dealer and pay up”
Yeah, but “skilled maintenance “ was an easy skill. There could only be a handful of things wrong if it didn’t start: e.g. no spark, no fuel. In the case of no spark, you check the plug, see if it’s dirty, change it if so; check the distributor, maybe the points are bad; check the coil or condenser… yeah there were things to check, but you could actually fix it once you learned about it. And yes, you could do this on the side of the road—there were “tool rolls” you could have for such purposes.
Now, you get a check engine light and the code reader says, in so many words: “bring to dealer and pay up”
And how often does that happen with modern day cars compared to old ones? I would argue that older cars, pre electronic wizardry, are easier to repair (assuming spare parts are available) but break down more often. Older cars are also in need of more maintenance.
Modern cars need an inspection every 30k km and hardly ever break down. When they do, they are usually toast so (at least financially). Older cars are financially toast as well, if you cannot do the work yourself so.
Modern cars need an inspection every 30k km and hardly ever break down. When they do, they are usually toast so (at least financially). Older cars are financially toast as well, if you cannot do the work yourself so.
New cars are reliable because we got better at making cars, not because they're loaded with new points of failure. This started in the 90s at the very least.
> Now, you get a check engine light and the code reader says, in so many words: “bring to dealer and pay up”
That's funny, because my OBDII reader tells me exactly which sensor logged a fault and what the fault is such as reading too high/low. Sure you can have oddball errors where a bus wire has its insulation melted and is sending noise over the CAN bus or something, but you also had bizarre issues on old engines with weird vacuum leaks in pipes and dashpots and all the other analogue junk that electronics have replaced.
People look at old cars through rose coloured glasses and forget having to clean distributors and adjust timing and fix tuning drift with carburettors.
That's funny, because my OBDII reader tells me exactly which sensor logged a fault and what the fault is such as reading too high/low. Sure you can have oddball errors where a bus wire has its insulation melted and is sending noise over the CAN bus or something, but you also had bizarre issues on old engines with weird vacuum leaks in pipes and dashpots and all the other analogue junk that electronics have replaced.
People look at old cars through rose coloured glasses and forget having to clean distributors and adjust timing and fix tuning drift with carburettors.
When I was a lad I had an illegal ancient motor scooter that didn't start. One of the dads told me:
"If it's got compression, and it's got fuel, and it's got a spark, then it's got to go".
He was right.
"If it's got compression, and it's got fuel, and it's got a spark, then it's got to go".
He was right.
Just wait until you get a sheared pin on the distributor drive... Compression, fuel, spark, no go.
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One of my motorcycles is from 1973. Nary a tube or chip on it. I think it's got a turn blinker that's kinda a flip-flop, but I think it's just charging and discharging capacitors. It's lasted way longer than most modern disposable vehicles.
I don't know if most of these things actually require digital features.
I don't know if most of these things actually require digital features.
You say "one of" your motorcycles, so I take it you aren't riding this bike everyday, putting 12-15,000 miles a year on it and needing it to be reliable every time you go to work or run an errand.
Apples to oranges comparison.
Apples to oranges comparison.
Frankly aside from the carb, the maintenance and reliability are pretty much the same. A new bike's parts would wear too.
However the computer won't crap out on you, and this is now happening with new bikes. Adventure bikes mind you. I wouldn't want my adventure cut short by a computer problem I can't fix in the field.
They still sell bikes without that crap, and they are absurdly reliable.
However the computer won't crap out on you, and this is now happening with new bikes. Adventure bikes mind you. I wouldn't want my adventure cut short by a computer problem I can't fix in the field.
They still sell bikes without that crap, and they are absurdly reliable.
But how many parts of it are original? In other words is it the ship of Theseus? Does it pass e-check or is it exempt?
Regardless I do appreciate the simplicity of long past inventions.
Regardless I do appreciate the simplicity of long past inventions.
Does that motorcycle pass modern emission requirements?
The engine controle unit plays a major role in emission control and fuel economy.
The engine controle unit plays a major role in emission control and fuel economy.
I have an early nineties car like the parent describes; processor controlled fuel injection/valve timing/other core engine routines, and that's pretty much it with the exception of windshield wiper control and the radio. Practicality of making a car like that today aside, it's remarkably well built, and I have no problem believing it'll last at least another five years.
I've driven my car with only enough battery to really power the spark plugs and instruments in the dash (alternator failed and I got jump started). It was manageable even with the heavy steering, although to be fair I was driving max 50kph. Perhaps braking at highway speeds would be challenging.
I also much prefer my phone navigation over the in car system (Android Auto/Apple Carplay would solve this). That said, I wouldn't buy the car GP is suggesting, but I could imagine that if you were price sensitive then you might.
No comment around the older systems, I don't really have the knowledge to agree or disagree there.
I also much prefer my phone navigation over the in car system (Android Auto/Apple Carplay would solve this). That said, I wouldn't buy the car GP is suggesting, but I could imagine that if you were price sensitive then you might.
No comment around the older systems, I don't really have the knowledge to agree or disagree there.
OP said "electronic control" not electronics, not the same! If you have an analog control on the dashboard directly connected to the heater element than it is electronic, but not electronically controlled.
> But most importantly, it wouldn't sell.
You don't know that. I'm pretty sure there is a market for simple cars that don't tell you what to do, don't report you to the authorities, don't shut down unexpectedly because you didn't follow the manufacturer's maintenance schedule, etc.
> How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
I can't tell if this is satire or not, but people who can't open a door with a key and a handle maybe shouldn't be allowed to drive.
You don't know that. I'm pretty sure there is a market for simple cars that don't tell you what to do, don't report you to the authorities, don't shut down unexpectedly because you didn't follow the manufacturer's maintenance schedule, etc.
> How about even getting into the car without a radio key fob. I very much doubt the majority of people will even know how to lock or unlock their rear doors without a central lock/unlock key. They will probably just leave their car unlocked.
I can't tell if this is satire or not, but people who can't open a door with a key and a handle maybe shouldn't be allowed to drive.
I think you chose a few wrong examples, power steering and brake assistance (simple depression from the engine) were a thing much before electronics became ubiquitous, as well as central locks (just a bunch of solenoids), the issue is much more with safety-related systems like ABS and engine (and pollution) control.
Is the _market_ begging, or a few folks on the internet? The only folks I know that complain about technology in cars are a couple posters on internet forums.
Sure, lots of internet people who don't want to be tracked (license plate readers notwithstanding).
But also plenty of IRL people complaining about how, for example, they miss their $10k pickup with no power anything that worked great for anytime they needed to haul material X from location M to N, but now you need to drop a minimum of $50k for a vehicle you might use once per weekend to haul gravel, insulation, cement, lumber, furniture, etc.
Trucks are a particularly big market for this idea. It's a vehicle you use when you're already dirty and sweaty from work/projects and don't care about comfort, and serves a primary purpose: moving heavy and/or large items.
But the big carmakers have opted to cater to the market that doesn't actually use trucks for their actual purpose, but rather the market that buys trucks as commuter vehicles.
But also plenty of IRL people complaining about how, for example, they miss their $10k pickup with no power anything that worked great for anytime they needed to haul material X from location M to N, but now you need to drop a minimum of $50k for a vehicle you might use once per weekend to haul gravel, insulation, cement, lumber, furniture, etc.
Trucks are a particularly big market for this idea. It's a vehicle you use when you're already dirty and sweaty from work/projects and don't care about comfort, and serves a primary purpose: moving heavy and/or large items.
But the big carmakers have opted to cater to the market that doesn't actually use trucks for their actual purpose, but rather the market that buys trucks as commuter vehicles.
You can still get a stripped down, plain white F-150 for under $27k through fleet sales. But buyers don’t want that. They want the 4-door people hauler that happens to have a pick-up bed and leather seats.
They’ll imagine the $10k from memories but forget the vinyl seats, no AC, and manual windows. But they won’t buy that one n
They’ll imagine the $10k from memories but forget the vinyl seats, no AC, and manual windows. But they won’t buy that one n
They are also thinking of that $10K in todays dollars. Adjusted for inflation, that $10K truck that could could buy back in the mid-80s costs the same as a new one today. You just get a heck of a lot more features.
Assuming those memories are from the 70s, $10k then are worth about $50k today. Never mind the fact you’re also buying a much, much better vehicle in most aspects.
That statement makes no sense. The folks complaining can still buy those old pickups if they want. All that has happened is they are now older. No one is forcing them to buy a new truck that they use sporadically.
I've investigated about 20 of those old pickups; they're crap, because they've been run into the ground. I want a new old pickup.
That will not happen unless new legislation is passed:
https://www.bloomberg.com/news/articles/2015-02-19/bigger-pi...
https://www.bloomberg.com/news/articles/2015-02-19/bigger-pi...
I would love a stripped down 1990's-era Toyota truck
https://www.thedrive.com/news/42523/84-mile-1993-toyota-pick...
But not for 50k
https://www.thedrive.com/news/42523/84-mile-1993-toyota-pick...
But not for 50k
Ignoring everything else, that new truck is much larger. Compact trucks have not really existed in the US market for a decade at least.
An old Ford Ranger was 175-200 inches long depending on year and model. The new one is 200-210 inches.
Sort this list by class and you'll see a total of two compact trucks in the US market. Both are debuting either this year or the next: Ford Maverick (200") and Hyundai Santa Cruz (195").
https://en.wikipedia.org/wiki/List_of_pickup_trucks
An old Ford Ranger was 175-200 inches long depending on year and model. The new one is 200-210 inches.
Sort this list by class and you'll see a total of two compact trucks in the US market. Both are debuting either this year or the next: Ford Maverick (200") and Hyundai Santa Cruz (195").
https://en.wikipedia.org/wiki/List_of_pickup_trucks
Those new "compact" trucks are sadly still 2ft longer than old compact trucks from the early 90s. Can't get anything small anymore.
People can have nostalgia for stuff they grew up with but when it comes down to it don't actually want to spend the money to buy it now.
I reminisce about 90s sports cars that I used to dream about too. But then I think about the lack of bluetooth, keyless start, the low power output, poor handling, poor safety, poor fuel economy, and I just buy a modern car instead.
I reminisce about 90s sports cars that I used to dream about too. But then I think about the lack of bluetooth, keyless start, the low power output, poor handling, poor safety, poor fuel economy, and I just buy a modern car instead.
Yeah, I don't like how overcomplicated many products are becoming but even then wouldn't buy a car without at least AC and Bluetooth.
My must-have now is the backup camera with steering integration. I can hook up a trailer like a god now.
"Where is your god now?"
"Right behind you."
"Right behind you."
Actually new vehicles are legally required to have backup cameras. At least if they are sold in the US [1]. I would love to see a simple, back to the basics vehicle but there is so much regulation and safety requirements that it is unlikely for any basic vehicle to be sold in the US.
[1]: https://abcnews.go.com/US/cars-us-now-required-backup-camera...
[1]: https://abcnews.go.com/US/cars-us-now-required-backup-camera...
It's absolutely a good thing that these cameras are required with how many children are run over frequently as drivers reverse their cars.
You could easily pick up an after market bluetooth-enabled product. A/C is definitely important however.
Though A/C doesn't really need much in the way of electronics.
interestingly, I go the opposite direction. I try to buy cars without AC (environmental reasons), without electronics (expensive to fix when they fail 'cos the constructor takes a huge premium on these), with the least possible automation ('cos I think these are overpriced)...
Basically, the more sophisticated a car is, the higher the risk of failure and thus price to fix the failures. Now, I buy inexpensive cars. Maybe if I go for expensive brands, the risk is less.
Basically, the more sophisticated a car is, the higher the risk of failure and thus price to fix the failures. Now, I buy inexpensive cars. Maybe if I go for expensive brands, the risk is less.
I won't buy a car if it has bluetooth or cellular connectivity, but that is getting harder to find. I want that shit air-gapped. Someday I might have to just rip out the media head and telematics unit after buying it if I can't find one anymore.
I'd describe myself as having above-average privacy anxiety but I have to ask, what's the threat model here? I'm way more concerned about ALPRs than I am about Bluetooth or a data connection.
I think you’re vastly a) underestimating the time it takes to bring a new product line all the way into production in the auto industry, and b) overestimating the true demand for such a product, Hacker News and adjacent crowds notwithstanding – peoples broadly have come to expect those simple features at practically every price point, as evidenced by the ubiquity of said features in the market.
B in particular. Products like the Yaris compete on price alone.
And Yaris is already premium affordable car. Koreans are slightly below it and then cheap ones are India or specific models.
In the United States backup cameras, tire pressure monitors, and electronic stability control are required by law.
So out of your list that leaves..
GPS (already optional on most cars) Ass warmers (already optional on most cars) Telemetry (this could be removed from models that have it, not all cars sold today have telemetry) USB chargers (really don't think USB chargers are causing a production shortage at this moment) Proximity Sensors (already optional on budget cars) Keyless entry (could be removed, I doubt many people would buy a new car without keyless entry tho) Remote climate control (already optional on budget cars)
So out of your list that leaves..
GPS (already optional on most cars) Ass warmers (already optional on most cars) Telemetry (this could be removed from models that have it, not all cars sold today have telemetry) USB chargers (really don't think USB chargers are causing a production shortage at this moment) Proximity Sensors (already optional on budget cars) Keyless entry (could be removed, I doubt many people would buy a new car without keyless entry tho) Remote climate control (already optional on budget cars)
I tried to buy a car without AC, but as it turns out that’s almost impossible. They had never imported that model without AC and the waiting time was pretty long, because they where not really built in large numbers.
The models without AC mostly exist so they can produce ads saying “available from less than X“
The models without AC mostly exist so they can produce ads saying “available from less than X“
What's the point of buying a car without A/C? You might save $1000 now, but you'll lose several thousand at trade-in time because no one else will want your car.
No parasitic power losses and it's one less system that needs to be maintained.
AC is used for windshield defrost. I remember waiting for heat to defrost the windshield so I could see. AC defrost works in 10 sec.
The power loss from an AC compressor with the clutch disengaged is negligible.
Modern AC also use variable displacement compressors which adjust load according to temperature, so once the cabin is cool they use a constant small amount of engine power rather than toggling to full power on and off like older designs.
Modern AC also use variable displacement compressors which adjust load according to temperature, so once the cabin is cool they use a constant small amount of engine power rather than toggling to full power on and off like older designs.
For driving indoors.
I'm trying to think of a case where regular passenger cars are driven in climate-controlled indoor settings, and I'm not having much success. What do you have in mind?
Teslas in the Las Vegas hyper loop.
Even those are going to be taken out of service and sold into the used market at some point. When that happens, trying to sell a car without A/C in the Las Vegas area is going to be about as successful as trying to sell a swift kick in the gonads.
That depend on your country. I would save closer to $2500 on the budget model. Other than that you are completely right.
What's the point of keyless entry? Mine comes with key, and yhe auxiliary immobilizer which will not let it drive without radio tag or typing in PIN.
Ease of use. I would love if I could just leave key in my pocket and not worry about opening doors or putting it in ignition. I could even connect it to my keychain.
I wonder if nobody did ssh+nfc keys yet. At least I could trust it.
SSH+NFC sound like horrible protocol choice for such token.
Not that I would be against option to periodically rekey the whole system. Generate new pair of private keys and have the car and key swap them with my approval.
Not that I would be against option to periodically rekey the whole system. Generate new pair of private keys and have the car and key swap them with my approval.
You don't need to ever rekey an SSH private-public key pair. Still, a single hands-free token can be taken by force or stolen.
So can car key... I don't really have a car and probably never will were I truly worried that it was essentially single factor authentication.
But the car key + separate wireless immobilizer token is 2FA and it makes me somewhat confident.
WRT keyless entry, I actually have figured it out. Central wireless lock is cool. It's keyless start that I'm opposed to.
WRT keyless entry, I actually have figured it out. Central wireless lock is cool. It's keyless start that I'm opposed to.
And how often you keep those separate and operate the car? Can you even safely store one in safe place and still use the car? Or is there more factors. Which then increases the potential failure cases. And I prefer really not to involve anything like pin codes, fingerprints, facial recognition needed for me to drive my own car.
Fingerprints and facial recognition is circus, but physical token is a real thing, and I do keep it separate from my car keys
[deleted]
I think Dacia addresses this market pretty well already. However many of the things you’ve listed (cameras, TPMS, telemetry) are mandated by law in most regions.
I can't imagine anyone would want the car you described, for market-sized values of "anyone"
This feels like the Microsoft Word problem - Word users only use N% of Microsoft Word, the rest is needless bloat wasted on them. The problem is that the N% of features is different for each user.
Some people like blind spot monitoring, others are annoyed by it. Some people need to have satellite radio, others never use it. Some people won't buy a car without Apple CarPlay, others would never so much as buy an Apple product. And so on... but for your product to appeal to customers in general, you need all of the features.
Some people like blind spot monitoring, others are annoyed by it. Some people need to have satellite radio, others never use it. Some people won't buy a car without Apple CarPlay, others would never so much as buy an Apple product. And so on... but for your product to appeal to customers in general, you need all of the features.
The latest Dacia Sandero is selling better than all other models in its class for a few months now - even if it's basically a revamped last-gen Renault Clio with even lower quality interior and safety features. Some people prefer a basic, cheaper car.
Is that because it's literally impossible to buy other cars since they have a chip backlog though? Is it worth redesigning a car for a trend that will be gone next year?
No, it is because it is a lot cheaper and it can be bought by people that otherwise would not be able to buy a car at all. I know people who bought a Sandero for this reason and I was considering buying one one year ago, just before they announced an electric Dacia that I am still waiting for.
Anyone driving a car thats older than 15 years old is already driving the car that OP is describing.
And that car is worth $2000 on the market. No matter how many features they cut manufacturers aren’t going to be able to sell a new car at that price.
> And that car is worth $2000 on the market.
Yes, because the only reason a person would be willing to part with one at anywhere near that price was if was a lemon.
Yes, because the only reason a person would be willing to part with one at anywhere near that price was if was a lemon.
Sure, but do they actually want that car, or is that just what they have and can afford?
I personally have no interest in any upgrades over my 20 year old car. Maybe electric or no car at all if my living situation changed to support it. Obviously my hand will be forced soon enough as it slowly degrades.
I mean I drive that car because I don't see what I get out of a newer more costly model. I get my 35mpg and have my blutooth. Everything in the new car is exactly the same as everything in my old car.
Is a typical new car buyer currently driving a 15-year-old car?
You could say that's plausible. In a way it even makes sense, that people buy cars and then drive them for as long as they reasonably last. But if you had to, would you guess that this is how the market operates?
You could say that's plausible. In a way it even makes sense, that people buy cars and then drive them for as long as they reasonably last. But if you had to, would you guess that this is how the market operates?
No, because in every product sector people have shown when given a choice and the means to make it, they'd rather buy a shiny new thing than mend an older one. We are addicted to the dopamine hit of consumption.
They aren't buying a new car on all these new widgets that might be different between one today and one from yesteryear. I bet for the vast majority of people the primary technological wants of a car are cold AC and blutooth. Everything else, your TPMS, your brake alert system that beeps like a missile is locked on when you inch too close in traffic, no one stood up and asked for any of that stuff. The market just saddled it upon us and the higher per unit cost is passed right along to us with markup.
They aren't buying a new car on all these new widgets that might be different between one today and one from yesteryear. I bet for the vast majority of people the primary technological wants of a car are cold AC and blutooth. Everything else, your TPMS, your brake alert system that beeps like a missile is locked on when you inch too close in traffic, no one stood up and asked for any of that stuff. The market just saddled it upon us and the higher per unit cost is passed right along to us with markup.
Then OP can just buy a used car that has low mileage. Also, with many of the features they list, if they break, then they're just broken. It would have no effect on you if you aren't using those features already. A broken seat with a warmer is just a regular seat.
Mine's from 1997 so easily in that range.
most things you mention are mandated by the government, you can't sell a car in any western market without tire pressure monitoring, stability control, back up camera etc.
the manufacturers have no choice, it would be like suggesting they sell cars without seatbelts.
the manufacturers have no choice, it would be like suggesting they sell cars without seatbelts.
I hate tire pressure sensors, they are amazingly flaky and makes you uneasy about driving. That and the stupid alarms in my car that informs me that the temperature is below 4 degrees, it disturbs my driving.
You should be uneasy about driving.
For most people, it’s the most dangerous thing you will do today. If you are going to kill someone, it’s with your car.
For most people, it’s the most dangerous thing you will do today. If you are going to kill someone, it’s with your car.
But I don’t need flaky sensors alert me of no existing problem. That just makes everything worse.
False positives are annoying, but not knowing about a true positive is fatal.
Back up cameras are not mandatory until May 2022 in the EU.
Cars designed at least three years before they are shipped - so May 2022 might as well be tomorrow in car time.
[deleted]
Ah. Not only does our car (VW from 2016) not have one, I don't think I have ever been in a car that had a backup camera.
Reading in this thread that it's impossible to even buy a car without it is very surprising to me.
Reading in this thread that it's impossible to even buy a car without it is very surprising to me.
We're already only a few months away from 2022, most (if not all) carmakers present on the EU market have included back-up cameras in their vehicles. I know that my brother's Dacia Logan built in 2019 already had one.
Backup cameras have been an optional extra for a long time sure, but I don't think I'm aware of any car that actually comes standard with one. Well, maybe a Mercedes-Benz S-Class. I do have a backup camera in my 10-year-old Benz, but I imagine that the original owner paid a four-digit amount of euros for it back in the day.
I have a 2016 Hyundai Accent. Unless the law is very new my car has no backup camera or much else. I'm sure there's an emergency tire pressure sensor but that's about it. Not much to my car.
You're pretty much right before the cut-off. The rule/law in the US kicked in in mid-2018.
You probably want ABS as well - and then everyone else will want their favorite feature - and pretty soon we'll be where we are.
There are two practical issues with your suggestion.
One is that neither one of us have any idea of the electronics BOM breakdown between the various parts of the car, and whether the effect of shortage would be mitigated in a meaningful way if the entertainment stuff was simplified. And you can't legally sell a new car in the US without back-up cameras and tire pressure monitoring.
The second issue is that re-designing that part of the car takes more than a year (probably years, given that you need to collaborate with business and marketing to fit it in the existing lineup and e.g. not have it be associated with down-market products)
One is that neither one of us have any idea of the electronics BOM breakdown between the various parts of the car, and whether the effect of shortage would be mitigated in a meaningful way if the entertainment stuff was simplified. And you can't legally sell a new car in the US without back-up cameras and tire pressure monitoring.
The second issue is that re-designing that part of the car takes more than a year (probably years, given that you need to collaborate with business and marketing to fit it in the existing lineup and e.g. not have it be associated with down-market products)
Especially since the chips experiencing horrible shortages are the cheap simple ones used for those dumb features no one even thinks about anymore.
>A simple, basic car, with the ONLY electronic control being for:
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
You still need electronics for
- ABS - ESP - Airbags (- Diagnostics)
Because these are mandated.
Buy a cheap Dacia and there won't be much else except electric windows.
- Valve timing - Fuel injection - Oxygen and throttle - Emissions
You still need electronics for
- ABS - ESP - Airbags (- Diagnostics)
Because these are mandated.
Buy a cheap Dacia and there won't be much else except electric windows.
I found that one can live without ESP.
> Buy a cheap Dacia and there won't be much else except electric windows.
As mandated by EU law the latest Dacia models already have most of those, they do have back up cameras, for example.
> Buy a cheap Dacia and there won't be much else except electric windows.
As mandated by EU law the latest Dacia models already have most of those, they do have back up cameras, for example.
> I found that one can live without ESP.
True, but on average ESP is highly effective. Cars with ESP are correlated with 40-50% less running off the road or roll over crashes.[0] Carrie Underwood may sing about Jesus Taking the Wheel[1], but she really has GM Stabilitrak to thank.
[0] https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/... [1] https://www.youtube.com/watch?v=lydBPm2KRaU
True, but on average ESP is highly effective. Cars with ESP are correlated with 40-50% less running off the road or roll over crashes.[0] Carrie Underwood may sing about Jesus Taking the Wheel[1], but she really has GM Stabilitrak to thank.
[0] https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/... [1] https://www.youtube.com/watch?v=lydBPm2KRaU
I have a lot of thoughts about this comment, but here are my two cents.
> There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
I feel like you're vastly overestimating the market size. Most non-tech people don't care about their privacy on their phone, their laptop or their TV. Most people don‘t even know that their car actually has the hardware to track them, why would they care about their privacy in their car?
> I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
I would not expect that to be fairly simple re-engineering. Many assistive technologies are mandatory in new vehicles (at least in some regions like the EU) such as automatic emergency calls, etc. Those are not standalone systems but they have many dependencies on sensors, etc. With the supply chains of traditional automakers, chances are the components necessary to integrate one mandatory system aren't even from the same supplier. This makes cherry picking features extremely hard if not impossible.
> these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I don't think it's coincidental that they decide to shut down a plant in Germany (besides the fact that Opel is originally German). In Germany we have something called "Kurzarbeitergeld" which is a support companies in trouble can receive in certain situations to support their employees. Employees continue to work a fraction of the time (50% Kurzarbeit basically means you only work half of your weekly hours, 100% Kurarbeit means you don't work at all for a certain period). The money the employees receive is largely paid for by the Government (the taxpayer).
Usually Kurarbeit comes with a very strict set of rules, but thanks to covid those rules have been loosened a bit and especially carmakers (VW and BMW) take advantage of it (BMW for example sent many of their workers into Kurzarbeit but decided to pay billions of dividends to the Quandt family). So I suspect it was cheapest to shut down the Germany plant.
> There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give us a simple car with no GPS navigation, ass warmers, tire pressure sensors, telemetry, backup cameras, USB chargers, proximity detectors, traction control, keyless entry, remote climate control, etc.
I feel like you're vastly overestimating the market size. Most non-tech people don't care about their privacy on their phone, their laptop or their TV. Most people don‘t even know that their car actually has the hardware to track them, why would they care about their privacy in their car?
> I understand the re-engineering is a cost. But when you're simply removing existing features, this should be a fairly negligible one.
I would not expect that to be fairly simple re-engineering. Many assistive technologies are mandatory in new vehicles (at least in some regions like the EU) such as automatic emergency calls, etc. Those are not standalone systems but they have many dependencies on sensors, etc. With the supply chains of traditional automakers, chances are the components necessary to integrate one mandatory system aren't even from the same supplier. This makes cherry picking features extremely hard if not impossible.
> these carmakers have decided to throw up their hands and shut down production or pile up unfinished inventory waiting on chips. It makes precisely zero sense.
I don't think it's coincidental that they decide to shut down a plant in Germany (besides the fact that Opel is originally German). In Germany we have something called "Kurzarbeitergeld" which is a support companies in trouble can receive in certain situations to support their employees. Employees continue to work a fraction of the time (50% Kurzarbeit basically means you only work half of your weekly hours, 100% Kurarbeit means you don't work at all for a certain period). The money the employees receive is largely paid for by the Government (the taxpayer).
Usually Kurarbeit comes with a very strict set of rules, but thanks to covid those rules have been loosened a bit and especially carmakers (VW and BMW) take advantage of it (BMW for example sent many of their workers into Kurzarbeit but decided to pay billions of dividends to the Quandt family). So I suspect it was cheapest to shut down the Germany plant.
Buy an old Dodge W250 with a 12-valve Cummins 6BT, and enjoy mechanical fuel injection and 160 hp. No emissions control, no timing chain or belt, no overhead cams, no aluminum block or heads, ABS is optional, no airbags.
And with that 15MPG fuel economy you get to give your maintenance savings to the gas station instead while you drive a slow uncomfortable car.
AFAIK, backup cams and TPMS are required. As for privacy, how do any of those features affect anything?
But they're not changing their lineups, product design and marketing are expensive and take a long time. I don't think shrine expects the shortage to last that long.
But they're not changing their lineups, product design and marketing are expensive and take a long time. I don't think shrine expects the shortage to last that long.
>AFAIK, backup cams and TPMS are required.
Backup cameras are indeed mandated by law in the US for all new cars and have been since 2018.
Backup cameras are indeed mandated by law in the US for all new cars and have been since 2018.
Good news, you can buy this car today. It is called the Mitsubishi Mirage. Hardly anyone buys it because it is an absolutely dreadful car to drive.
Every time I hear about self-driving, I just think how bad every media system UI and functionality of BT, etc. in cars have ever been. I know it's probably different teams and much stricter standards for self-driving but all I ever think when using my Mazda's media center is 'fast chance I trust this team with self driving'.
As far as media centers go, just make apple carplay / android auto standard...
I personally wish that the infotainment part of the vehicle was a interface cable where the customer could freely choose the platform and also have an upgrade path in the future. Making cars more like cell phones means they will assume the lifetime of a cell phone.
That’s already exist - Apple Carplay/Android Auto. Gets better with every iOS release and app update. First thing i do when i get in the car is plug my phone in and support for wireless Carplay will be major factor in my next car purchase.
tire pressure sensor, gps and e-call is needed by law.
I didn't know TPMS is mandatory in US and EU about a decade ago. It's still not mandatory in Japan so most cars except luxury or imported don't equip it. Maybe vehicle inspection program (shaken) for every two years helps to avoid using worn tires. Also maybe due to less people use run flat tires than US/EU, or roads in Japan is better.
And I'm not sure what kinds of pressure sensors cars use, but I can tell you the ones I need have been impossible to source for months.
TPMS works by calculating the RPM of the wheel and knowing the tire size and vehicle speed. Most TPMS setups don't know the actual pressure, they infer it.
Both types of systems exist, but from what I've seen the indirect TPMS systems you're describing are becoming less popular. I'm somewhat familiar with Mazdas anyhow and that's the way it's going with them.
For 2017 the Mazda6 used an indirect system: https://www.mazdausa.com/static/manuals/2017/mazda6/contents...
For 2020 it's a direct system with in-tire sensors: https://www.mazdausa.com/static/manuals/2020/mazda6/contents...
For 2017 the Mazda6 used an indirect system: https://www.mazdausa.com/static/manuals/2017/mazda6/contents...
For 2020 it's a direct system with in-tire sensors: https://www.mazdausa.com/static/manuals/2020/mazda6/contents...
This is true of cheaper cars, like my Honda. German cars like Audis and Porsches have direct TPMS that can actually tell you the exact tire pressure.
Most Audis have indirect systems, but they have direct TPMS as an optional extra. At least that's the case on the European market, unsure about the US market.
Some premium Audis also have loose wheel detection, which is based on a similar technology as the indirect TPMS.
Oh, interesting. Well, my car at least has sensors—either that or I paid way too much for valve stems. :)
And rear view cameras
Maybe we should amend/change those laws back.
Perhaps we shouldn't.
The EU estimates that half the fatalities on the road will be prevented with these systems. That's 10.000 lives each year. If that's true, increasing the cost marginally is more than worth it (and it really is marginally, budget cars have not noticably increased in price).
The EU estimates that half the fatalities on the road will be prevented with these systems. That's 10.000 lives each year. If that's true, increasing the cost marginally is more than worth it (and it really is marginally, budget cars have not noticably increased in price).
They probably estimated from behind a desk to justify some activity, not by research. Over 90% of the fatalities on the road in my country, that has the highest numbers in EU, come from excessive speed and ignoring road laws, something no current safety systems can change. Even airbags are completely useless in a front collision at 150km/h.
Good news, the EU realizes that as well. Starting May 2022 all new cars sold in the EU need to support Intelligent Speed Adaptation: https://www.cnet.com/roadshow/news/european-union-speed-limi...
> budget cars have not noticably increased in price
Actually, they did. The new Dacia Logan starts at 8500 euros, back in 2009 you could buy an entry-level one at about 5500-6000 euros, which would be around 6400-7000 euros in today's money. At those entry level prices those extra 1500-2000 euros do count.
Actually, they did. The new Dacia Logan starts at 8500 euros, back in 2009 you could buy an entry-level one at about 5500-6000 euros, which would be around 6400-7000 euros in today's money. At those entry level prices those extra 1500-2000 euros do count.
Those systems are good for idiot-proofing. You don't want some idiot with underinflated tires running off the highway. In the same way, you don't want them to back over your kid in a parking lot.
It might make zero sense as a buyer but as a manufacturer it makes a lot of sense. I would guesstimate that most of the margin is made on luxury and add-on features. A good example of this is rims: larger rims don't change anything for a daily driver, but you can add them as an option for a considerable premium. Same for many other add-ons and they're still bought very often. In addition to this, while there definitely is a certain subset of the market that would appreciate a product with considerably fewer features, my gut feeling is that it's the same in automobiles as in tech — it's a very small part of the market.
Some side by sides or UTVs are pretty close to what you are asking for. As these vehicles are not universally road legal they don't have many requirements, it is really up to the market. Many are under $10k and have relatively few electronics. Some of them can be operated on public roads at lower speeds. And when you are no longer designing a vehicle for 70-90+ speeds you can make a lot of other changes, engine 1/4 the size, lighter wheels, brakes, frame while still being able to tow as much as a mid size suv.
Most of the tech results in absolutely critical safety features. Backup/blind spot cams, safer cruise control, breaking systems, etc etc. Nobody is begging for more dangerous cars.
I like your thinking & I wish this was a thing, but even if it were legal to sell new cars w/out ABS, traction control, backup cameras, etc., it seems like anyone who would actually follow thru w/ buying a car like that could just buy a used car - or buy a car w/ a salvage title & replace everything to their exact preferences - for way less than a new car costs anyway
I believe backup cameras and TPMS systems are now mandatory for US cars, so some of the complexity is mandated at least for “production” vehicles.
I think that keyless systems came after few incidents of people's key chains being too heavy and accidentally turning the car off when hitting a bump on the highway.
Since most cars keys already, from the late 90s, had chips in them, to prevent theft. It was the next step to remove the superfluous metal part.
Since most cars keys already, from the late 90s, had chips in them, to prevent theft. It was the next step to remove the superfluous metal part.
I love keyless entry. I can approach the car with two hands full of bags and still manage to open a door or trunk without having to free up a hand just so I can rummage through pockets to find the keys.
So what about airbags? Or ABS? Those are basic safety features that cannot work without electronics.
That sounds like the Dacia and Tata approaches, although they sell addon packs as well.
Dacia's addon packages are pretty tame since you need to get an addon package for an FM radio or for height-adjustable seats.
I disagree with most of the people responding to you; I think if Toyota re-released the 2000 Tacoma with minor updates to the stereo system and a webcam on the back they'd do a billion in sales.
By the time you finish the product design and manufacturing pipeline the chip shortage will be long over, and the market for a car without any modern amenities is not actually that big.
Almost everything you have mentioned are expensive add-ons. Any budget base model car today comes only with stuff mandated by law and little else.
> tire pressure sensors ... luxury features
These are to keep people alive! They aren't luxuries unless you think living is a luxury!
These are to keep people alive! They aren't luxuries unless you think living is a luxury!
Completely agree and it's because they don't want to make great cars they want to make profit on add-ons.
[deleted]
You assert removing those "luxury" items results in a car that is immune to chip supply issues.
Tire pressure sensors, ABS, ESP, airbags, etc. are compulsory in new cars in most countries.
You are welcome to buy the most basic Dacia at any time
This is a surefire way to sell hundreds of cars. Yes, hundreds!
I want something (exactly) like a Ford Escort 1988 model with the 1.6 diesel (Ford LT "Dagenham") engine.
That thing would work long after a massive solar flare and nuclear apocalypse... If it wasn't rusted to shit.
So yeah, better alloy/treatment for the frame :D
That thing would work long after a massive solar flare and nuclear apocalypse... If it wasn't rusted to shit.
So yeah, better alloy/treatment for the frame :D
I like your idea.
The only reason all those accessories are mandated, is because the car industry made it so, thus increasing the value (profit) of a standard car.
We could just as easily 'mandate', a different class of vehicle. Call it a classic class, or something. For example, motorcycles don't have back up cameras, air bags, etc.
Back to the consumer having a choice. Similar to right to repair.
Motorcycles don’t have a reverse gear and airbags only help if you have seatbelts. Not sure what your point is. Motorcycles are radically more dangerous for riders than passenger cars are for drivers.
> Stellantis has halted production at other plants, including in Europe and Canada, forecasting that it would make 1.4 million fewer vehicles this year due to the chip shortage.
For perspective:
> Combined sales of FCA and PSA totaled 6,206,000 units in 2020, down by 22% compared to 2019 figures. When the two companies announced their decision to merge, they became the world’s 4th largest automaker by sales volume. It was only outsold by Volkswagen Group, Toyota and Renault-Nissan-Mitsubishi alliance. With 7,907,000 vehicles sold in 2019, FCA-PSA (which was not called Stellantis by then), was bigger than GM and Hyundai-Kia. One year later, these two outperformed Stellantis.
https://fiatgroupworld.com/2021/02/14/stellantis-sold-6-2-mi...
If I'm reading this right, pre-pandemic sales were ~8 million. So a cut 1.4 million due to chip shortages represents an 18% drop. But compared to 2020, the drop is 23%.
That's disastrous hit for any company to withstand.
I'm curious how much of this is actually due to chip supply vs. how much could be due to other factors, but blamed on chip supply.
For perspective:
> Combined sales of FCA and PSA totaled 6,206,000 units in 2020, down by 22% compared to 2019 figures. When the two companies announced their decision to merge, they became the world’s 4th largest automaker by sales volume. It was only outsold by Volkswagen Group, Toyota and Renault-Nissan-Mitsubishi alliance. With 7,907,000 vehicles sold in 2019, FCA-PSA (which was not called Stellantis by then), was bigger than GM and Hyundai-Kia. One year later, these two outperformed Stellantis.
https://fiatgroupworld.com/2021/02/14/stellantis-sold-6-2-mi...
If I'm reading this right, pre-pandemic sales were ~8 million. So a cut 1.4 million due to chip shortages represents an 18% drop. But compared to 2020, the drop is 23%.
That's disastrous hit for any company to withstand.
I'm curious how much of this is actually due to chip supply vs. how much could be due to other factors, but blamed on chip supply.
> If I'm reading this right, pre-pandemic sales were ~8 million. So a cut 1.4 million due to chip shortages represents an 18% drop. But compared to 2020, the drop is 23%.
But it's a low margin industry. They can now charge above MSRP. If they aren't stuck paying for parts (or labor) of the units they can't make, they might come out ahead. Fewer units, waaaay more profit per unit.
But it's a low margin industry. They can now charge above MSRP. If they aren't stuck paying for parts (or labor) of the units they can't make, they might come out ahead. Fewer units, waaaay more profit per unit.
Tesla has done a decent job of mitigating some of the chip shortages since they are so vertically integrated. Though obviously Tesla produces way less cars than Toyota/Honda/VW. But other manufacturers simply can't do this even if they wanted to since they outsource most of this stuff.
> “We were able to substitute alternative chips, and then write the firmware in a matter of weeks,” Musk said. “It’s not just a matter of swapping out a chip; you also have to rewrite the software.”
https://www.theverge.com/2021/7/26/22595060/tesla-chip-short...
> “We were able to substitute alternative chips, and then write the firmware in a matter of weeks,” Musk said. “It’s not just a matter of swapping out a chip; you also have to rewrite the software.”
https://www.theverge.com/2021/7/26/22595060/tesla-chip-short...
They also just completely dropped a feature - radar - because they couldn't get parts for it. I'm not sure other manufacturers would be able to do that either due to internal processes or being able to risk their reputation.
Volvo dropped a security package too because of the chip shortage: "Volvo is contacting customers who have specified the Driver Awareness package to ask if they want to continue with their orders without the equipment, or wait until the kit becomes available once more."
https://www.autocar.co.uk/car-news/industry-news-manufacturi...
https://www.autocar.co.uk/car-news/industry-news-manufacturi...
I'm expecting them to turn the radar off at some point on the cars with a radar, because in my own experience driving Tesla, the radar was good to trigger phantom breaking.
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Tesla dropped radar because they are moving to vision only systems like how the Comma AI/OpenPilot works. Vision models are superior to radar since radar can't detect stopped obstacles.
From their comments about it being a setback, it doesn't sound like it was planned to happen so quickly.
Radar can absolutely detect stationary objects. Your vehicle moving at 50 mph means a stationary object is moving at 50 mph relative to your radar.
Yea but they need to distinguish between the stationary objects that are inconsequential to the car.
Are you telling me that its an unsolved problem in aero industry whose entire tracking mostly dependa on radar and it doesn’t work with non moving objects?
That doesnt make any sense to me, I mean how is a static image more superior to, say a metric that has accurate angle and distance.
Indeed - not many manufacturers could get away with Tesla's strategy of charging money for features that are in Alpha state, to put it charitably (e.g. Autopilot).
Many manufacturers had no shame to charge for shitty features in alpha state like the "ping pong" line assist.
Well they aren't going to "ping pong" themselves into a parked emergency vehicle.
Right, because it will just turn off itself randomly and run full speed into vehicle ahead.
Even Tesla's basic autopilot is far ahead of competitors and it's already included in base price.
Many companies will rip you off for far more basic cruise control
Even Tesla's basic autopilot is far ahead of competitors and it's already included in base price.
Many companies will rip you off for far more basic cruise control
> Even Tesla's basic autopilot is far ahead of competitors
Depends on how you define "competitors" I guess. It doesn't seem to be ahead of Waymo.
Depends on how you define "competitors" I guess. It doesn't seem to be ahead of Waymo.
You can't buy a Waymo car
Probably because they don't deem it safe enough yet. Tesla on the other hand is happy to sell tech that hasn't matured yet.
My Skoda Citygo's line-keeping assist tries to drive me into the barrier every single time I go driving. Only a firm hand on the steering wheel prevents disaster.
> and then write the firmware in a matter of weeks
Well, it doesn't sound very reassuring to read that they just swapped out some chips here and there and then "hacked" the new firmware in a couple of weeks. It may be the chip for the FM radio or it could be part of the breaking system.
Well, it doesn't sound very reassuring to read that they just swapped out some chips here and there and then "hacked" the new firmware in a couple of weeks. It may be the chip for the FM radio or it could be part of the breaking system.
Don't worry, they've been hacking the self driving code for a few years now.
> Tesla has done a decent job of mitigating some of the chip shortages since they are so vertically integrated
That and the fact they ten times less vehicles than other manufacturers like VW or Toyota per year.
That and the fact they ten times less vehicles than other manufacturers like VW or Toyota per year.
Man - the magnitude / impact of these chips shortages on autos in particular is crazy.
Regardless of Opel popularity, in the US the F-150 was a best selling vehicle and massive cash cow and they had unfinished vehicles sitting out. These chips have GOT to be a relatively low margin / somewhat lower cost item (ie, feature size can be large). What a miss not to have more coverage for them.
Regardless of Opel popularity, in the US the F-150 was a best selling vehicle and massive cash cow and they had unfinished vehicles sitting out. These chips have GOT to be a relatively low margin / somewhat lower cost item (ie, feature size can be large). What a miss not to have more coverage for them.
After a train crash destroyed a few dozen Ford trucks, they sent an engineer who was also handy to pry the chips out of the smashed trucks. They were hand delivered back to the factory.
Normally this would be ridiculous--there are many other parts that were probably more valuable. But now we have people cracking open smashed vehicles like walnuts so they can extract a chip nominally worth a few dollars.
Normally this would be ridiculous--there are many other parts that were probably more valuable. But now we have people cracking open smashed vehicles like walnuts so they can extract a chip nominally worth a few dollars.
200mm tapeouts have briefly became more profitable than leading edge ones on the wave of panic buying.
On my side, I lost a lot of firmware devs to poaching by companies migrating between microchip brands, and ready to pay just anything, to the point of me myself being tempted.
On my side, I lost a lot of firmware devs to poaching by companies migrating between microchip brands, and ready to pay just anything, to the point of me myself being tempted.
Heck, why not? It’s a market economy and we are a commodity. Why resist your price going up?
It's an ultimate irony to see that 200mm fabs in the West were closed one after another for "low profitability" just to see them missing out on this money volcano
If those fabs where still around probably profitability would be even lower and there wouldn't be so massive profits. Irony is that we haven't been paying some more, to keep slack in supply.
Mind telling us whether you're hiring? And, mind pointing us to some contacts where your people are going?
Will you be ready to move to China? Working of physical products requires being there. We don't do much software only projects.
We tried DHLing prototypes around before, it didn't work out. People still need tons of expensive tooling, go to other specialist companies with these prototypes, etc. Too much pingpong
We tried DHLing prototypes around before, it didn't work out. People still need tons of expensive tooling, go to other specialist companies with these prototypes, etc. Too much pingpong
Taiwan would work too perhaps ? Maybe even South Korea/ Japan as well.
Auto makers should just buy back leased cars from dealerships and harvest the chips. These are cars after all, so the chipsets have probably been the same underpowered crapware for the last ten years.
Used car prices are so high, that would probably be pretty expensive.
That doesn't work in practice; there's a legal difference between a part on a new vehicle that was DIT (Damaged In Transit) and one pulled out of a lease.
This is the auto industry we are talking about. If they want something that will help them be more competitive or float them in hard times they go to congress and get it.
Would this actually ever make any sense? Not counting totalled vehicles. There really isn't so much profit in new cars price that it pays for used car fully. Unless that used car is really heavily used. Which then leads to questions of how much lifetime left the parts have.
They could lobby and get another cash for clunkers sort of arrangement from the federal government to incentivize dealers turning over leases rather than having them on the lot, and having the cost of getting back these cars publicly subsidized by the government. The run for used car supply right now is entirely due to new car supply being so strained. Pushing that demand back to new cars rather than used cars puts the profits back into the automakers rather than dealerships, and guess who swings with more weight in Washington. Not Joe Shmoe Chevrolet from Anytown USA.
How long longest leases are really 7 years? Is there relevant usable parts left in those vehicles? On other hand with shorter leases like 2, 3 or 5 years the cars are still perfectly functional and scrapping them would be huge waste just from environmental point alone.
Simplest thing might be just to pay some part of laid-off workers compensantion.
Simplest thing might be just to pay some part of laid-off workers compensantion.
Idk about recent years,but opel has already been looking at closing sites in Germany, Bochum I believe was the most recent one. This smells like an excuse to do so eventually (Whether justified or not)
"Some 1,300 workers employed at the plant will be temporarily laid off, Opel said, with a separate plant in France picking up some of the production."
Perhaps a very convenient chip shortage? Anyhow, why not build a car without electronics, gps, g4, microphones, voice control, tracking and screens. Because that is exactly what I want.
Perhaps a very convenient chip shortage? Anyhow, why not build a car without electronics, gps, g4, microphones, voice control, tracking and screens. Because that is exactly what I want.
Because even that car would have chips in it, unless if you’re selling it illegally. You cannot make a gasoline engine that meets emissions regulations without sophisticated engine control unit (ECU) systems in it. That and there are a bunch of safety features that require it, like ABS and automatic braking. In the United States it is also illegal to sell a new car without a backup camera, which obviously requires a screen of some sorts near the driver.
Beyond that, the reality is that these features you decry are very, very popular. Nobody will make a car exactly the way you want, because that’s not where consumers are.
Beyond that, the reality is that these features you decry are very, very popular. Nobody will make a car exactly the way you want, because that’s not where consumers are.
Very few people would want this, certainly not enough to warrant a production line. The cars you want already exist, just buy a classic car from the 60's. None of the stuff you dislike and if done right a nice looking car. Gas is a bit more though.
> why not build a car without electronics, gps, g4, microphones, voice control, tracking and screens. Because that is exactly what I want.
That sounds like what Dacia does.
That sounds like what Dacia does.
> Perhaps a very convenient chip shortage?
Absolutely not. Margins on new vehicles are the highest ever.
> Anyhow, why not build a care without electronics… because that’s exactly what I want
You should just buy a low mileage used vehicle
Absolutely not. Margins on new vehicles are the highest ever.
> Anyhow, why not build a care without electronics… because that’s exactly what I want
You should just buy a low mileage used vehicle
There are already bills in the pipeline to require all cars to have GPS in the EU (speed limiters) and more privacy violating stuff. Governments want to know of every aspect of your life, so any privacy conscious device will not be viable.
One thing that's going to come out of this crisis is cars being repriced as not just engine + wheels + seats but rather a consumer tech gadget. I expect prices to keep climbing well after supply chain issues have been solved. Piling on subscription pricing is next (and is already happening in a lot of cases).
I'm not following your chain of reasoning here.
Prices were climbing before the chip shortage, while "technology" (or specifically, features requiring computer chips) has increasingly been an important part of marketing strategy, differentiation and consumer focus in the automotive industry. (Anecdotally, I check reviews for how well they handle things like Android Auto/Apple CarPlay, and in-car software updates.)
The pricing could reflect a lot of things, including inflation, growing consumer wealth (or credit), consumers prioritizing automotive due to a variety of reasons including marketing/image, increased time spent commuting, etc.
What does this supply chain hiccup have to do with your hypothesis?
Prices were climbing before the chip shortage, while "technology" (or specifically, features requiring computer chips) has increasingly been an important part of marketing strategy, differentiation and consumer focus in the automotive industry. (Anecdotally, I check reviews for how well they handle things like Android Auto/Apple CarPlay, and in-car software updates.)
The pricing could reflect a lot of things, including inflation, growing consumer wealth (or credit), consumers prioritizing automotive due to a variety of reasons including marketing/image, increased time spent commuting, etc.
What does this supply chain hiccup have to do with your hypothesis?
The aspect of the problem not talked about is that a lot of automotive chips are really, really old.
And they are old, because of many certification requirements set partially by the industry, and a few odd governments.
In reality, most of them are both less reliable, and harder to work with in comparison to open market parts.
The only two things I seen chips with micron scale nodes used in my life were: air conditioner boards, and car parts.
And they are old, because of many certification requirements set partially by the industry, and a few odd governments.
In reality, most of them are both less reliable, and harder to work with in comparison to open market parts.
The only two things I seen chips with micron scale nodes used in my life were: air conditioner boards, and car parts.
Cars are a really noisy electrical environment. Can you replace that micron-scale chip with a 7 nm chip and have it function reliably for two decades in that environment?
I mean, worst case, when you let go of the starter motor, it creates a huge back EMF. Imagine your chip finding its +5 input suddenly 12 volts below ground for a significant fraction of a second. (Now, it shouldn't be that bad any more. That was back in the bad old days, when chips were just starting to be added to cars. Shielding should be a mostly-solved problem these days. But is it solved well enough for your 7 nm chip, or just well enough for the micron-scale chips? It's something you have to really carefully look at before you move to smaller processes.)
I mean, worst case, when you let go of the starter motor, it creates a huge back EMF. Imagine your chip finding its +5 input suddenly 12 volts below ground for a significant fraction of a second. (Now, it shouldn't be that bad any more. That was back in the bad old days, when chips were just starting to be added to cars. Shielding should be a mostly-solved problem these days. But is it solved well enough for your 7 nm chip, or just well enough for the micron-scale chips? It's something you have to really carefully look at before you move to smaller processes.)
> Cars are a really noisy electrical environment. Can you replace that micron-scale chip with a 7 nm chip and have it function reliably for two decades in that environment?
For as long as you talk about digital side, you can. Your smartphone is a way more noisy electrical environment than your car.
For as long as you talk about digital side, you can. Your smartphone is a way more noisy electrical environment than your car.
First, there is no such thing as digital. It is just an abstraction to facilitate our understanding and design of circuits. Any number of issues can cause that abstraction to fail, even deep within a modern chip, let alone at the board level. On-chip cross talk, RC drop, and ground bounce are simple analog issues that have to be contended with on digital designs. Every chip has a power supply and the smaller geometry chips have less tolerance to supply spikes. Same with I/O including voltage range tolerances and ESD protection. All that gets harder in smaller geometries. Also factor in circuit lifetimes (including digital). Due to a variety of mechanisms, small geometry chips just are not as reliable and some of these mechanisms are very hard to accelerate so qualification is a nightmare.
A smart phone is not a "way more noisy" environment than a car. It has different issues, and frankly a far more constrained and predictable environment. A load dump event in a car can take the 12V supply over 100V. I have never heard of that in cell phone. Long wiring harnesses are a nightmare and require careful design. It is hard to compare a cell phone and car without a clear definition of "noisy", but as someone who has designed systems similar to both, I think the car is a harder set of problems. Just not as constrained noise sources or components.
A smart phone is not a "way more noisy" environment than a car. It has different issues, and frankly a far more constrained and predictable environment. A load dump event in a car can take the 12V supply over 100V. I have never heard of that in cell phone. Long wiring harnesses are a nightmare and require careful design. It is hard to compare a cell phone and car without a clear definition of "noisy", but as someone who has designed systems similar to both, I think the car is a harder set of problems. Just not as constrained noise sources or components.
>Your smartphone is a way more noisy electrical environment than your car.
Cellphones are are certainly tricky, but in a different way than cars. In my experience with EMF measurement and EMI compliance at Underwriters Labs, cars are uniquely challenging due to the relatively strong EMF generation from the huge number of motors, solenoids, coils other magnetic bits banging around and interacting with each other in hard-to-predict ways.
Cellphones are are certainly tricky, but in a different way than cars. In my experience with EMF measurement and EMI compliance at Underwriters Labs, cars are uniquely challenging due to the relatively strong EMF generation from the huge number of motors, solenoids, coils other magnetic bits banging around and interacting with each other in hard-to-predict ways.
High voltage CMOS is certainly needed there of course, but you don't put you logic chip on the same die as a motor inverter.
Misunderstandings about noise in digital systems and environmental conditions in smartphones vs cars aside (well, no: your phone isn't operating at 100C or vibrating in anything like the way a car does), your smartphone doesn't run reliably (relative to automotive reliability requirements) for a day.
When a failure can kill someone, you have to take it much more seriously than when a failure slightly inconveniences a user while they restart the app.
When a failure can kill someone, you have to take it much more seriously than when a failure slightly inconveniences a user while they restart the app.
I don't think smartphones are expected to work on the same timescale that a car should.
It’s true that the auto market tends to be behind the times, but regulation is not the cause. That is much more of an issue in airplanes and aerospace in general.
Cars still use micron level chips because:
- They still do the job.
- They have enough volume to keep those fabs open.
- Since they end up becoming the only buyer (monopsony), they get cheap rates.
So they pretty much run those fabs to the ground.
Cars still use micron level chips because:
- They still do the job.
- They have enough volume to keep those fabs open.
- Since they end up becoming the only buyer (monopsony), they get cheap rates.
So they pretty much run those fabs to the ground.
They used to be big back in the day when hot hatches ruled and we had Golf vs Astra (Vauxhall for the UK) but then we got crossovers and mini-SUV and GM had their own problems to invest in the brand.
Nowadays they make rebadged Peugeot/Citroen cars.
Nowadays they make rebadged Peugeot/Citroen cars.
I’m no fan but it’s reductive to call them rebadged Peugeots. Like just about any car you buy, including a Rolls Royce, they are built using a shared platform. In this case, it’s one of the Stellantis platforms.
Rolls Royce has actually been moving _away_ from shared platforms; only the Wraith and Dawn (both in their final year of production) are on a shared platform.
Certainly there's still shared components with BMW, but they've gone back to being more bespoke.
Certainly there's still shared components with BMW, but they've gone back to being more bespoke.
Opel used to be owned by GM since 1931.
From Wikipedia: "In the 1990s, Opel was considered to be GM's cash cow, with profit margins similar to that of Toyota. Opel's profit helped to offset GM's losses in North America and to fund GM's expansion into Asia"
The GM bankruptcy contributed to Opel downfall.
It makes PSA cars because PSA bought them in 2017.
From Wikipedia: "In the 1990s, Opel was considered to be GM's cash cow, with profit margins similar to that of Toyota. Opel's profit helped to offset GM's losses in North America and to fund GM's expansion into Asia"
The GM bankruptcy contributed to Opel downfall.
It makes PSA cars because PSA bought them in 2017.
Are you suggesting the plant closure is due more to waning popularity of their cars rather than availability of parts?
Stellantis, the controlling company, is more or less an aggregation of all those car brands which makes you go "wait, _they're_ still in business?!", so, I mean, it's kind of plausible.
Unpopularity probably affects their negotiating abilities.
Unpopular doesn't mean bad sales numbers.
If you listen to the white collar internet you'd think that nobody buys Nissan and FCA (I'm sorry, Stellantis) but that couldn't be further from reality.
If you listen to the white collar internet you'd think that nobody buys Nissan and FCA (I'm sorry, Stellantis) but that couldn't be further from reality.
Opel annual sales in 2019 was 800k, half their peak of 1.6 million in 1999 and there sales graph is basically a steady continuous drop in that period: https://carsalesbase.com/europe-opel-vauxhall/
The people who historically would have bought Opels or Vauxhalls (thanks to high numbers of UK imports, you used to see both here) now tend to buy Toyotas and Kias mostly today, at least in my country.
The people who historically would have bought Opels or Vauxhalls (thanks to high numbers of UK imports, you used to see both here) now tend to buy Toyotas and Kias mostly today, at least in my country.
Opel Manta .. they made even movies about two movies about it :-)
Cheesy German movies from the 80's.
Heh. I was thinking the same thing: “yeah, so what if they do?”
Horrible shame, that lack of Opels.
Horrible shame, that lack of Opels.
Is there a DIY chip fabrication scene? What is the cutting edge of what hobbyists are doing in their own garages?
That was actually a post here on HN just a few weeks ago.
Here's one "point of entry" (to find the homepage and similar videos and pages): https://youtu.be/IS5ycm7VfXg "Upgraded Homemade Silicon Chips"
Here's one "point of entry" (to find the homepage and similar videos and pages): https://youtu.be/IS5ycm7VfXg "Upgraded Homemade Silicon Chips"
This is exactly what I was looking for, thanks for sharing!
I hope a lot of car industry supply chain managers are losing their jobs now. Worst people ever. Hurt their suppliers, hurt their own company, out of sheet arrogance and ignorance.
On the other hand, good for us, any ICE car or car in general that is not produced is good for the environment.
On the other hand, good for us, any ICE car or car in general that is not produced is good for the environment.
It's not like the supply chain managers had much choice in this. For years they would have been fired for keeping too much stock around.
True. Whoever made these choices then. Incompetent management. 100s of workers are losing their jobs because of them.
Well these hundreds of workers wouldn't have had the job if they hadn't operated efficiently for the preceding 20 years.
It's a bet that has probably paid off, even including the current situation.
It's a bet that has probably paid off, even including the current situation.
Any carmaker whose cars can't sell will be happy to get their suppliers to not supply them with chips.
Let's see how the main EV manufacturers will procure their chips in the coming months.
Let's see how the main EV manufacturers will procure their chips in the coming months.
Wouldn’t carmakers instead buy capacity from people making USB chargers etc? I would think the cost of downtime would have them paying any price.
Auto chips are usually a higher grade than consumer. They have to be able to handle wide ranges of temperature and moisture and also handle vibration. There is usually an extensive testing process until a chip gets qualified for auto production. This is especially true for chips used in the drivetrain and/or safety systems.
There are some cases where a foundry is already qualified for an auto grade chip and they make a consumer chip in addition to it on the same equipment. They can stop making the consumer chip and devote 100% of their capacity to the auto grade chip.
If that is a possibility, I am sure it is already happening. But a lot of foundries that make consumer chips simply aren't qualified to make auto grade chips, so they cannot move production.
There are some cases where a foundry is already qualified for an auto grade chip and they make a consumer chip in addition to it on the same equipment. They can stop making the consumer chip and devote 100% of their capacity to the auto grade chip.
If that is a possibility, I am sure it is already happening. But a lot of foundries that make consumer chips simply aren't qualified to make auto grade chips, so they cannot move production.
It takes 1 to 2 quarters for silicon to be manufactured, we are seeing the results of decisions that were finalized in early 2021 with regard to what is available today to buy.
Seems like the best time to start a mining startup
Or maybe there’s just a lack of demand??
Finally some good news.
Less cars is a global good thing.
Less cars is a global good thing.
People will just keep driving their older cars which pollute even more.
There haven't been many breakthroughs in the past twenty years in regards to fuel efficiency. They're just gaming the numbers at this point by making the engines have higher and higher compression at the cost of making them less and less reliable.
Maybe old cars being dramatically less fuel efficient was true in the 90s when an "old-car" was from the 70s.
Maybe old cars being dramatically less fuel efficient was true in the 90s when an "old-car" was from the 70s.
I'm curious to see a more up to date analysis of the chip shortage. My understanding is that when it started last year, the problem was caused by unprecedented demand for silicon fueled by people being stuck at home. Factories were pumping out chips at maximum capacity and it still wasn't enough to meet demand.
As people return to vacationing and social activities as the vaccine became available, I expected demand to slowly come back down to meet supply, but the problem seems to only be getting worse.
As people return to vacationing and social activities as the vaccine became available, I expected demand to slowly come back down to meet supply, but the problem seems to only be getting worse.
We are in for The Great Supply Crisis. This is everywhere from fuel to agriculture to chips. I believe the high level picture is that a significant percentage of labor force has decided not to return to work and that causes staffing crisis and that causes reduced outputs. Even though chip industry don't suffer from staffing, their suppliers do.
Edit: Too many downvotes for my view that this Opel case is yet another symptom of the wrong handling of the panedmic by any governments, leading to inflation and supply chain disruptions.
If opinions are downvoted then I do not need to participate.
If opinions are downvoted then I do not need to participate.
Remember the 70s oil crisis? People stopped working because there wasn't enough energy to keep businesses and therefore jobs open. If there aren't enough semiconductors then those car factories won't stay open no matter what you do.
Also regarding laying off people. Germany kept unemployment below 4% during the entire pandemic because of its more flexible labor market mechanism known as Kurzarbeit that allows people to work less during economic crises. The rigid labor market in the USA encourages employers to lay off entire people rather which tends to fuel recessions, make them worse and delay recovery. Just think about how inefficient it is to lay people off, pay them to do nothing, do massive state intervention through a rent moratorium and then hire them again. The unemployed still need housing and food. The idea that there is something more productive than producing food for them is laughable.
>This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
I don't get it. Paying people unemployment benefits is the long term strategy. We give people food stamps because if they starve to death they won't be able to work at all. Even if they stay on welfare their children will have a better shot at life. Abandoning them is the height of short term thinking.
Also regarding laying off people. Germany kept unemployment below 4% during the entire pandemic because of its more flexible labor market mechanism known as Kurzarbeit that allows people to work less during economic crises. The rigid labor market in the USA encourages employers to lay off entire people rather which tends to fuel recessions, make them worse and delay recovery. Just think about how inefficient it is to lay people off, pay them to do nothing, do massive state intervention through a rent moratorium and then hire them again. The unemployed still need housing and food. The idea that there is something more productive than producing food for them is laughable.
>This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
I don't get it. Paying people unemployment benefits is the long term strategy. We give people food stamps because if they starve to death they won't be able to work at all. Even if they stay on welfare their children will have a better shot at life. Abandoning them is the height of short term thinking.
>It would have been better to lay off people; many have money saved to survive a few months; others could have lend some money (and pay it back when employed again). This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
This is completely wrong and trivial to research: https://www.fool.com/the-ascent/research/average-savings-acc...
Most Americans couldn't handle a $400 emergency. 56% have $5000 or less in savings.
These people have no one to borrow money from. This is one of the most insidious forms of privilege: It's much easier to "pull yourself up by the bootstraps" when you have a rich parent or uncle to loan you O(10000) to start a business or to give you food and shelter when you're down, but the VAST majority of people have no such resources.
This is completely wrong and trivial to research: https://www.fool.com/the-ascent/research/average-savings-acc...
Most Americans couldn't handle a $400 emergency. 56% have $5000 or less in savings.
These people have no one to borrow money from. This is one of the most insidious forms of privilege: It's much easier to "pull yourself up by the bootstraps" when you have a rich parent or uncle to loan you O(10000) to start a business or to give you food and shelter when you're down, but the VAST majority of people have no such resources.
The fun part about recessions is that demand for savings is going up and since the most popular savings vehicle is money it means demand for borrowers and debt is going up. The people who end up unemployed have absolutely zero capacity to borrow even though they are the ones who need it the most.
Thanks to our moral frameworks we interpret strategies like Keynesian fiscal stimulus as some sort of bad drug that the economy is addicted to and should quit. There is a huge double standard here. People want money and they don't want anyone to go into debt. It's the height of hypocrisy. People demand debt and they vilify it at the same time.
An amoral interpretation of Keynesian stimulus is that it effectively makes the debt market available to the unemployed. The unemployed are in debt in regards to the government which issues treasury bonds and the government is in debt in regards to the savers. In other words, it is decreasing market rigidity and decreasing overall market distortions.
The reason why Keynesian stimulus is a bad idea has nothing to do with morals. Rather, the problem is that using the government to bypass market rigidities shows a deep underlying problem in the labor market that nobody wants to address.
There are people who work more than they demand work and there are people who work less than they demand work. In a perfectly flexible market this should be impossible and you know what, it's impossible in a barter economy. People wouldn't work to pile up money that they don't intend to spend the same way a farmer wouldn't produce and pile up potatoes that they won't sell to the economy.
Thanks to our moral frameworks we interpret strategies like Keynesian fiscal stimulus as some sort of bad drug that the economy is addicted to and should quit. There is a huge double standard here. People want money and they don't want anyone to go into debt. It's the height of hypocrisy. People demand debt and they vilify it at the same time.
An amoral interpretation of Keynesian stimulus is that it effectively makes the debt market available to the unemployed. The unemployed are in debt in regards to the government which issues treasury bonds and the government is in debt in regards to the savers. In other words, it is decreasing market rigidity and decreasing overall market distortions.
The reason why Keynesian stimulus is a bad idea has nothing to do with morals. Rather, the problem is that using the government to bypass market rigidities shows a deep underlying problem in the labor market that nobody wants to address.
There are people who work more than they demand work and there are people who work less than they demand work. In a perfectly flexible market this should be impossible and you know what, it's impossible in a barter economy. People wouldn't work to pile up money that they don't intend to spend the same way a farmer wouldn't produce and pile up potatoes that they won't sell to the economy.
What's your broader economic framework for this analysis? From your comment history georgist/LVT adjacent. But the responses seem very well connected and elaborate beyond that with which I'm familiar with. On top of a name for the system, what books/wikipedia pages/journal articles would be available to read about it?
These aren't Americans, though. These are Germans.
I don't know if the same statistics apply to Germans, but you at least need a different source to cite.
I don't know if the same statistics apply to Germans, but you at least need a different source to cite.
https://news.ycombinator.com/newsguidelines.html
> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
However many downvotes you may have gotten initially, most of them are now for this reason.
To the original comment, what exactly was the role of government handling in the automotive industries mishandling of their chip supply chain? How did these automotive industry missteps lead to inflation?
> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
However many downvotes you may have gotten initially, most of them are now for this reason.
To the original comment, what exactly was the role of government handling in the automotive industries mishandling of their chip supply chain? How did these automotive industry missteps lead to inflation?
Replying to your edit.
I didn’t downvote you for your original response but holy hell the entitlement at
> If opinions are downvoted then I do not need to participate.
If you are incapable of accepting that people may disagree with your opinion, then yes you do not need to participate, but I don’t know how you’re gonna get through life if you pull out of any situation where there is disagreement
I didn’t downvote you for your original response but holy hell the entitlement at
> If opinions are downvoted then I do not need to participate.
If you are incapable of accepting that people may disagree with your opinion, then yes you do not need to participate, but I don’t know how you’re gonna get through life if you pull out of any situation where there is disagreement
First of all, your original comment was this:
> I try to simplify the root cause like this:
> - people kept getting money while not working
> - those people did not work, hence, no goods were produced
> Same amount of money without the goods in the market. Inflation and good shortages. I believe that those government helicopter money was a huge mistake. It would have been better to lay off people; many have money saved to survive a few months; others could have lend some money (and pay it back when employed again). This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
Secondly, you're wrong. The shortage has nothing to do with "government helicopter money". It has to do with changing spending habits due to the pandemic plus companies anticipating, wrongly, where those changing habits will lead. And that's topped off by the fact that the electronics supply chain is not agile, so once you change your mind, you can't really go back quickly.
Your opinion is downvoted because you're wrong.
> I try to simplify the root cause like this:
> - people kept getting money while not working
> - those people did not work, hence, no goods were produced
> Same amount of money without the goods in the market. Inflation and good shortages. I believe that those government helicopter money was a huge mistake. It would have been better to lay off people; many have money saved to survive a few months; others could have lend some money (and pay it back when employed again). This would have been "mean" in the short-term, but good for the entire society in the mid- and long-term.
Secondly, you're wrong. The shortage has nothing to do with "government helicopter money". It has to do with changing spending habits due to the pandemic plus companies anticipating, wrongly, where those changing habits will lead. And that's topped off by the fact that the electronics supply chain is not agile, so once you change your mind, you can't really go back quickly.
Your opinion is downvoted because you're wrong.
The people not producing goods weren’t doing so out of laziness or some bureaucratic snafu. They weren’t producing goods because there was a pandemic and getting physically near others was dangerous.
If you think those furloughed workers shouldn’t have gotten any money sue it would be “good” for the long term system, then might I suggest as a modest proposal that you simply toss them into a meat grinder? Very simple and removes the people spending too much money from the economy
If you think those furloughed workers shouldn’t have gotten any money sue it would be “good” for the long term system, then might I suggest as a modest proposal that you simply toss them into a meat grinder? Very simple and removes the people spending too much money from the economy
Any proof that there's a significant inflation ongoing?
Well, since January the US CPI rose by 4.4% and there are still 4 months to go (September data is released in two weeks). The Fed target is ~2%.
That's before you get into whether the official number is underestimated (e.g homeowner's equivalent rent, which is a quarter of the CPI basket). Is it significant? Maybe, maybe not.
That's before you get into whether the official number is underestimated (e.g homeowner's equivalent rent, which is a quarter of the CPI basket). Is it significant? Maybe, maybe not.
Inflation is growing everywhere. You can't have a crisis and then dump that much money without inflation happening.
Besides CPI, the main inflation is actually asset inflation. Look at the huge stock, real estate, etc. price booms since 2020.
Besides CPI, the main inflation is actually asset inflation. Look at the huge stock, real estate, etc. price booms since 2020.
CPI in Germany
You won't get downvoted just for having right-wing ideals, but you can't just assert controversial beliefs without backing, like "There shouldn't be a social safety net". The counterargument is simple: "I desire a high quality of life in my country, and that correlates with a social safety net. Most countries with high quality of life have excellent social programs: universal healthcare, universal youth education, robust unemployment [1]".
[1] https://www.usnews.com/news/best-countries/quality-of-life-r...
[1] https://www.usnews.com/news/best-countries/quality-of-life-r...
"right wing ideas"? You must be kidding me. Are you one of those valley hackers who changed his gender 300 times and who is only wearing pink runes to protect his/her/its aura?
Sorry, but not everything is "right wing", except ofc you are one of those "special kids".
Sorry, but not everything is "right wing", except ofc you are one of those "special kids".
Every IC is being bought up by new 3rd party distributors to scalp to desperate electronics manufacturers.
Take a look at this chip we are just now crossing as an example, click on 'Non-authorized stocking distributors':
https://octopart.com/tps2052bdgnr-texas+instruments-699312?r...
Win Source has a bunch, but you will pay 6x the cost. We have been quoted even 100x the list price for some ICs on our boards.
Luckily as a small company we are nimble and can mostly cross to similar components, and have been for months now, but a whole board assembly run can be stopped with a single component being impossible to find out of hundreds on the BOM.
Having scalpers in the mix raising the price for all components worries me that the chip shortage might not end for many years, as they can self-fund by raising their prices to stock up on new supply. Not to mention the higher number of random failures as counterfeits easily find their way into the supply chain without 'authorized' distributors.