Comment by parineum
17 hours ago
It's actually not labor costs at all.
The difference between the USA and, for example, China, in manufacturing is the difficulty of getting a new factory built.
If you have a product designed and ready for production, it will take you years to build a factory in the USA. All the while you'll be losing money managing the build, paying your employees and, most importantly, letting your competitors get a head start.
Likewise, if you build that factory in China, it'll be up and running in less than a year and you can start making your R&D money back, get to market before your competitors and not bleed money keeping your companies doors open.
The labor costs are easily offset by removing the logistics of moving the product.
Tesla Gigafactories are a pretty good example of this. The first two took ~3 years to build in Nevada and New York. The third, in Shanghai, took 10 months.
'Company learns from mistakes, third time it does something it does it better, quicker'
The 4th one, in Germany, took 2 years.
Famously regulated to hell Germany. There is no way that Nevada and NY have more regulations than Germany. It really is all about having experience.
Gigafactory Nevada notably became the second-largest building in the world (by volume) and was a joint partnership with Panasonic, locating two major manufacturing facilities within the same structure. Seems like a big project with additional joint partner complexities. Making the second largest building in the world as your first try is going to maybe run into some things.
Gigafactory Berlin is a different beast and produces a different product mix.
Gigafactory New York produces photovoltaic cells and Tesla Supercharger assemblies but does not produce batteries or vehicles yet another product mix.
Giga Shanghai just does final vehicle assembly (basically the easiest kind of factory and most minimally regulated) and is a million square feet smaller than the other factories and with no joint partnership/co buildout.