Another Hidden Cost You’re Obliged to Pay

  • June 12, 2023

Why is it that the large SUVs so many Americans would love to own – because they are so much like the large sedans Americans used to routinely drive – have become so absurdly expensive?

Italicized to emphasize the fact as well as the grift.

A new Chevy Tahoe stickers for $52,600 to start. This is typical for a vehicle of this type. And they routinely “transact” – that is, sell – for upwards of $60,000.

For what?

A vehicle like the Tahoe is not an elaborate or expensive to manufacture vehicle. It has a steel frame onto which the body is bolted. It is powered by a V8 that is not fundamentally different from the V8 that Chevrolet introduced in 1955. The current V8 is cast in aluminum rather than steel and it is fuel injected and has some other “modern” features. But it is still recognizably related to the V8 Chevy unveiled almost 70 years ago. Both have a single camshaft actuating two valves per cylinder via pushrods. Nothing fancy – or expensive – about it.

Nor the Tahoe’s frame. Nor its stamped steel (mostly) body panels. The wowza electronica inside the cabin – e.g., the LCD digital displays and so on – are the cheapest things about it. So why is it – the Tahoe – so expensive?

Well, it isn’t.

What it is is profitable.

Unlike, say, EVs. They are money-losers, each one costing GM (and everyone else who makes them) money on each “sale.” GM CEO Mary Barra recently admitted this. And someone’s got to pay for that.

Guess who?

Correctomundo! It is the people who buy SUVs like the Tahoe who do. It ought to cost about $35,000 – perhaps even less – and that would still be enough to cover the cost to manufacture it and make enough profit selling it to make it worth manufacturing it. But it would not be enough profit to cover the losses of “selling” EVs, so the cost of the SUV goes up to cover it. And that’s how you’re paying for it.

Assuming you can still afford to.

The fact is that vehicles like the Tahoe – which were (like the similar in general layout large sedans with large engines) vehicles once upon-a-time vehicles average Americans could once commonly afford no longer are. Because average Americans don’t earn $50,000 in a year. Before taxes. Before they pay their rent/mortgage and buy the necessities of life. It does not leave room for an $800-per-month payment, which is about what it costs to finance a new Tahoe for six years. Not counting insurance costs.

This is why SUVs like the Tahoe, the Olds Vista Cruisers of our time, have become APVs – Affluent People’s Vehicles. Even more so – and even more absurdly so – the gilded lily versions of the same thing sold under different labels.

A Cadillac Escalade costs $79,295 to start. Yet it is not a fundamentally different vehicle. It is in fact essentially the same vehicle as the Tahoe, albeit with a slightly different skin and some additional features, including a larger and more powerful (6.2 liter vs. 5.3 liter) V8. But it is not a fancier V8. Nor is much else about it costly enough to justify it it costing almost $30,000 more than its sibling-under-the-skin. Including the plastic used in lieu of the chrome that plated almost everything metal on the Cadillacs of the past.

But it is even more profitable. Probably to the tune of about $20,000 per vehicle sold, which is not a bad mark-up.

The fact – if not the exact number – is not in dispute. SUVs like the Tahoe and its siblings-under-the-skin (italics to include the “GMC” iteration of the Tahoe) are the cash cows of the “car” industry. What is not as well-known is the grift. The way SUVs are being used to support the unsupportable, i.e., EVs. Without the counterbalancing profits generated by the sales of SUVs (and of the big trucks on which these big SUVs are based) it would not be financially feasible to continue “investing” in money-losing EVs.

But what happens when there are no longer profitable SUVs and trucks to support EVs? Because it is no longer feasible to sell them?

GM – and the rest – have (apparently) not thought that far ahead. Indeed, they appear to not be thinking, at all. Instead, they are “committing” to an all-EV future that depends on the continued existence and sale of the very vehicles EVs are meant to replace and which GM (and the rest) are using to bankroll this replacement.

There is a biological analog of this: The parasite that eventually kills its host. In nature, there is always a new host – and the parasite’s survival (and propagation) are assured. But that relationship may not work as well when it comes to vehicles – and the EVs that are parasitical upon them. Once not enough people to make the grift work can afford to be relieved of $60k-plus on an SUV to bankroll the manufacture of $40,000 EVs, the EV’s true cost will be known.

Of course, by then, it will be too late.

And we’ll all get to pay for it.

. . .

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