(Drivebycuriosity) - If we believe the Biden administration there is too little competition and concentrated markets are causing inflation and stifle innovation. Biden, Warren, Sanders & Co. see monopolies everywhere. Really? A look on the market of electric cars shows quite the opposite. The table below displays how much the shares of the EV producers had dropped since their peaks:
(source)
Apparently the valuations of the majority of the EV producers shrank close to zero. The stock market losses are caused by too much competition on the EV market. The EV specialists in the table also have to compete against Volkswagen, BMW, Ford, Honda and many other traditional car producers, who entered the crowded market for EVs. Obviously there are more EV producers than the market can support.
The Biden administration does not understand markets and ignores history & economics. Whenever there is hope on high future profits, a lot innovators & investors try their luck. The EV market is just one example. The prospects of the EV market initiated a gold rush mentality which reminds of the Railroad Wars of the 19th century, when too many investors set their bets on the exploitation of the North American continent by railroads (wikipedia ).
The heated competition forced even market leader Tesla to cut prices several times - and the competitors had to follow. As a result the average price for a new EV dropped 21% over the past 12 months ( caredge). So we see deflation instead of inflation.
Apple already responded and cancelled their electric car project. I suppose the market will consolidate and many EV producers will quit or go bankrupt. Only a few will survive - the producers which are the most productive and cost efficient. The survivors will benefit from technological progress and the still bright future of the EV market. Competition works!
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