The withering dream of a cheap American electric car

Is the car 10k more expensive because of inflation or is the inflation so high because the car costs 10k more?

yes

Is it actually $10K more expensive? The F150 Lightning I just bought was cheaper than the hybrid version I was looking at buying. The Tesla Model 3 & Y seem to be priced pretty competitively, as well.

I had the same thought. You can actually look up the inflation data by category:

https://www.perplexity.ai/search/find-me-the-cpi-inflation-d...

New cars actually match the total average inflation the closest of any categories (22.3% for new cars vs 22.1% all items). Also interesting to note that food is up 30.7%, transport is up 39.5 % and shelter is up 27.6% in the past 5 years!

One of the best understandings of inflation is to use the mathematical concept of "equality" on those. They're two ways of phrasing the same thing.

A lot of people do a lot of bad thinking when they say "oh, well, inflation is umptybumpkins percent, so the fact that cars are that much more expensive is 'just' inflation, and thus isn't anything".

But inflation is prices going up. When the various sources release "how large inflation is", they are telling you "this is how much prices went up". Ignoring prices going up because "oh, the prices went up because of inflation" is basically using the thing's own existence to argue that it doesn't exist, which, while abstractly sort of impressive, is not strong thinking.

There are some arguments about what causes prices to go up, but that's a separate question.

> One of the best understandings of inflation is to use the mathematical concept of "equality" on those. They're two ways of phrasing the same thing.

They're not quite the same thing. All other things equal, if a price increase is "just" inflation then it takes the same number of hours of work to buy the car (or equivalently, the car is worth the same number of loaves of bread).

The alternative is that car prices have increased relative to other goods. This could happen through higher-quality/more featureful/bigger cars (which would be removed from the inflation calculation), or it could come because of some idiosyncratic feature of the industry like the car-chip shortage during covid.

Inflation is a shit metric because it's easily manipulated.

The cost of a GB of hard drive is failing spectacularly. The price of health care went up much more than the price of eggs. So what is the "real" inflation?

Government gets to pick what they use to define inflation so they can manipulate "inflation" numbers. And manipulate they do.

What you should look at is money printing: how much money did the government print. This is about 8% yearly for US.

This money debasement is eventually reflected in prices.

Some things get cheaper, because we can produce them more efficiently (like hard drives). Some things get even more expensive than 8% because we produce them less efficiently (health care insurance or college diplomas).

So to answer your question: cars costs more mostly because the government prints money, which devalues your dollars and car makers are not getting more efficient at making cars to counter currency debasement.

First, there's a reason I said "One of the best".

Second, if you wrap inflation into your salary like that you are obscuring some important aspects of inflation, most especially the various lag effects that result in your salary being the last thing to update.

While understanding "purchasing power" (the term for what you are trying to describe) is important, it doesn't mean inflation is non-existent. It still has effects on savings, effects on assets, effects due to the aforementioned delays as it flows through the economy, and is in general not something you should view as any sort of "cancelling" like that, or, if you do, only as a final result, not an excuse to just wave it away like it's all just an artifact.