To compare productivity in China vs the US, Weijian Shan looked at industries that have similar production facilities for similar products in both countries. And, in particular, he looked at Tesla because they "operate gigafactories in California and Shanghai producing identical models," namely "identical Model 3 and Model Y vehicles," making it an apples-to-apples comparison. When comparing both he arrived at the following numbers: - In the California gigafactory, in 2024, Tesla produced 21 vehicles per worker - In the Shanghai gigafactory, in 2024, Tesla produced 50 vehicles per worker Which means a ratio of 2.4x: the average Tesla worker in China can produce 2.4 times as many cars than the average Californian Tesla worker. Looking at average salaries of Tesla workers in both countries: - China: $14,110 per year - US: $82,500 => Ratio: 17.1% Putting it all together, it means that there is, in effect, a 14x labor cost-effectiveness advantage: for every dollar spent on wages in both countries, Tesla gets an incredible 14 times more out of that dollar in China than they get out of the U.S. To be clear: this 14x figure is labor only, which is but one component of total vehicle production costs, so this alone doesn't make production 14x cheaper overall. But still, labor costs and productivity advantages are embedded throughout the entire supply chain: when your suppliers and your suppliers' suppliers also benefit from that same 14x labor advantage, the cost savings compound. This is why when entire manufacturing ecosystems locate in China, the total cost advantage becomes massive. It's also especially meaningful given that Tesla, in both countries, is at the cutting-edge of advanced manufacturing practices. What this means is that, even when the most advanced American companies deploy their best technology and cutting-edge production methods, they still achieve only tiny fraction of the output-per-dollar that the same company can achieve in China. And Tesla isn't an outlier - Shan found similar numbers across the other industries he looked into: shipbuilding, steel, solar panels, and cement. That's a big reality check on the whole "reindustrialization of the West" effort: closing a 14x labor cost-effectiveness gap require improvements of an order of magnitude that's realistically just unachievable.