China is doing moon shots. Yes,
that’s plural. When I say “moon
shots” I mean big,
multibillion-dollar,
25-year-horizon, game-changing
investments. China has at least four
going now: one is building a network
of ultramodern airports; another is
building a web of high-speed trains
connecting major cities; a third is
in bioscience, where the Beijing
Genomics Institute this year ordered
128 DNA sequencers — from America —
giving China the largest number in
the world in one institute to launch
its own stem cell/genetic
engineering industry; and, finally,
Beijing just announced that it was
providing $15 billion in seed money
for the country’s leading auto and
battery companies to create an
electric car industry, starting in
20 pilot cities. In essence, China
Inc. just named its dream team of
16-state-owned enterprises to move
China off oil and into the next
industrial growth engine: electric
cars.
Not to worry. America today also
has its own multibillion-dollar,
25-year-horizon, game-changing moon
shot: fixing Afghanistan.
This contrast is not good. I was
recently at a Washington Nationals
baseball game. While waiting for a
hot dog, I overheard the
conversation behind me. A management
consultant for a big national firm
was telling his colleagues that his
job was to “market products to the
Department of Homeland Security.” I
thought to myself: “Oh, my!
Inventing studies about terrorist
threats and selling them to the U.S.
government, is that an industry
now?”
We’re out of balance — the balance
between security and prosperity. We
need to be in a race with China, not
just Al Qaeda. Let’s start with
electric cars.
The electric car industry is
pivotal for three reasons, argues
Shai Agassi, the C.E.O. of Better
Place, a global electric car company
that next year will begin operating
national electric car networks in
Israel and Denmark. First, the auto
industry was the foundation for
America’s manufacturing middle
class. Second, the country that
replaces gasoline-powered vehicles
with electric-powered vehicles — in
an age of steadily rising oil prices
and steadily falling battery prices
— will have a huge cost advantage
and independence from imported oil.
Third, electric cars are full of
power electronics and software.
“Think of the applications industry
that will be spun out from electric
cars,” says Agassi. It will be the
iPhone on steroids.
Europe is using $7-a-gallon
gasoline to stimulate the market for
electric cars; China is using
$5-a-gallon and naming electric cars
as one of the industrial pillars for
its five-year growth plan. And
America? President Obama has
directed stimulus money at electric
cars, but he is unwilling to do the
one thing that would create the
sustained consumer pull required to
grow an electric car industry here:
raise taxes on gasoline. Price
matters. Sure, the Moore’s Law of
electric cars — “the cost per mile
of the electric car battery will be
cut in half every 18 months” — will
steadily drive the cost down, says
Agassi, but only once we get scale
production going. U.S. companies can
do that on their own or in
collaboration with Chinese ones. But
God save us if we don’t do it at
all.
Two weeks ago, I visited the Coda
Automotive battery facility in
Tianjin, China — a joint venture
between U.S. innovators and
investors, China’s Lishen battery
company and China National Offshore
Oil Company. Yes, China’s oil
company is using profits to develop
batteries.
Kevin Czinger, Coda’s C.E.O., who
drove me around Manhattan in his
company’s soon-to-be-in-production
electric car last week, laid out
what is going on. The backbone of
the modern U.S. economy was locally
made cars powered by locally
produced oil. It started us on a
huge growth spurt. In recent
decades, though, that industry was
supplanted by foreign-made cars run
on foreign oil, so “now every time
we buy a car we’re exporting $15,000
of capital, paying for it with
borrowed money and running it on
foreign energy sources,” says
Czinger. “We’ve gone from autos
being a middle-class-making-machine
to a
middle-class-destroying-machine.” A
U.S. electric car/battery industry
would reverse that.
The Coda, 14,000 of which will be
on the road in California over the
next year and can travel 100 miles
on one overnight charge, is a
combination of Chinese-made
batteries and complex
American-system electronics — all
final-assembled in Oakland (price:
$37,000). It is a win-win start-up
for both countries.
If we both now create the market
incentives for consumers to buy
electric cars, and the plug-in
infrastructure for people to drive
them everywhere, it will be a
win-win moon shot for both
countries. The electric car industry
will flourish in the U.S. and China,
and together we’ll tackle the next
challenge: using auto battery
innovations to build big storage
batteries for wind and solar.
However, if only China puts the
gasoline prices and infrastructure
in place, the industry will
gravitate there. It will be a moon
shot for them, a hobby for us, and
you’ll import your new electric car
from China just like you’re now
importing your oil from Saudi Arabia
