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
