Bloomberg reported that the United States should follow China's lead when it comes to electric vehicle technology. With the goal of acquiring technology transfer, Washington has the ability to force China to intervene.
A study by the U.S. National Bureau of Economic Research found that joint ventures with foreign partners have brought some of the biggest technological advancements to China, benefiting not only local partners but also other businesses in the same industry. If Chinese battery companies like BYD and CATL want to sell products in the U.S., they can only do so through joint ventures.
U.S. Secretary of Commerce Gina Raimondo has turned her attention to the U.S. electric vehicle industry, which means dealing with threats from China. In order to achieve the dual goals of developing local industries and protecting national interests, she only needs to refer to China's own strategy.
Electric and autonomous vehicles are"Gather a lot of information about the driver, the location of the vehicle and the surroundings of the vehicle, Raimondo said at a meeting of the Atlantic Council on January 31. "Do we want all this data to go to Beijing? ”
Money control. It may be an excuse to close the doors of Chinese cars, but that doesn't mean her worries are unwarranted. Modern cars have dozens of sensors that collect a lot of information. This may include images of people traveling anywhere, such as near sensitive military installations. The data accumulated by the convoy made a few disobedient Chinese balloons seem insignificant.
However, China's electric vehicles and battery technology are so advanced that they surpass the United States in many ways. If Raimondo and other members of Biden** want to advance China's new energy vehicle industry, they will need to use that capability while keeping an eye on safety issues.
Beijing has already shown them this.
For the past two decades, China has been keen to see Western tech companies set up there, but has been reluctant to grant unrestricted access. The goal is technology transfer, learning from world-class companies, replicating and then applying those skills. The U.S.-China Economic and Security Review Commission found that China managed to do just that, including through foreign direct investment, venture capital, licensing, and direct acquisition.
However, joint ventures are one of the most effective ways to do this. A study by the U.S. National Bureau of Economic Research found that joint ventures with foreign partners have brought some of the biggest technological advancements to China, benefiting not only local partners but also other businesses in the same industry.
In the early deals of Volkswagen and General Motors, these companies brought advanced design techniques that helped lay the foundation of China's Hyundai. Even more noteworthy is the 2003 joint venture between 3com, a leading global telecommunications company, and Huawei Technologies, which later became a major force in the industry, the bureau found.
Now, Washington has a chance to turn the tide with a carrot and a stick.
Although BYD said it has no plans to enter the U.S. auto market, it has already delivered more than 100 electric trucks to Anheuser-Busch InBev and is the world's leading supplier of electric vehicle batteries. CATL, referred to as CATL, is another big brand in the field of new energy vehicles in China. The company does not make cars, but it is one of the world's leading battery developers, and its customers include Tesla Inc.
At present, the United States needs China, and China's major businessmen may not need the United States. But if these companies want to continue their long-term growth, they need to enter the world's second-largest automotive market. Importantly, there is no reason for the United States to remain dependent on China. China has a 65% share of refined lithium, nickel and cobalt, which are key components of electric vehicles, but has little production or reserves of these raw materials. Over time, other countries will also emerge to process and ** these minerals.
What China has, however, is the know-how. Therefore, Raimondo should negotiate a quid pro quo instead of erecting hard barriers. If battery companies like BYD and CATL want to sell their products in the United States, they can only do so through joint ventures. Chinese car brands such as NIO, Xpeng, Volvo and Polestar could also be forced to find local partners if they want to enter the US landscape.
Dynamic Incentive Program in February Ford Motor Co., the auto giant announced an agreement with CATL a year ago to license the Chinese partner to use its battery technology, but Ford will fully own and produce the batteries. This looks like a perfect solution: both to create American jobs and to transfer intellectual property to the United States, and to protect by restricting ownership and use rights in China*** However, after China** decided in July to restrict the export of critical minerals used in chips and electric vehicles - gallium and germanium - US lawmakers panicked and demanded an investigation into the arrangement and CATL's alleged problems related to forced labor in Xinjiang. Human rights violations are a serious problem, and restricting the use of critical materials is also a concern, but conflating the two has the potential to harm U.S. interests. First, it's easy to legislate to ban the use of conflict minerals, as the U.S. Congress has already done so in Section 1502 of the Dodd-Frank Act of 2010. Second, China does not control the production of gallium and germanium feedstocks, which are mainly by-products of refining other minerals. In other words, the United States does not have to worry about being cut off from irreplaceable resources, but it has the ability to force China to share technology. All the U.S. needs to do is copy the rules of the game for China. Tim Culpan, February 6, 2024, Bloomberg.