Guest blog by Yair Crane
Last month, I had the pleasure of co-leading the first New Energy Vehicle (NEV) Trade Mission to China from the US, since China declared an imminent ban on diesel and gas vehicles. The mission took place in Shanghai, Jiangsu, and Guangdong, and allowed each US company CEOs and their representatives to meet over 40 leading companies, JV partners, investors, and teaming partners.
As the Cleantech Development Manager for the US-China Clean Tech Center, I manage our relationships with clean technology companies, investors, research and innovation centers, and project developers, while supporting our Founder and Executive Director, Dr. Feng An. For our NEV trade mission, I recruited 17 innovative companies engaged in NEV technologies for the passenger, commercial, bus, and heavy-duty truck markets; this included electric battery, hydrogen fuel cell, and hybrid technologies, as well as AI, wireless charging, and advanced lithium ion battery technology firms. Rather than summarize the trip, here are three realities confirmed by our activities.
1) We could have brought 50 companies. Today, we have an unprecedented amount of NEV technology offerings in the US, coupled with an ever-growing demand for NZEV and ZEV in China. Subsidies play a role, as WSJ pointed out, but they are not the only factor and, in fact, as a percentage of EV price, Chinese subsidies are lower than that of some Scandinavian countries. Regardless of the policies in the US at the national or sub-national levels, in general, and regardless of the policies of specific auto manufacturers, China’s declaration has directly influenced the future of the worldwide automotive industry. Just the other day, Shell announced a major charging initiative for highways with Ford, BWM, Volkswagen, and Daimler.
Beyond the environmental and sustainability motivations, any rational auto manufacturer and technology supplier will focus or double-down their investments in NZEV and ZEV to sell in the largest auto market in the world. Read: It doesn’t make a difference if the US bans diesel and gas cars or if California enacts a ban or if Ford choses to stop manufacturing diesel and gas vehicles; companies (regardless of where their HQ is located) will increase, re-allocate, and shift resources toward NZEV and ZEV – or not survive.
Some have equated this “China EV effect” to the “California MPG effect on steroids.” Global auto manufactures have long produced vehicles to sell in the US based on the standards of California – the largest car market in the US and with the strictest emissions and MPG regulations. This presents a golden opportunity for the resurgence of US auto manufacturing, by ramping up NZEV and ZEV production – a boon for employment, trade and the economy. When one includes the commercial, bus, and heavy-duty truck sectors, the benefits for US employment, trade, and the economy multiply exponentially.
- The Rise of Auto-Mobility. Investments in clean energy and clean transportation have and will continue to benefit the US economy (reports are widely available on jobs created and sustained, as well as the economic impacts, for example). However, this trade mission clearly demonstrated sea-changes in the auto industry which must be heeded by US companies, investors, and leaders in clean transportation.
The rise of the connected-car, ride sharing, automatic driver assistance, autonomous driving/AI, and related innovations have spurred investments in the billions of USD within China. The US must recognize the long-term economic importance of funding and investing in research, commercialization, and scaling of similar technologies as the new auto-mobility paradigm becomes entrenched worldwide.
My colleague Bill Russo, a globally recognized automotive and mobility expert with over 35 years of experience including 15+ years as an automotive executive, with more than 13 years in China, writes: “Connected mobility, which we define as ‘technology-enabled on-demand mobility services for moving people and goods from point A to B’, has become a disruptive, paradigm-changing development in the automotive industry. It requires a complete rethinking of the way to deliver value to the market.” To further escalate the positive economic impact of NZEV and ZEV, traditional US auto manufactures “must widen their focus from the product (the automobile) to the utility derived from the product (‘automobility’), and create a business model and digital ecosystem optimized to provide digitally enabled solutions for both car owners and mobility services users.”
The economic potential in auto-mobility continues to grow, and estimates continue to be re-adjusted upwards, especially as Smart Cities, embedded with IoT, become a reality. The annual massive tech gather CES (Consumer Electronics Show), held every January in Las Vegas, recently launched Self-Driving and Connected Car initiatives, and some say it will need it’s own show soon, given the number of companies exhibiting. Public and private sector investment must be made now if the US wants to benefit from the ever-increasing jobs and economic benefits of this new, advanced automobile age.
- IP is now VIP. Thanks to our partnership with the US Department of Commerce (DOC), one of UCCTC’s main objectives – and most important – is to increase cleantech exports from the US to China and support manufacturing and export related jobs in the US. We have also been able to work with the DOC to introduce many of our clients and trade mission attendees to both DOC and private sector IP experts, to assist in navigating through the copyright, trademark and IP morass.
Times have changed, and the Chinese IP market has transformed and matured to the point that Chinese firms understand the value of protecting the most innovative IP they have licensed and/or co-created. Further, the IP produced by Chinese firms continues to grow year over year. As Chris Wilson summarized in a recent blog post: “There’s a general trend for more and better enforcement of IP rights, largely because the Chinese market is evolving from being populated by copiers to being populated by innovators. It’s not surprising, really. Every country that starts to become an innovator starts to pay more attention to IP rights.”
This has spurred a radical change in strategy for US firms, which now must seek partners in China with this appreciation of IP and the wherewithal to defend it. One of our key offerings is to introduce US companies to reliable, reputable, and financially sound Chinese partners who can help defend IP in their own market, fending off other Chinese copyright violators. Comprehensive due diligence of potential partners has always been crucial; however, we highly recommend a thorough analysis of a potential partner’s financial resources for IP matters, investigation of the potential partner’s IP portfolio, as well as their track record of defending their own IP in China.
As Jason Zukus from The Diplomat eloquently wrote this past July: “As with many issues in China, the status of Chinese IP rights defies one-dimensional stereotypes. While IP infringement is no longer tolerated with impunity in China, the country also still has progress to make in updating IP laws and strengthening enforcement. Overall, through a mix of market incentives and political pressure, China appears to be emerging as a global IP leader. And with senior Chinese leadership continuing to support IP rights at conferences like ‘Summer Davos,’ the cultivation of entrepreneurship and intellectual property in China shows no signs of slowing.”
Ultimately, this US-China NEV trade mission proved and solidified many of the NEV-related investment hypotheses I have been active in and pursued for the last decade; expanding and refining these investment hypotheses will continue as I collaborate with my colleagues involved in the dynamic and fundamental US-China NEV relationship.
I look forward to your comments and feedback. Please feel free to reach out if you would like to learn more about our investment, consulting, and cross-border services, or would like to connect with the more than 3,500 cleantech companies, corporate venture funds, technology providers, and investors in our database, since launching in 2008.