The Great Race: The Global Quest for the Car of the Future - Couverture rigide

The Great Race 1

The New Emperor and Wan Gang’s Eco-Wonderland

IT WAS something between a cotillion ball and a ritual war dance. Like the Beijing Olympics two years earlier, the Shanghai World Expo was a coming-out party for China’s communist leadership. Over the summer of 2010, 72 million visitors flooded the Expo. The government spent more than $4 billion preparing for the fair—not including new rail lines, roads, landscaping, and other improvements to the city.

China’s pavilion was a massive crown-shaped pagoda, which cost over $200 million to build and was packed with cultural treasures. The building loomed like a sovereign over the Expo’s international guests, and countries from around the world paid tribute in diverse currencies. The Swiss built a chairlift that suspended visitors on an aerial journey over Shanghai’s sprawling metropolis, and in the Expo’s French quarter priceless Impressionist paintings hung on display. Elsewhere, corporate sponsors showcased the future of clean energy and “K-pop” megastars squealed, crooned, and gyrated for the new emperor.

To anyone with the faintest sense of context, the Chinese government was sending a clear message: the Middle Kingdom was rising; it was to be respected and shown deference; it was building a new world order and a sustainable empire.

The Expo also represented a significant symbolic victory for one man, an engineer named Wan Gang, China’s enigmatic minister of science and technology. The entire fairground was a canvas for his life’s masterwork: securing Chinese dominance in the global auto industry. China was about to become the world’s largest auto market, and Wan Gang’s obsession was to make its national champions internationally competitive.

Over the preceding decade Wan had enjoyed an improbable rise to power. Rather than joining the Communist Youth League as a young man or ascending the ranks through family connections, Wan had left China to study engineering in Germany, and made a career as an executive with Audi. After returning he had penetrated China’s highest circles on the strength of his conviction that one day soon China could lead the industrial future. China, said Wan, could dominate the twenty-first-century market for electric vehicles (EVs). All this would have been impressive in its own right, but the fact that Wan was not even a member of the Chinese Communist Party made it truly exceptional.

Behind Wan’s enigmatic smile—and he almost always seemed to be smiling—was an iron determination to break a century of dependence on foreign oil and Western technology. The ultimate goal was to leapfrog over Japan and the United States so that the world’s big markets for automobiles would import cars and factories from China rather than the other way around. To a nation just emerging from a self-declared “century of humiliation,” the prospect was irresistible. The 2010 Expo was a powerful declaration of intent: China was in the race, and they intended to win.

Against this backdrop, the EV quickly became a national hero—and a focal point of China’s technology ambitions. The Shanghai Expo was the culmination of a decade of engineering and imagineering under Wan’s research program at Shanghai’s Tongji University. Two years earlier, Tongji’s Beijing rival, Qinghua, had led a similar effort for the Olympics. But the demonstration in Shanghai was more than twice as big and vastly more complex. There were electric cars, fuel cell–powered buggies, and buses that ran on fast-charging “ultracapacitors.” Almost all of these were pre-commercial—meaning they were more science project than store shelf product. But for now, China did not need to work out the messy details of building the industry—the consumer technology, economics, and business plans that would help it grow. Wan Gang and the others seemed to believe that with enough money and political pressure, those would come. What China needed for the Expo was a declaration of its ultimate potential—a road map and a compelling story.

General Motors and the Shanghai Automotive Industrial Corporation (SAIC, GM’s Chinese partner) were responsible for exploring the farthest reaches of this futuristic vision. As the country’s largest automakers and prominent corporate citizens of the host city they were under intense pressure to perform. They delivered. The pair presented an ornate, dizzying, transformational spectacle. China’s future cars would be smaller, smarter, faster, cleaner, safer, and sexier than anything that had previously existed.

Inside the SAIC-GM pavilion was the show to top all others. Visitors strapped into five-point harnesses as an IMAX-sized movie with computer-generated imagery flew them through a bright, crisp virtual reality. Electric pods raced through the streets at breakneck speeds. Stoplights, traffic jams, and even drivers were gone. By 2030, GM and SAIC promised, China would be animated by a living network of safe, efficient, zero-emission vehicles in constant communication with each other and the environment.

In this bold new world, a blind girl could race through the canyons of Shanghai in perfect comfort and safety, secure in her personal mobility pod. Rather than drive to work, the conductor of Shanghai’s symphony reviewed his scores and made last-minute preparations for the day’s performance. A pregnant mother made it to the hospital just in time thanks to a speedy autonomous ambulance. This was a machine as big as a city and intricate as a Swiss watch. After the ride, a curtain rose to reveal real-life EVs—which looked exactly like those onscreen—wheeling autonomously around the building. It was quite a spectacle.

For Expo attendees, this vision of 2030 was tantalizingly real—at least until they reemerged into the exhaust-laden smog swamps of Shanghai. Inside, skies were blue and the air was fresh. Futuristic robots rocketed silently down highways lined by space-age wind turbines. But outside, the air was chewy with soot and skies were gray. The phalanx of electric cars and buses commissioned for the Expo stopped at a chain-linked frontier demarcating the boundaries of Wan Gang’s eco-wonderland and China 2010. Real life meant navigating manic waves of oil-burning SAICs, VWs, Audis, and Buicks. Indeed, the 100 million automobiles on China’s roads had become a distinctly mixed blessing. China’s megacities were stifled by putrid smog and gridlocked.

No doubt, this is why in 2009 China’s government announced ambitious plans to leapfrog the West in developing and deploying electric vehicles. In two short years, Wan Gang promised that China would deploy 500,000 domestically produced EVs.

But even in 2010, there were signs that this vision was faltering. Few analysts were ready to say that the emperor—or perhaps the debutante—had no clothes. But half a decade later, the contours of this failure were stark. Despite an intense government push to electrify China’s cars, the country’s industrial giants had fallen far short. China was the largest automobile market in the world, but its domestic EVs were a blush-inducing afterthought. China, with its double-digit economic growth rates, its 1.3 billion brains, and its $3.4 trillion in U.S. foreign exchange reserves, had aimed to “leapfrog” into the vanguard of automotive technology and dominate the race to build the electric car of the future. Instead, it struggled to keep pace.
Leapfrogging Leviathans

Part of the allure of leapfrogging was the difficulty of simply catching up. The complexity of today’s auto industry should not be underestimated. The modern automobile is one of the most sophisticated pieces of technology in the world. At the turn of the twentieth century, motorized cars were a novelty—they were finicky, dangerous, and there was a reasonable argument that the horse was a better piece of hardware. But within a decade or two this had changed. After World War II, the level of industrial specialization required to integrate ever more advanced automotive systems grew exponentially. The British futurist Arthur C. Clarke once famously wrote that “any sufficiently advanced technology is indistinguishable from magic.” And by the beginning of the twenty-first century, the complexity of an automobile had far outstripped the understanding of the common man.

Making an automobile that was strong, safe, durable, clean, and efficient enough to be globally competitive required legions of engineers, physicists, specialists in areas like fluid dynamics, harmonics, kinematics, materials science, and an increasingly large number of electrical engineers and computer scientists. A typical car had around 30,000 individual parts, and computing specialists were involved in everything from writing the software for the car’s new onboard computers, to building robots for factory automation, to honing the advanced computer-assisted design (CAD) tools that took the painstaking job of component design out of the physical hands of draftsmen and moved it onto digital screens. About 40 percent of the cost of a luxury vehicle was for electronics, computers, and software. A billion dollars might be spent on writing code before a single car left the factory floor.1

Building a modern automobile required ever-greater levels of precision. Sizing for pieces like fuel injectors and various control mechanisms had to be calibrated to the level of microns—about one-fiftieth the diameter of a human hair. What’s more, all these precision elements had to be designed to withstand enormous abuse, and integrated seamlessly into a package that could be shaken, rattled, crashed, frozen, and scalded for decades at a time over hundreds of thousands of miles. If one of these systems failed, the result could be fatal.

Although China had sent millions of students to the United States and flooded the American academy with aspiring engineers, programmers, and scientists, the country’s leadership knew it might take decades to reach global standards. Anyway, that race was already decided. Why try to redo the past? Why not instead spend that effort on the car of the future—an electric vehicle?

The “leapfrog narrative” was powerful, sensual, and compelling. But it was also hollow—like the futuristic concept cars often displayed at auto shows. Underneath a Ferrari exterior, it had no guts.

Today, China is the world’s auto behemoth. But it still lacks the expertise to be an industrial superpower. It is losing the technology race to smaller, better-organized, and more nimble rivals. Japan and America lead the world in developing the cars of tomorrow—a new generation of electric and autonomous vehicles. But that is only half the story, because China is not really losing to Washington or Tokyo. It is losing to tiny groups of strategically minded technologists and regulators in Sacramento and Kanagawa. In California—a state whose entire population is smaller than commonly accepted rounding errors for China’s citizenry—a clutch of indefatigable policy activists and techies have spent two decades grappling with Detroit, trying to force this revolution. And their efforts are finally paying off. In 2012, Tesla Motors’ Model S—conceived and built in California by the pugnacious visionary Elon Musk—was anointed “car of the year” by Motor Trend magazine. Consumer Reports called the “S” the best car it had ever driven. The all-American Chevy Volt was similarly acclaimed as Consumer Reports’ highest consumer satisfaction vehicle and repeatedly topped J. D. Power’s consumer appeal survey.

On the other side of the world, in Japan, this revolution was sparked by a different sort of iconoclast: a nuclear engineer at the sprawling Tokyo Electric Power Company (TEPCO) named Takafumi Anegawa. It was Anegawa who laid plans for the world’s first mass-produced consumer EVs. While Tesla has taken the crown for the world’s coolest car, Japan has raced ahead in building and deploying a people’s EV. In 2012 Japan manufactured almost three-quarters of the electric vehicles sold worldwide. By 2013, an American could lease a Japanese EV for less than $200 a month and fuel that car for a small fraction of the cost of a gasoline- or diesel-powered vehicle.

Today in Japan and America, the futuristic world of transportation portrayed by Shanghai’s GM-SAIC Expo is actually much closer than most realize. Not only electric but “driverless” autonomous vehicles are within sight. The transition to electric and driverless cars will usher forth a step change in both quality of life and economic productivity and potentially be the most transformational social development since the World Wide Web. It will change the way we live and many of the fundamentals of the global economy. That’s why America, China, and Japan are in a white-hot race for the future of transportation. Indeed, the petroleum-free EV and what Forbes called the “Trillion-Dollar Driverless Car”—those autonomous mobility pods from the SAIC-GM Expo—are just around the proverbial corner.

Of course, there will be winners and losers. Some countries and companies will inevitably move faster than others. And part of this will depend on the sophistication of a country’s car, battery, and technology companies—it certainly does not hurt to have a giant like Google or Nissan as a national champion. The leadership of individual innovators, activists, inventors, and dreamers is also key—and a focus of this story. But success also depends on the role that governments take in strategic planning, and their competence in executing policies to encourage investors, banks, entrepreneurs, and businessmen to build the economy of the future and invest in sunrise industries like EVs.
A Brief History of the Global Automobile

Few technologies have been as economically important and transformative as the automobile. Cars first appeared around the turn of the twentieth century, assembled from extra bits of the bicycle and carriage industries. These wheels were mated with electric motors, tube framing, and steam or spark ignition engines. For the first half decade or so, electric vehicles were actually produced in larger numbers than those powered by internal combustion engines. Electric taxi fleets trolled the streets of major cities across the United States.2 These taxi companies witnessed speculative run-ups in valuation that looked like something out of the dot-com bubble. Thomas Edison was also in on the game. He—and many of his contemporaries—poured a decade’s effort and piles of money into developing a competitive EV. But by 1910 Ford had won. The advantages of liquid fuels had overwhelmed the battery, and for a century the history of the automobile was the history of oil and internal combustion. Oil and its derivatives, such as gasoline or diesel, could hold much more energy for a given volume or weight than could any contemporary battery. Additionally, gasoline-powered cars could be refueled quickly, and that fuel was fairly easy to transport—though it was certainly dangerous.

By the 1910 model year, Ford was producing nearly 20,000 Model T’s annually.3 By 1927 that number had skyrocketed so that there was one car for every five Americans, and more than 50 percent of American families owned an automobile.4 Even during the depths of the Great Depression, automotive sales fluctuated between about one and three million units a year.5 With growth came consolidation, and by the 1930s the international auto industry was dominated by three giants: Ford, General Motors, and Chrysler.

Each of these companies ensured global ascendancy by harnessing the powers of oil, internal combustion, and economies of scale. Because their method of manufacturing was basic...

"The Great Race captures the drama of a global competition for markets and new technology that is changing the auto industry and indeed the world in which we all live. It is a gripping read that takes us inside critical decisions in China and Japan and the United States. Tillemann’s experience as a tech entrepreneur focused on cars, his skill as a linguist (he is fluent in Chinese and Japanese), and his expertise on energy policy enable him to bring unique insights. The result is an epochal saga of leadership, money, power, global competition and innovation; and Tillemann tells it all superbly. Whether your "thing” is the clash of nations or the battle for global markets -- or how fast you can get from zero to 60 -- you’ll like The Great Race a lot. Indeed, you will race through it!" (Daniel Yergin, author of The Quest and The Prize)

"It is simply the best book out there on not just electric vehicles, but the complicated nexus between innovation, energy security and smart energy policy for the 21st century." (Robbie Diamond, Founder and CEO, Securing America's Future Energy (SAFE))

“If you like cars, you will love this book. If you care about climate change, you will love this book. And if you want to find out how the United States is retaining its competitive and innovative edge in the world, in a tale that reads like a spy novel, you will love this book!” (Anne-Marie Slaughter, President and CEO, New America)

"No one is better positioned to write this book than Levi Tillemann. This book has much to say about how governments can succeed and also fail. Above all, The Great Race is a Great Read." (Peter Bergen, author of Manhunt: The Ten-Year Search for bin Laden from 9/11 to Abbottabad and CNN's National Security Analyst)

"Tillemann’s vivid story of capitalism, innovation and politics in the international economy hits the mark. The Great Race brilliantly captures the three-way tug of war between industry, the government and markets and how it inexorably drives the global auto industry forward." (Eric Ridenour, former COO of Chrysler)

“To explain the scramble for the next-generation auto—and the roles played in that race by governments, auto makers, venture capitalists, environmentalists and private inventors—comes Levi Tillemann’s “The Great Race”... Mr. Tillemann seems ideally cast to guide us through the big ideas percolating in the world’s far-flung workshops and labs. He is an inventor himself: With his father and brothers, he conceived a gasoline engine, the IRIS, that is smaller and theoretically more efficient than standard designs of the same output, and over the past decade the design has won attaboys from NASA and ConocoPhillips.” (Wall Street Journal)

"Mr Tillemann, an energy expert, writes about the car guys with the grasp of an insider. This seems to have been gained from founding a company which tried to bring a low-emission car engine to market and by the rigour of having led negotiations with Detroit. Fluent in Chinese and Japanese, he is able to take the adventure to the heart of the world’s other automotive powers.” (Economist)

“Free-market and small-government purists will find much to quibble with here, but the author is skilled, and sometimes relentless, at highlighting the ability of official industrial policy to work in the public interest. “Since the time of Henry Ford,” he writes, “no automobile industry in the world had ever become internationally competitive without . . . government intervention.” (Washington Post)