About a hundred years ago, engineers from various countries traveled to Detroit to learn Henry Ford’s innovative car production methods. These engineers knew they had to catch up to American methods to remain competitive. Fast forward to today, and America is now playing catch-up in the booming clean energy industry. China has become the largest car exporter and dominates the solar panel supply chain. While China mastered clean energy industries, the United States was debating clean-energy policies. The Inflation Reduction Act provides the United States with an opportunity to become more competitive, and there is a strong desire among lawmakers to surpass China. However, building a competitive renewable or electric vehicle industry from scratch is not feasible. American engineers can only progress in these industries by collaborating with their Chinese counterparts.
Take Ford Motor Company, for example. Ford plans to sell electric vehicles with L.F.P. (lithium, iron, and phosphate) batteries, but they don’t have the expertise to produce these batteries on a large scale. No American company does. Chinese companies, on the other hand, have mastered the technology. Ford’s solution is to open a battery factory in Michigan and license the technology from a Chinese battery maker. The idea is to learn from the Chinese engineers and eventually produce the batteries themselves. This partnership seems like a win-win situation, but some lawmakers, like Senator Joe Manchin, oppose it. However, collaborating with other countries and learning from competitors is how technology advances. The United States has experienced this firsthand, whether it was bringing German scientists to the US after World War I or partnering with Japanese automakers in the 1980s.
Know-how, or “tacit knowledge,” is crucial for progress. It is this know-how that makes industries like surgery, chemical refinement, and battery manufacturing successful. Ford needs the expertise of Chinese engineers because they are currently the leaders in electric vehicle battery production. Rejecting this partnership would only make the United States more dependent on China in the future. Treasury Secretary Janet Yellen recently faced this dilemma during her trip to China, and it’s a challenge that federal officials will continue to navigate. If American firms cannot collaborate with Chinese firms, the country will miss out on job opportunities, technological advancements, and fall behind the rest of the world. Competing with China is important, but being overly suspicious and hindering collaborations will do more harm than good.
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