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 A ROLE FOR GOVERNMENT: The Connected Car November 03, 2009 5:58 PM



The introduction of the Chevy Volt and other electric vehicles will require a vast ecosystem of entrepreneurial businesses.

By Bernard Avishai | Nov 1, 2009
Inc.com


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Actually, here is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and '90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers -- or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves.

There's a lesson here for government, whose pedestrian duty, as Adam Smith wrote, is to "facilitate commerce in general." To facilitate the auto industry in particular, the federal government will need to anticipate a new division of labor among car companies, electric utilities, and, crucially, the layer of new companies that will tie the former two together. Smartening the grid will mean, collaterally, transforming energy infrastructure in virtually every neighborhood; as President Obama never tires of reminding us, green energy means businesses creating jobs here, not sending them overseas. So governments at all levels must get over what once seemed a clear distinction between manufacturing and information services, or automotive jobs and construction jobs. They must seek to expand employment less by helping original-equipment manufacturers, or OEMs, to grow and more by encouraging small software and components suppliers to launch.

Posawatz, who himself runs a kind of start-up within GM, puts the matter eagerly, if a little cryptically: "Our urgent challenge is to become the leading integrator of the sustainable transportation-energy ecosystem -- to control the intellectual property governing the integration of the battery to the car and the car to the grid." Translation: if GM plays its cards right, it could well incubate, and own, the new industry's crucial operating and telecommunications standards, the anchors for thousands of smaller technology companies supporting the electric car's components, information, and entertainment and charging needs. For his part, Duke's Rowand is sure that 10 years from now the dominant players in this new automotive ecosystem will be companies we have not yet heard of.


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The point is, there are far too many living things in the emerging ecosystem to be anticipated by any government or major OEM. It will take an implicit partnership of hundreds, perhaps thousands, of suppliers to fill out the technology. The key is to bring them into alignment. "If governments act to consolidate standards," Posawatz says, "they can really make a difference in catalyzing competition among suppliers." He would not want to impose standards prematurely and cut off promising avenues for innovation. (Presumably, OnStar's ambitions are also on his mind.) But when the catalyzers of the new auto industry are so entrepreneurial and distributed, technical standards hardened by government become virtual roads and bridges. They are more vital to electric cars than actual ones. The faster we get to standards, the better.

This principle, of catalyzing competition, is an endless subject I cannot do justice to here. To build out the grid Posawatz envisions, the government must help reduce other obvious barriers to entrepreneurial teams converging on a problem. The administration might look at an outdated patent office, which has been swamped by software developers in recent years -- filings mainly from big companies, whose fat patent portfolios needlessly block or intimidate entrepreneurs. It might look at facilitating the exchange, categorization, and monetizing of intellectual property, which cannot flow unless governments engender mutual trust.

Some will persist in calling such government socialist. But you listen to Posawatz and you know that there is no contradiction between a catalytic commonwealth and an ownership society. You also know that the old socialism is finished, not because of natural greed or the invisible hand or even because it required, as Oscar Wilde said, "too many evenings." Socialism is finished because the old machine-industrial capitalism against which it arose is finished, superseded by technologies so transformative that it seems a privilege to be alive just to witness their diffusion.


Bernard Avishai teaches business at the Hebrew University of Jerusalem and writes about business and politics.



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 November 04, 2009 10:19 AM



6 hot electric car start-ups



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