GOALI: Think Globally, Act Locally -- China and the Future of Energy Saving Vehicle Technologies

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In recent years there has been a dramatic shift in the location of demand and production from developed to industrializing countries. To remain competitive, U.S. firms and policymakers must understand the significance these shifts for the economic viability of new technologies and technology trajectories. This project develops a methodology to assess the impact of nation-specific differences in market and production characteristics on the relative competitiveness of emerging technologies and, consequentially, on global technology trajectories. The project focuses on energy-saving vehicle technologies for passenger cars in the automotive industry -- in particular, it looks at the implications of locating in the U.S. versus China for the relative competitiveness of emerging technologies in alternative powertrains. The project outcomes include 1) a general modeling approach for integrating market and manufacturing models to determine the most competitive technology in nation-specific contexts under high uncertainty; 2) identification of a set of industry-specific variables predictive of how national context will impact technology decision-making differently across different products, firms, or industries; and 3) insights into the implications of global shifts in the location of production and demand for the future of energy-saving automotive technologies. To achieve these outcomes, our primary research tasks are to 1) model market preferences for vehicle attributes in the U.S. and in China; 2) model vehicle production and associated costs in the U.S. and in China; 3) determine the most economically competitive designs in each location and identify critical location-specific factors affecting this choice; and 4) analyze global platform economics to understand the global implications of local differences. Our primary educational tasks are 1) to bring research and industry into the classroom; 2) to send Ph.D. students to Detroit and Beijing for data collection and knowledge exchange with a major U.S. auto manufacturer; and 3) to disseminate our results to policymakers to help bridge the gap between technology policy decision-making and the real-time economics facing companies. Broader Impact: Today only 15% of manufacturing value-added occurs in the U.S., and the U.S. share of global manufacturing and demand continues to decline. Despite these trends, and despite recent research demonstrating the significance of national context for technology competitiveness, we hold relatively little scientific knowledge about how national contexts affect the economic viability of firm and national technology strategies. By 1) quantifying the significance of national differences in demand and production for technology competitiveness given uncertainty and 2) identifying key industry-specific factors determining the role that national context plays, this research contributes to a new theory for global technology decision-making and the impact of international trends in production and demand location on the evolution of technology. In addition, this project's case-specific findings provide the automotive industry and national policy-makers with critical insights into the impact of recent shifts in the location of automobile demand and production on the economic viability of, and economic incentives for, energy-saving designs in next-generation automobiles.