June 12, 2025

China, Tesla, and the Electric Tech Stack Revolution

45 minutes

This week, Noah Smith and Erik Torenberg discuss China’s economic strategies, technological advancements, and geopolitical challenges, contrasting them with U.S. policy. They discuss topics from the Hong Kong protests to battery manufacturing and emphasize the need for American industrial policy, education reform, and strategic investment to stay competitive.

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SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

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FOLLOW ON X:

@noahpinion

@eriktorenberg

@turpentinemedia

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RECOMMENDED IN THIS EPISODE:

Is the U.S. in a "high-level equilibrium trap"?: https://www.noahpinion.blog/p/is-the-us-in-a-high-level-equilibrium

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠

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TAKEAWAYS:

China's Strategic Position & Capabilities: China can easily police sea lanes to protect their own trade while potentially disrupting others, giving them a significant strategic advantage over America's traditional role as a global public goods provider.

Financial System Stress: China faces a persistent drag from their real estate crash and mounting bad debt in local government financing vehicles. Banks are struggling to transition from real estate lending to manufacturing loans, many of which will likely go bad.

Electric Tech Stack Revolution: The convergence of lithium-ion batteries, permanent magnet electric motors, and power electronics is creating a new technological paradigm that's replacing combustion engineering across multiple industries.

America's Manufacturing Challenge: America has "too many bottlenecks" - only Elon Musk seems capable of overwhelming all 20+ bottlenecks simultaneously, while other talented entrepreneurs can only handle 15 or fewer.

Republican Industrial Policy: America needs "Biden-style industrial policy without the everything bagel" - massive subsidies and support for electric tech manufacturing without progressive contractor requirements and community engagement processes.

China's Innovation Plateau: By the 2040s, China may face Japan's experience where aging leadership in corporations reduces innovation and creates fewer opportunities for young talent.

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