Elon Musk’s vision for Korean innovation isn’t crazy

For a “genius,” Elon Musk sure does say lots of mindless things. Yet on any list of the least crazy ideas from the Tesla founder, his take that South Korea is "one of the top choices" for investment deserves prominent placement. 

Few economies in Asia, after all, are doing a better job of creating tech “unicorn” startups. And Musk’s interest is both savvy and logical. That’s true even if press reports are correct that Musk favors Indonesia for his Gigafactory, not Korea. 

Either way, this is a teachable moment for President Yoon Suk-yeol as he backs away from the very technologies that excite the Musk crowd. 

Earlier this week, Yoon’s government said it’s prioritizing nuclear power generation over increasing the use of other renewable energy as Asia’s No. 4 economy struggles to meet emissions reduction targets.

Yet why take Korea out of the region’s most important economic arms race? All around Korea-- in China, India and Southeast Asia -- there are a few billion people who would prefer not to choke on rapid economic growth powered by fossil fuels. 

From Singapore to Tokyo, there are countless households and businesses that don’t want Russian leader Vladimir Putin’s military exploits setting back living standards as prices surge. Nor do they relish imported energy inflation becoming a decade-long crisis. 

And from Ho Chi Minh City to Seoul, the growing ranks of young entrepreneurs are keen on disrupting systems from the ground up. All they need is for governments to get out of their way and champion incentives and regulatory frameworks that empower startups to grow and thrive. 

For Korea, no industry of tomorrow is there more for the taking than Asia’s renewables boom. Why else would Musk be eying an aging, change-averse, high-regulation economy like Korea over many lower-cost neighbors? It is the potential for Korean innovation in batteries and other segments that intrigues Musk, not its qualifications as a cheap production hub. 

In a widely-reported video chat in late November, Musk expressed a willingness to deepen Tesla’s engagement — and that of SpaceX — with Korea on the strength of its high-quality parts he sources there for autonomous driving and artificial intelligence-related vehicles. 

Frankly, Musk choosing Indonesia over Korea for his newest Gigafactory would not be a huge surprise. 

As erratic as he is, particularly since buying Twitter, Musk’s obsession with zero regulations, cheap labor and every perk and indulgence imaginable from politicians is well documented. Rest assured that whatever tax-giveaway deal he might be striking with President Joko Widodo will not advantage Indonesian workers or communities. 

But Yoon’s team should take to heart why one of the globe’s best-known innovators has Korea on his mind. 

It’s often said that Korea is starved of natural resources. Not true, when you consider the ingredients needed to invent new renewable energy sources: ample access to wind, solar and geothermal resources and a sizable, highly educated workforce properly incentivized to change the world.

Korea boasts the first four, but the fifth depends on a government now making the Japan-like mistake of going bigger on nuclear. By 2030, renewables are only seen generating about 20% of electricity compared to roughly one-third for nuclear. 

To many, reactors generate cheap, clean and safe energy. That is, until something goes wrong. From Fukushima in Japan to Ukrainian reactors targeted by Russian forces, Asia has reason to fear pivots to nuclear power. 

The trouble for Korea is that, like Japan, so much of what it does well is being commoditized. As China, India and other neighbors make better cars, gadgets, smartphones, appliances, medical equipment and biopharmaceuticals, Korea could find its future market share under assault. 

The heat is on to make Korea a bigger presence on the global innovation map. It would be great if Musk’s interest in Korea were a major wake-up call for Yoon’s economic team.

In 2014, when Musk was building his original Gigafactory in Nevada, one of his first calls was to battery pioneer Panasonic Corp. in Osaka. Over the last 105 years, few companies built a more storied history of innovation and reinvention. That reminds Asia its future should be less about making cars than inventing and profiting from sustainable ways to power them. 

Yoon should be supersizing initiatives like one in November to join forces with renewable battery giants LG Energy Solution, Samsung SDI and SK On to expand global market share. Korea needs more such 50 trillion won ($35 billion) plans to raise its game in a fast-changing region. Seoul also is establishing a public-private alliance to secure key battery-related minerals. 

Why not think even bigger, act faster and deploy far more financing. And reduce financial, regulatory or labor hurdles to Korea being the go-to place for tech gurus everywhere looking to power the future. There’s nothing crazy about that.

By William Pesek


William Pesek is an award-winning Tokyo-based journalist and author of Japanization: What the World Can Learn from Japan's Lost Decades. Previously, he was a columnist for Bloomberg and Barron’s.