US launches 'new weapon' against Chinese electric vehicles

In a recent move, the US Department of Commerce has proposed a ban on Chinese-made automotive software and hardware. This decision marks the next tough step by the US government to limit China's influence in the auto industry, especially in electric vehicles.

The US has also imposed a 100% tariff on electric vehicles imported from China and excluded models with components made in China from a $7,500 subsidy program for electric vehicle buyers. These measures are aimed at protecting domestic automakers and ensuring supply chain security.

Unlike previous restrictions, the ban on connected car technology will be much broader in scope. Specifically, even cars made by Chinese companies in other countries, such as Mexico or European countries, where they are investing in building factories, will be affected. This means that, regardless of where they are manufactured, any car equipped with connected technology provided by Chinese companies could be banned from entering the US market.

“This is a very aggressive move,” said Michael Dunne, an analyst with years of experience tracking the Chinese auto industry. He added that after imposing high tariffs on electric vehicles made in China, U.S. policymakers reassessed the situation and asked, “Is this enough to achieve the intended goal?” And the answer appears to be no.

China’s leading electric vehicle manufacturer BYD has announced plans to build a manufacturing plant in Mexico. Although BYD insists that the plant will primarily serve the domestic Mexican market, US trade associations have expressed concerns. They say BYD’s expansion into North America could create fierce competition that could seriously threaten the survival of domestic automakers.

President Joe Biden’s new proposal to limit Chinese companies’ participation in the US high-tech market is causing a lot of controversy. Specifically, this proposal calls for a complete ban on testing and deploying Chinese-origin software or self-driving cars in the US.

The decision is seen as a move to protect the interests of US technology companies, especially Tesla, a pioneer in the electric vehicle sector and a company that is pushing to develop self-driving technology. By creating a trade barrier, the US government hopes to give domestic companies more time and space to compete and develop.

Analysts are expressing concern about the possibility of China taking retaliatory trade measures that directly target Tesla’s large-scale operations in the country. If these scenarios come to fruition, Tesla could face a range of challenges, from increased production costs to reduced sales, directly impacting the company’s profits and position in one of the world’s largest electric vehicle markets.

Meanwhile, U.S. officials have warned of potential national security risks posed by Chinese-made vehicles and technology, fearing that the devices could be used to gather intelligence, launch cyberattacks, or even cripple critical national systems. The rise of China’s electric vehicle industry, with its advances in battery technology and software, has added to these concerns.

The US auto market is currently almost completely devoid of Chinese-branded products. The latest decision by the US Department of Commerce to further tighten regulations, making it more difficult than ever for Chinese automakers to penetrate this market. This move is seen as an effort to protect domestic automakers and maintain America's competitive advantage.

Regarding this issue, Chinese Foreign Ministry Spokesperson Lin Jian said: "China firmly opposes the US's action of generalizing the concept of national security to justify unfair trade restrictions targeting Chinese companies and products."

National security concerns

US lawmakers are warning of potential security risks as Chinese companies ramp up testing of self-driving cars in the US. The possibility that these companies could install malware or have the Chinese government remotely interfere with autonomous vehicle systems is a serious threat to national security.

Earlier this year, trade tensions between the US and China escalated when the Biden administration officially added Hesai Group, one of the leading suppliers of light detection and ranging (Lidar) equipment to US autonomous vehicle companies, to a “blacklist” of companies with ties to the Chinese military. Hesai, which has major partners such as Cruise (owned by General Motors) and Zoox (owned by Amazon), has denied the allegations and decided to sue the US government to protect its reputation and business interests.

White House economic adviser Lael Brainard has pointed out that the US-China trade war has escalated as Beijing has placed restrictions on Tesla’s operations in its domestic market. The banning of Tesla vehicles in some regions, citing national security concerns related to data collection, was seen as a provocative move. However, after verifying that Tesla was in compliance with Chinese regulations, the restrictions were eased, highlighting the complexity and sensitivity of national security issues in the context of trade competition between the two powers.

The US proposed ban on foreign automotive technology to address growing national security concerns. Specifically, they are concerned about the possibility of unauthorized access to vehicle control systems, posing threats to traffic safety and user privacy. At the same time, the US also wants to protect the domestic auto industry from unfair competition and ensure its leading position in the global market.

The White House has said it has a large body of evidence that Chinese-origin malware has infiltrated critical U.S. infrastructure systems. Cybersecurity experts fear that the malware could be used to steal sensitive data, disrupt operations, or even launch large-scale cyberattacks. However, there is no concrete evidence to date that China is using automotive technology to conduct espionage in the United States.

Commenting on the proposal to ban Chinese auto technology, Mr. Sam Fiorani, Vice President of the auto market research company AutoForecast Solutions (USA), said: "Chinese technology is deeply present in countless products imported into the US. From small electronic components to core components of many devices, China's mark is increasingly evident. Determining a clear boundary to distinguish which products are completely 'Made in America' in the current context of globalization is an extremely big challenge."