The US launches a 'new weapon' against Chinese electric vehicles.

In a recent move, the U.S. Department of Commerce has proposed a ban on automotive software and hardware manufactured in China. This decision marks another tough step by the U.S. government to limit China's influence in the automotive industry, particularly in electric vehicles.

Previously, the US had also imposed a 100% tariff on electric vehicles imported from China and excluded models containing components manufactured in that country from the $7,500 subsidy program for electric vehicle buyers. These measures were aimed at protecting domestic automakers and ensuring supply chain security.

Unlike previous restrictions, the ban on connected car technology will have a much broader scope. Specifically, even cars manufactured by Chinese companies in other countries, such as Mexico or European countries where they have invested in building factories, will be affected. This means that, regardless of the place of manufacture, any vehicle equipped with connected technology supplied by Chinese companies could be banned from import into the US market.

"This is a very drastic move," said Michael Dunne, an analyst with years of experience monitoring the Chinese automotive industry. He added that after imposing high tariffs on electric vehicles manufactured in China, US policymakers reassessed the situation and asked: "Was this measure strong enough to achieve the stated goal?" And the answer seems to be no.

BYD, a leading Chinese electric vehicle manufacturer, has announced plans to build a production plant in Mexico. While BYD insists that products from this plant will primarily serve the Mexican domestic market, U.S. trade associations remain concerned. They argue that BYD's expansion of production in North America could create fierce competition, seriously threatening the survival of domestic automakers.

President Joe Biden's new proposal to restrict Chinese companies' participation in the US high-tech market is causing considerable controversy. Specifically, the proposal calls for a complete ban on testing and deploying self-driving software or vehicles originating from China in the US.

This decision is seen as a move to protect the interests of American technology companies, particularly Tesla, a pioneer in the electric vehicle sector and a driving force behind the development of self-driving technology. By creating a trade barrier, the US government hopes to give domestic companies more time and space to compete and grow.

Analysts are expressing concerns about the possibility of China implementing retaliatory trade measures, directly targeting Tesla's large-scale business in the country. If these scenarios unfold, Tesla could face numerous challenges, from increased production costs to reduced sales, directly impacting the company's profitability and position in one of the world's largest electric vehicle markets.

Meanwhile, U.S. officials have raised concerns about the potential national security risks posed by vehicles and technology manufactured in China. They fear that these devices could be exploited to gather intelligence, launch cyberattacks, or even cripple critical national systems. The rise of China's electric vehicle industry, with its significant advancements in battery and software technology, has further heightened these concerns.

Currently, the US automotive market is almost devoid of Chinese-branded products. The latest decision by the US Department of Commerce to further tighten regulations makes it more difficult than ever for Chinese automakers to enter 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 stated: "China firmly opposes the US's actions in generalizing the concept of national security to justify unfair trade restrictions targeting Chinese companies and products."

National security concerns

US lawmakers are raising concerns about potential security risks as Chinese companies actively test autonomous vehicles in the US. The possibility of these companies installing malware or of the Chinese government remotely interfering with autonomous vehicle systems poses a serious threat to national security.

Earlier this year, trade tensions between the US and China escalated when the Biden administration officially blacklisted Hesai Corporation, one of the leading suppliers of light-detection and distance-measuring (LIDA) equipment to autonomous vehicle companies in the US, as having ties to the Chinese military. Hesai, with major partners such as Cruise (owned by General Motors) and Zoox (owned by Amazon), denied the allegations and decided to sue the US government to protect its reputation and business interests.

White House economic adviser Lael Brainard pointed out that the US-China trade war escalated when Beijing imposed restrictions on Tesla's operations in its domestic market. The ban on Tesla vehicles in certain areas, citing national security concerns related to data collection, was seen as a provocative move. However, after verification that Tesla complied with Chinese regulations, these restrictions were eased, highlighting the complexity and sensitivity of national security issues in the context of trade competition between the two superpowers.

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

The White House has announced it possesses a large amount of evidence showing that malware originating from China has infiltrated critical U.S. infrastructure systems. Cybersecurity experts fear that this software could be used to steal sensitive data, disrupt operations, or even conduct large-scale cyberattacks. However, to date, there is no concrete evidence that China is exploiting automotive technology to conduct espionage in the U.S.

Commenting on the proposal to ban Chinese automotive technology, Sam Fiorani, Vice President of the US automotive market research firm AutoForecast Solutions, stated: "Chinese technology is deeply embedded in countless products imported into the US. From tiny electronic components to the core components of many devices, the Chinese imprint is increasingly evident. Defining a clear line to distinguish what is truly 'Made in the US' in today's globalized world is an enormous challenge."

Phan Van Hoa