Biden Administration Targets Chinese EV Tech with Proposed Ban
WASHINGTON/DETROIT, Sept 24 (Reuters) – The Biden administration is moving to restrict Chinese connected-car technology, potentially escalating the trade war over electric vehicles (EVs). This move is seen as a major effort to counter the growing dominance of low-cost Chinese EVs and to address national security risks.
The proposed ban, announced by the U.S. Commerce Department, would cover both hardware and software. It’s a strategic response following the imposition of 100% tariffs on Chinese EVs and the denial of a $7,500 consumer EV subsidy for vehicles with Chinese-made components.
This new measure is designed to be far-reaching. Unlike previous actions, the connected-car technology ban would apply even to vehicles manufactured by Chinese companies outside of China, such as in Mexico or Europe.
“It’s a powerful statement,” stated Michael Dunne, an industry consultant who follows the Chinese auto market closely. He noted that after imposing high tariffs, U.S. officials reassessed the situation and concluded more action was necessary.
BYD (002594.SZ), a leading Chinese EV maker, has plans for a factory in Mexico. Although BYD has stated its plant would only serve the local market, U.S. trade groups are wary of the potential for Chinese EVs to disrupt the U.S. auto industry.
National Security and Economic Concerns Drive the Ban
U.S. officials see Chinese EV technology as both a national-security and economic threat. They argue that the technology could enable espionage and that China’s heavily subsidized EV sector, strong in both battery and software technology, puts U.S. manufacturers at a disadvantage.
According to Liz Cannon, who heads the Commerce Department’s information and communications technology office, this measure closes a critical loophole: “If we had just said, ‘No Chinese vehicles,’ we would really have been leaving a front door open for China to come in via automotive software.”
The Biden plan envisions prohibiting software in 2026, for 2027 model vehicles, and hardware for the 2030 model year. The administration hopes to finalize the rules before President Biden leaves office in January 2025.
China’s Foreign Ministry issued a statement opposing the ban, arguing the U.S. is generalizing the concept of national security and discriminating against Chinese companies.
Potential for Retaliation
Analysts are warning of potential trade-policy retaliation from China. This could impact Tesla’s substantial operations within China. The company did not respond to requests for comment.
Canada is also considering a similar ban, according to Finance Minister Chrystia Freeland.
The U.S. has raised concerns about the data these vehicles collect, citing potential risks to privacy and suggesting the possibility of remote vehicle control.
Lael Brainard, a White House economic advisor, emphasized the administration’s focus on both national security and fostering fair competition for U.S. automakers.
Buy American Push
The issue of electric vehicles and trade policy has become a central theme of the 2024 U.S. presidential campaign. Anti-China measures have become a rare point of bipartisan agreement.
Brainard articulated the administration’s goal: “When Americans do choose electric vehicles, we want to make sure they choose an American vehicle – not a Chinese vehicle.”
The move is expected to impact a number of technologies. As Sam Fiorani, vice president at research firm AutoForecast Solutions, noted, “There’s Chinese tech in so many products that come into the U.S. Figuring out where you draw that line … is going to be very difficult.”
