Analysis: Biden’s Car-Tech Ban as a Powerful New Weapon Against Chinese EVs

Proposed Ban on Chinese Connected-Car Technology by Biden Administration

By David Shepardson, Nora Eckert, and Abhirup Roy

In a significant move against the rising presence of inexpensive Chinese electric vehicles, the Biden administration has announced a proposed ban on Chinese connected-car technology. This measure, unveiled by the U.S. Commerce Department, marks another step in the administration’s strategy to safeguard the domestic auto industry.

The ban on hardware and software components aims to prevent Chinese firms from establishing a foothold in the U.S. automotive market. Unlike previous measures, such as 100% tariffs on Chinese electric vehicles and eliminating a $7,500 subsidy for EVs with Chinese-made parts, this prohibition would impact even vehicles produced by Chinese companies outside of China, including potential factories in Mexico and Europe.

Michael Dunne, an industry consultant with expertise in the Chinese automotive market, characterized the ban as a decisive action. He noted that after levying high tariffs, U.S. officials reevaluated their approach and recognized the need for further measures.

Prominent Chinese electric vehicle manufacturer BYD has announced plans for a production facility in Mexico. Although the company has stated that the plant will cater to local demand, U.S. trade organizations express concerns that the influx of Chinese electric vehicles could severely threaten American automakers.

Additionally, Biden’s proposal includes restrictions on Chinese software and autonomous driving technologies, preventing their testing and deployment within the U.S. This initiative could bolster domestic automakers like Tesla, which is increasingly pivoting towards self-driving technology amid fierce competition from China.

However, analysts caution that such trade policies might provoke retaliatory measures from China, potentially impacting Tesla’s extensive operations in the country. Tesla has not commented on this issue.

U.S. officials have framed the potential influence of Chinese vehicles and technology as both an economic and national security concern, with fears that it could facilitate espionage. China’s heavily subsidized electric vehicle sector has excelled in battery and software innovations, including advanced in-car systems.

Currently, there are few Chinese automobiles available in the U.S. market—none from brands based in China. The recent action seeks to tighten loopholes that could allow such vehicles increased access to the market. U.S. Commerce officials emphasized the importance of preventing a situation where the automotive software sector could be exploited.

The proposed regulations aim to ban software by 2026 for the 2027 model year, and hardware by 2030. The administration intends to finalize these rules before President Biden’s term concludes in January 2025.

Chinese authorities have warned that they will protect their national interests in response to the U.S. actions. A spokesperson from the Chinese Ministry of Foreign Affairs expressed opposition to what they see as discriminatory practices against their companies.

In Canada, the finance minister indicated that similar restrictions are being considered, reflecting concerns within the country’s closely tied automotive industry.

Concerns about security related to Chinese autonomous vehicle technology, including that from companies like Hesai Group, have escalated. The U.S. government recently added Hesai to a list of firms allegedly connected to China’s military, a claim the company disputes.

The Biden administration has highlighted the importance of national security and the economic competitiveness of U.S. manufacturers in proposing the ban. Officials argue that the U.S. should ensure their manufacturers can compete fairly in the automotive market.

As electric vehicles and trade policies become key topics in the upcoming presidential campaign, both major parties seem to agree on the need for anti-China measures. Former President Trump has warned about the potential for China to dominate auto production, while Biden’s administration emphasizes the importance of American-made electric vehicles in the market.

With numerous products containing Chinese technology entering the U.S., industry experts acknowledge the challenge of delineating the boundaries for these regulations.