Biden administration raising barriers to block Chinese vehicles
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The Biden administration is taking steps to make it even harder for Chinese automakers to sell vehicles in the U.S.
Why it matters: China's domestic auto industry has made major strides in quality and cost — especially on electric vehicles — but it still hasn't sold any of its homegrown vehicles in the U.S.
Driving the news: Biden today ordered the Commerce Department to investigate "connected vehicles with technology from countries of concern and to take action to respond to the risks," specifically citing China.
- The move puts a spotlight on the data security of high-tech vehicles — many of which will be EVs with autonomous driving elements.
What they're saying: "China's policies could flood our market with its vehicles, posing risks to our national security. I'm not going to let that happen on my watch," Biden said in a statement.
- "Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People's Republic of China," the president added. "These vehicles could be remotely accessed or disabled."
The big picture: The upshot is another barrier for Chinese automakers in their quest to bring cars to the U.S., where political opposition to China's automotive ambitions is already rigid.
- "Taking action to limit or block Chinese EVs coming into the U.S. — that is action that is easy to implement and something that all of Washington can get behind, even in an election year," Evercore ISI analyst Sarah Bianchi said in a research note.
- The move could also help Biden shore up support in automotive powerhouse Michigan heading into the 2024 election.
State of play: In the U.S., Chinese vehicle imports face a 27.5% tariff, which has limited their ability to come here on a cost-effective basis despite being cheaper.
Yes, but: Chinese automakers are reportedly taking steps to diversify their manufacturing footprints, including forming manufacturing partnerships or exploring Mexico as a production base.
- In the European Union, Chinese automakers have increased their EV market share from 1.7% in 2021 to an estimated 8-10% in 2023, according to Evercore ISI.
- When Chinese automaker BYD — which now sells more EVs worldwide than Tesla — recently debuted an $11,000 EV, it bragged, "The price will make petrol car assemblers tremble."
The bottom line: American political and business leaders are growing increasingly concerned about the prospect of Chinese vehicles coming to the U.S.
