New Chinese electric carsNew Chinese electric cars


US government cracks down on foreign tech, casting doubt on future of Chinese-made EVs

  • Clampdown on Chinese-made tech threatens sales of EVs in the US
  • Increase in taxation on Chinese models to 100% aims to level playing field
  • Latest ban on DJI drones reiterates strict approach to Chinese companies

Time 7:23 am, June 20, 2024

A raft of new defence policies that view Chinese-made tech as a threat to national security also threaten the sale of Chinese EVs in the US.

Earlier this year, President Joe Biden announced that his government was opening an investigation into the security risk that Chinese-made cars might pose, potentially slamming the brakes on Chinese brands entering the US market.

It appears the ban on Chinese-made tech is becoming stricter, as news broke late last week that the United States House of Representatives passed a ban on the future sale of DJI drones in the US.

DJI, which is headquartered in Shenzhen, owns more than 70% of the world’s drone market share and 6% of its stock is held by Chinese state-owned businesses..

Dubbed the ‘Countering CCP Drones Act’, this piece of legislation is part the United States’ 2025 National Defense Authorization Act (FY25 NDAA), which lays out the main defence spending for the year to come.

US lawmakers believe that this could pose a national security risk, with fears of Chinese firms using the devices for surveillance operations.

It follows Biden’s decision to open a commerce department investigation that is looking at the technology embedded in Chinese-made electric vehicles and deciding whether data handled by Chinese firms could pose a risk to national security.

The move followed pressure from numerous US automaker unions that feared the onslaught of cheaper Chinese electric models would flood the market and threaten future sales of any North America-made models.

In addition to the tightened security measures, Biden also implemented a border tax increase on Chinese-made electric vehicles, rising from 25% to 100% in a bid to level the playing field for homegrown electric car makers.

The increase in taxation would also extend to a number of other products hailing from China, including semiconductors – a vital part of any modern EV – which will face an increase from 25% to 50% by 2025, as well as lithium batteries and critical minerals, which will rise from 7.5% to 25% in 2024.

The recent DJI announcement appears to confirm that the US government is taking affirmative action on any Chinese-made tech that could pose a threat to national security and helps to strengthen the Chinese economy.

Although popular with congress, the bill has not been passed yet and would not prohibit the legal flying of existing DJI drones. However, coupled with the results of the Commerce Department investigation, the recent bill could have serious implications on the sale of Chinese EVs in the US in coming years, or ban them altogether.

Leon Poultney's avatar

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