On the face of it, Joe Biden’s effective ban on Chinese technology in new vehicles appeared to be a devastating blow to Beijing’s burgeoning electric car industry.
In reality, it poses the greatest threat to Tesla, the US car giant owned by Elon Musk, Donald Trump’s cheerleader-in-chief.
On Monday, Gina Raimondo, the US commerce secretary, raised the terrifying scenario of a rogue state controlling America’s cars remotely.
It may sound like science fiction but it’s a real and present danger.
“In an extreme situation, foreign adversaries could shut down or take control of all their vehicles operating in the United States at the same time,” said Ms Raimondo.
Modern cars, connected to the internet, possess cameras, microphones, GPS tracking and other technologies which, said Ms Raimondo, are in the hands of “foreign adversaries… could pose a serious risk to both our national security and the privacy of US citizens”.
The chilling warning came with a proposed block by the US Department of Commerce on the import and sale of cars that rely on Chinese software and hardware to connect to the internet.
Ban also impacts the Russians
The ban – which also affects Russian suppliers – will take effect on new models from 2027 with further restrictions from 2030.
Microchips used to receive and transmit information such as location or traffic data or for use with self-driving technology will be prohibited.
The proposed ban could also include cars that use Chinese technology for keyless unlocking.
It followed an investigation into cybersecurity risks posed by Chinese software.
On the face of it, any such ban would spell the death knell for China’s nascent electric vehicle (EV) industry in the US.
But the reality is it may have little effect because China’s new generation of EVs – prevalent in the UK and Europe – are barely on US streets.
Biden’s eye-watering tariffs on Chinese EVs
Tariffs, announced by President Biden in May, rose from 25 per cent to an eye-watering 100 per cent, doubling the cost of Chinese cars and pricing them out of the market.
Canada has also imposed a 100 per cent tariff.
The new software ban is prohibiting vehicles that no one in their right mind would actually buy because of the cost.
But it is likely, experts warn, that China could retaliate. Bill Russo, founder and chief executive of Shanghai-based investment advisory firm Automobility, told Bloomberg that any ban would be “met with reciprocity” that will impact US business in China.
How that would manifest is unclear at this stage.
But there is an obvious target: Tesla, the world’s second biggest manufacturer of EV cars, which last year sold more than 600,000 cars in China, its second largest market.
BYD, a Chinese conglomerate, is the biggest EV maker on the globe but its cars are not even sold in the US.
Geoffrey Gertz, a senior fellow at the Center for a New American Security, warned that China could now come after Tesla.
“US automakers don’t see a big impact [on this ban],” said Dr Gertz, “There are already a number of measures designed to keep China’s EV makers out… It’s hard to speculate what exactly any retaliation might be. I suspect there will be something but certainly Tesla has a foothold in China.”
Nobody is suggesting President Biden’s move was politically motivated although it can only help Kamala Harris’s cause.
The swing state at the heart of the issue
Detroit in the swing state of Michigan is the centre of the US’s auto industry.
The fact that Elon Musk, who has used his social media platform X to promote Trump and push his agenda, could be damaged by any Chinese blowback will likely not cause too many sleepless nights in the White House.
Professor Weisong Shi, who runs the Connected and Autonomous Research Laboratory (CAR Lab) at the University of Delaware, said: “Because of the tariffs, we haven’t seen too many China EVs here.
“The latest sanction covers software for future connected and autonomous vehicles, and as a result, we are not going to see software made by China in US markets.
“This will be a big challenge for China. I don’t know whether China will retaliate, but they might. If you think about Tesla vehicles operating in China, the software they are running is being made by Tesla.
“That is potentially somewhere for China to go.”
Musk, normally not shy in his pronouncements on X, hasn’t commented on the proposed ban.
Tesla also did not respond to a request for comment.
